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HomeMy WebLinkAbout05 RENTAL AGREEMENT WITH KYA SERVICES, LLC FOR SPACE AT 15171 DEL AMOAgenda Item 5 Reviewed: AGENDA REPORT City Manager Finance Director /A MEETING DATE: JULY 21, 2015 TO: JEFFREY C. PARKER, CITY MANAGER FROM: CITY MANAGER'S OFFICE — ECONOMIC DEVELOPMENT DIVISION SUBJECT: RENTAL AGREEMENT BETWEEN THE CITY OF TUSTIN AND KYA SERVICES, LLC FOR A PORTION OF THE BUILDING LOCATED AT 15171 DEL AMO AVENUE SUMMARY: Approval is requested to enter into a three (3) year Rental Agreement between the City and Kya Services, LLC (Tenant), for City -owned property located at 15171 Del Amo Avenue. RECOMMENDATION: It is recommended that the City Council authorize the City Manager to execute the Rental Agreement with Kya Services, LLC in a form substantially consistent with the attachment and support the finding that the Rental Agreement is at market value and no further policy directions, as outlined in Tustin City Code Section 7960(B), are required. FISCAL IMPACT: The Rental Agreement requires the Tenant pay approximately $128,520 in rent for an initial 14,000 square feet and then increasing to 28,000 square feet on November 19, 2015, in the middle section of the subject building during the first year. This calculation is based on the Tenant moving in on August 1, 2015. If move -in occurs after August 15` the total rent amount would be reduced. Assuming the August 15` move -in, the net rent proceeds available to the City General Fund will be $120,808.80, net of the 6% broker commission of $7,711.20. Although it is standard business practice for the brokerage fees to be paid upon agreement execution and to be based on the total rent generated during the term of an agreement, fees will be paid annually in order to reflect the option for either party to terminate at any time during the three-year Rental Agreement. Agenda Report July 21, 2015 Page 2 . ALIGNMENT WITH STRATEGIC PLAN: The Rental Agreement with Kya Services, LLC is consistent with the City's value of Fiscal Stewardship. In complying with Tustin City Code Section 7960(8), fact -based financial decisions ensure the City practices sound stewardship of its existing assets. BACKGROUND: The City owns property at 15171 Del Amo Avenue, as part of a larger acquisition associated with the new construction of an on-ramp and an off -ramp providing access to and from State Route 55 to Newport Avenue and Edinger Avenue. Rather than demolishing the building and associated parking improvements at a cost to the City, it was determined that rental of the premises in the existing condition would provide interim rental revenue until such time as the City develops a comprehensive strategy for marketing the property, market conditions warrant new development, and the City is able to obtain an adequate financial return for its original acquisition expenses. In January 2010, the City entered into a brokerage agreement with Lee & Associates to seek tenants for the building as a light industrial use, distribution use, or warehouse use (the legal non -conforming uses currently authorized on the property). Kya Services, LLC ("Tenant") has submitted a proposal to rent the middle section at 15171 Del Amo for three years with annual 3% rent increases. Currently, National Office Liquidators ("NOL") rents 14,000 square feet and Color Marble Commercial Projects, Inc. ("Color Marble") rents the remaining 14,000 square feet of the middle section. On May 18, 2015, NOL provided the City with a six-month notice to terminate and vacate rental on the 14,000 square feet. Effective August 1, 2015, or upon the Rental Agreement's commencement, Tenant proposes to rent NOL's vacated space for $6,300 per month at $.45 per square feet. Color Marble's Rental Agreement expires on November 18, 2015, and they will not be seeking to extend their term. Effective November 19, 2015, Tenant will expand into Color Marble's vacated space and rent the entire 28,000 square feet of the middle section for $12,600 per month at $.45 per square feet. In order to enter into a three year Rental Agreement while maintaining flexibility for site development, staff is recommending a minimum one year term with the option at any point after the sixth month for either party to give a six-month Notice to Terminate. The premises will be rented on a triple -net basis, meaning the Tenant will pay all real estate taxes, insurance, maintenance, repairs, utilities and other items associated with tenancy. The Tenant will also be responsible for any additional capital expenses including tenant improvements and repairs to the facility and will accept the property in an "AS -IS WHERE -IS" condition. Tustin City Code (TCC) Section 7960, as enacted by Ordinance No. 1389, outlines the process City staff must follow for the approval, extension or modification of any existing Agenda Report July 21, 2015 Page 3 City real property lease for less than market value. In the event a lease is less than market value, then staff must seek policy direction from the City Council as outlined in TCC Section 7960(6). Staff, in working with Lee & Associates, has reviewed comparables to confirm current asking rates for dead storage type spaces are in the same market range as the Del Amo building and the proposed Rental Agreement is not for less than market value. This space is rented on an "AS IS" basis only and is limited to a short term, month-to- month term, or includes a termination clause which does not completely guarantee a Tenant of longer term occupancy (as normal rental rates are usually based on a three (3) to five (5) year initial term). In view of these facts, staff and Lee & Associates have determined and concur that the proposed rental rate of $.45 per square foot is at market value. As a result, the proposed Rental Agreement does not trigger further actions as outlined in TCC Section 7960(6). Upon execution of the Agreement, the Tenant shall be required to pay a security deposit which is the equivalent of one month's rent and the first month's rent. Staff will be available to answer any questions the City Council may have. Jerry Craig Economic D,eWelo me Housing Manager Rental Agreement between the City and Kya Services, LLC RENTAL AGREEMENT 1. PARTIES: The parties to this Rental Agreement are the City of Tustin, a municipal corporation ("City"), and Kya Services, LLC ("Tenant"), a California Limited Liability Corporation. 2. RECITALS: This Rental Agreement is made with reference to the following facts: (a) The City has acquired the property commonly known as 15171 Del Amo Avenue, Tustin, CA 92780 ("Premises") for a planned redevelopment project (the "Project"). (b) If Tenant chooses to occupy the Premises as a new tenant, Tenant understands it will not be eligible for relocation payments or assistance under the California Relocation Assistance and Real Property Acquisition Guidelines, Title 25, California Code of Regulations, Chapter 6, Section 6000 et seq. (the "Guidelines"). (c) Tenant desires to initially rent approximately 14,000 square feet of the middle section of the Premises and may use and occupy the Premises for the purpose of storage and warehousing use only. The Premises are restricted to Tenant employees and retail sales are not permitted. Any other use of the Premises will constitute a breach of this contract and may result in an eviction. (d) Upon the November 18, 2015 termination of the City's First Amendment to the Rental Agreement with Color Marble Commercial Projects, Inc. ("Color Marble"), or such later date as Color Marble vacates the Premises, Tenant desires to increase their rental space to the entire 28,000 square feet of the middle section of the Premises. (e) By this Rental Agreement, the parties intend to establish a landlord/tenant relationship between them and to specify the rights and duties of the respective parties with reference to the Premises. 3. PREMISES: City does hereby rent to Tenant and Tenant hereby rents from City that certain real property situated in the City of Tustin, County of Orange, State of California, commonly known as 15171 Del Amo Avenue and as shown on Exhibits A.1 and A.2. The Land and Buildings are collectively referred to as the "Premises" 4. TERM: The term of this Rental Agreement shall commence on August , 2015, ("Commencement Date") and shall be in full force and effect through July 31, 2018, unless otherwise terminated as provided herein ("Termination Date"). At any time following the six- month anniversary of the Commencement Date, the City or the Tenant may terminate this Rental Agreement, for any reason, by providing six (6) months prior written notice of termination to the other party. Tenant will not receive approval to occupy and may not occupy the Premises until they have (1) made, at its sole cost and expense, the required repairs listed on Exhibit B — Terms of Condition to Occupy, and (2) provided satisfactory evidence of insurance as required by Section 19. Tenant agrees to vacate the Premises on or before the Termination Date. 997174.1 5. RENT: For Purposes of this Rental Agreement, Base Rent and Cost Reimbursements are hereinafter collectively referred to as Rent. 5.1 Base Rent. 5.1.1 From the Commencement Date through November 18, 2015, the Tenant shall pay the City the monthly sum of Six Thousand Three Hundred Dollars ($6,300) for 14,000 square feet of the Premises, payable in advance. If the Commencement Date is other than the first day of a calendar month, the rent payable hereunder shall be prorated by the City on the basis of a thirty (30) day month. Checks should be made out to the "City of Tustin" and delivered to the City in accordance with Section 5.3. 5.1.2 Effective November 19, 2015, or such later date as the Tenant shall pay the City the monthly sum of Twelve Thousand Six Hundred Dollars ($12,600) for 28,000 square feet of the Premises, payable in advance. If the Commencement Date is other than the first day of a calendar month, the rent payable hereunder shall be prorated by the City on the basis of a thirty (30) day month. 5.1.3 In subsequent years, the rent shall increase 3% annually. Effective August 1, 2016, the Tenant shall pay the City the monthly sum of Twelve Thousand Nine Hundred and Seventy -Eight Dollars ($12,978), prorated on the basis of a thirty (30) day month. Effective August 1, 2017, the Tenant shall pay the City the monthly sum of Thirteen Thousand Three Hundred and Sixty -Seven Dollars and Thirty -Four Cents ($13,367.34), prorated on the basis of a thirty (30) day month. If the Commencement Date is other than the first day of a calendar month, the rent payable hereunder shall be prorated by the City on the basis of a thirty (30) day month. 5.2 Cost Reimbursements. All sums payable by Tenant to City under this Rental Agreement not otherwise required for Base Rent shall be deemed a Cost Reimbursement ("Cost Reimbursement"), including any special costs incurred by City, which are specifically attributable to an action (or inaction) of Tenant including without limitation Tenant's failure to provide the protection and maintenance services required by Section 6 herein. The City will notify the Tenant of such costs on a monthly basis and Tenant will be obligated to pay City within thirty (30) calendar days of the date of an invoice for such costs. 5.3 Place of Payment. All payments due and owing shall be made by Tenant to the City, or to another party at such other place as the City may designate in writing from time to time. Make checks payable to: The City of Tustin, Finance Department, 300 Centennial Way, Tustin, CA 92780. 5.4 Late Charge. If payment of or any part thereof to be made by Tenant to City become overdue for a period in excess of ten (10) calendar days, a late charge equal to ten (10) percent of such overdue amount shall be paid by Tenant for purposes of defraying the expense incidental to handling such delinquent payment. Pursuant to California law, if Tenant passes a check on insufficient funds, Tenant will be liable to the City for the amount of the check plus a service charge of $55.00 for the first check passed on insufficient funds, and $55.00 for each subsequent 997174.1 check passed on insufficient funds. City may require future payments to be in a form other than a personal check in the event of a returned check, at City's sole discretion. 5.5 No City Responsibilities. The Tenant hereby acknowledges and agrees that the City is not responsible for any costs, charges, expenses, outlays or any nature whatsoever arising from or relating to the Premises, or the use or occupancy thereof, of the contents thereof or the business carried on therein, and that Tenant shall pay all charges, impositions, costs and expenses of every nature and kind related to the Premises, including costs of maintenance and repair of the Premises, all costs of insuring the Premises, and all taxes and assessments attributable to the Premises and which might be associated with the possessory interest of said Rental Agreement and personal property of the Tenant. 5.6 Security Deposit. Tenant shall provide a security deposit to City of $12,600 prior to occupying said premises which shall be refundable upon termination of the Rental Agreement provided that the Premises is returned to the City upon termination in the condition in which it was first received. No part of this deposit is to be considered an advance payment of rent, including last month's rent, nor is it to be used or refunded prior to the leased premises being permanently and totally vacated by the Tenant. 6. PROTECTION, MAINTENANCE, AND REPAIRS: City will not make any modifications, alterations, improvements or repairs to the Premises of any nature whatsoever and the Premises is rented to Tenant in an "As -Is Where Is, With ALL Faults basis", in its present state and condition with all faults. Tenant acknowledges that the City has made no representations or warranties of any kind whatsoever, either express or implied in connection with any matters with respect to the Premises, or any portion thereof. Tenant shall be allowed no credit by the City for costs of any repair work performed or ordered by Tenant to the Premises. Tenant shall, at Tenant's own expense, maintain and repair the Premises in good order and condition as the same were on Commencement Date and as improved by Tenant Pursuant to Section 7. The degree of such maintenance and repair to be furnished by Tenant shall be that which is sufficient to maintain weather tightness, structural stability, protection from fire hazards, elimination of safety and health hazards which may arise during the term of this Rental Agreement. The City, upon due notice, may inspect the Premises to insure performance of the maintenance required. Further, Tenant shall be responsible for the repair and maintenance of all interior utility systems and those exterior utility systems, distribution lines, connections and equipment which support the Premises. 6.1. Security and Fire Protection. Tenant shall provide for all security and safety within the Premises. 7. ALTERATIONS: Prior to receiving approval to occupy, Tenant will make the required repairs listed on Exhibit B — Terms of Condition to Occupy. Beyond these required repairs, Tenant will make no alterations or additions in or to the Premises, or contract for any alterations or additions, without written approval of the City. 8. WAIVERS 8.1 Waiver of Claims. Neither the City of Tustin or the Tustin Community 997174.1 Redevelopment Agency ("Agency") nor any of their officers, agents, representatives and employees will be liable and Tenant waives all claims for damage to persons or property sustained by Tenant or any occupant of the Premises resulting from the Premises or any part of it, becoming out of repair, resulting from any accident in or about the Premises or resulting directly or indirectly from any act or neglect of Tenant, occupant or of any other person including Tenant's agents and employees. All property belonging to Tenant or any occupant of the Premises will be there at the risk of Tenant or such other person only and City will not be liable for damages, theft or misappropriation. 8.2 Relocation and Compensation waivers. Tenant by signing this Rental Agreement is waiving any and all rights of any kind or amount for relocation benefits including but not limited to any such or similar rights prescribed by any state, federal or local law and/or regulation and waiving any and all rights to just compensation under U.S. and California constitutions, and agreeing and acknowledging that they waive any rights to payments for Loss of Goodwill. 8.3 No Waivers. The failure or omission of City to terminate this tenancy for any violation of any of its terms, conditions or covenants, shall not be deemed to be a consent by City to such violation and shall not bar, stop or prevent City from terminating this Agreement thereafter, either for such or for any subsequent violation of any such term condition or covenant. The acceptance of rent under this Agreement shall not be or be construed to be a waiver of any breach of any term covenant or condition of this Agreement. Nothing contained in this Agreement shall be construed as limiting City from performing all acts required by City in connection with the relocation of occupants of the Premises, or taking such steps as it may deem necessary to remove occupants of the Premises at any time. 9. CLEANLINESS AND WASTE: Tenant will keep the Premises and the walks/alley adjacent to it at all times in a neat, clean and sanitary condition, free from waste or debris and will neither commit nor permit any waste or nuisance on the Premises nor store materials hazardous to health or safety. Debris, trash, and other used materials shall be promptly removed from the Premises and the Premises shall be kept reasonably clean and free of unused materials at all times. At termination, the Premises shall be left without containers, tenant's equipment, and other undesirable materials, and in an acceptably clean condition. 10. VACATION OF PREMISES: Tenant will give the City immediate notice of his/her intention to move or vacate the Premises, and on that vacation agrees to leave same in good condition, clear of all debris, hazardous materials and personal property. 11. DAMAGE TO PREMISES: Any damage to the Premises in excess of above ordinary and normal usage may be charged to the Tenant. 12. NUISANCE AND WASTE: Tenant shall not commit, suffer or permit any nuisance or waste in or about the Premises, and shall not permit the use of the Premises for any illegal or immoral purpose. Tenant further agrees to comply with all State and Federal laws and local ordinances concerning the Premises and the use of the Premises. 13. INSPECTION BY CITY: City by and through its employees or agents, shall have the 997174.1 right to enter upon the Premises at all reasonable times during the term of this tenancy for the purpose of inspecting the same, making such repairs as City may deem desirable, and conducting any investigation, study or remediation activity the City may deem desirable upon providing Tenant with reasonable advance notice, whenever practicable. 14. PERSONAL PROPERTY LEFT ON PREMISES: City shall have the right, WITHOUT NOTICE, to sell, destroy or otherwise dispose of any personal property left on the Premises by Tenant after he/she has vacated or abandoned the Premises, or when this tenancy has been terminated, or when Tenant may be evicted from the Premises. 15. DEFAULT AND TERMINATION UPON DEFAULT: 15.1 Events of Default. The following events shall constitute events of default under this Rental Agreement: (a) A default by Tenant in payment when due of any rent or other sum payable under this Agreement and the continuation of this default for five (5) or more days after notice of the default by the City. (b) A default by Tenant in the performance of any of the terms, covenants, or conditions of the Agreement, other than a default by Tenant in the rent payment, and the continuation of the default beyond fifteen (15) days after notice by City, or if the default is curable and would require more than fifteen days, then such reasonable time to cure as authorized by the City. (c) The bankruptcy or insolvency of Tenant. (d) The appointment of a receiver for a substantial part of Tenant's assets. (e) Tenant's abandonment of the Premises. (f) The levy upon this Rental Agreement by attachment or execution and the failure to have the attachment or execution vacated within thirty (30) days. 15.2 Termination Upon Default. On the occurrence of any event of default by Tenant, City may, in addition to any other rights and remedies given here or by law, terminate this Rental Agreement and exercise remedies relating to it without further notice or demand in accordance with the following provisions: (a) So long as the event of default remains uncured, City shall have the right to give notice of termination to Tenant, and on the date specified in the termination notice, this Rental Agreement shall terminate. (b) If this Rental Agreement is terminated, City may, by judicial process, reenter the Premises, remove all persons and property, and repossess and enjoy the Premises, all without prejudice to other remedies that City may have because of Tenant's default or the 997174.1 termination. (c) If this Rental Agreement is terminated, City shall have all of the rights and remedies of a landlord provided by Civil Code section 1951.2, in addition to any other rights and remedies City may have. If any rent shall be due or unpaid, or if default shall be made in any of the provisions otherwise contained in this Rental Agreement on the part of Tenant to be observed and performed, City may exercise any and all remedies provided by law or equity by reason of such default, including without limitation the right at City's option of terminating this tenancy. Each and all of the remedies of City shall be construed as cumulative and no one of them as exclusive of the other or as exclusive of any remedy provided by law or equity. 16. UTILITIES AND TAXES: The Premises has one electric meter for the entire facility and it is currently in the name of the National Office Liquidators ("NOL"), the tenant renting space in the southern section of the facility. Prior to approval to occupy at identified in Exhibit B — Terms of Condition to Occupy, the Tenant agrees to enter into a cost-sharing agreement with NOL or its successor in interest, to pay Tenant's proportionate share of electric utilities, subject to any license approval of tenancy by City. Tenant agrees and understands that its failure to timely pay for its share of electric utilities shall constitute an event of default under this Rental Agreement. 17. DAMAGE BY FIRE: In the event the Premises are destroyed or so damaged by fire or other casualty or act of God, then this Rental Agreement shall terminate, and any advance or unearned rent that may have at such time been paid will be refunded to the Tenant on a pro rata basis. 18. ASSIGNMENT AND SUBLETTING: Tenant shall not assign this tenancy in whole or in part, nor sublet the Premises or any portion of the Premises. In the event of a breach of this condition, City shall have the power to immediately declare this Rental Agreement terminated and will then be entitled to immediate possession of the Premises. 19. INSURANCE AND INDEMNITY: 19.1 Insurance. Tenant shall provide and maintain in full force and effect at its own expense during the Term of this Rental Agreement the following insurance covering its operations under this Rental Agreement. Such insurance shall be provided with insurers licensed to do business in the State of California, with a rating of at least A VII, according to the latest Best's Key Rating Guide or A -X (if offered by a surplus line carrier that is non -admitted). Evidence of such insurance shall be delivered to City prior to the Commencement Date, including provision of certificates of insurance and required insurer endorsements. Insurance endorsements (or a copy of the policy, if applicable) shall be provided as evidence of meeting the requirements of this Section. If self-insured for workers compensation, Tenant shall submit to the Lessee a copy of its certification of self-insurance issued by the Department of Industrial Relations. The Insurers shall specifically identify this Rental Agreement and shall contain express conditions. Such insurance, shall include an endorsement that coverages are to be primary to and not contributing with any other insurance maintained by City, and an endorsement shall name the City, and their respective 997174.1 officers, officials, employees, agents and contractors as additional named insured (except for workers' compensation insurance) and by an endorsement provide that all losses shall be payable notwithstanding any act or failure to act or negligence of City, or any other person. All insurance shall be maintained on an occurrence basis. Insurer or Insurer's agent and Tenant shall give the City thirty (30) days advance written notice of any written material modification or termination of any insurance required under the provisions of this Rental Agreement. Failure of Tenant to provide such notice shall be deemed a material breach of this Rental Agreement. 19.1.1 Comprehensive General Liability Insurance. Comprehensive general liability and property damage insurance covering the rented Premises, contractual, broad form property damage, and bodily injury or death, with a combined single limit of not less than $1,000,000 per occurrence with respect to personal injury or death, and $1,000,000 per occurrence with respect to property damage. The general liability policy is to contain, or be endorsed to contain, the following provisions: (1) The City and their respective officers, officials, employees, agents and contractors are to be covered as additional named insureds as respects: liability arising out of use of the Premises. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees, agents or contractors. (2) The Tenant's insurance coverage shall be primary insurance as respects the City, and their respective officers, officials, employees and contractors. Any insurance or self-insurance maintained by the City shall be in excess of the Tenant's insurance and shall not contribute with it. (3) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents, or contractors. (4) Coverage shall state that the Tenant's insurance shall apply separately to each additional insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (5) Each insurance policy shall include an endorsement that the Insurer waives any right of subrogation against the City which may arise by reason of any activities of Tenant, City or payments under a policy. 19.1.2 Workers Compensation Insurance. Workers compensation insurance shall be in an amount and form meeting all applicable requirements of the California Labor Code, covering all persons providing services by or on behalf of Lessee and all risks to such persons. The worker's compensation is to contain, or be endorsed to contain, a waiver of subrogation against the City. 19.2 Indemnity. Notwithstanding anything to the contrary hereinabove contained, and irrespective of any insurance carried by Tenant, Tenant shall defend, with counsel acceptable to City, indemnify, protect, and save harmless City and their respective officers, officials, employees, agents and contractors from, and shall pay all costs, expenses and reasonable attorney fees for all trial and appellate levels and post judgment proceedings in connection with and from any and all demands, claims, actions, proceedings, suits, losses, liens, costs, judgments, damages 997174.1 or liabilities of any kind and nature whatsoever, including expenses incurred in defending against legal actions, for death or injury to persons or damage to property and for civil fines and penalties arising , or for any violation or alleged violation of local, state or federal law or regulation at the Premises, or for any breach of this Rental Agreement growing out of , or in connection, or in any manner predicated upon the use of, occupancy of and/or operations carried on upon the Premises by Tenant, its officers, officials, employees, agents, servants, guests, invitees, or contractors. 20. NOTICES. Any notice shall be personally delivered or placed in a sealed envelope postage paid, addressed to the person on whom it is to be served with return receipt requested and deposited in the United States Mail. Personal service shall be deemed complete upon delivery and service by mail shall be deemed complete upon receipt as reflected by the return receipt. The address to be used for any notice served by mail shall be as follows: Tenant Kya Services, LLC C/O Edwin Jay, President 1522 Brookhollow Drive, Ste. 3 Santa Ana, CA 92705 City City Manager City of Tustin 300 Centennial Way Tustin, CA 92780 Attention: Jeffrey C. Parker, City Manager 21. REFUND OF RENT: In the event Tenant vacates the Premises and terminates this tenancy before expiration of the rental term for which rent has been paid, City shall refund the pro rata portion of such rent which is unearned at the time of vacancy. 22. ANTI -DISCRIMINATION: Tenants agrees that this Rental Agreement is made and accepted on and subject to the following conditions: That there will be no discrimination against or segregation of any person or group of persons, on account of race, color, sex, age, handicap, marital status, religion, national origin or ancestry in the use, occupancy, tenure or enjoyment of the Premises, nor will Tenant or any person claiming under or through it establish or permit any practice or practices of discrimination or segregation with reference to the Premises. 23. ATTORNEY FEES. If as a result of a breach or default under this Rental Agreement, City uses an attorney to secure compliance with Agreement provisions to recover damages, to terminate this Agreement, or to evict Tenant, Tenant shall reimburse City, on demand, for all reasonable attorney fees and expenses incurred by City. 24. KEYS: Tenant agrees that upon vacating the Premises, Tenant will deliver all keys to the 997174.1 Premises in the Tenant's possession to the City at the address stated in Section 5. 1, and on failure to deliver the keys, Tenant agrees that rent for the Premises will continue to be paid to the City until such time as the keys are delivered. If, at any time during the Term of this Rental Agreement, Tenant changes or causes to be changed any of the locks to the Premises, Tenant shall immediately deliver copies of the new keys to the City as provided above. 25. TIME OF ESSENCE. Time is of the essence in this Rental Agreement and all of its provisions. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 997174.1 26. ENTIRE AGREEMENT: It is understood that there are no oral agreements between the parties affecting this Rental Agreement and this Rental Agreement supersedes and cancels any and all previous negotiations and understanding, if any, between the parties and none will be used to interpret or construe this Agreement. Approval as to Form David E. Kendig City Attorney CITY OF TUSTIN "CITY" Jeffrey C. Parker, City Manager Date Kya Services, LLC "TENANT" By: Edwin Jay, President By: Name: Title: Date: < Note two corporate signatories authorized to sign by corporation resolution should sign unless the corporation resolution permits one signatory> 997174.1 EXHIBIT "A.1" 15171 Del Amo Avenue, Tustin Tenant will utilize spaces in front of Subject units in a manner that does not interfere with the operations of adjoining tenants. Tenant will be limited to utilizing Loading Dock Doors #4 & 5 and Loading Dock #4 and the number of parking spaces for the subject unit is not to exceed 10. On an as needed basis, Tenant will provide NOL with access to Loading Dock Door #4. The overnight parking of trailers is limited to the loading docks. Trailers not parked at a loading dock shall not be parked overnight for more than two (2) consecutive nights. EXHIBIT "A.2" 15171 Del Amo Avenue, Tustin Upon expansion into entire middle section of 15171 Del Amo Avenue, 28,000 sq. ft., Tenant will be limited to utilizing Loading Dock Doors 94, 5, 6 & 7 and Loading Docks 94 & 5. The number of parking spaces will remain at 10. Tenant will utilize spaces in front of Subject units in a manner that does not interfere with the operations of adjoining tenants. On an as needed basis, Tenant will provide NOL with access to Loading Dock Door 94. The overnight parking of trailers is limited to the loading docks. Trailers not parked at a loading dock shall not be parked overnight for more than two (2) consecutive nights. EXHIBIT B TERMS OF CONDITION TO OCCUPY As noted in Section 6. PROTECTION, MAINTENANCE, AND REPAIRS of the Rental Agreement, the City will not make any improvements or incur any expenses in regards to the Tenant. Pursuant to Section 7. ALTERATIONS, Tenant must resolve the following conditions rp for to receiving approval from the City to occupy: 1. Execute an electric utility cost sharing agreement between Kya Services, LLC ("Kya") and National Office Liquidators ("NOL") to share electrical costs in the building, subject to any license approval of tenancy by City. The building currently has one meter and is in the name of NOL. 2. Execute a facility sharing agreement between Kya and NOL, allowing both parties to access the ground level loading dock door in Kya and the bathroom facilities in NOL. 3. Execute a temporary access sharing agreement with the neighboring tenant, Color Marble Commercial Projects, Inc. ("Color Marble"), for the purpose of turning on lights. Color Marble will be vacating premises by November 18, 2015. 4. Execute a temporary access sharing agreement with Color Marble for the purpose of allowing Color Marble access to the ramp for the purpose of driving their forklift from the parking lot to their section of the Premises. 5. Upon Color Marble vacating the premises, Kya will remove the chain link fence separating the two spaces. 6. Provide the City with a Release Form from the contractor(s) that certifies all labor, services, equipment and material furnished for repair work performed has been paid for in full and releases any right to a mechanic's lien, stop notice, or any right against a labor and material bond on the job.