HomeMy WebLinkAboutThird Amendment to the AgreementTHIRD AMENDMENT TO THE LEASE AGREEMENT
BETWEEN THE CITY OF NATIONAL CITY
AND
AMERICAN DIGITAL OUTDOOR, L.F.
This THIRD AMENDMENT to the Lease Agreement is entered into this 1st day of April
2014, by and between the City of National City, a municipal corporation ("CITY"), and
American Digital Outdoor, L.P. ("AO").
RECITALS
A. The CITY and AO entered into a Lease Agreement on April 3, 2012 ("the Lease"), for the
lease of a vacant parcel of land identified as assessor's parcel number 562 220 41 00,
located between the 30th Street cul-de-sac and Interstate 5.
B. The Lease sets forth terms and conditions whereby AO will install, operate, and maintain
a single -faced digital billboard.
C. The parties entered into an Amendment to the Lease in June 2012, to extend the time to
obtain Caltrans and City permits.
D. The parties entered into a Second Amendment to the Lease Agreement, dated October 30,
2012, to allow for a north facing digital display to be built as part of the originally
contemplated structure which would provide opportunities for a more visible gateway and
greater revenue generation.
E. The Second Amendment contained a re -opener regarding the appropriate amount of base
monthly rent, as the current rent contemplated a single -faced message center.
F. AO now seeks to re -open the appropriate amount of the base rent and amend the Lease
and Second Amendment to modify the Section 3 and Schedule 1 to include a base monthly
rent for the north facing digital display and clarify the additional Business Revenue Share
is 33% of Annual Net Revenue less the Base Monthly Rent paid for that year.
NOW, THEREFORE, the parties hereto agree to amend the Lease and Second
Amendment, as follows:
1. Section 3(a)(2) of the Lease: The references to Monthly Rent in Section 3(a)(2)
shall be replaced with Percentage Rent. Percentage Rent shall have the meaning
set forth in Schedule 1, as stated in this Third Amendment,
2. Section 3(b) of the Lease is restated in the entirety to read: Business Revenue
Share. In addition to the Monthly Rent payment, AOA shall pay a business
revenue share. AOA shall make this payment on the last day of the thirteenth
month following the Initial Term, on an annual basis in arrears. The business
revenue share shall be calculated as set forth in Schedule 1, and shall be the
greater of (i) one-third (1/3) of the Annual Net Revenue less the Annual Rent or
(ii) the Annual Rent. By way of example, if July 1, 2012 is the commencement of
the Initial Term, then the business revenue share would be payable on July 31,
2013 and would cover the time period of July 1, 2012 through June 30, 2013.
3. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall
pay Business Revenue Sharing (as referenced in Section 3), in addition to
Monthly Rent, as follows ... 3 = BRS" with the following:
AOA shall pay Business Revenue Sharing (as referenced in Section 3), in addition
to Monthly Rent, as follows:
AOA shall pay thirty-three percent (33%) of the Annual Net Revenue for both the
North and South Faces, as applicable (the "Percentage Rent") less the total
Annual Rent paid under this Lease for that year.
Should the Annual Rent exceed the Percentage Rent for that year, no further
amounts shall be due City for that year, nor shall there be any carry-over credit for
future Percentage Rent. As an example, if the Annual Net Revenue for a given
year is $1,000,000, then AOA shall pay Business Revenue Sharing to City as
follows: $333,000 as Percentage Rent (33% of the Annual Net Revenue) less the
credited amount of $141,996 as the Annual Rent already paid to the City for that
same year, for a total Business Revenue Share of $191,004. As another example,
if the Annual Net Revenue for a given year is $250,000, then AOA shall pay
Business Revenue Sharing to City as follows: $82,500 as Percentage Rent less the
Annual Rent credit of $102,000 (already paid), for a total Business Revenue
Sharing of $0 because the Annual Rent exceeds the Percentage Rent. The
Percentage Rent shall be calculated on an annual basis in arrears.
4. Section 6 of the Second Amendment is amended to read as follows: In addition to
the Monthly Rent of $8,500 AOA pays for the existing south face per Schedule 1
of the Lease, AOA shall pay a Base Rent for the North Face in the amount of
$3,333 per month. The Monthly Rent for both faces shall be $11,833.
The Base Rent for the North Face shall commence on the first day of the first
month after the North Face Message Display is able to accept commercial
advertising, but shall be no later than August 1, 2014.
5. Schedule 1 of the Lease is amended by replacing the section entitled "AOA shall
pay Monthly Rent ... in advance, as set forth in Section 3" with the following:
AOA shall pay Monthly Rent as follows:
a. South Facing Digital Display: Base Rent for the south facing
digital display is $8,500 per month. Annual Rent for this face
shall be $102,000 (one -hundred two -thousand dollars) per year.
The first 60 months shall be paid in advance, as set forth in
Section 3.
Third Amendment
to Agreement (2014)
b. North Facing Digital Display: Base Rent for the north facing
digital display is $3,333 per month. Annual Rent for this face
2 City of National City and
American Digital Outdoor, LP
shall be $39,996 (thirty-nine thousand nine hundred ninety-six
dollars) per year.
c. Total Monthly Rent: The Monthly Rent for the north and south
facing digital displays shall total $11,833 (eleven -thousand
eight hundred thirty-three dollars) per month.
d. Total Annual Rent: Commencing June 1, 2014, the total
annual rent for both the north and south facing digital displays
shall total $141,996 (one -hundred forty-one thousand nine -
hundred ninety-six dollars) per year.
6. Upon approval of this Third Amendment, AOA shall pay the City the first five
years (60 months) of the Base Rent for the North Face in the amount of $200,000
(two -hundred thousand dollars).
7. Each and every term of the Lease, Amendment, and Second Amendment shall
remain in full force and effect, except for the amendments contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to the
Agreement on the date and year first above written above.
CITY OF NATIONAL CITY AMERICAN DIGITAL OUTDOOR, L.P.
By: By:
Ron Morrison, Mayor Tom LeClair, Managing Partner
APPROVED AS TO FORM:
Claudia Gacitua Silva
City Attorney
Third Amendment 3 City of National City and
to Agreement (2014) American Digital Outdoor, LP