8F
Date: June 3, 2025
To: Honorable Mayor and Members of the City Council
From: Aram Chaparyan, City Manager
Kim Turner, Transit Director
By: Godfrey Offoegbu, Deputy Transit Director | [email protected] Carlos Huizar, Management Associate | [email protected] Subject: City Manager and Transit – Adopt Categorical Exemption Under California Environmental Quality Act (CEQA) Section 15301, Adopt RESOLUTION and Approve a Lease Agreement between the City of Torrance and Cluck & Crust, LLC for a retail pad space located at 475 Crenshaw Boulevard, Suite 150. Expenditure: None.
RECOMMENDATION
Recommendation of the City Manager and Transit Director that City Council:
1. Adopt a California Environmental Quality Act (CEQA) Categorical Exemption pursuant to Guidelines Section 15301 (Existing Facilities); and
2. Adopt a RESOLUTION determining portion of City-owned building is not required for city purposes and that leasing the building is in the public interest; and
3. Approve a Lease Agreement made by and between the City of Torrance, a municipal corporation, and Cluck & Crust, LLC, a California limited liability company, for portion of a City-owned building located at 475 Crenshaw Boulevard, Suite 150, for an initial term of five-years commencing July 1, 2025 through June 30, 2030.
FUNDING
None required.
BACKGROUND
The Mary K. Giordano Regional Transit Center is a state-of-the-art, multi-modal transportation hub located at 465 Crenshaw Boulevard in Torrance, California. Officially opened in June 2023, the facility enhances regional connectivity and transit access for residents and commuters throughout the South Bay. Named in honor of longtime Torrance employee Mary K. Giordano, the center supports local and intercity bus operations, including Torrance Transit routes and private carriers such as FlixBus.
The 15,000-square-foot, LEED-certified facility includes eight bus bays, a passenger waiting area, bicycle amenities, electric vehicle chargers for passengers, and a surface parking lot with future expansion capabilities. The center serves as a key element of the City's long-term transportation strategy and is a potential future terminus for Los Angeles Metro’s proposed K Line extension, 1 City Council
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positioning the facility as a central asset in the region's mobility network. As a designated multi-modal transportation hub, features such as patron amenities and retail spaces were incorporated into the facility’s design.
DISCUSSION
Cluck & Crust, LLC, a California-based limited liability company, has proposed operating a food and beverage establishment within the Mary K. Giordano Regional Transit Center. In alignment with the City’s objective to foster a vibrant, sustainable, and activated public space, staff has negotiated a lease agreement that incorporates fair market rental rates, phased rent escalations, and a long-term tenancy framework.
The proposed lease covers approximately 1,800 square feet of retail space (Suite 150) located at 475 Crenshaw Boulevard. The initial lease term is five years, commencing July 1, 2025, and expiring June 30, 2030. The Tenant will have the option to extend the lease for up to three additional five-year terms, contingent upon compliance with lease terms and timely notice. Each option period will include rent adjustments based on the then-current Fair Market Rental Rate, with a guaranteed minimum increase of 3% over the preceding term.
To support timely tenant build-out, the lease includes a rent deferral period of up to six months from the lease commencement date. During this time, base rent will not be collected, allowing the Tenant to focus on completing necessary improvements. The City Manager may, at their discretion, extend the rent deferral by an additional six months if more time is required for tenant improvements.
Following the deferral period, base rent is set at $4,500 per month for the first two years.
Beginning in the third year, rent will increase to $4,950 per month, followed by a 3% annual escalation for the remainder of the lease and any exercised option periods.
The Premises will be delivered in shell condition and will include a 200-amp, 3-phase electrical panel, along with operational plumbing, electrical, and HVAC systems in accordance with City specifications. These delivery conditions are intended to provide a functional base upon which the Tenant may complete their interior improvements.
Over the initial five-year term, the Lease Agreement is projected to generate approximately $270,000 in base rent revenue. This revenue will contribute to the General Fund or other designated operating funds, while also supporting the City’s goal of ongoing Transit Center activation through expanded commercial services.
Pursuant to the California Environmental Quality Act (CEQA), the proposed action qualifies for a Categorical Exemption under Section 15301 (Existing Facilities). This exemption is appropriate as the lease pertains to an existing structure and does not involve physical expansion or land use changes that could result in significant environmental effects. The property will continue to function as a regional transit facility with complementary commercial uses.
Adoption of the accompanying Resolution will formally declare that the leased portion of the facility at 475 Crenshaw Boulevard is not currently required for City use and that leasing it to Cluck & Crust, LLC serves the public interest by providing a food and beverage amenity for transit patrons and the surrounding community.
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June 3, 2025
By adopting the CEQA exemption, approving the Lease Agreement, and adopting the associated Resolution, the City Council will support continued activation of the Mary K. Giordano Regional Transit Center, enhance services for transit users, and generate new revenue for City operations.
Cluck & Crust, LLC, a California-based limited liability company, has proposed operating a food and beverage establishment at the Transit Center. To support this activation, the City has negotiated a lease agreement that reflects fair market rental rates, phased rent escalation, and long-term tenancy consistent with the City’s goal of creating a vibrant and sustainable environment at the Transit Center.
ATTACHMENTS
1. Lease Agreement
2. Resolution
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LEASE
THIS LEASE (this “Lease”) is made and entered into as of July 1, 2025, by and between the CITY OF TORRANCE, a municipal corporation (the “Landlord”), and CLUCK & CRUST, LLC., a California limited liability corporation (the “Tenant”).
WHEREAS, the Landlord is the owner of certain real property, together with a building thereon, located in the City of Torrance commonly known as the Torrance Transit Center located at 475-485 Crenshaw Blvd., Torrance, California 90501 (the “Project”); and WHEREAS, it is in the public interest that a portion of said Property consisting of approximately 1,800 square feet of retail space at the Project and identified as 475 Crenshaw Blvd., Suite 150, Torrance, California 90501 (“Premises”), as shown on the attached “Exhibit A”, which is incorporated by this reference be leased to the Tenant on the terms and conditions set forth herein; and
WHEREAS, said Premises, is not required for any public purposes.
NOW, THEREFORE, the parties agree as follows:
1. PREMISES.
For and in consideration of the rents, covenants and conditions herein contained the Landlord leases to the Tenant, and Tenant leases from the Landlord the Premises. The Premises shall be delivered to Tenant broom clean with all plumbing and electrical systems serving the Premises in good operating condition and with the HVAC system installed according to the City of Torrance specifications. At delivery, the Premises shall be in shell condition with its own individually metered electrical panel of 200 amps 3 phase. Except as specifically set forth in this Lease, (i) Tenant shall accept the Premises on an “AS IS” basis, (ii) Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises, the Common Areas, or the Project, and (iii) Landlord has made no representation or warranty regarding the condition of the Premises, the Common Areas or the Project. Pursuant to Section 1938 of the California Civil Code, Landlord hereby informs Tenant that the Premises has not undergone inspection by a Certified Access Specialist (a “CASp”). Further, pursuant to Section 1938 of the California Civil Code, Landlord notifies Tenant of the following: “A Certified Access Specialist (CASp) can inspect the Premises and determine whether the Premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the Premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the Premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant.
The parties shall mutually agree on the arrangements for the time and manner of any such CASp inspection, the payment of the costs and fees for the CASp inspection and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Premises.” If Tenant requests to perform a CASp inspection of the Premises or any Common Areas, Tenant shall, at its cost, retain a CASp approved by Landlord (provided that Landlord may designate the CASp, at Landlord’s option) to perform the inspection at a time agreed upon by the parties. Tenant shall provide Landlord with a copy of any report or certificate issued by the CASp 4 ATTACHMENT 1
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(the “CASp Report”) and Tenant shall, at its sole cost, promptly complete any modifications necessary to correct violations of construction related accessibility standards identified in the CASp Report, notwithstanding anything to the contrary in the Lease; provided, however, Landlord, at its option, may elect to complete the modifications itself, and Tenant shall immediately pay all costs and expenses of Landlord to complete such modification upon receipt of Landlord’s invoice therefor. Tenant agrees to keep the information in the CASp Report confidential except as necessary for the Tenant to complete such modifications.
2. TERM.
A. Initial Term. The initial term of this Lease (“Initial Term”) is five (5) years, commencing as of July 1, 2025 (“Commencement Date”) and expiring June 30, 2030 (“Expiration Date”). The Initial Term, together with any extensions thereof, is referred to herein as the “Term.” B. Options to Extend. Subject to the terms and conditions set forth in this Section 2.B, Landlord hereby grants Tenant three (3) options to extend the Term for a period of five (5) years each (each, an “Option Term”), which options shall be exercisable only by written Exercise Notice (as defined below) delivered by Tenant to Landlord as provided below. During each Option Term, all of the terms and conditions of the Lease shall remain the same as set forth herein, however, that upon the commencement of the second and third Option Term, the Base Rent shall be adjusted to the Fair Market Rental Rate for the Premises. As used herein, the “Fair Market Rental Rate” for purposes of determining the Base Rent payable by Tenant for each Option Term shall mean the annual Base Rent at which retail tenants, as of the commencement of the Option Term, will be leasing non-sublease, non-equity, unencumbered space on a modified gross non- percentage rent basis for comparable size, location and quality to the Premises for a comparable term, which comparable space is located at the Project and in projects that are comparable to the Project, provided, however, that in no event shall the Fair Market Rental Rate be less than one hundred three percent (103%) of the Base Rent in effect immediately before the commence of the applicable Option Term. Upon the proper exercise of an option to extend, the Term shall be extended for the Option Term. The options contained in this Section 2.B shall be exercised by Tenant, if at all, only in the following manner: (i) Tenant shall deliver written notice to Landlord (the “Interest Notice”) not less than two hundred seventy (270) and not more than three hundred sixty (360) days prior to the expiration of the Initial Term or then expiring Option Term stating that Tenant is be interested in exercising its option; (ii) Landlord, after receipt of Tenant’s Interest Notice, shall deliver notice (the “Option Rent Notice”) to Tenant setting forth Landlord’s determination of the Fair Market Rental Rate for the Option Term for the Premises; and (iii) if Tenant wishes to exercise such option, Tenant shall, on or before the date (the “Exercise Date”) which is ten (10) days after receipt of the Option Rent Notice, exercise the extension option by delivering written notice (“Exercise Notice”) thereof to Landlord accepting Landlord’s determination of the Fair Market Rental Rate contained in the Option Rent Notice. Tenant’s failure to timely deliver the Interest Notice or the Exercise Notice shall be deemed to constitute Tenant’s waiver of its extension right hereunder and any future unexercised options remaining shall be void and of no further force or effect. In no event, have the option to extend the Term beyond the Option Terms. Notwithstanding anything to the contrary, at Landlord’s option, and in addition to all of Landlord’s remedies under the Lease, at law or in equity, the option to extend the Term hereinabove granted to Tenant shall not be deemed to be properly exercised if, as of the date of Tenant’s delivery of the Exercise Notice or at the commencement of the Option Term, Tenant is 5 2780/062579-0159
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in default under the Lease (or would be in default under the Lease but for the passage of time or the giving of notice, or both). In addition, Tenant’s right to extend the Term is personal to the original named Tenant and may not be assigned or exercised, voluntarily or involuntarily, by or to, any person or entity other than the original named Tenant, and shall only be available to and exercisable by the Tenant when the original named Tenant is in actual and physical possession of the entire Premises and has continuously operated its business in the Premises for the Permitted Use in accordance with Section 5 of the Lease.
3. RENT.
A. Base Rent. The Tenant agrees to pay to the Landlord as base rent for the Premises the sum of Four Thousand Five Hundred Dollars ($4,500.00) per month (“Base Rent”) commencing on the date the Premises are delivered to Tenant (“Rent Commencement Date”), which is currently estimated to occur on or around the Commencement Date, provided, however, that (i) if Landlord is unable to deliver possession of the Premises by the Commencement Date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date, however, that Rent Commencement Date shall not occur until the date the Premises are delivered to Tenant, and (ii) Landlord shall have no obligation to deliver the Premises to Tenant until Tenant has delivered the first months’ Base Rent, Security Deposit and evidence of insurance required hereunder, provided, however, that if Tenant has failed to deliver the Base Rent, Security Deposit and evidence of insurance, the Rent Commencement Date shall be deemed to have occurred, notwithstanding any failure to deliver possession of the Premises. On the second anniversary of the Rent Commencement Date, the Base Rent shall be increased to Four Thousand Nine Hundred Fifty Dollars ($4,950.00) per month, and on each anniversary of the Rent Commencement Date thereafter throughout the Term (including, without limitation, during any Option Term) the Base Rent shall increase by three percent (3%). Tenant’s obligation to pay Base Rent shall commence on the Rent Commencement Date and shall be payable in advance in on the first day of each calendar month thereafter throughout the term of this Lease, without demand or offset. If the Rent Commencement Date falls on a day of the month other than the first day of such month, the rental for the first fractional month shall be calculated on a daily basis for the period from the date of such commencement to the end of such fractional calendar month at a rate equal to 1/30th of the monthly Base Rent per day and shall be paid on the Rent Commencement Date. Upon the execution of this Lease by Tenant, Tenant shall deliver to Landlord Base Rent for the first full calendar month of the Term following the Abated Rent Period together with the Security Deposit. Provided that no Event of Default, or any condition or event which with the giving of notice and/or passage of time would constitute an Event of Default hereunder, has occurred Tenant shall have six (6) months of abated Base Rent (collectively, “Abated Rent”) commencing on the Rent Commencement Date and ending on the date that is one hundred eighty (180) days thereafter (“Abated Rent Period”);s provided, however, that the City Manager in its sole and absolute discretion, may elect, but shall have no obligation, to extend the Abated Rent Period for an additional six (6) months. Lessee shall pay all Operating Expenses, utilities and all other charges to be paid pursuant to this Lease during the Abated Rent Period.
Tenant acknowledges and agrees that Landlord’s agreement to provide the Abated Rent shall be an Inducement Provision under Paragraph 17.B(vii) of the Lease. Accordingly, upon any default or Event of Default under the Lease, in addition to Landlord’s rights or remedies hereunder, the Abated Rent Period shall automatically expire, Landlord shall have the right to demand the full repayment of all Abated Rent, which shall be due and payable immediately upon demand. 6 2780/062579-0159
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B. Operating Expenses. In addition to paying the Base Rent specified in Section 3.A of this Lease, Tenant shall pay to Landlord as additional rent Tenant’s Share (as defined below) of the amount by which Operating Expenses (as defined below) for a calendar year exceed the Operating Expenses for the Base Year. Such additional rent, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, shall be hereinafter collectively referred to as the “Additional Rent.” The Base Rent and Additional Rent are herein collectively referred to as the “Rent.” All such Rent shall be paid, without deduction or offset at such place as the Landlord shall designate from time to time in writing. All amounts due under this Section 3.B as Additional Rent shall be payable for the same periods and in the same manner, time and place as the Base Rent. Without limitation on other obligations of Tenant which shall survive the expiration of the Term, the obligations of Tenant to pay the Additional Rent provided for in this Section shall survive the expiration of the Term. (i) As used herein, “Base Year” shall mean the 2025 calendar year. As used herein, “Operating Expenses” shall mean all expenses, costs and other amounts accrued or incurred by Landlord during any calendar year during the Term in connection with the operation, cleaning, security, maintenance, ownership, management, repair and replacement of the Project, together with an administrative fee equal to fifteen percent (15%) of all Operating Expenses. Such Operating Expenses shall include, without limitation, the costs of: (a) all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including, without limitation, real estate taxes, general and special assessments, transit taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project), accrued or incurred by Landlord during any calendar year because of or in connection with the ownership, leasing and operation of the Project or Landlord’s interest therein; (b) all premiums, deductibles and other expenses for insurance policies, coverage and endorsements with respect to the Project that Landlord may from time to time consider appropriate in connection with Landlord’s ownership, management or operation of the Project, including without limitation liability (including umbrella) insurance, property insurance, environmental coverage, pollution coverage, mold coverage and terrorism coverage; (c) the costs of operating, maintaining, cleaning, repairing, repainting, renovating, replacing and managing the Project and all parts thereof, including, without limitation, all machinery, transformers, duct work, cable, wires, utility and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sanitary, irrigation, sprinkler, communications, alarm, security, or fire/life safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment which serve the Project in whole or in part (collectively, “Systems and Equipment”), parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, parking lot striping, bumpers, irrigation systems, lighting facilities, fences, gates, monuments, signs, tenant directories, elevators, roofs, roof drainage systems, walls and structural elements of the Building, and all other areas and improvements that are within the exterior boundaries of the Project, together with supplies, tools, materials and equipment and maintenance and service contracts in connection therewith and reasonable reserves for future repairs and replacements; (d) janitorial service, alarm and security service, window cleaning, trash removal, pest control, and irrigation and maintenance of planted 7 2780/062579-0159
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areas; (e) utilities for the Project, including, but not limited to, water, sewer, electricity and other utilities, as well as related fees, assessments and surcharges; (f) licenses, certificates, permits and inspections and the cost of contesting the validity or applicability of any governmental enactments which affect Operating Expenses, and the costs incurred in connection with the implementation and operation of any government mandated transportation demand management program; (g) fees and costs of auditors, accountants, attorneys, consultants and contractors engaged by Landlord in connection with the management, operation, maintenance and repair of the Project; (h) management agreements, including the fair rental value of any reasonable on-site property management office space provided thereunder, (i) wages, salaries and other compensation and benefits of all persons engaged in the operation, management, maintenance or security, and employer’s Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits; provided, that if any employees of Landlord provide services for more than one project of Landlord, then a prorated portion of such employees’ wages, benefits and taxes shall be included in Operating Expenses based on the portion of their working time devoted to the Project; (j) payments under any easement, license, operating agreement, declaration, restrictive covenant, underlying or ground lease (excluding rent), or instrument pertaining to the sharing of costs by the Project or any portion thereof, including, without limitation, any covenants, conditions or restrictions now or hereafter recorded against or affecting the Project; (k) any other services to be provided by Landlord that are stated elsewhere in this Lease to be an Operating Expense; and (l) capital expenditures which are (I) intended as a labor-saving device or to effect other economies in the operation or maintenance of the Project, (II) required under any Applicable Law, or (III) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Project at the same quality levels as prior to the repair or replacement, provided that such capital expenditures shall be amortized over the shorter of (A) useful life of the particular capital item in question as Landlord shall reasonably determine in accordance with sound accounting and management principles or (B) a 12 year period, with interest thereon at the rate reasonably determined by Landlord. (ii) If the Project is less than 100% occupied during all or a portion of any calendar year (including the Base Year), Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year or applicable portion thereof, employing sound accounting and management principles, to determine the amount of Operating Expenses that would have been paid had the Project been 100% occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year, or applicable portion thereof. For purposes of determining the Operating Expenses for the Base Year, Operating Expenses shall not include one-time special assessments, charges, costs or fees or extraordinary charges or costs incurred in the Base Year only, including those attributable to boycotts, embargoes, strikes or other shortages of services or supplies or amortized costs relating to capital improvements, utility rate increases and other costs arising from extraordinary market circumstances such as by way of example, boycotts, black-outs, brown-outs, the leasing of auxiliary power supply equipment, embargoes, strikes or other shortages of services or fuel (whether or not such shortages are deemed actual or manufactured), or any conservation surcharges, penalties or fines incurred by Landlord. Furthermore, notwithstanding any contrary provision in this Lease, if at any time after the Commencement Date, if any component of Operating Expenses decrease, then for purposes of the calendar year in which such decrease in costs occurs, and for all subsequent calendar years, the Base Year Operating Expenses with respect to such costs shall be reduced by an amount equal to such decrease in costs. Such decrease in the 8 2780/062579-0159
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Base Year Operating Expenses with respect to such costs shall not be limited to the initial decrease, if any, but may, at Landlord’s election, be subject to decrease annually upon each subsequent decrease in such costs.
(iii) If Landlord determines that the method of proration of any item included within Operating Expenses is inequitable, Landlord may prorate such item on the basis of usage or other equitable considerations. Any Operating Expenses that are specifically attributable to the Premises, the building in which the Premises are located, or parcel of land of which the Premises is a part, or to any other premises, parcel of land or building in the Project or to the operation, repair and maintenance thereof shall be allocated entirely thereto. However, any Operating Expenses that are not specifically attributable to any premises, parcel or land or building or to the operation, repair and maintenance thereof shall be equitably allocated by Landlord to all buildings in the Project.
(iv) As used herein, “Tenant’s Share” shall mean the percentage calculated by dividing the number of gross leasable square feet of the Premises by the total gross leasable square feet in the Project. In the event either the gross leasable square feet of the Premises and/or the total gross leasable square feet of the Project is changed, Tenant’s Share shall be appropriately adjusted, and, as to the calendar in which such change occurs, Tenant’s Share for such year shall be determined on the basis of the number of days during such calendar that each such Tenant’s Share was in effect.
(v) Prior to the date which is thirty (30) days prior to the first day of a new calendar year, Landlord shall endeavor to give Tenant a yearly expense estimate statement (the “Estimate Statement”) which shall set forth Landlord’s reasonable estimate of Tenant’s Share of Operating Expenses for the new calendar year (the “Estimated Expenses”). The failure of Landlord to timely furnish the Estimate Statement for any year shall not prejudice Landlord from enforcing its rights under this Section 3.B. Tenant shall pay to Landlord the Estimated Expenses for each such year, in monthly installments of one-twelfth (1/12) thereof on the first (1st) day of each calendar month during such calendar year; provided, however, if such Estimate Statement is delivered to Tenant after the start of such new calendar year, Tenant shall pay to Landlord, with its next installment of Base Rent due, a fraction of the Estimated Expenses for the then-current year (reduced by any amounts paid pursuant to the last sentence of this paragraph). Such fraction shall have as its numerator the number of months which have elapsed in such current calendar year to the month of such payment, both months inclusive, and shall have twelve (12) as its denominator. If at any time Landlord determines in good faith that Tenant’s Share of Operating Expenses for a calendar year is projected to vary from the then Estimated Expenses for such year, Landlord may, by notice to Tenant, revise such Estimated Expenses, and Tenant’s monthly installments for the remainder of such year shall be adjusted so that by the end of such year Tenant shall have paid to Landlord the revised Estimated Expenses for such year. Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the Estimated Expenses set forth in the previous Estimate Statement delivered by Landlord to Tenant.
(vi) Following the end of each calendar year, Landlord shall give to Tenant a statement (the “Statement”) which shall state (i) the amount of Operating Expenses actually incurred or accrued for that calendar year, and (ii) the amount, if any, by which Tenant’s 9 2780/062579-0159
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Share of Operating Expenses exceeded (or was less than) the Estimated Expenses paid by Tenant for such preceding calendar year. Within ten (10) business days after Tenant’s receipt of the Statement for such calendar year, Tenant shall pay to Landlord the full amount of Tenant’s Share of Operating Expenses for such calendar year, less the amounts, if any, actually paid by Tenant to Landlord with respect to such calendar year as Estimated Expenses. If any Statement reflects that the amount of Estimated Expenses paid by Tenant to Landlord for such year is greater than the actual amount of Tenant’s Share of Operating Expenses for such year, then Landlord shall, at its option, either credit such overpayment toward Tenant’s next rent payment(s) then due and payable under this Lease, or remit such overpayment to Tenant within thirty (30) days after such applicable Statement is delivered to Tenant. Even though the Term has expired and Tenant has vacated the Premises, if the Statement for the year in which this Lease terminates reflects that Tenant’s payment to Landlord of Estimated Expenses for such year was greater than or less than the actual amount of Tenant’s Share of Operating Expenses for such last year, then within thirty (30) days after Landlord’s delivery of such Statement to Tenant, Landlord shall refund to Tenant any such overpayment, or Tenant shall pay to Landlord any such underpayment, as the case may be.
Landlord shall endeavor to deliver the applicable Statement to Tenant within one hundred twenty (120) days after the end of the year in question, but the failure of Landlord to furnish such Statement within such 120-day period shall not prejudice Landlord from enforcing its rights under this Section 3.B.
C. Late Payments. If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee within five (5) business days after written notice from Landlord that said amount is past due, then Tenant shall pay to Landlord a late charge equal to ten percent (10%) of the amount due; provided, however, that if Landlord has given Tenant one (1) such delinquency notice in the preceding twelve (12) month period, then the late charge shall be imposed for any subsequent delinquent payment of Rent by Tenant, without requirement of any notice or cure period. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner.
In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid within five (5) business days after written notice from Landlord that said amount is past due shall bear interest from the date due until paid at the Default Rate; provided, however, that if Landlord has given Tenant one (1) such delinquency notice in the preceding twelve (12) month period, then interest shall be imposed for any subsequent delinquent payment of Rent by Tenant, without requirement of any notice or cure period. The provisions herein for payment of late charges and/or interest shall not be construed to extend the date for payment of any sums required to be paid by Tenant hereunder or to relieve Tenant of its obligation to pay all such sums at the time or times herein stipulated. Notwithstanding the imposition of such late charges, Tenant shall be in default under this Lease if any or all payments required to be made by Tenant are not made at the time herein stipulated (including any grace periods set forth in this Lease), and neither the demand for, nor collection by, City of such late charges shall be construed as a curing of such default on the part of Tenant.
4. USE.
A. Permitted Use. The Premises will be used only for the purpose of a food and beverage establishment, most specifically a restaurant serving chicken and related menu items 10 2780/062579-0159
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(“Permitted Use”) in accordance with and subject to the terms and restrictions set forth in this Lease, and for no other purpose without the prior written consent of Landlord. Tenant shall not use or permit the Premises to be used under any trade name other than “The Chicken Guys” (the “Approved Trade Name”) without Landlord’s prior written consent. Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose (i) contrary to the rules and regulations from time to time promulgated for the Project (collectively, the “Rules and Regulations”), (ii) in violation of Applicable Laws, or (iii) in violation of any exclusive or restricted uses granted to other tenants of the Project.
B. Hazardous Substances. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts or fractions thereof. Tenant shall not use, handle, generate, store, possess, transport or permit any Tenant Party to use, handle, generate, create, store, dispose of, possess or transport, Hazardous Substances at the Premises without the express prior written consent of Landlord and timely compliance (at Tenant’s expense) with all Applicable Laws. Notwithstanding the foregoing, Tenant may use any ordinary and customary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials to be used in the normal course of the Permitted Use, so long as such use is in compliance with all Applicable Laws and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Landlord to any liability therefor. If Tenant knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, Tenant shall immediately give written notice of such fact to Landlord, and provide Landlord with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance. Tenant shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Tenant’s expense, comply with all Applicable Laws and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or contributed to by Tenant, or pertaining to or involving any Hazardous Substance brought onto the Premises during the Term of this Lease. Tenant shall indemnify, defend and hold Landlord, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises during the Term or any extension thereof. Tenant’s obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by any Tenant Parties, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Landlord and Tenant shall release Tenant from its obligations under this Lease with respect to 11 2780/062579-0159
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Hazardous Substances, unless specifically so agreed by Landlord in writing at the time of such agreement.
5. COVENANT TO OPEN AND OPERATE.
Tenant shall open the whole of the Premises for business, fully fixturized and stocked with inventory, and with sufficient personnel, no later than the date that is 180 days after the Commencement Date (the “Required Opening Date”), time being of the essence. In addition, after such initial opening, Tenant shall continuously operate Tenant’s business in the Premises and shall keep the whole of the Premises open for business and cause Tenant’s business to be conducted therein during the Project business hours, as designated by Landlord from time to time, and shall keep the Premises fully stocked with inventory, and with sufficient personnel. Tenant shall keep the Premises in a neat, clean and orderly condition and shall install and maintain at all times in the Premises modern and high quality fixtures, furnishings, fittings and equipment adequate, appropriate and properly laid out to sustain Tenant’s Permitted Use. Landlord makes no representations, warranties or projections as to the demographics of the customer base of the Project or as to Tenant’s anticipated sales or likelihood of success at the Project.
6. COMPLIANCE WITH LAW.
A. General. The Tenant agrees to comply with all laws, statutes, ordinances, governmental rules or regulations now in force or that may subsequently be promulgated or enacted.
B. Premises. Tenant, at its sole cost and expense, will comply with all applicable local, state and federal statutes, regulations, rules, codes (including building codes), ordinances, and other requirements of governmental authorities now or subsequently in effect (“Applicable Laws”) pertaining to the use or condition of the Premises and Tenant’s operations, including without limitation, the Americans with Disabilities Act of 1990 (42 USC Sections 12101-12213). Without limiting the generality of the foregoing, prior to the Commencement Date, Tenant shall obtain all of the necessary permits and licenses from all appropriate governmental authorities, which are necessary for the operation of Tenant’s Permitted Use within the Premises as contemplated under this Lease, which shall, to the extent required by Applicable Laws, include, without limitation, a health operating permit, a business license, police and fire permits, and a reseller number with the State Board of Equalization. Tenant will give the Landlord immediate written notice if Tenant becomes aware that the use or condition of the Premises is in violation of any Applicable Law.
7. ALTERATIONS.
A. Consent. The Tenant will not make or permit any alterations or additions to the Premises, nor will it construct or erect any improvements on the Premises without first obtaining the written consent of the City Manager or their designee. Notwithstanding the foregoing, any proposed alterations, additions, or improvements with an aggregate cost exceeding Two Hundred Fifty Thousand Dollars ($250,000) shall require the prior written consent of the City Council. All approved work shall be performed in a professional and workmanlike manner, in compliance with all applicable laws, regulations, and permitting requirements. 12 2780/062579-0159
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B. Construction. The Tenant will not construct any improvements or alterations to the Premises unless the plan showing the location thereof and plans and specifications for such improvements or alterations are first approved by the Landlord and the Community Development Director or their designee, and the giving of consent will not be a waiver of any rights to object to further or future improvements or alterations.
C. Payment by Tenant.
(1) Subject to the Tenant’s right to contest the same as hereinafter provided in subparagraph D of this Paragraph 7, Tenant agrees that it will pay as soon as due all mechanics’, laborers’, materialmen’s, contractors’, subcontractors’, or similar charges, and all other charges of whatever nature that may become due, attached to or payable on the Premises or any part thereof or any building, structure or other improvement thereon, from and after the date as of which this Lease is made.
(2) Nothing in this Lease will in any respect make Tenant the agent of the Landlord or authorize the Tenant to do any act or to make any contract encumbering or in any manner affecting the title or rights of the Landlord in or to the Premises.
D. Notice. Before any buildings, structures or other improvements, repairs or additions thereto, of an aggregate cost in excess of two-hundred and fifty thousand dollars ($250,000) are constructed, remodeled or reconstructed upon the Premises, the Tenant will serve written notice upon the Landlord, in the manner provided for in Paragraph 16 below, twenty (20) days prior to commencement of Tenant’s intention to perform such work, for the purpose of enabling the Landlord to post and record notices of non-responsibility under the provisions of Section 3094 of the California Civil Code, or any other similar notices that may be required by law.
E. Liens. If any such mechanics’ or other liens will at any time be filed against the Premises or any portion thereof or interest therein, the Tenant will cause the same to be discharged or record, within thirty (30) days after the date of filing the same, or otherwise free the Premises from the effect of such claim of lien and any action brought to foreclose such lien, or Tenant will promptly furnish to the Landlord a bond in an amount and issued by a surety company satisfactory to the Landlord, securing the Landlord against payment of such lien and against any and all loss or damage whatsoever in any way arising from the failure of Tenant to discharge such lien.
F. Contest. Any contest by the Tenant of any such liens will be made by Tenant in good faith and with due diligence and the Tenant will fully pay and immediately discharge the amount of any final judgment rendered against the Landlord or Tenant in any litigation involving the enforcement of such liens or the validity thereof.
G. Discharge by City. In the event of the Tenant’s failure to discharge or record any such uncontested lien within said thirty (30) day period or to pay and satisfy any such judgment as aforesaid, the Landlord may, but will not be obliged to, pay the amount thereof, inclusive of any interest thereon and any costs assessed against the Tenant in said litigation, or may discharge such lien by contesting its validity or by any other lawful means. 13 2780/062579-0159
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H. Repayment by Tenant. Any amount paid by the Landlord for any of the aforesaid purposes, and all reasonable legal and other expenses of the Landlord, including reasonable counsel fees, in defending any such action or in connection with procuring the discharge of such lien, with all necessary disbursements in connection therewith, together with interest thereon at the rate of one and one-half percent (1-1/2%) per month (“Default Rate”) from the date of payment, shall be repaid by the Tenant to the Landlord on demand; provided that, interest payable hereunder shall in no event exceed the maximum per annum rate permitted under Applicable Law.
8. SURRENDER.
A. Surrender of the Premises. At the expiration of the term of this Lease, the Tenant will surrender the Premises, including but not by way of limitation, any alterations, additions or improvements thereon, to the Landlord in the same condition as received, reasonable wear and tear excepted. Any alterations, additions or improvements will become at once a part of the Premises and will remain for the benefit of the Landlord; provided, however, that Landlord shall have the right to require, upon expiration or termination of this Lease, that Tenant remove any alterations or improvements made to the Premises by or on behalf of Tenant. No portions of any buildings or structures thereon will be removed from the Premises or voluntarily destroyed or damaged without the prior written consent of the Landlord.
B. Personal Property. Any and all personal property of every kind and nature whatsoever, not attached to or installed in any building, structure or other improvement which the Tenant or its sub-lessees places in, upon or about the Premises during the term of the Lease may be removed therefrom prior to the expiration of the term of this Lease and will, as between the Landlord and the Tenant be and remain the personal property of the Tenant or its sub-lessees , as the case may be, provided that any personal property left on the premises upon surrender to the Landlord will be presumed to be abandoned by the Tenant.
C. Lighting, Etc. Notwithstanding anything to the contrary contained in subparagraph B of this Paragraph 8, any and all lighting, plumbing, air cooling, air conditioning, heating and ventilating equipment will be deemed to be a part of the realty, and regardless of whether or not any such item or equipment can be removed without structural damage to the building, structure or improvement in which it is installed, it will not be removed from such building, structure or other improvement except for repairs, alterations and replacement with newer equipment, without the consent of the Landlord, and all such equipment will remain as a part of the realty at the expiration of the Term of this Lease.
9. MAINTENANCE.
A. Tenant’s Responsibilities. Subject to the provisions of Sections 9.B and 14, Tenant shall, at Tenant’s own expense, at all times throughout the Term, keep and maintain Premises and all portions thereof, in good order, condition an repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all alterations to the Premises made by or on behalf of Tenant, heating, ventilation and 14 2780/062579-0159
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air conditioning systems and equipment exclusively serving the Premises (“HVAC”) and all other Systems and Equipment exclusively serving the Premises, any grease traps serving the Premises, interior walls, interior surfaces of exterior walls, ceilings, skylights, floors, interior and exterior doors and windows (including plate glass), restrooms, and fixtures, furniture and equipment in the Premises. In keeping the Premises in good order, condition and repair, Tenant shall exercise and perform good maintenance practices. Tenant’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and repair. Tenant shall, at Tenant’s sole expense, procure and maintain contracts, with copies to Landlord, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on or exclusively serving the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii) grease traps, and (iv) clarifiers. However, Landlord reserves the right, upon notice to Tenant, to procure and maintain any or all of such service contracts, and Tenant shall reimburse Landlord, upon demand, for the cost thereof. If Tenant fails to perform Tenant’s obligations under this Section, Landlord may enter upon the Premises after 10 days’ prior written notice to Tenant (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Tenant’s behalf, and put the Premises in good order, condition and repair, and Tenant shall promptly reimburse Landlord for the costs of such work, together with an administrative fee equal to fifteen percent (15%) of such costs.
B. Landlord’s Responsibilities; Common Areas. Landlord shall, at Landlord’s expense subject to reimbursement as Operating Expenses, repair and maintain (including replacements when necessary) in good order and condition the foundations, exterior walls, structural condition of interior bearing walls, exterior roof and fire sprinkler system of the building containing the Premises, the common areas of the Project as the same may exist from time to time (“Common Areas”), parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas; provided, however, Tenant shall be solely responsible for payment to repair any and all damage to any of the foregoing caused by Tenant or any of Tenant’s agents, contractors or invitees. The term “Common Areas” shall include any additional common areas, improvements, facilities, parking areas and structures and common areas which Landlord may add thereto from time to time within or as part of the Project. Notwithstanding the foregoing, except as otherwise expressly set forth herein, (i) Landlord has no obligation to expand or otherwise make any improvements within the Project, including, without limitation, any of the Common Areas (as the same may be modified by Landlord from time to time without notice to Tenant), and (ii) Landlord shall have the right from time to time to include or exclude any improvements or facilities within the Project, at Landlord’s sole election, provided such exclusion will not materially and adversely interfere with Tenant’s permitted use of the Premises. Landlord shall have exclusive control over the Common Areas and Tenant’s use thereof shall be subject to such reasonable rules, regulations and restrictions as Landlord may establish from time to time.
Landlord reserves the right from time to time to use any of the Common Areas, and to do any of the following in accordance with all Applicable Laws: (a) make any changes, additions, improvements, repairs and/or replacements in or to the Project or any portion or elements thereof, including, without limitation, (1) changes in the location, size, shape and number of driveways, entrances, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways, plazas, courtyards, transportation facilitation areas and Common Areas, parking spaces and parking areas, and (2) expanding or decreasing the size of the Project and any Common Areas and other elements thereof; (b) close temporarily any of the Common Areas while engaged in 15 2780/062579-0159
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making repairs, improvements or alterations to the Project; (c) limit or prohibit employee parking in the Common Areas; and (d) perform such other acts and make such other changes with respect to the Project as Landlord may, in the exercise of good faith business judgment, deem to be appropriate.
10. UTILITIES AND OTHER CHARGES,
The Tenant agrees to pay before delinquency every charge, lien or expense accruing or payable during the term of this Lease in connection with the use of the Premises including, but not limited to water, electricity, gas, telephone, refuse, and other utilities and services. If certain utilities are furnished to the Premises in common with other premises, then Landlord shall make a good faith estimate as to the amount used by each tenant (including Tenant) and bill each tenant accordingly; however, at any time, Landlord may elect to install one or more submeters for one or more premises (which, if installed at the Premises, shall be at Tenant’s expense), in which event Landlord will bill each tenant whose premises is submetered for the amount used according to that tenant’s submeter. Any amounts which Landlord bills to Tenant under the terms of this Section shall be deemed Additional Rent and will be due within ten (10) business days after the date upon which Landlord delivers such bill to Tenant. Tenant shall also bear the cost of, and responsibility for, replacement of all lamps, starters and ballasts for lighting fixtures within the Premises.
11. TAXES AND ENCUMBRANCES.
A. Payment of Liens. The Tenant agrees to pay before delinquency every charge, lien or expense accruing or payable during the term of this Lease in connection with the use or occupancy of the Premises, in addition to any liens described in Paragraph 7 above.
B. Payment of Taxes. The Tenant agrees to pay at least ten (10) days prior to delinquency all taxes levied against its interest in the Premises or its personal property, or against any alterations or improvements erected or constructed by the Tenant on the Premises, or that become a lien against the Premises or its interest therein or its personal property thereon or against any alterations or improvements erected or constructed by the Tenant on the Premises during the term of this Lease. The Tenant will provide proof of its payment of such taxes prior to any such taxes becoming delinquent. Pursuant to California Revenue and Taxation Code §107.6, Tenant understands and acknowledges that this Lease may create a taxable possessory interest and that Tenant is responsible to pay taxes for possessory interests if assessed. Tenant agrees to pay before delinquency all taxes, including but not limited to property taxes and possessory interest taxes, that may be levied against its interest in the Premises or that become a lien against the Premises or its interest during the term of this Lease.
12. LIABILITY.
The Tenant agrees that its taking possession of the said Premises will be an acceptance of the safety and condition thereof. To the fullest extent permitted by Applicable Law, the Tenant shall indemnify, defend, and hold harmless the Landlord, the City Manager, the City Council and each member thereof, each member of a City Commission or Committee, and every officer, agent, representative, employee, volunteer, contractor or consultant of the Landlord (collectively, “Landlord Parties”) from and against any and all claims, damages, losses, liabilities, costs, and 16 2780/062579-0159
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expenses (including reasonable attorney’s fees and court costs) (collectively, “Claims”) arising out of or relating to (a) bodily injury or death to any person or persons, or property damage to property of any kind whatsoever and to whomsoever belonging, from any cause whatsoever while in, upon or in any way connected with the Premises during the term of this Lease, or any renewal or extension thereof, or any occupancy thereunder, (b) bodily injury or death to any person or persons, or property damage to property of any kind whatsoever and to whomsoever belonging, resulting from the negligent or wrongful acts, errors, or omissions of Tenant or its agents, representatives, employees, contractors, consultants, subtenants, assignees, invitees, customers or guests (collectively, “Tenant Parties”), (c) breaches of this Lease by Tenant or any Tenant Parties, and/or (d) violations of any federal, state, or local laws, ordinances, or regulations applicable to Tenant’s business by Tenant or any Tenant Parties, including, without limitation, health, safety, and labor laws. Without limiting the foregoing, as used herein the term “Claims” shall include Claims arising from foodborne illness, contamination, or food safety issues related to Tenant’s handling, preparation, and delivery of food products.
13. INSURANCE.
A. Liability. The Tenant agrees that at all times during the Term of this Lease and any renewal or extension thereof, it will maintain in full force and effect at the Tenant’s expense a comprehensive (commercial) general liability insurance with the broad form comprehensive liability endorsement and automobile liability insurance policy which will insure and indemnify Tenant and the Landlord and the Landlord Parties against liability or financial loss resulting from any suits, claims or actions brought by any person or persons and from all costs and expenses of litigation brought against the Landlord in the amount of One Million Dollars ($1,000,000.00) per occurrence, Two Million Dollars ($2,000,000.00) annual aggregate, for any injury to persons and/or damages to property (i) in or about the Premises and any buildings or structures constructed thereon, or (ii) by reason of the use and occupation by the Tenant or by any other person or persons of the Premises. The Landlord, the City Council, and every member thereof and every officer and employee of the Landlord, acting in due course of his or her employment or his or her official capacity, will be named as an additional insured on said policy.
B. Property Insurance.
(1) The Tenant agrees that at all times during the Term of this Lease and any renewal or extension thereof, it will maintain in full force and effect at the Tenant’s expense an insurance policy that will insure and indemnify the Tenant and the Landlord from loss occurring to it personal property located at the Premises and any alterations or improvements to the Premises constructed by or on behalf of Tenant by reason of fire, extended coverage perils, and “all risk” perils, including but not by way of limitation earthquake, flood, demolition, and increased cost of construction and contingent liability arising out of the operation of building codes. (2) The amount of such insurance will be at least one hundred percent (100%) of the full replacement cost of the personal property or improvements located at the Premises with an agreed amount endorsement. The Landlord will be named as an additional insured on said policy.
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(3) Upon request from Landlord, the Tenant will obtain an appraisal of the replacement cost of the personal property and improvements to be insured by Tenant as aforesaid. If the Tenant and the Landlord cannot agree on said replacement cost, the same will be determined by arbitration in the manner provided in subparagraph A of this Paragraph 13. The Tenant agrees that it will increase such minimum limits thereafter to at least equal such replacement cost.
C. Workers Compensation and Employers Liability. The Tenant agrees that at all times during the Term of this Lease and any renewal or extension thereof, it will maintain in full force and effect at the Tenant’s expense, Workers’ Compensation insurance as required by law, including employer’s liability insurance in an amount not less than One Million Dollars ($1,000,000.00) per accident, One Million Dollars ($1,000,000.00) per disease per employee and One Million Dollars ($1,000,000.00) for disease policy limit.
D. Liquor Liability Insurance. If at any time alcoholic beverages are served, sold or consumed on the Premises, Tenant agrees that at all times during the Term of this Lease and any renewal or extension thereof, it will maintain in full force and effect at the Tenant’s expense, liquor liability coverage with limits not less than One Million Dollars ($1,000,000.00) per occurrence.
E. Business Interruption. Tenant agrees that at all times during the Term of this Lease and any renewal or extension thereof, it will maintain in full force and effect at Tenant’s expense a business interruption and/or rent or rental value insurance policy with endorsements and coverage equivalent to the fire, extended coverage and “all risk” perils policies described in Paragraph 13(B) above, in an amount not less than twelve (12) months’ Rent, plus the estimated annual cost of taxes and the annual premiums for such policy. All business interruption and/or rent or rental value insurance policies provided for herein shall name Landlord and Tenant as insureds as their respective interest may appear, but shall be deposited with Landlord. Such business interruption and/or rent or rental value insurance policies shall provide for payment or loss to Landlord to the extent of Tenant’s obligations hereunder, and the difference between such payment and the amount of insurance collected shall be payable to Tenant. Any business interruption and/or rent or rental value insurance proceeds received by Landlord shall be applied against Tenant’s rental obligations hereunder.
F. Carrier Rating and Cancellation. All policies enumerated in this Paragraph 13 will be issued by an insurer admitted to do business in California, which qualifies as a member of the California Insurance Guaranty Fund, and which is rated in Best’s Insurance Guide with a financial rating of A:XII or better, or as may be accepted in writing by the City Manager. Said policies will provide that the insurance coverage will not be cancelled or reduced by the insurance carrier without the Landlord having been given sixty (60) days prior written notice thereof by such carrier. The Tenant agrees that it will not cancel or reduce said insurance coverage and will replace any insurance cancelled, reduced or non-renewed by the insurance company during the Term of the Lease.
G. Copy of Policy. At all times during the Term of this Lease and prior to taking possession of said Premises, the Tenant will maintain on file with the City Clerk of the City a certified copy of each insurance policy required herein and all amendments thereto. 18 2780/062579-0159
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Notwithstanding any other provisions to the contrary contained in this Lease, the Tenant will not have the right to take possession of the Premises until copies are filed with the City Clerk.
H. Failure to Provide. The Tenant agrees that if it does not keep the aforesaid insurance in full force and effect, the Landlord may obtain the necessary insurance and pay the premium thereon, and the repayment thereof will be deemed to be Additional Rent and payable as such on the next day after notice of the payment by the Landlord for said insurance policy.
I. Tenant’s Insurance Primary. The insurance provided in the policies of insurance required hereunder to be maintained by the Tenant will be primary and noncontributing with any insurance that may be carried by the Landlord.
J. Subrogation. The Tenant agrees to waive its right of subrogation against the Landlord. Any insurance policies procured by the Tenant hereunder will provide that, to the extent that insurance is provided, the insurance carrier waives all rights of subrogation against the Landlord.
K. Cross Liability Endorsement. It is agreed that claims for Personal Injury or Property Damage made by an insured hereunder against another insured hereunder will be covered in the same manner as if separate policies had been issued to each insured. Nothing contained herein will operate to increase the insurance company’s limit of liability as provided under such policy.
L. Amount of Coverage. It is understood that the type of insurance and minimum limits of liability insurance required herein may become inadequate for such purposes during the term of this Lease, and the Tenant agrees that it will add such insurance coverage and increase such minimum limits at its sole expense by such amounts as may be reasonably required by the Landlord. If Tenant objects to such increase on the grounds that it is unreasonable, and the dispute cannot be resolved by the parties, the issue will be decided by arbitration in accordance with the rules of the American Arbitration Association. In no event shall the coverage or limits of the insurance policies be considered as limiting the liability of Tenant under this Lease.
14. CASUALTY: PROCEEDS OF INSURANCE.
A. Destruction, Less Than Twenty-Five Percent. In the event any building on the Premises is damaged by any cause for which the proceeds of insurance are available, and the cost of repair or rebuilding does not exceed twenty-five percent (25%) of the total replacement cost of the building as determined by the Community Development Director, the Landlord will repair or rebuild, or cause the Premises to be repaired or rebuilt, and the Tenant will remain as the tenant for the remainder of the Term; provided, however, that Landlord shall have no obligation to repair or rebuild any alterations or improvements made to the Premises by Tenant. Following the completion of any such repair work by Landlord, Tenant shall promptly commence and diligently complete the repair and restoration of any alterations or improvements made to the Premises by Tenant and reopen for business as soon as reasonably practical.
B. Destruction, More Than Twenty-Five Percent. In the event any building on the Premises is destroyed by any cause for which the proceeds of insurance are available, and the cost of repair or rebuilding exceeds twenty-five percent (25%) of the total replacement cost of the 19 2780/062579-0159
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damaged building as determined by the Community Development Director, the Landlord may in its discretion determine whether to rebuild or repair the building and continue the Lease in effect, or to terminate the Lease, take the proceeds of insurance insofar as they are available and make such other use of the land as the City Council will determine to be in the best interest of the Landlord. If Landlord elects to continue the Lease in effect, following the completion of any such repair work by Landlord, Tenant shall promptly commence and diligently complete the repair and restoration of any alterations or improvements made to the Premises by Tenant and reopen for business as soon as reasonably practical.
C. Destruction, No Insurance. In the event any building on the Premises is destroyed by any cause for which no insurance proceeds are available or the proceeds available are insufficient to repair said building, as determined by the Community Development Director, the Landlord may in its discretion determine whether to rebuild or repair the building and continue the Lease in effect, or to terminate the Lease, take the proceeds of insurance insofar as they are available and make such other use of the land as the City Council will determine to be in the best interest of the Landlord. If Landlord elects to continue the Lease in effect, following the completion of any such repair work by Landlord, Tenant shall promptly commence and diligently complete the repair and restoration of any alterations or improvements made to the Premises by Tenant and reopen for business as soon as reasonably practical.
15. ASSIGNMENT AND SUBLETTING.
A. The Tenant will not assign or sublet this Lease or any interest therein or any part thereof (each, a “Transfer”) without first obtaining the written consent of the Landlord and the giving of consent will not be a waiver of any rights to object to further or future assignments or sub-leases, but the consent to each successive assignment or sub-lease must be first obtained in writing from the Landlord. For purposes of this Lease, the term “Transfer” shall also include:
(i) if Tenant is a partnership (including a limited liability partnership), the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners, or transfer of fifty percent (50%) or more of partnership interests, within a twelve (12)-month period, or the dissolution of the partnership without immediate reconstitution thereof; and (ii) if Tenant is a closely held corporation or limited liability company (i.e., whose stock or membership interests are not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant, (B) the sale or other transfer of more than an aggregate of fifty percent (50%) of the voting shares or membership interests of Tenant within a twelve (12)-month period (other than transfer of voting shares or membership interests to immediate family members by reason of gift or death) or (C) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12) month period. Without limiting Landlord’s right to withhold consent to a Transfer, Landlord shall specifically not be obligated to consent to any Transfer unless Landlord is assured that substantially the same type, class, nature and quality of business, services, atmosphere and management, and prestige, reputation, experience and financial soundness of ownership, management, and operation, is maintained and will continue to be furnished in a manner compatible with the standards contemplated by this Lease, and, provided further that each and every covenant, condition or obligation imposed upon Tenant by this Lease and each and every right, remedy or benefit afforded Landlord by this Lease, is not thereby diminished or impaired.
If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be 20 2780/062579-0159
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deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, and (iv) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of this Lease from liability under this Lease.
B. The appointment of a receiver to take possession of all or substantially all of the assets of the Tenant or a general assignment by the Tenant for the benefit of creditors, or any action taken or suffered by the Tenant under any insolvency or bankruptcy act will constitute a breach of this Lease by the Tenant.
16. NOTICE.
Whenever it is necessary for either party to serve notice on the other respecting this Lease, that notice will be served by mail or by personal service addressed to the following:
If to the Landlord: City of Torrance
City Clerk
3031 Torrance Boulevard
Torrance, California 90503
If to Tenant: Cluck & Crust, LLC
17523 Delia Ave
Torrance, CA 90504
unless and until different addresses may be furnished in writing by either party to the other. Notice will be deemed to have been served within seventy-two hours after the same has been deposited in a United States Post Office or immediately if by personal service.
This will be a valid and sufficient service of notice for all purposes.
17. DEFAULT.
A. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” by Tenant under this Lease:
(i) Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due; (ii) If Tenant abandons or vacates the Premises;
(iii) Any failure by Tenant to maintain any insurance as required under Section 13, or to timely provide any estoppel or other instrument or assurances as and when required under Sections 26.S and T, or any breach under Section 26.U below; (iv) Any failure by Tenant to maintain its good standing with (i) any local or state agency charged with administering health or safety standards for food service, 21 2780/062579-0159
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restaurants and dining facilities, or (ii) if the Permitted Use permits Tenant to sell or serve alcoholic beverages on the Premises, the California Department of Alcoholic Beverage Control or other local or state agency charged with alcoholic beverage oversight, including, but not limited to, keeping in effect Tenant’s ability to sell or serve alcoholic beverages on the Premises at all times to the extent permitted during the Term;
(v) Any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant and, if such failure is capable of being cured, where such failure continues for fifteen (15) days after written notice thereof from Landlord to Tenant; or
(vi) To the extent permitted by Applicable Law, a general assignment by Tenant or any guarantor of the Lease for the benefit of creditors, or the filing by or against Tenant or any guarantor of any proceeding under an insolvency or bankruptcy law, unless in the case of a proceeding filed against Tenant or any guarantor the same is dismissed within thirty (30) days, or the appointment of a trustee or receiver to take possession of all or substantially all of the assets of Tenant or any guarantor, unless possession is restored to Tenant or such guarantor within thirty (30) days, or any execution or other judicially authorized seizure of all or substantially all of Tenant’s assets located upon the Premises or of Tenant’s interest in this Lease, unless such seizure is discharged within thirty (30) days.
Any notice given by Landlord pursuant to this Section 17.A shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any other law which imposes notice requirements on Landlord prior to the commencement of an unlawful detainer action.
B. Remedies. Upon the occurrence of any Event of Default by Tenant pursuant to Section 17.A above which remains uncured after expiration of the applicable notice and cure period set forth in Section 17.A above, if any, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any additional notice or demand whatsoever:
(i) Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:
(a) The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus 22 2780/062579-0159
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(c) The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (d) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to, brokerage commissions and advertising expenses incurred, and expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use and any special concessions made to obtain a new tenant; and (e) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law.
The term “rent” as used in this Section 17.B shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 17.B(i)(a) and (b), above, the “worth at the time of award” shall be computed by allowing interest at the Default Rate. As used in Section 17.B.(i)(c) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). (i) Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due. (ii) Landlord may, but shall not be obligated to, make any such payment or perform or otherwise cure any such obligation, provision, covenant or condition on Tenant’s part to be observed or performed (and may enter the Premises for such purposes). Any such actions undertaken by Landlord pursuant to the foregoing provisions of this Section shall not be deemed a waiver of Landlord’s rights and remedies as a result of Tenant’s failure to perform and shall not release Tenant from any of its obligations under this Lease. Tenant shall pay to Landlord, within ten (10) business days after delivery by Landlord to Tenant of statements therefor, sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with Landlord’s performance or cure of any of Tenant’s obligations as set forth herein. Tenant’s obligations under this Section shall survive the expiration or sooner termination of the Lease Term. (iii) If Landlord elects to terminate this Lease on account of any default by Tenant as set forth in this Section 17, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder. 23 2780/062579-0159
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(iv) No waiver by Landlord or Tenant of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Landlord or Tenant in enforcement of one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default. The acceptance of any Rent hereunder by Landlord following the occurrence of any default, whether or not known to Landlord, shall not be deemed a waiver of any such default, except only a default in the payment of the Rent so accepted. (v) For the purposes of this Section 17, Tenant’s right to possession shall not be deemed to have been terminated by efforts of Landlord to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by appointment of a receiver to protect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative of acts which may be performed by Landlord without terminating Tenant’s right to possession.
(vi) Any agreement by Landlord for possession of the Premises by Tenant without the payment or with reduced payment of Rent or other charges or any agreement for the giving or paying by Landlord to or for Tenant of any cash or other bonus, inducement, incentive or consideration for Tenant’s entering into this Lease including, but not limited to tenant improvement allowances and abated Rent, all of which concessions are hereinafter collectively referred to as “Inducement Provisions,” are conditioned upon Tenant’s full, timely and faithful performance of all of the terms, covenants, and conditions of this Lease to be performed or observed by Tenant. Upon the occurrence of a default by Tenant under this Lease beyond any applicable notice and cure period, any Rent, other charge, bonus, inducement or consideration abated, given or paid by Landlord under such an Inducement Provision shall immediately terminate and be of no further force or effect and, to the extent previously received or earned by Tenant, be immediately due and payable by Tenant to Landlord and recoverable by Landlord as Additional Rent due under this Lease.
18. SIGNS.
The Tenant agrees that no signs or advertising material may be erected or maintained upon the Premises without the prior written consent of the Landlord, in its sole and absolute discretion.
All interior signs shall be professionally made, and subject to the prior written approval of Landlord.
19. SUCCESSORS.
Each and every of the terms, covenants and conditions of this Lease will inure to the benefit of and will bind, as the case may be, not only the parties hereto· but each and every of the heirs, executors, administrators, successors, assigns and legal representatives of the parties; provided, however, that any subletting or assignment by the Tenant of the whole or any part of the Premises or any interest therein will be subject to the provisions of Paragraph 15 of this Lease. 24 2780/062579-0159
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20. RIGHT OF ENTRY.
The Landlord and the Landlord’s officers, employees and agents will at all reasonable times have the right to enter upon the Premises or any buildings, structures or other improvements thereon for the purpose of inspecting the same and posting notices of non-responsibility or any other notices the Landlord may reasonably deem necessary or desirable.
21. HOLDOVER BY TENANT.
If Tenant shall hold the Premises after the expiration of the Term with or without the consent of Landlord, express or implied, such holding over, in the absence of written agreement on the subject, shall be deemed to have created a tenancy from month-to-month, terminable on thirty (30) days’ written notice by either party to the other, upon a monthly rental hereinafter stated, but otherwise subject to all of the terms and provisions of this Lease. Such monthly rental shall be computed on the basis of 200% of the Base Rent in effect prior to such expiration, plus all Additional Rent payable hereunder. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant hereby agrees to indemnify and hold Landlord harmless from loss or liability resulting from such failure, including, but not limited to, any claims made by any succeeding tenant based upon Tenant’s failure to surrender.
22. QUIET ENJOYMENT.
The Landlord covenants that (except as otherwise provided herein), the Tenant, upon paying rent herein and observing and keeping the terms, covenants, and conditions of this Lease on its part to be kept and performed, will lawfully and quietly hold, occupy and enjoy the Premises during the term of this Lease.
23. AMENDMENTS AND MODIFICATIONS.
This Lease may not be amended or modified in any way, and no purported amendment or modification will be effective, unless same has been approved by the City Council and set forth in a written instrument, expressly purporting to amend this Lease, executed by the Landlord and the Tenant.
24. APPROVALS BY CITY.
For all purposes where the consent or approval of Landlord is required under this Lease, so long as the Landlord is the City of Torrance, such approval shall be provided by the City Manager or their designee. No consent, approval or satisfaction of the Landlord provided for hereunder, and no waiver by the Landlord of any provisions hereof, will be effective unless given in writing specifically referring to this Lease and executed by the Landlord as provided for in this Lease. No such consent, approval, satisfaction or waiver under or with respect to this Lease will be inferred or implied from any other act or omission of the Landlord or any agent or employee thereof. Similarly, unless otherwise expressly provided therein, no approval, consent or other action taken by the Landlord under or pursuant to this Lease will be deemed to waive any other 25 2780/062579-0159
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rights or authority of the Landlord in any capacity other than as the Landlord under this Lease.
Tenant shall reimburse Landlord on demand for all reasonable legal, engineering, and other professional or consulting services and expenses incurred by Landlord in connection with any requests by Tenant or any lender of Tenant for consent, waiver or approval of any kind.
25. WARRANTY OF POWER TO LEASE.
The Landlord warrants and represents to the Tenant that it has the power to lease the Premises to the Tenant for the purposes and for the term at the rent and upon the covenants and conditions set forth in this Lease.
26. GENERAL PROVISIONS.
A. Remedies Cumulative. No remedy or election provided by any provision in this Lease will be deemed exclusive unless it so indicates but will whenever possible be cumulative with all other remedies in law or equity except as otherwise specifically provided.
B. Independent Covenants. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord; provided, however, that the foregoing shall in no way impair Tenant’s express rights as stated elsewhere in this Lease.
C. Time. Time is of the essence of this Lease and each of its provisions.
D. Headings. The paragraph headings in this Lease are for convenience and reference only, and are not intended to and do not define, govern, limit, modify or in any manner affect the scope, meaning, or intent of any provision in this Lease.
E. Waivers. The waiver by either the Tenant or the Landlord of any breach of any of the covenants, agreements, obligations, conditions or provisions of this Lease will not be construed to be a waiver of such covenant, agreement, obligation, condition, term or provision upon any subsequent breach of the same or of any other covenant, agreement, obligation, condition, term or provision herein contained.
F. Memorandum of Lease. Tenant shall not suffer or permit this Lease or a copy or memorandum thereof to be recorded; provided, however, at the request of Landlord, a memorandum of this Lease in recordable form will be prepared, executed by both parties, and recorded. Landlord’s title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord beyond such encumbrances as are created by this Lease.
G. Default by Landlord. Landlord shall not be in default under this Lease unless Landlord fails to perform obligations required of Landlord within thirty (30) days after written notice by Tenant to Landlord, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord’s obligation is such that more than 26 2780/062579-0159
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thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. If Tenant has been notified of the holder of any mortgage or deed of trust or the lessor of any ground lease or underlying lease affecting the Project, such holder or lessor shall be given a reasonable opportunity to cure any default by Landlord prior to Tenant’s exercising any remedy available to Tenant. In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default, and Tenant’s remedies shall be limited to damages and/or an injunction. Further, Landlord shall in no event be liable to Tenant or any other person for any consequential damages, special or punitive damages, or for loss of business, revenue, income or profits and Tenant hereby waives any and all claims for any such damages. It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any Applicable Law to the contrary, the liability of Landlord and any recourse by Tenant against Landlord shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project, and neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant.
H. Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Project, the Premises and/or this Lease, and Tenant agrees that in the event of any such transfer, Landlord shall be released from all liability under this Lease arising after the effective date of such transfer (to the extent such liability relates to the interest transferred), and Tenant agrees to look solely to the transferee for the performance of Landlord’s obligations hereunder arising after the date of transfer.
I. Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.
J. Application of Payments. Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.
K. Partial Invalidity. If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by Applicable Law.
L. No Warranty. In executing and delivering this Lease, Tenant has not relied on any representation or any warranty or any statement of Landlord which is not set forth herein or in one or more of the exhibits or riders attached hereto. 27 2780/062579-0159
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M. Entire Agreement. It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease (including the exhibits and riders which are attached hereto and constitute an integral part of this Lease) contains all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto. All negotiations and oral agreements acceptable to both parties have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Lease.
N. Right to Lease. Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in the exercise of its sole and absolute discretion shall determine. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Term, occupy any space in the Project.
O. Submission of Lease. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.
P. Authority. Tenant represents and warrants that it has full right and authority to execute and deliver this Lease. Tenant is making the foregoing representation knowing that Landlord will rely thereon.
Q. Attorneys’ Fees; Jury Trial. IF EITHER PARTY COMMENCES
LITIGATION AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS
LEASE, FOR DAMAGES FOR THE BREACH HEREOF OR OTHERWISE FOR
ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES HERETO AGREE TO
AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY AND, IN THE EVENT OF
ANY SUCH COMMENCEMENT OF LITIGATION, THE PREVAILING PARTY SHALL BE
ENTITLED TO RECOVER FROM THE OTHER PARTY SUCH COSTS AND REASONABLE ATTORNEYS’ FEES AS MAY HAVE BEEN INCURRED, INCLUDING ANY AND ALL
COSTS INCURRED IN ENFORCING, PERFECTING AND EXECUTING SUCH JUDGMENT.
R. Landlord Relocation Right. Landlord shall have the right at any time to change the location of the Premises in the Project, provided such relocated premises be comparable in size to the original Premises. In the event Landlord elects to exercise such right, it shall so advise Tenant by sixty (60) days prior written notice, and Tenant hereby agrees to be bound by such election and to execute, upon receipt from Landlord, whatever amendments or other instruments as may be required to correctly reflect the foregoing. Landlord shall pay the reasonable, third party, documented costs of renovating the relocated Premises so that the same are reasonably comparable to the original Premises and of moving and reinstalling Tenant’s trade 28 2780/062579-0159
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fixtures and storefront sign. Landlord shall have no liability for such relocation or the closing of the Premises other than as specifically set forth in this paragraph and Tenant waives any such claims including, without limitation, claims for lost profits.
S. Estoppel. Within ten (10) days following a request in writing by Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate, in such form as may be required by the Landlord or any prospective mortgagee or purchaser of the Project, or any portion thereof, indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by Landlord or Landlord’s mortgagee or prospective mortgagee or purchasers. Tenant shall execute and deliver whatever other instruments may be reasonably required for such purposes. Failure of Tenant to execute and deliver such estoppel certificate within such 10-day period shall constitute an acknowledgment by Tenant that statements included in the estoppel certificate delivered to Tenant by Landlord are true and correct, without exception, and shall constitute a non-curable default by Tenant under this Lease and entitle Landlord to immediately pursue its remedies under Section 17.B. In addition, at any time during the Term, Landlord may require Tenant to provide Landlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year, each such financial statement certified by an authorized officer of Tenant as being true and correct as of the date of such financial statement. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant.
T. Subordination. This Lease is subject and subordinate to all present and future ground or underlying leases of the Project and to the lien of any mortgages or trust deeds, now or hereafter in force against the Project and the Common Areas, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages or trust deeds, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage, or if any ground or underlying lease is terminated, to attorn to the purchaser upon any such foreclosure sale, or to the lessor of such ground or underlying lease, as the case may be, and to recognize such purchaser or lessor as the lessor under this Lease. Tenant waives the protection of any statute or rule of law which gives or purports to give Tenant any right to terminate this Lease or surrender possession of the Premises upon the transfer of Landlord’s interest. Tenant shall, within ten (10) days of request by Landlord, execute such further instruments or assurances as Landlord may request to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. If Tenant fails to do so within ten (10) days after written request (i) Tenant hereby makes, constitutes and irrevocably appoints Landlord, or any transferee or successor of Landlord, the attorney-in-fact of Tenant to execute and deliver any such instrument or document and (ii) such failure shall constitute a non-curable default by Tenant under this Lease and entitle Landlord to immediately pursue its remedies under Section 17.B.
U. OFAC Provisions. Tenant represents and warrants to Landlord that, as of the date hereof and at all times during the Lease Term, neither Tenant nor any individual, entity, or organization holding a significant ownership or controlling interest in Tenant, including any executive officer or director, is an individual, entity, or organization with whom any United States 29 2780/062579-0159
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law, regulation, or executive order prohibits U.S. companies and individuals from dealing, including, without limitation, names appearing on the U.S. Department of Treasury’s Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List. In the event the foregoing representation is or later becomes untrue, it shall constitute a non-curable default by Tenant under this Lease and entitle Landlord to immediately pursue its remedies under Section 17.B above.
V. Counterparts; Electronic Signature. This Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. The execution of this Lease may be effected by signatures delivered via facsimile, electronic mail or other electronic means (including pdf or any electronic signature complying with the U.S. Federal ESIGN Act of 2000, California’s Uniform Electronic Transactions Act (Cal. Civ. Code § 1633.1, et seq.) or other Applicable Law), and any signatures so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
W. SB 1103. The parties acknowledge and agree that this Lease has been negotiated exclusively in English. The parties further acknowledge and agree that, at any time on or prior to the execution of the Lease, Tenant has not provided Landlord with any notice that Tenant is a “qualified commercial tenant” as defined in Section 827, 1632, 1946.1 or 1950.9 of the California Civil Code, as may be amended from time to time (a “QCT Notice”). If Tenant subsequently provides a QCT Notice to Landlord, then, notwithstanding anything to the contrary set forth in this Lease (including any Exhibit attached hereto), any renewal or extension option granted to Tenant that has not been exercised by Tenant before providing the QCT Notice to Landlord shall automatically terminate and be of no further force or effect. Without limiting the foregoing, in the event Tenant is or becomes a qualified commercial tenant, Landlord hereby notifies Tenant that it may inspect any supporting documentation of building operating costs upon written request pursuant to Section 1950.9(a)(4) of the California Civil Code, and Tenant hereby acknowledges receipt of such notice before the execution of the Lease.
X. Brokers. Tenant represents and warrants to Landlord it has not dealt with any broker or agent in connection with this Lease other than Thompson Team Real Estate (“Broker”) and that no commission or fees are due and owing to any person or entity, other than Broker, by reason of the execution of this Lease or the payment of rent hereunder, and Tenant shall indemnify and hold Landlord harmless from and against any demand, liability, claim or obligation for any such fees or commissions from any person or entity in the event of a breach of the foregoing representation and warranty.
Y. Governing Law. This Agreement is made under and shall be construed pursuant to the laws of the State of California. Any suit hereon or hereunder shall be brought only in a state or federal court sitting in the City of Los Angeles, State of California, and all parties hereto hereby agree that venue shall lie therein.
Z. Security Deposit. Tenant, contemporaneously with its execution of this Lease, shall deposit the sum of Four Thousand Five Hundred Dollars ($4,500.00) (“Security Deposit”), said Security Deposit being given to secure the faithful performance by the Tenant of all terms, covenants, and conditions of this Lease by the Tenant to be kept and performed during 30 2780/062579-0159
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the Term hereof. If Tenant shall fail to pay the Rent herein reserved or any other sum required hereby promptly when due, said Security Deposit may, at the option of the Landlord be applied to any Rent or other sum due and unpaid (provided that the Landlord shall not be required to do so), and if the Tenant violates any of the other terms, covenants, and conditions of this Lease, said deposit may, at Landlord’s option, be applied to any damages suffered by Landlord as a result of Tenant’s default. Nothing contained in this Section, shall in any way diminish or be construed as waiving any of the Landlord’s other remedies as provided in this Lease, or by law or in equity.
Should the entire Security Deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, on the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore said security deposit to its original amount, and Tenant’s failure to do so within five (5) days after receipt of such demand shall constitute a breach of this Lease. Should Tenant comply with all of the terms, covenants, and conditions of this Lease and promptly pay all of the rental herein provided for as it falls due, and all other sums payable by Tenant to Landlord hereunder, said security deposit shall be returned in full to Tenant within sixty (60) days after the end of the Term of this Lease and the surrender of the Premises by the Tenant as required herein.
Within five (5) days following the increase of the Base Rent pursuant to the terms contained herein, Tenant shall deliver to Landlord an amount equal to the percentage increase in Base Rent times the amount of Security Deposit Landlord is then entitled to hold hereunder. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code (and under all other similar laws, statutes or ordinances now or hereafter in effect) to a return of the Security Deposit by reason of Tenant’s default, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises.
By reason of Tenant’s default, Landlord may apply or hold the Security Deposit against unpaid rent and damages which would have been earned after termination of the Lease pursuant to Section 1951.2 of the California Civil Code and/or the provisions of any similar or successor statutes. [Signatures Follow]
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CITY OF TORRANCE,
a municipal corporation,
By:
George K. Chen, Mayor
CLUCK & CRUST, LLC.,
a California limited liability corporation
By:
Name:
Title: President
By:
Name:
Title: Secretary
ATTEST:
Rebecca Poirier, City Clerk
APPROVED AS TO FORM:
PATRICK Q. SULLIVAN
City Attorney
By:
Tatia Y. Strader
Assistant City Attorney
32 2780/062579-0159
21343821.5 a05/06/25
EXHIBIT A
33 RESOLUTION NO. 2025-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TORRANCE, CALFIORNIA, DETERMINING CERTAIN
CITY-OWNED PROPERTY NOT REQUIRED FOR CITY
PURPOSES AND THAT LEASING THE PROPERTY IS IN
THE PUBLIC INTEREST.
WHEREAS , the City of Torrance (“City”) is owner of certain real property, including a building thereon, located at 475–485 Crenshaw Boulevard, Torrance, California 90501 (Assessor’s Parcel Number 7352-002-912), commonly known as the Torrance Transit Center; and
WHEREAS , the City and Cluck & Crust, LLC (“Lessee”) have negotiated a lease agreement for the Lessee to occupy approximately 1,800 square feet of commercial retail space located at 475 Crenshaw Boulevard, Suite 150, Torrance, California 90501 (the “Premises”); and
WHEREAS , the City Council finds that the Premises are not required for any current or foreseeable public use; and
WHEREAS , the leasing of the Premises will benefit the City by activating underutilized space at the Torrance Transit Center, providing a new retail service, creating local employment opportunities, and generating additional rental revenue for the City; and WHEREAS , pursuant to the California Environmental Quality Act (CEQA), the lease of the Premises qualifies for a Class 1 Categorical Exemption under Section 15301 of the CEQA Guidelines, as the project involves negligible or no expansion of use beyond that previously existing.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TORRANCE HEREBY FINDS AND DETERMINES AS FOLLOWS:
1. That, pursuant to the California Environmental Quality Act (CEQA), the First Amendment to Lease is exempt under CEQA (2025) Categorical Exemption 15301, Class 1 - Existing Facilities, as the subject request is the letting of property involving existing facilities; and
2. That the lease premises is not required for City purposes; and
3. That it is in the best interest of the public for the Lease between the City and Cluck & Crust, LLC to be executed by the City and delivered to the lessee as it represents a substantial capital investment and additional on-going rental revenue growth for the Torrance Transit Center; and
34 ATTACHMENT 2
2 4. That pursuant to California Government Code Section 37280 (b)(1) the lease’s rent provisions allows the City’s rental revenue to respond to market conditions without requiring additional discretionary review by a City officer; and
5. That the Mayor is authorized to execute the lease on behalf of the CITY and the City Clerk shall attest to the Mayor's signature and deliver the lease to the lessee.
INTRODUCED, APPROVED AND ADOPTED this 3rd day of June 2025.
ATTEST:
____________________________ __________________________ George K. Chen Rebecca Poirier, MMC
Mayor City Clerk
APPROVED AS TO FORM:
PATRICK Q. SULLIVAN, City Attorney
By ________________________________
Tatia Y. Strader, Assistant City Attorney
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