HomeMy WebLinkAbout17 LEASE AGREEMENT BETWEEN THE CITY OF TUSTIN AND OUTFRONT MEDIA, LLCAgenda Item _______
Reviewed:
City Manager _______
Finance Director _______
MEETING DATE: NOVEMBER 15, 2022
TO: MATTHEW S. WEST, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: LEASE AGREEMENT BETWEEN THE CITY OF TUSTIN AND
OUTFRONT MEDIA, LLC
SUMMARY
Lease Agreement (Agreement) between the City of Tustin and Outfront Media, LLC
(Outfront) for a digital display billboard on City owned property located at the SR-55
Freeway and Edinger Avenue.
RECOMMENDATION
It is recommended that the City Council:
1.Approve the Agreement with Outfront Media, LLC “as to form”, subject to any
non-substantive modifications as may be deemed necessary and/or
recommended by the City Attorney; and
2.Authorize the City Manager to execute the Agreement upon O utfront obtaining all
entitlements.
FISCAL IMPACT
Under the terms of the Agreement, Outfront will pay the City annual rent, either a
Minimum Annual Guarantee (MAG) of one hundred thousand dollars ($100,000) or
twenty-five percent (25%) of Annual Net Revenue (ANR), whichever is greater. In
addition, if ANR reaches established benchmarks, the City’s ANR share increases from
25% to 60% or more for all the ANR differential above established benchmarks. As an
additional consideration for the Agreement, Outfront will also make a one-time, one
hundred thousand dollars ($100,000) payment to the City within thirty (30) days of
receiving Caltrans permits for the digital display billboard.
CORRELATION TO THE STRATEGIC PLAN
The proposed Agreement furthers Goal C – Financial Strength by diversifying the City’s
revenue sources beyond sales and property taxes.
AGENDA REPORT
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BACKGROUND
In February 2020, the City Council adopted Ordinance 1505, approving freeway
adjacent digital display billboards under limited circumstances. The Ordinance
requires that a digital display billboard can only replace an existing legal non-
conforming static billboard or a freeway oriented electronic changeable copy sign. It
must be located within 400 feet of either Interstate 5 (I -5) freeway or State Route 55
(SR-55) freeway right-of-way and may be no closer than 300 feet to the nearest
residentially zoned parcel. The distance is measured from the border of the digital
display billboard face, or the base of the digital display billboard structure, whichever
is closest to the residentially zoned parcel.
At the time of the 2020 Ordinance adoption, there were six (6) billboards, five (5) legal
non-conforming static billboards and one (1) existing digital display billboard located in
the Tustin Auto Center (Auto Center). However, the Auto Center billboard was not
allowed under the sign regulations to advertise businesses, activities, services, or
products not sold or produced on their premises. On June 16, 2020, the City Council
adopted Ordinance 1507 allowing the Auto Center’s digital display billboard to provide
off-site advertising to be consistent with and as allowed under Ordinance 1505.
Of the remaining five (5) static billboards, four (4) do not comply with Ordinance 1505
and therefore cannot be converted to digital displays. Only one existing billboard,
located at SR-55 Freeway (SR-55) and Edinger Avenue, is eligible for conversion to a
digital display. The billboard is within approximately 300 feet from the nearest lane of
travel on the SR-55 and the nearest residentially zoned parcel is located
approximately 400 feet north of the existing billboard.
Since December 1994, the City of Tustin has had a static display billboard Lease
Agreement with Outfront or its predecessors at the City property at the SR-55 and
Edinger Avenue location. On August 20, 2019, the City Council approved the Second
Amendment to the Lease Agreement, increasing the annual payment to sixty
thousand dollars ($60,000) with a three percent (3%) annual increase. Outfront’s
payment in August 2022 was sixty-five thousand five hundred sixty-three dollars and
sixty-two cents ($65,563.62).
Outfront has proposed to remove the existing static display billboard and construct
and operate a new digital display billboard at this location. City staff have negotiated
the proposed twenty-year Agreement with Outfront that will pay the City annual rent,
either a Minimum Annual Guarantee (MAG) of one hundred thousand dollars
($100,000) or twenty-five percent (25%) of Annual Net Revenue (ANR), whichever is
greater. At the end of every Agreement year, Outfront will calculate the ANR and, if it
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exceeds the MAG, Outfront will pay the City the difference between the amounts. For
example, if ANR totals one million dollars ($1,000,000), Outfront will pay the City an
additional one hundred fifty thousand dollars ($150,000). Every five years, the MAG
increases by ten percent (10%) and, after ten years, the City’s share of ANR
increases from 25% to thirty percent (30%). Outfront will prepare and submit to the
City a detailed revenue report for the applicable period and the City will be entitled to
examine and audit all of Outfront’s records relating to the revenue collections after
receipt of the revenue report.
The Agreement also establishes additional revenue benchmarks in which Outfront, will
pay the City an additional percentage share of ANR against those amounts in excess of
the specific benchmarks.
If Outfront’s ANR exceeds one million five hundred thousand dollars
($1,500,000), the City’s share of every dollar over the benchmark is sixty percent
(60%).
If Outfront’s ANR exceeds one million seven hundred thousand dollars
($1,700,000), the City’s share of every dollar over the benchmark is seventy
percent (70%).
If Outfront’s ANR exceeds one million nine hundred thousand dollars
($1,900,000), the City’s share of every dollar over the benchmark is eighty
percent (80%).
If Outfront’s ANR exceeds two million one hundred thousand dollars
($2,100,000), the City’s share of every dollar over the benchmark is ninety
percent (90%).
Finally, as an additional consideration for the Agreement, Outfront will also make a one-
time, one hundred thousand dollars ($100,000) payment within thirty (30) days of
receiving Caltrans permits for the digital display.
Prior to committing the financial resources to pursue the entitlements and all
governmental permits for a digital display billboard, Outfront is seeking conditional
approval of the Agreement as to form. Outfront understands that execution of the
Agreement and the subsequent construction and operation of the digital display
billboard is conditioned upon Outfront’s receipt of all City and Caltrans approvals. Final
execution by the City Manager of this Agreement will not occur until Outfront completes
and secures approvals of the necessary entitlements from the City. Entitlements
include a Development Agreement (DA) and Conditional Use Permit (CUP). In
accordance with Ordinance 1505, DA approval requires that the City Council must find
the DA will confer a substantial public benefit to the City and to the gen eral public.
Public benefits may include, without limitation, the removal of additional legal non -
conforming static billboards within the City, advertising of City events and public service
announcements, and/or financial contributions to the City.
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If the City Council conditionally approves the Agreement as to form, Outfront will begin
the entitlements review and approval process. It is anticipated the DA and CUP would
be before the Planning Commission and City Council for consideration in the Spring of
2023.
_____________________________
Christopher Koster
Director of Economic Development
_____________________________
Jerry Craig
Deputy Director of Economic Development
Attachments: Lease Agreement
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DIGITAL DISPLAY BILLBOARD LEASE
THIS DIGITAL DISPLAY BILLBOARD LEASE ("Lease"), is made and entered into by and
between the CITY OF TUSTIN, a California municipal corporation and general law city (“Lessor”
or “City”) and OUTFRONT MEDIA LLC, a Delaware limited liability company ("Lessee" or
“Outfront”). Lessor and Lessee are sometimes referred to herein collectively as the “Parties.”
RECITALS
WHEREAS, Lessor (as successor in interest to Case-Swayne Co., Inc., and the Tustin
Community Redevelopment Agency) and Lessee (as successor in interest to Gannett Outdoor
Co., Inc., et al.) are parties to that certain Lease Agreement dated November 15, 1992 as
amended by addenda/amendment(s) dated December 19, 1994, and as amended by a Second
Amendment dated August 27, 2019 (together, the “Current Lease”), which are incorporated herein
by this reference; and
WHEREAS, in accordance with the Current Lease, Lessee currently owns, operates and
maintains a double-sided static display billboard (“Static Billboard”) in the City of Tustin near the
northeast intersection of Edinger Boulevard and State Route 55 on the City-owned real property
described and depicted in attached Exhibit “A” (the “Leased Premises”); and
WHEREAS, in August 2021, the California Department of Housing and Community
Development informed the City that the Surplus Land Act does not apply to this Lease between
Lessor and Lessee; and
WHEREAS, the Parties desire to enter into this Lease to provide for the removal of the
Static Billboard and construction and operation of a new Digital Display Billboard on the Leased
Premises, conditioned upon Lessee’s receipt of Government Approvals necessary to operate the
Digital Display Billboard (as defined in Section 2 of this Lease), all as more specifically set forth
in this Lease.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
1. INCORPORATION OF RECITALS. The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. DEFINITIONS. For purposes of this Lease, unless a different meaning is clearly required
or assigned elsewhere herein, the following terms will have the following meanings when
capitalized throughout this Lease:
2.1 “Annual Net Revenue” means all gross revenue received by Lessee in
connection with the sale of advertising on the Digital Display Billboard (less any
commissions paid by Lessee to advertising agencies in connection with advertising on the
Display if any, maximum of 16.66%), provided the foregoing income shall not include the
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value of any in-kind usage of the Display by the City pursuant to this Lease or any
Development Agreement entered into by and among Lessor and Lessee.
2.2 “Caltrans” means the California Department of Transportation.
2.3 “Caltrans Permits” means all permits and approvals, if any, that Lessee
must obtain from Caltrans to construct, install, operate, and maintain the Display in
accordance with this Lease.
2.4 “Conditional Use Permit” means a discretionary permit approved by the
City in accordance with Sections 9291 and 9404(b)(7) of the Tustin City Code.
2.5 “Development Agreement” means a statutory development agreement
between the Parties approved by the City in accordance with Section 65865 et seq. of the
California Government Code and Section 9404(b)(7) of the Tustin City Code.
2.6 “Digital Display Billboard” or “Display” means an outdoor advertising
structure that has a double-sided digital display face, with each face having a display area
of approximately 672 square feet as further described and depicted on Exhibit “B”. The
Display permitted by this Lease shall be conditioned upon the Government Approvals, and
Lessee shall be responsible for the construction, installation, operation, and maintenance
of the Display in strict accordance with the Government Approvals and this Lease.
2.7 “Effective Date” means ________, ____ 2023, which date shall coincide
with the 31st day following City Council adoption of the ordinance approving the
Development Agreement.
2.8 “Entitlements” means the Development Agreement and Conditional Use
Permit, together with any and all building permits, site plan review, electrical permits,
architectural review, and/or other permits, entitlements, and agreements required by the
City or other governmental agency, acting in its governmental capacity, for Lessee’s
construction, installation, operation, and maintenance of the Display on the Leased
Premises.
2.9 “Government Approvals” means, collectively, the Entitlements and the
Caltrans Permits, together with any other authorizations, permits, or approvals required
from governmental agencies with jurisdiction that are necessary for Lessee to remove the
Static Billboard and construct, install, operate, and maintain the Display on the Leased
Premises. Notwithstanding anything to the contrary set forth in this Lease, no Government
Approvals shall be deemed to be received by, or issued to, Lessee if (A) there exists any
unexpired appeal, contest, challenge or review periods for the issuance of such
Government Approval, (B) an appeal, contest, challenge (including, without limitation, a
Project Approval Challenge (as defined below)) or review has been filed with respect to
such Government Approval and the same has not been resolved on terms satisfactory to
Lessee in its sole and absolute discretion, or (C) such Government Approval is only
available with conditions unacceptable to Lessee in its sole and absolute discretion.
2.10 “Operational” means the Display is capable, legally and functionally, of
displaying outdoor advertising in the manner intended by Lessee under this Lease.
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2.11 “Operational Date” is the date upon which the Display becomes
Operational, and Lessee has executed and delivered to Lessor the Operational Term
Commencement Memorandum, as required by Section 19.14, memorializing the
Operational Date and the commencement of the Operating Term, as defined in Section
3.3.2.
2.12 “Project Approval Challenge” shall mean the initiation by any individual
person or entity of any legal or equitable action or proceeding to challenge the validity of
any provision of this Lease, or the validity or implementation of any Government Approval.
3. LEASED PREMISES AND TERM
3.1 Lease of Leased Premises. Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor the Leased Premises, for the use and operation of the Static
Billboard located thereon and the Digital Display Billboard hereafter to be located thereon
(collectively, the "Improvements") as specified in this Lease. The real property immediately
adjacent to the Leased Premises owned by Lessor and the personal property of Lessor
located thereon is collectively referred to as the “Lessor Property”.
3.2 Termination of Prior Tenancy. The Current Lease shall be terminated, and
the tenancy described or created by the Current Lease shall cease upon the Effective
Date. This Lease shall constitute the new lease for the Leased Premises.
3.3 Term. The “Term” of this Lease shall consist of (collectively): (i) the “Initial
Term”, and (ii) the “Operating Term”, each as defined in this Section.
3.3.1 Initial Term. The “Initial Term” of this Lease will begin on the
Effective Date and unless earlier terminated as set forth below, shall
automatically expire as follows: (1) if, within thirty (30) days
following the Effective Date, Lessee has not submitted necessary
permit application materials to Caltrans; or (2) if, within one hundred
eighty (180) days of receipt of all necessary Caltrans Permits,
Lessee has not constructed the Digital Billboard Display, though
this second deadline period shall be tolled to the extent delays are
caused by Force Majeure and/or any Government Approvals are
subject to legal challenge for the pendency of that challenge.
Notwithstanding any contrary term or provision in this Lease, if
Lessee has not or is unable to secure the necessary Governmental
Approvals and/or does not construct the Display and commence
advertising operations on the Display within twenty-four (24)
months from the Effective Date, then this Lease shall automatically
expire and be of no further force and effect, with neither Party
having a right to claim a breach of this Lease provided, however, if
City building permits are not issued within ninety (90) days following
Lessee’s submittal of a complete building permit application to City,
this twenty-four (24) month deadline shall be tolled on a day-for-day
basis until the City building permits are issued.
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3.3.1.1 Continued Use and Removal of Static Billboard. Lessee
may continue to operate and maintain the existing Static Billboard
during the Initial Term until such time as vertical construction of the
Digital Display Billboard commences. No outdoor advertising shall
occur on the Digital Display Billboard unless and until the Static
Display is removed.
3.3.2 Operating Term. The “Operating Term” of this Lease will begin, and
the Initial Term shall conclude, on the Operational Date and will
expire on the twentieth (20th) anniversary of the Operational Date.
3.4 Condition of Leased Premises. The Leased Premises are leased in “AS
IS” condition and any grading, paving or fencing that may be necessary to meet Lessee’s
needs will be the sole responsibility of Lessee. Lessee acknowledges that it has inspected
and accepts the Leased Premises in its present condition as suitable for the purpose for
which the Leased Premises are leased. Other than Lessor’s representation that it owns
the Leased Premises, Lessor makes no warranties or representation as to the suitability
of the Leased Premises for Lessee’s intended use, including, without limitation, as to
visibility, traffic count or any other factors.
4. COMPENSATION
4.1 Rent
Lessee shall pay Lessor “Rent” during the Term of this Lease, which shall be
comprised of a Minimum Annual Guarantee (“MAG”) or, if applicable, an Annual Share of
Revenue (“ASR”) as set forth below. Notwithstanding anything to the contrary set forth in
this Lease, provided that Lessee is diligently pursuing all Governmental Approvals, then
for such period commencing on the date on which the Static Billboard is removed and
expiring on the Operational Date, Lessee have no obligation to pay Rent under this Lease.
4.1.1 Initial Term Rent. The Parties agree and acknowledge that Lessor
has paid all rent owed to Lessee under the Current Lease; no rent
is payable on the Effective Date of this Lease through July 31, 2023.
If the Operating Term has not commenced by August 1, 2023,
Lessee shall pay to Lessor sixty-seven thousand five-hundred thirty
dollars and fifty-three cents ($67,530.53) for the one-year period
commencing August 1, 2023 and ending July 31, 2024. Should the
Initial Term extend beyond the July 31, 2024, and subject to the
limitations imposed by Section 3.3.1, rent shall increase 3%
annually and the payment shall be made in advance of August 1;
provided, Lessor shall refund to Lessee a prorata share of all such
prepaid rent applicable to time occurring after the Static Billboard is
removed.
4.1.2 Operating Term: Year One Rent. Within fifteen (15) days following
the Operational Date, Lessee shall pay to Lessor a MAG of one-
hundred-thousand dollars ($100,000.00) (“Year One MAG”).
Lessee shall calculate the Annual Net Revenue derived from the
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Digital Display Billboard during Operating Term year one. If twenty-
five percent (25%) of this figure exceeds the Year One MAG, then
Lessee shall pay the difference between the sums to Lessor within
ninety (90) days following the anniversary of the Operational Date
(“Year One ASR”). [e.g. if Annual Net Revenue totals $1.5 million,
Lessee would pay to Lessor an additional $275,000.00 as the Year
One ASR (25% of $1.5 million = $375,000.00 - $100,000.00 Year
One Mag = $275,000.00)].
4.1.3 Operating Term: Years 2-5 Rent. On or before the annual
anniversary of the Operational Date, Lessee shall pay to Lessor a
MAG of one-hundred-thousand dollars ($100,000.00) for
Operational Term years two (2) through five (5) of the Lease (“Years
Two-Five MAG”). Lessee shall calculate the Annual Net Revenue
derived from the Digital Display Billboard for each respective
twelve-month period. If twenty-five percent (25%) of this figure
exceeds the Years Two-Five MAG, then Lessee shall pay the
difference between the sums to Lessor within ninety (90) days
following the anniversary of the Operational Date.
4.1.4 Operating Term: Years 6-10 Rent. On or before the annual
anniversary of the Operational Date, Lessee shall pay to Lessor a
MAG of one-hundred-ten-thousand dollars ($110,000.00) for
Operational Term years six (6) through ten (10) of the Lease
(“Years Six-Ten MAG”). Lessee shall calculate the Annual Net
Revenue derived from the Digital Display Billboard for each
respective twelve-month period. If twenty-five percent (25%) of this
figure exceeds the Years Six-Ten MAG, then Lessee shall pay the
difference between the sums to Lessor within ninety (90) days
following the anniversary of the Operational Date.
4.1.5 Operating Term: Years 11-15 Rent. On or before the annual
anniversary of the Operational Date, Lessee shall pay to Lessor a
MAG of one-hundred-twenty-one-thousand dollars ($121,000.00)
for Operational Term years eleven (11) through fifteen (15) of the
Lease (“Years Eleven-Fifteen MAG”). Lessee shall calculate the
Annual Net Revenue derived from the Digital Display Billboard for
each respective twelve-month period. If thirty percent (30%) of this
figure exceeds the Years Eleven-Fifteen MAG, then Lessee shall
pay the difference between the sums to Lessor within ninety (90)
days following the anniversary of the Operational Date.
4.1.6 Operating Term: Years 16-20 Rent. On or before the annual
anniversary of the Operational Date, Lessee shall pay to Lessor a
MAG one-hundred-thirty-three thousand one hundred dollars
($133,100.00) for years sixteen (16) through twenty (20) of the
Lease (“Years Sixteen-Twenty MAG”). Lessee shall calculate the
Annual Net Revenue derived from the Digital Display Billboard for
each respective twelve-month period. If thirty percent (30%) of this
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figure exceeds the Years Sixteen-Twenty MAG, then Lessee shall
pay the difference between the sums to Lessor within ninety (90)
days following the anniversary of the Operational Date.
4.2 Revenue Sharing. Annually, Lessee shall pay an ASR per Section 4.1 for
up to one million five hundred thousand dollars ($1,500,000) in Annual Net Revenue. If
the Annual Net Revenue exceeds $1,500,000, then Lessee shall only apply the
percentages identified in the specified benchmarks below in this Section 4.2 against those
amounts in excess of the specified benchmarks. Lessee shall pay the difference between
the sums to Lessor within ninety (90) days following the anniversary of the Operational
Date.
4.2.1 $1.5 Million Benchmark. Lessee shall pay to Lessor sixty percent
(60%) of all Annual Net Revenue above one million five hundred
thousand dollars ($1,500,000.00), up to one million seven hundred
thousand dollars ($1,700,000.00). [e.g., if Annual Net Revenue
totals $1.7 million, Lessee would pay to Lessor an additional
$395,000.00 as the ASR. (25% of $1.5 million = $375,000.00) plus
(60% of $200,000 = $120,000) for a total of $495,000 minus
$100,000.00 MAG = $395,000)].
4.2.2 $1.7 Million Benchmark. Lessee shall pay to Lessor seventy
percent (70%) of all Annual Net Revenue above one million seven
hundred thousand dollars ($1,700,000.00), up to one million nine
hundred thousand dollars ($1,900,000.00).
4.2.3 $1.9 Million Benchmark. Lessee shall pay to Lessor eighty percent
(80%) of all Annual Net Revenue above one million nine hundred
thousand dollars ($1,900,000.00), up to two million one hundred
thousand dollars ($2,100,000.00).
4.2.4 $2.1 Million Benchmark. Lessee shall pay to Lessor ninety percent
(90%) of all Annual Net Revenue above two million one hundred
thousand dollars ($2,100,000.00). [e.g., if Annual Net Revenue
totals $2.5 million, Lessee would pay to Lessor an additional
$1,055,000 as the ASR. (25% of $1.5 million = $375,000.00) plus
(60% of $200,000 = $120,000) plus (70% of $200,000 = $140,000)
plus (80% of $200,000 = $160,000) plus (90% of $400,000 =
$360,000) for a total of $1,155,000 minus $100,000.00 MAG =
$1,055,000)].
NOTE: Calculations assumed ASR was 25% and the MAG was
$100,000. If ASR was 30% and/or the MAG had increased, then
the calculation would utilize that ASR and/or MAG.
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4.3 Payments to Lessor.
All Rent and other payments required to be made hereunder to Lessor shall be
payable to:
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attn: Director of Economic Development
4.4 Revenue Report. Lessee will cause to be prepared and submitted to
Lessor with its Rent payment a detailed report, in a form reasonably approved by Lessor,
of all gross revenue collected during the applicable period from the Digital Display
Billboard as well as applicable deductions resulting in the calculation of the Annual Net
Revenue for such period (“Revenue Report”). Lessee or its licensee must maintain all
records related to the calculation of gross revenue and Annual Net Revenue in the normal
course of Lessee’s business for a minimum period of three (3) years.
4.5 Audit. Lessor is entitled at any time after its receipt of any Revenue Report
(but not more than once annually), to examine and audit all the books and records of
Lessee relating to the collection of revenue related to the Digital Display Billboard and any
media displayed on the Digital Display Billboard, including without limitation (i) all
payments received or made with respect to the Leased Premises, (ii) all agreements
relating to the Leased Premises (subject to Lessee’s right to redact proprietary or
confidential information), and (iii) any other records relevant to the determination of gross
revenue and Annual Net Revenue under this Lease. Lessor may conduct such audits
using its own employees, a management agent or consultant or an independent
accountant. Lessee will provide Lessor with access to such books and records upon not
less than thirty (30) days’ prior written notice and will make such books and records
available at Lessee’s offices in Southern California (Orange County Region). If such audit
reveals a shortfall in the Lessor’s share of the net revenue of ten percent (10%) or more,
then Lessee must immediately pay to Lessor upon the submission of an invoice from the
auditor the reasonable cost of such audit; otherwise, the cost of the audit will be paid by
the Lessor.
4.6 Additional Consideration. As additional consideration for this Lease,
Lessee shall make a onetime payment of one hundred thousand dollars ($100,000.00) to
Lessor (“Onetime Payment”). Lessee shall make the Onetime Payment to Lessor within
thirty (30) days following its receipt of Caltrans Permits.
5. USE OF LEASED PREMISES AND OPERATION OF THE DIGITAL DISPLAY
BILLBOARD
5.1 Outdoor Advertising Use. The Leased Premises may be used only for the
removal of the Static Billboard and installation, repair, maintenance, operation, and, if
necessary, replacement, and reconstruction of the Digital Display Billboard. Lessee must
make commercially reasonable efforts to obtain any and all Government Approvals
required in connection with the foregoing, and Lessor shall reasonably cooperate with
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Lessee in connection with Lessee’s efforts regarding the same. Lessee must comply with
all governmental laws, ordinances and regulations applicable to the use of the Leased
Premises and operation of the Digital Display Billboard including, without limitation, the
Outdoor Advertising Act (California Business & Professions Code § 5400 et seq.) and
regulations promulgated in connection therewith (collectively, the "Act"). Without limiting
the generality of the foregoing, and subject to Section 7 below, Lessee must install and
construct all physical improvements needed to serve the Leased Premises and the Digital
Display Billboard, which are required by any federal, state or local building code or other
law or regulation applicable to the Leased Premises or the Digital Display Billboard
(including, without limitation, the Act), or are made necessary by the nature of Lessee's
use of the Leased Premises. Lessee must promptly comply with all governmental orders
and directives in connection with its use of the Leased Premises. Lessee must protect
from damage all underground and aboveground installations and improvements, such as
pipes, fiber optic lines, and wires on Lessor Property that may be impacted by any work
or any use of the Leased Premises by Lessee.
5.2 Advertising. Lessee agrees that it will not display or allow to be displayed
on the Digital Display Billboard any advertising, content or message that is not consistent
with the advertising criteria set forth in Exhibit “D” (“Advertising Restrictions”). Except as
otherwise provided herein and Exhibit “D”, Lessee will have sole control over the
advertising to be displayed on the Digital Display Billboard and will be solely liable for the
content of such messages.
5.3 Removal of Prohibited Advertising. Lessee must, within 48 hours after
written demand from Lessor, at Lessee’s risk and expense, remove any advertising
material or message that is in violation of the Advertising Restrictions. If Lessee fails to
promptly cause the removal of such advertising, Lessor may (but is not be required to),
without further process of law, remove the advertising or shut down electric power and/or
telecommunications lines to the Digital Display Billboard or other Improvements. Lessee
must reimburse Lessor’s costs of such actions upon demand and will bear the risk of any
damage to the Digital Display Billboard or other Improvements resulting from such actions.
Lessor may exercise such remedies without prejudice to any other remedies it may be
entitled to exercise under this Lease, at law or in equity.
5.4 Local Advertisers. Lessee agrees to ensure that businesses or
organizations located within the City or residents of the City will be able to purchase
advertising on the Digital Display Billboard in such manner and at such rates as offered to
businesses, organizations or persons located or residing outside of the City and that it will
not permit any exclusivity contracts or arrangements with advertisers that would violate
this covenant.
5.5 Emergency Notifications. At no cost to the City and as further consideration
for the use and occupancy of the Leased Premises, Lessee shall make the Digital Display
Billboard available to Caltrans and the California Highway Patrol for the purpose of “Amber
Alerts” and for emergency or disaster notifications by local, state or federal agencies.
Emergency notifications may be displayed without interruption for up to one (1) hour and
intermittently thereafter for a particular emergency.
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5.6 View Obstruction. If Lessee notifies City in writing that any obstruction
exists which obstruction impedes or reduces the view of the Display from State Route 55,
and which did not exist as of the Effective Date (each such obstruction, an “Obstruction”),
Lessee will have the right, in addition to all other remedies granted under this Lease to (a)
equitably reduce the Rent, if agreed to by the City, (b) remove the Obstruction if it is
feasible to do so (and the cost of which shall be shared by the Parties); or (c) terminate
this Lease. Notwithstanding the foregoing, if an Obstruction is located on property owned
by City, then, prior to having the rights set forth in the foregoing sentence, Lessee shall
provide notice to City identifying such Obstruction, in which event, Lessee may require the
City to remove such Obstruction and require an equitable reduction in the Rent. In such a
situation, the City shall promptly abate the Obstruction and equitably abate the Rent.
6. TAXES
If applicable, Lessee will be liable for all taxes levied or assessed against Lessee’s
possessory interest in and to real property, personal property, furniture, fixtures, and
equipment located or placed on the Leased Premises under this Lease, whether owned
by the Lessee, or otherwise. The possessory interest created by this Lease may be subject
to property taxation so that Lessee may be subject to the payment of property taxes levied
on the interest and Lessee also agrees to pay before delinquency any and all possessory
interest taxes due and arising from this Lease. The foregoing statement is included to
comply with California Revenue and Taxation Code Section 107.6.
7. MAINTENANCE AND REPAIR
Lessee will be responsible for maintaining the Leased Premises and Improvements.
Lessee must keep the Leased Premises and Improvements clean, safe, reasonably free
and clear of debris, weeds, trash, vegetation, unauthorized vehicle parking, graffiti and
occupancy by transients/homeless persons or individuals. Lessee further agrees to
ensure that the Improvements will not unreasonably impede or interfere with the use or
operation of the Lessor Property; provided, however, Lessor acknowledges and agrees
that Lessee’s operation of the Leased Premises as intended under this Lease for the
display of an advertising billboard shall not, of itself, be deemed to unreasonably impede
or interfere with the use or operation of the Lessor Property. As used herein, “maintain”
means, as applicable, construct, install, paint, service, repair, alter, maintain, reconstruct,
reinstall, replace, upgrade or remove. Subject to Lessor’s reasonable consent, Lessee
will be entitled to trim or remove vegetation on the Leased Premises that obstructs the
view of the Digital Display Billboard from adjacent thoroughfares subject to compliance
with City’s applicable laws. Lessor shall trim or remove vegetation on the Lessor Property
that obstructs the view of the Digital Display Billboard from adjacent thoroughfares, subject
to compliance with City’s applicable laws.
8. ALTERATIONS, LIENS AND SIGNS
8.1 Alterations. Except for the Improvements including the Digital Display
Billboard and the use of the Leased Premises as described in Section 5, Lessee may
make no additional alterations, additions or improvements to the Leased Premises without
obtaining the prior written consent of Lessor in each instance; provided, the foregoing
prohibition shall not apply in the event that Lessee is maintaining, replacing or repairing
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the Digital Display Billboard or Improvements. Lessee must notify Lessor in writing at
least thirty (30) days prior to the commencement of any such work in or about the Leased
Premises. If Lessor consents to the construction of any additional improvements by
Lessee, all such construction work must be carried out in compliance with any and all state
and City rules, regulations and requirements.
8.2 Liens. Lessee has no authority to create or place any lien or encumbrance
of any kind or nature whatsoever upon the interest of Lessor or Lessee in the Leased
Premises for any claim in favor of any person dealing with Lessee, including those who
may furnish materials or perform labor for any construction or repairs. Lessee covenants
and agrees that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any work
performed by Lessee on the Leased Premises. Lessee must discharge of record by
payment, bonding or otherwise any claim of lien or stop notice filed against the Leased
Premises on account of any labor performed or materials furnished in connection with any
work performed by Lessee on the Leased Premises immediately upon the filing of any
claim of lien or stop notice. Lessee must indemnify and hold Lessor harmless from any
and all loss, cost or expense based on or arising out of asserted claims, liens or stop
notice against the leasehold estate or against the right, title and interest of Lessor in the
Leased Premises or this Lease arising from the act or agreement of Lessee. If Lessee
becomes aware of the placing of a lien, stop notice, or encumbrance against the Leased
Premises, Lessee agrees to give Lessor immediate written notice of the placing of any lien
or stop notice or encumbrance against the Leased Premises. Notwithstanding the above,
Lessee may, with Lessor’s written consent, which consent may be withheld for any reason
in the sole discretion of Lessor, encumber the Digital Display Billboard and its other
permitted Improvements.
8.3 Signs. Except for the Digital Display Billboard, Lessee may not, erect or
install any other signs, decorations or advertising media of any type which can be viewed
from outside the Leased Premises.
9. UTILITIES
Lessee must cause to be paid for all electrical and other utilities and services used on or
from the Leased Premises directly to the utility providing the same. If any utility company
requires a license or permit from Lessor to cross property of Lessor other than the Leased
Premises before services will be provided Lessor may charge Lessee a fee to cover the
expense of preparing and processing each such license or permit.
10. INSURANCE
10.1 Lessor's Insurance. Lessor may maintain insurance covering the Leased
Premises and Lessor’s ownership and operation thereof in such types and amounts as it
deems necessary in its sole discretion. Such insurance must be for the sole benefit of
Lessor and under its sole control. Lessee's insurance policies must provide primary
coverage to Lessor; when any such policy issued to Lessor provides duplicate coverage
or is similar in coverage, Lessor’s policy will be excess over Lessee 's policies.
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10.2 Lessee’s Insurance Obligations. Lessee shall procure and maintain in full
force and effect during the Term of this Lease insurance in the amounts and coverages
and issued by an insurer in accordance with the requirements of Exhibit “C”. Proof of
insurance coverage and required endorsements must be received by Lessor within ten
(10) calendar days from the Effective Date and resubmitted to City annually thereafter.
11. INDEMNIFICATION
11.1 Lessee Indemnification. Lessee, on behalf of itself and its successors and
assigns, agrees to indemnify, defend (by counsel satisfactory to Lessor), and hold
harmless Lessor, its officials, officers, commissioners, employees, and agents,
(individually and collectively, "Lessor Indemnitees") to the maximum extent allowed by
law, from and against all loss, liability, claims, demands, suits, liens, claims of lien,
damages (including consequential damages), costs and expenses (including, without
limitation, any fines, penalties, judgments, litigation expenses, and experts' and attorneys'
fees), that are incurred by or asserted against Lessor Indemnitees arising out of or
connected in any manner with (i) the acts or omissions to act of the Lessee in connection
with the Leased Premises or arising from the presence upon or performance of activities
by Lessee with respect to the use of the Leased Premises; (ii) bodily injury to or death of
any person (including employees of Lessor Indemnitees) or damage to or loss of use of
property resulting from such acts or omissions of Lessee; (iii) non performance or breach
by Lessee of any term or condition of this Lease; (iv) the character or contents of subject
matter displayed from the Digital Display Billboard (except pertaining to any subject matter
displayed at the direction of City (“City Messages”)); (v) any actual or alleged infringement
of any intellectual property right relating to the Digital Display Billboard or any subject
matter displayed on the Digital Display Billboard (except pertaining to any City Messages);
and (vi) any violation of applicable law by Lessee; and (vii) any legal action or proceeding
brought this Lease or any other permit or approval that authorizes the installation and use
on the Premises, in each case whether occurring during the Term of this Lease or
thereafter.
11.2 Lessor Indemnification. Lessor, on behalf of itself and its successors and
assigns, agrees to indemnify, defend, and hold harmless Lessee, its officials, officers,
commissioners, employees, and agents, (individually and collectively, "Lessee
Indemnitees") to the maximum extent allowed by law, from and against all loss, liability,
claims, demands, suits, liens, claims of lien, damages (including consequential damages),
costs and expenses (including, without limitation, any fines, penalties, judgments, litigation
expenses, and experts' and attorneys' fees), that are incurred by or asserted against
Lessee Indemnitees arising out of or connected in any manner with: (a) the failure of
Lessor to perform any obligation of Lessor pursuant to this Lease; the inaccuracy or falsity
of any representation or warranty of Lessor in this Lease; and (c) the active negligence or
willful misconduct of Lessor.
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12. LESSOR'S RIGHT OF ACCESS
Upon no less than forty-eight hours’ written notice, Lessee will permit Lessor and its
agents, at all reasonable times (and at any time in case of emergency), in such manner
as to cause as little disturbance to Lessee as reasonably practicable (a) to enter into and
upon the Leased Premises to inspect them or to protect Lessor's interest therein, (b) to
take all necessary materials and equipment onto the Leased Premises, and perform
necessary work thereon to the extent expressly permitted under this Lease, and (c) to
perform non-invasive testing, monitoring, and analysis on, under or about the Leased
Premises.
13. ASSIGNMENT AND SUBLETTING
13.1 Lessor’s Consent. Lessee may not assign all or any portion of its interest
in this Lease, whether voluntarily, by operation of law or otherwise, and may not sublet all
or any portion of the Leased Premises, including, but not limited to, sharing them,
permitting another party to occupy them or granting concessions or licenses to another
party, except with the prior written consent of Lessor (not to be unreasonably withheld,
conditioned or delayed). Notwithstanding anything to the contrary set forth in this Lease,
Lessee may assign its interest in this Lease, without the written consent of Lessor, in
connection with any of the following: if Lessee merges with another company, reorganizes
its stock, or undergoes a similar corporate restructuring, or if Lessee sells all or
substantially all of its assets or if Lessee changes its name.
13.2 Fees. Lessee must pay Lessor's reasonable attorneys' fees incurred in
evaluating any proposed assignment or sublease and in documenting Lessor's consent,
13.3 Procedure. Whenever Lessee has obtained an offer to assign any interest
in this Lease or to sublease all or any portion of the Leased Premises, Lessee must
provide to Lessor the name and address of said proposed assignee or sublessee, all
compensation, the proposed use by the proposed assignee or sublessee, the proposed
effective date of the assignment or subletting, and any other business terms which are
material to the offer and which differ from the provisions of this Lease ("Notice of Offer").
Lessee must also provide to Lessor the nature of business, financial statement, and
business experience resume for the immediately preceding five (5) years of the proposed
assignee or sublessee and such other information concerning such proposed assignee or
sublessee as Lessor may reasonably require. The foregoing information must be in writing
and must be received by Lessor no less than thirty (30) days prior to the effective date of
the proposed assignment or sublease.
Within thirty (30) days of receiving a complete Notice of Offer for the proposed assignment
or subletting, Lessor must either notify Lessee that Lessor consents to the proposed
assignment or subletting or withholds its consent for reasons to be specified in the notice.
If Lessor does not provide a notice granting its consent to Lessee within thirty (30) days
of receiving a Notice of Offer, Lessor will be deemed to have granted its consent to the
proposed assignment or subletting, and Lessor's reasons for any withholding of such a
consent will be furnished to Lessee concurrently with the notice indicating the same.
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13.4 Continuing Lessee Obligations. Any subleasing or assignment, even with
the approval of Lessor, will not relieve Lessee from liability for payment of all forms of Rent
and other charges herein provided or from the obligations to keep and be bound by the
terms, conditions and covenants of this Lease.
13.5 Waiver, Default and Consent. The acceptance of Rent from any other
person will not be deemed to be a waiver of any of the provisions of this Lease or a consent
to the assignment or subletting of the Leased Premises. Any assignment or sublease
without Lessor's prior written consent (where such consent is required under this Lease)
will be voidable, at Lessor's election, and will constitute a default hereunder. Consent to
any assignment or subletting will not be deemed a consent to any future assignment or
subletting.
14. CONDEMNATION
14.1 Taking . If the whole or any substantial part of the Leased Premises, as
determined by Lessor, should be taken or damaged because of the exercise of the power
of eminent domain, whether by condemnation proceedings or otherwise, including acts or
omissions constituting inverse condemnation, or any transfer of the Leased Premises or
portion thereof in avoidance of the exercise of the power of eminent domain (collectively,
a "Taking"), and the Taking would prevent or materially interfere with the use of the Leased
Premises for the purpose for which they are being used, as determined by Lessee, Lessee
shall have the right to terminate this Lease when or after the physical Taking of the Leased
Premises occurs. Notwithstanding anything to the contrary set forth in this Lease, Lessee
shall have all rights in law or equity in connection with a Taking, including, without
limitation, the right to dispute a Taking and to pursue just compensation as a result thereof.
14.2 Partial Taking. If part of the Premises is subject to a Taking and this Lease
is not terminated as provided in Section 14.1 above, this Lease will not terminate.
14.3 Condemnation Award. Lessor and Lessee may each independently seek
to recover all compensation and other remedies provided by law for any Taking of the
Leased Premises, including relocation benefits and loss of goodwill; however, Lessor may
not seek or recover compensation from Lessee’s lost interests, and Lessee may not seek
or recover compensation for Lessor’s lost interests.
14.3 Exclusive Remedy. This Section 14 will be Lessee's sole and exclusive
remedy in the event of any Taking. Lessee hereby waives the benefits of California Code
of Civil Procedure Section 1265.130.
15. SURRENDER
15.1 Static Billboard. Upon termination or automatic expiration of the Initial
Term pursuant to Section 3.3.1, and unless otherwise agreed by Lessor and Lessee,
Lessee must, at its sole cost and expense, apply for demolition permits from the City within
thirty (30) days and completely remove the Static Billboard, including, but not limited to,
any structure or facility erected or maintained as part of or in relation to the Static Billboard,
from the Leased Premises within ninety (90) days from receipt of demolition permits from
the City for such removal. Lessee shall restore the Premises to its original condition
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(reasonable wear and tear, modifications required to accommodate the installation of the
Digital Display Billboard, and damage or destruction by casualty or the acts of God beyond
the control of Lessor excepted), except that Lessee shall only be required to remove the
support column(s)/footing to a depth of five (5) feet below grade. Removal of the Static
Billboard will be in accordance with any applicable federal, state, or local regulations,
including regulations of the City. Lessee will, at its sole cost and expense, secure any
required permits to remove and properly transport the Static Billboard from the Leased
Premises.
15.2 Digital Display Billboard. Upon termination or expiration of the Operating
Term, and unless otherwise agreed by Lessor and Lessee, Lessee must, at its sole cost
and expense, apply for demolition permits from the City within thirty (30) days and
completely remove the Digital Display Billboard, including, but not limited to, any above-
grade structure or facility erected or maintained as part of or in relation to the Digital
Display Billboard, from the Leased Premises within ninety (90) days from receipt of
demolition permits from the City for such removal. Lessee shall restore the Premises to
its original condition (reasonable wear and tear and damage or destruction by casualty or
the acts of God beyond the control of Lessor excepted), except that Lessee shall only be
required to remove the support column(s)/footing to a depth of ten (10) feet below grade.
Removal of the Digital Display Billboard will be in accordance with any applicable federal,
state, or local regulations, including regulations of the City. Lessee will, at its sole cost
and expense, secure any required permits to remove and properly transport the Digital
Display Billboard from the Leased Premises. Notwithstanding anything to the contrary set
forth in this Lease, Lessor and Lessee acknowledge and agree that the Static Billboard
and the Digital Display Billboard shall at all times remain the sole property of Lessee,
notwithstanding that the same may be, from time to time, permanently affixed to the
Leased Premises or other real or personal property located thereon.
15.3 In the event that Lessee fails to timely remove the Static Billboard and/or
Digital Display Billboard as provided in Sections 15.1 and 15.2, Lessor may remove the
Static Billboard and/or Digital Display Billboard and exercise its rights below to pay for
such removal. Any such removal of the Static Billboard and/or Digital Display Billboard by
Lessor after the termination or expiration of this Lease will not entitle Lessee to any
damages of any kind whatsoever against Lessor, and Lessee hereby releases the Lessor,
its officers, employees, agents or contractors from any claims or liabilities, for any action
by the Lessor, its officers, employees, agents or contractors in removing the Static
Billboard and/or Digital Display Billboard. Should Lessor be required to exercise its rights
under this Section 15.3 due to Lessee’s failure to comply with this Section, or should
Lessee fail to pay all costs and expenses of removal and storage of the Static Billboard
and/or Digital Display Billboard, Lessee will be liable to Lessor to pay any reasonable
expenses incurred by Lessor in exercising its rights under this Section 15.3 and will pay
Lessor such costs within no more than ten (10) days following Lessor’s delivery of an
invoice itemizing such expenses and demanding payment for the same.
16. QUIET ENJOYMENT
Lessor represents and warrants that it has full rights and authority to enter into this Lease
and that Lessee, upon paying the Rent herein set forth and performing its other covenants
and agreements herein set forth, will peaceably and quietly have, hold and enjoy the
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Leased Premises for the Term without hindrance or molestation from Lessor, subject to
the terms and provisions of this Lease and all matters of record.
17. EVENTS OF DEFAULT; LESSOR'S REMEDIES
17.1 Events of Default. Lessee will be deemed to be in def ault under this Lease
when any of the following occurs:
17.1.1 Lessee fails to pay any installment of the Rent when due, or any
other payment or reimbursement to Lessor required herein when
due and such failure to pay continues for fifteen (15) days after
written notice to Lessee.
17.1.2 Lessee does not pay any financial obligations under this Lease as
they become due and such failure to pay continues for fifteen (15)
days after written notice to Lessee.
17.1.3 Lessee admits in writing the inability to pay its obligations or makes
a general assignment for the benefit of creditors; a receiver or
trustee (or similar official) is appointed for all or substantially all of
the assets of Lessee; or the filing of any voluntary petition by
Lessee under the Bankruptcy Code, or the filing of an involuntary
petition by Lessee's creditors, which involuntary petition remains
undischarged for a period of forty-five (45) days; or the attachment,
execution or other judicial seizure or non-judicial seizure of all or
substantially all of Lessee's assets located at the Leased Premises
or of Lessee's interest in this Lease or the Leased Premises, if such
attachment or other seizure remains undismissed or undischarged
for a period of ten (10) business days after the levy thereof.
17.1.4 Lessee permanently vacates or legally abandons all or a substantial
portion of the Leased Premises, whether or not Lessee is in default
of the Rent or other charges due under this Lease.
17.1.5 Lessee fails to comply with any other term, provision or covenant of
this Lease, and does not cure such failure within thirty (30) days
after written notice thereof to Lessee, or if any such failure would
reasonably require more than thirty (30) days to cure, Lessee fails
to commence curing with the thirty (30) day notice period or fails
thereafter to promptly, effectively, and continuously proceed with
the cure of such failure. Such notice will be in lieu of and not in
addition to any notice required under Section 1161 of the California
Code of Civil Procedure.
17.2 Lessor's Remedies. Upon the occurrence of any of the events of default
described in Section 17.1, Lessor will have the option to pursue any one or more of the
following remedies as allowed by law:
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17.2.1 Termination. Lessor will have the right, at any time, with or without
notice or demand, to terminate this Lease, and at any time
thereafter to recover possession of the Leased Premises or any part
thereof and expel and remove therefrom Lessee and any other
person occupying the same, by any lawful means, and again
repossess and enjoy the Leased Premises without prejudice to any
of the remedies that Lessor may have under this Lease, at law or
equity by reason of Lessee 's default or of such termination.
17.2.2 Damages upon Termination. Should Lessor terminate this Lease
pursuant to the provisions of Section 17.2.1, Lessor, without limiting
any other remedy, will have all the rights and remedies of a Lessor
provided by Section 1951.2 of the California Civil Code, or any
successor code section.
17.2.3 Costs. If Lessor incurs any cost or expense occasioned by the
default of Lessee (including but not limited to attorneys' fees and
costs), then Lessor will be entitled to receive such costs together
with interest on all funds Lessor expends at the lesser of ten percent
(10%) per annum or the maximum rate allowed by law, the costs of
removing and storing Lessee's or other occupant's property; the
costs of repairing, altering, remodeling or otherwise putting the
Leased Premises into condition acceptable to a new Lessee or
Lessees; and all reasonable expenses incurred by Lessor in
enforcing or defending Lessor's right and/or remedies, including
reasonable attorneys' fees whether or not suit is actually filed.
17.2.4 Remedies Cumulative. All rights, privileges and remedies of the
Parties are cumulative and not alternative or exclusive to the extent
permitted by law except as otherwise provided herein.
17.2.5 Lessor's Cure; Reimbursement by Lessee. If Lessee should fail to
make any payment, take any required action or cure any default
hereunder within the time herein permitted, Lessor, without being
under any obligation to do so and without thereby waiving such
default, may make such payment, take such action and/or remedy
such other default for the account of Lessee (and enter the Leased
Premises for such purpose), and thereupon Lessee will be
obligated to, and hereby agrees, to pay Lessor, upon demand, all
costs, expenses and disbursements (including reasonable
attorneys' fees) incurred by Lessor in making such payment or
taking such remedial action.
17.3 Actual Damages. Notwithstanding anything to the contrary in this Lease,
Lessor expressly waives the right to any cause of action or claim for consequential,
economic, or incidental damages, including lost profits, as well as any cause of action or
claim for exemplary or punitive damages.
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18. LESSEE 'S REMEDIES
18.1 Lessor’s Default. Lessor will not be in default under this Lease unless
Lessor fails to perform obligations required of Lessor within thirty (30) days after written
notice is delivered by Lessee to Lessor specifying the obligation which Lessor has failed
to perform; provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance, then Lessor will not be in default if
Lessor commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion. All obligations of Lessor hereunder will be construed
as covenants, not conditions.
18.2 Lessee’s Remedies. Except as provided below, in the event of any default
by Lessor, Lessee's shall have all available to it all remedies available at law or equity.
Without limiting the generality of the foregoing, in the event of any default by Lessor,
Lessee shall have the right to: (1) maintain an action for specific performance; (2) maintain
an action for actual damages, provided, however, that Lessee expressly waives the right
to any cause of action or claim for consequential, economic, or incidental damages,
including lost profits, as well as any cause of action or claim for exemplary or punitive
damages; or (3) to terminate this Lease. Lessee hereby waives the benefit of any laws
granting it the right to perform Lessor's obligation, the right to place a lien upon the property
of Lessor and/or upon Rent due to Lessor on account of any Lessor default.
19. GENERAL PROVISIONS
19.1 Time of Essence. Time is of the essence.
19.2 Binding Effect. The terms, provisions and covenants and conditions
contained in this Lease will apply to, inure to the benefit of, and be binding upon, the
Parties hereto and upon their respective heirs, legal representatives, successors and
permitted assigns, except as otherwise herein expressly provided. If more than one
person executes this Lease as Lessee, then each will be jointly and severally liable for all
obligations of Lessee hereunder.
19.3 Governing Law and Venue. This Lease has been negotiated and executed
in the State of California and will be governed by and construed under the laws of the
State of California. In the event of any legal action to enforce or interpret this Lease, the
sole and exclusive venue will be a court of competent jurisdiction (including all state and
federal courts) located in Orange County, California, and the Parties hereto agree to and
do hereby submit to the jurisdiction of such court, notwithstanding the provisions of
California Code of Civil Procedure section 394.
19.4 Captions. The captions inserted in this Lease are for convenience only and
in no way define, limit or otherwise describe the scope or intent of this Lease, or any
provision hereof, or in any way affect the interpretation of this Lease.
19.5 Certificates. Lessee agrees from time to time within twenty (20) days after
request of Lessor, to deliver to Lessor, or Lessor's designee, an estoppel certificate stating
(if true) that this Lease is in full force and effect, the date to which Rent has been paid, the
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unexpired Term of this Lease and such other matters pertaining to this Lease as may be
requested by Lessor.
19.6 Entire Agreement; Amendments. This Lease constitutes the entire
understanding and agreement of Lessor and Lessee with respect to the subject matter of
this Lease and contains all of the covenants and agreements of Lessor and Lessee with
respect thereto. Lessor and Lessee each acknowledge that no representations,
inducements, promises or agreements, oral or written, have been made by Lessor or
Lessee, or anyone acting on behalf of Lessor or Lessee, which are not contained herein,
and any prior agreements, promises, negotiations, or representations not expressly set
forth in this Lease are of no force or effect with respect to this Lease. This Lease may not
be altered, changed or amended except by an instrument in writing signed and dated by
both parties.
19.7 Waivers. The waiver by either party of any term, covenant, agreement or
condition herein contained will not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant, agreement or condition herein contained, nor will
any custom or practice which may grow up between the Parties in the administration of
this Lease be construed to waive or lessen the right of the party to insist upon performance
in strict accordance with all of the provisions of this Lease. The failure of a party to insist
upon strict performance of any of the terms, conditions, and covenants of this Lease will
not be deemed a waiver of any right or remedy that party may have, and will not be
deemed a waiver of any right or remedy for a subsequent breach or default of the terms,
conditions and covenants herein contained. The subsequent acceptance of Rent
hereunder by Lessor will not be deemed to be a waiver of any preceding breach by Lessee
of any provisions, covenant, agreement or condition of this Lease, other than the failure
of Lessee to pay the particular Rent so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such Rent.
19.8 Survival of Obligations. All obligations of Lessee hereunder accrued but
not fully performed as of the expiration or earlier termination of the Term of this Lease will
survive the expiration or earlier termination of the Term, including without limitation, all
payment obligations with respect to Rent and all obligations concerning the condition of
the Leased Premises.
19.9 Severability. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the Term of this Lease, then
and in that event, it is the intention of the Parties hereto that the remainder of this Lease
will not be affected thereby, and it is also the intention of the Parties to this Lease that in
lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there
be added as a part of this Lease a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal, valid and
enforceable.
19.10 Easements. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable, and
to cause the recordation of parcel maps, easement agreements and covenants, conditions
and restrictions, so long as such easements, rights, dedications, maps and covenants,
conditions and restrictions do not unreasonably interfere with the permitted use of the
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Leased Premises by Lessee. Lessee must sign any of the aforementioned documents,
subject to commercially reasonable comments from Lessee, promptly following request of
Lessor and failure to do so will constitute a material breach of this Lease.
19.11 Performance Under Protest. If at any time a dispute arises as to any
amount or sum of money to be paid by one party to the other under the provisions hereof,
the party against whom the obligation to pay the money is asserted will have the right to
make payment "under protest" and such payment will not be regarded as a voluntary
payment, the right on the part of said party to institute suit for recovery of such sum will
survive. If it is adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party will be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this Lease.
19.12 No Third Party Beneficiaries. This Lease is not intended by either party to
confer any benefit on any third party, including without limitations any broker, finder, or
brokerage firm.
19.13 Effective Date/Nonbinding Offer. Submission of this Lease for examination
or signature by Lessee or Lessor does not constitute an offer or option for lease, and it is
not effective as a lease or otherwise until executed and delivered by both Lessor and
Lessee. Each individual executing this Lease on behalf of Lessor or Lessee represents
and warrants to the other party that he or she is authorized to do so.
19.14 Recording. City shall record with the Orange County Recorder’s Office the
Memorandum of Digital Display Billboard Lease in the form attached as Exhibit “E”
promptly after execution of this Lease. Additionally, within fifteen (15) days after the Digital
Display Billboard becomes Operational, Lessee shall execute and deliver to City the
Operational Term Commencement Memorandum memorializing the commencement of
the Operational Term in the form attached as Exhibit “F”, which the City will record with
the Orange County Recorder’s Office.
19.15 Notices. All notices under this Lease shall be effective when delivered by
overnight courier or United States Postal Service mail, registered or certified, postage
prepaid return receipt requested; and addressed to the respective Parties as set forth
below or as to such other address as the Parties may from time to time designate in writing
by providing notice to the other party:
To Lessor: City of Tustin
300 Centennial Way
Tustin, CA 92780
Attn: City Manager
With Copy to:
Woodruff, Spradlin & Smart
555 Anton Boulevard, Suite 1200
Costa Mesa, CA 92626
Attn: David Kendig, Esq.
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To Lessee: Outfront Media LLC
Attention: Collin Smith
1731 Workman Street
Los Angeles, CA 90031
19.16 Water, Oil and Mineral Rights. Lessor reserves all right, title or interest in
water, oil, gas or other hydrocarbons, other mineral rights and air and development rights,
together with the sole and exclusive right of Lessor to sell, lease, assign or otherwise
transfer the same, but without any right of Lessor or any such transferee to enter upon the
Leased Premises during the Term in connection therewith.
19.17 Broker's Fees. The Parties acknowledge and agree that Lessor is not liable
for any fee or compensation with respect to any broker, agent or other person in
connection with this transaction, and Lessee agrees to indemnify and hold Lessor
harmless from and against any claims by any other broker, agent or other person claiming
a commission or other form of compensation by virtue of having dealt with Lessee with
regard to this leasing transaction.
19.18 Nondiscrimination. Lessee certifies and agrees that all persons employed
by Lessee and its affiliates, subsidiaries, and holding companies are and must be treated
equally without regard to or because of race, religion, ancestry, national origin, or sex, and
in compliance with all federal and state laws prohibiting discrimination in employment,
including but not limited to the Civil Rights Act of 1964; the Unruh Civil Rights Act; the
Cartwright Act; and the California Fair Employment Practices Act.
19.19 Holding Over. Unless otherwise agreed to in writing in advance by Lessor
and subject to terms and conditions determined in the sole discretion of Lessor, Lessee
shall immediately surrender the Leased Premises to Lessor on the expiration date of the
Term or earlier termination of this Lease. In the event that Lessee does not immediately
surrender the Leased Premises to Lessor on the expiration date of the Term or earlier
termination of this Lease, Lessee will be deemed to be a month-to-month Lessee upon all
of the terms and provisions of this Lease. Thirty (30) days after the Lessee receives written
notice from Lessor of such expiration or earlier termination or ninety (90) days following
such expiration or earlier termination, whichever occurs first, Lessee shall be obligated to
pay Thirty Thousand Dollars ($30,000.00) per month, or 80% of the monthly gross revenue
generated by the Static Billboard and/or Digital Display Billboard as applicable that is
received during such hold over period, whichever amount is greater. If Lessee holds over
after the expiration date of the Term or earlier termination of this Lease, and Lessor desires
to regain possession of the Leased Premises, then Lessor may forthwith re-enter and take
possession of the Leased Premises by any legal process in force in the State of California.
19.20 Force Majeure. If either Lessor or Lessee is prevented from performing
any obligation under this Lease by any labor dispute, act of God, fire or other casualty,
war, terrorist act, shortage of labor or materials, governmental regulation, order,
moratorium, control or action (including, without limitation, governmentally required
evacuations), civil commotion, civil disorder, riot, civil disturbance, or other cause beyond
such party's reasonable control (“Force Majeure”), such obligation shall be excused
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during (and any time period for the performance of such obligation shall be extended by)
the period of such prevention; provided, however, that this Section shall not (a) permit
Lessee to hold over in the Leased Premises after the expiration or earlier termination
hereof, or (b) excuse (or extend any time period for the performance of) any obligation to
pay any Rent or other amounts due hereunder.
19.21 Subordinate Rights. This Lease is subject to all licenses, leases,
easements, reservations, restrictions, conditions, covenants, encumbrances, liens, claims
and other matters of title ("title exceptions") which may affect the Leased Premises or
Lessor Property as of the Effective Date, and this Lease is executed and delivered by
Lessor without any warranty of title, express or implied, and the words "grant” or "convey”
as used herein will not be construed as a warranty of title or as a covenant against the
existence of any such title exceptions. Lessor represents and warrants to Lessee that
there is no mortgage, deed of trust, ground or master lease, or other security instrument
encumbering the Leased Premises as of the Effective Date.
IN WITNESS WHEREOF, this Lease has been duly executed, in duplicate, by the Parties
hereto as of the date first above written.
“Lessor”
CITY OF TUSTIN
By:_____________________
Matthew S. West
City Manager
APPROVED AS TO FORM
By:_____________________
David E. Kendig
City Attorney
“Lessee”
OUTFRONT MEDIA LLC
By: _____________________
_____________________
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Exhibit "A"
Description and Site Plan of the Leased Premises
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Exhibit "B"
Digital Display Billboard Plan
(The Digital Display Billboard Plan (“Plan”) will be part of Lessee’s Entitlements submittal and
the Plan will inserted as Exhibit “B” if Lessee receives Entitlements.)
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Exhibit “C”
INSURANCE REQUIREMENTS FOR LEASES, LICENSES, AND PERMITS
Lessee must procure and maintain, for the duration of the contract, insurance against claims for injuries to
persons or damages to property which may arise from, or in connection with, the use of Lessor property
hereunder by the Lessee its licensee, agents, representatives, employees, contractors, or subcontractors.
Minimum Scope of Insurance
Coverage must be at least as broad as:
Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
Insurance Services Office Form No.CA 0001 covering Automobile Liability, code 1 (any auto).
Worker's Compensation insurance as required by the State of California and Employer's Liability
Insurance.
Course of Construction insurance form providing coverage for "all risks" of loss.
Property insurance against all risks of loss to any Lessee improvements or betterments.
Minimum Limits of Insurance
Lessee must maintain limits no less than:
General Liability: $2,000,000 per occurrence for bodily injury, personal injury and property damage.
If Commercial General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit will apply separately to this project/location or the general aggregate
limit must be twice the required occurrence limit.
Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
Course of Construction (Builder’s Risk): Completed value of the project.
Property Insurance: Full replacement cost with no coinsurance penalty provision.
Deductibles and Self-Insured Retentions
Any self -insured retentions must be declared to and approved by Lessor. Lessor reserves the right to
require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will
not be considered to comply with these specifications unless approved by Lessor.
Other Insurance Provisions
The general liability and automobile liability policies are to contain, or be endorsed to contain, the following
provisions:
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1. Lessor, its officials, employees, agents and contractors are to be covered as additional insureds as
respects: liability arising out of activities performed by or on behalf of the Lessee; products and
completed operations of the Lessee; premises owned, occupied or used by the Lessee; and
automobiles owned, leased, hired or borrowed by the Lessee.
2. For any claims related to this project, the Lessee 's insurance coverage must be primary insurance
as respects Lessor, its subsidiaries, officials and employees. Any insurance or self-insurance
maintained by Lessor, its subsidiaries, officials and employees will be excess of the Lessee 's
insurance and will not contribute with it.
3. Any failure to comply with reporting or other provisions of the policies including breaches of
warranties will not affect coverage provided to Lessor, its subsidiaries, officials and employees.
4. The Lessee ’s insurance will apply separately to each 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 required by this clause must be endorsed to state that coverage will not be
suspended, voided, canceled by either a party, or reduced in coverage or in limits, except after
thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to
Lessor.
6. Workers’ Compensation policy must contain the inclusion of the Lessor, its officials, employees,
agents and contractors as additional insureds or provide a waiver of subrogation.
7. Lessor lease number, if any, must be included with description of leased premises.
Course of construction policies must contain the following provisions:
1. The insurer must waive all rights subrogation against Lessor.
Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A- VII, unless
otherwise approved by Lessor.
Verification of Coverage
Lessee must furnish Lessor with original endorsements and certificates of insurance evidencing coverage
required by this Lease. All documents are to be signed by a person authorized by that insurer to bind
coverage on its behalf. All documents are to be received and approved by Lessor before work commences.
As an alternative, the Lessee may provide complete, certified copies of all required insurance policies,
including endorsements affecting the coverage required by these specifications.
Contractors and Subcontractors
Lessee must include all contractors and subcontractors as insureds under its policies or require certificates
and endorsements for each contractor and subcontractor. All coverages for contractors and subcontractors
will be subject to all of the requirements stated herein. The administration of insurance compliance of
contractors and subcontractors will be subject to audit review by Lessor.
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Exhibit "D"
Advertising Restrictions
The primary purpose of the Digital display billboard is to generate revenue for the Parties, and
the display of advertising is solely for this purpose. The Digital display billboard is not intended
to provide a general public forum for purposes of communication, but rather to make use of
property held by the City in a proprietary capacity in order to generate revenue.
Except for any advertising or messages displayed on the Digital display billboard at the request
of the City (City Messages) or as otherwise expressly permitted under the Lease, all advertising
to be displayed on the Digital display billboard must be strictly “commercial advertising.” As used
in this Lease, “commercial advertising” means advertising for a commercial or industrial business,
product, good, service, or other commercial or industrial activity for a commercial or industrial
purpose.
In addition, Lessee may not display any message that in the judgment of the City Manag er of City
or his or her designee:
1. is false, misleading, or deceptive;
2. promotes the sale or use of firearms, tobacco products, vaping products,
marijuana, cannabis or CBD products whether directly or indirectly;
3. depicts violence or anti-social behavior or relates to illegal activity;
4. contains “obscene matter,” as that term is defined in California or federal
law, or promotes any “sexually oriented business” as such term is defined
in the Tustin Municipal Code;
5. promotes adult entertainment, products, conventions, events, or websites;
6. contains any “political advertising,” which means advertising that promotes
or opposes any candidate for public office or promotes or opposes a ballot
measure, referendum, bond issue, or any federal, state or local legislation,
regulation, or other discretionary action;
7. holds a person or group of persons up to public ridicule, derision, or
embarrassment, or defames a person or group of persons;
8. contains language that is obscene, vulgar, profane, or scatological, or that
presents a clear-and-present danger of causing riot, disorder, or other
imminent threat to public safety, peace, or order;
9. that promotes any product, service or activity that is illegal under federal,
state, or local law.
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Exhibit "E"
Memorandum of Digital Display Billboard Lease
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1577340.1
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: City Clerk
APN: __________
This document is recorded at the request and
for the benefit of the City of Tustin and exempt
from payment of a recording fee pursuant to
Government Code Sections 6103 and 27383.
MEMORANDUM OF DIGITAL DISPLAY BILLBOARD LEASE
This MEMORANDUM OF DIGITAL DISPLAY BILLOARD LEASE (“Memorandum”) is
made as of this ____ day of ____, 2023 (the “Effective Date”), by and between the CITY OF
TUSTIN, a California municipal corporate and general law city (“Lessor” or “City”), and
OUTFRONT MEDIA LLC, a Delaware limited liability company (“Lessee” or “Outfront”)
(collectively referred to as the “Parties”).
1. PURPOSE OF THIS MEMORANDUM. This Memorandum is entered into by the Parties
hereto for the purpose of providing record notice of that certain Digital Billboard Lease Agreement
dated ______ __, 2022 (“Lease”), and in no way modifies the provisions of the Lease, and rather
all terms and conditions set forth in the Lease are expressly incorporated by this reference. An
official and full copy of the Lease may be obtained from office of the Tustin City Clerk located at
300 Centennial Way, Tustin, CA 92780.
2. LEASED PREMISES. Pursuant to the terms and conditions of the Lease, City leases to
Outfront, and Outfront leases from City, that certain real property located in the County of Orange,
State of California, which is more fully described and depicted in the attached Exhibit “A” for use
and operation of an outdoor advertising structure as set forth in the Lease (“Leased Premises”).
3. TERM OF LEASE. Subject to the terms and conditions contained in the Lease, the
Operating Term of the Lease will extend (20) years from the Operational Date. The
commencement of the Operating Term will be memorialized prospectively in an Operational Term
Commencement Memorandum to be recorded with the Orange County Recorder’s Office.
4. EXECUTION. This Memorandum may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same instrument.
[Signatures on the following page]
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IN WITNESS WHEREOF, the Lessor and Lessee have caused this Memorandum to be executed
as of the date first written above.
“Lessor”
CITY OF TUSTIN
By:_____________________
Matthew S. West
City Manager
APPROVED AS TO FORM
By:_____________________
David E. Kendig
City Attorney
“Lessee”
OUTFRONT MEDIA LLC
By:_____________________
Its:_____________________
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Exhibit “A”
Description and Site Plan of Leased Premises
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Exhibit "F"
Operational Term Commencement Memorandum
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1731039.1
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: City Clerk
APN: __________
This document is recorded at the request and
for the benefit of the City of Tustin and exempt
from payment of a recording fee pursuant to
Government Code Sections 6103 and 27383.
OPERATIONAL TERM COMMENCEMENT MEMORANDUM
This OPERATIONAL TERM COMMENCEMENT MEMORANDUM (“Memorandum”) is
made as of this ____ day of ____, 202_ (the “Effective Date”), by and between the CITY OF
TUSTIN, a California municipal corporate and general law city (“Lessor” or “City”), and
OUTFRONT MEDIA LLC, a Delaware limited liability company (“Lessee” or “Outfront”)
(collectively referred to as the “Parties”).
WHEREAS, the Parties hereto executed that certain Memorandum of Digital Display
Billboard Lease Agreement recorded on _________ ___, 20__, as Instrument No. _____________
in the office of the County Recorder of Orange County, State of California (“Memorandum of
Lease”); and
WHEREAS, the purpose of the Memorandum of Lease was to provide record notice of that
certain Digital Billboard Lease Agreement dated ______ __, 2022 (“Lease”). An official and full
copy of the Lease may be obtained from office of the Tustin City Clerk located at 300 Centennial
Way, Tustin, CA 92780. All terms and conditions of the Lease are incorporated herein by
reference.
1. PURPOSE OF THIS MEMORANDUM. This Memorandum is entered into by the Parties
hereto for the purpose of providing record notice of the commencement of the Operational Term
of the Lease.
2. LEASED PREMISES. Pursuant to the terms and conditions of the Lease, City leases to
Outfront, and Outfront leases from City, that certain real property located in the County of Orange,
State of California, which is more fully described and depicted in the attached Exhibit “A” for use
and operation of an outdoor advertising structure as set forth in the Lease (“Leased Premises”).
3. TERM OF LEASE. Subject to terms and conditions contained in the Lease, the Operating
Term of the Lease commenced on dated ______ __, 20__, and shall continue for a period of
twenty (20) years ending on ______ __, 20__.
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4. EXECUTION. This Memorandum may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused this Memorandum to be executed
as of the date first written above.
“Lessor”
CITY OF TUSTIN
By:_____________________
Matthew S. West
City Manager
APPROVED AS TO FORM
By:_____________________
David E. Kendig
City Attorney
“Lessee”
OUTFRONT MEDIA LLC
By:_____________________
Its:_____________________
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Exhibit “A”
Description and Site Plan of Leased Premises
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