HomeMy WebLinkAboutBig O Tires, LLC - C. S. B. Partnership - 2010-04-05Council/Agency Meeting Held:
Deferred/Continued to:
'i-oved ❑ Conditionally Approved ❑ Denied - i ler Signal e
Council Meeting Date: 4/5/2010 Department ID Number: ED10-03
SUBMITTED TO: HONORABLE CHAIRMAN AND AGEN EMBERS
SUBMITTED BY: FRED A. WILSON, EXECUTIVE DIRE
PREPARED BY: ,STANLEY SMALEWITZ, DEPUTY EX IVE DIRECTO�
SUBJECT: APPROVE SUBLEASE OF AGENCY OWNED PROPERTY AT 7872
EDINGER AVENUE AND MASTER LANDLORD CONSENT THERETO
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Agency is being asked to approve the subleasing of Agency
owned property at 7872 Edinger Avenue (APN 142-081-28). The current tenant, C.S.B.
Partnership (C.S.B.), is selling their franchised store back to the corporate entity, Big O Tires,
LLC. Under the terms of their lease, C.S.B. must receive approval of the Agency Board
before subleasing the site.
Funding Source: Not applicable.
Recommended Action: Motion to:
1. Approve as to form the Sublease Agreement and Master Landlord's Consent Thereto;
and
2. Authorize Chairperson and Agency Clerk to sign and execute the Consent of Master
Landlord.
Alternative Action(s):
1, Do not approve the Sublease Agreement and Master Landlord's Consent Thereto; and
2. Continue the item and direct staff accordingly.
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: 4/5/2010 DEPARTMENT ID NUMBER: ED10-03
Analysis: On December 15, 2008, the Redevelopment Agency purchased the property
located at 7872 Edinger Avenue. The purchase was necessary in order to optimize the
development of the five (5) Agency -owned parcels that border the property. In connection
with the Agency's purchase of the property, the Agency assumed the rights and obligations
of the landlord under the lease. The tenant, C.S.B., operates a "Big O" Tire Store on the
property. As a result of the subsequent proposed redevelopment of the property, the Agency
determined that it will be necessary for the Tenant to permanently cease to occupy the
property some time within the next five years. On January 23, 2009, the Agency entered into
an Acquisition of Leasehold Interest Agreement with C.S.B.
C.S.B. is in the process of selling their Huntington Beach location to the corporate entity Big
O Tires, LLC. In order to maintain their leasehold interest in the property, C.S.B. is
requesting permission to sublease the property to Big O Tires, LLC for the remainder of the
term of the lease (maximum of four years). Under the Sublease Agreement, Big O Tires,
LLC agrees to all the terms and conditions of the original lease agreement and all
subsequent amendments. Until the Agency is ready to redevelop the site, Big O Tires, LLC
will continue to operate on the site and pay the monthly rent of approximately $17,600 to the
City. When the Agency is ready to develop the site, Big O Tires, LLC agrees to vacate the
property after a 90 day notice is given. The Agency has selected a developer through an
RFP process to build a hotel on the property and will begin negotiations on a Disposition and
Development Agreement in the coming year.
The City Attorney's Office has reviewed and approved as to form the Sublease Agreement
and Master Landlord's Consent Thereto. Staff is recommending approval of the sublease
and execution the Consent of Master Landlord.
Strategic Plan Goal: Maintain and Enhance Our Financial Revenues
Environmental Status: Not applicable.
Attachment(s):
-2- 3/18/2010 2:57 PM
ATTACHMENT
SUBLEASE AGREEMENT AND MASTER LANDLORD'S CONSENT THERETO
THIS SUBLEASE AGREEMENT AND MASTER LANDLORD'S CONSENT
THERETO (hereinafter referred to as this "Sublease") is entered into as of December 1, 2009,
by and between C.S.B. PARTNERSHIP, a California general partnership ("Sublandlord),
whose mailing address is 7872 Edinger Avenue, Huntington Beach, CA 92647, and BIG O
TIRES, LLC, a Nevada limited liability company ("Subtenant") whose mailing address is 4300
TBC Way, Palm Beach Gardens, FL 33410. Sublandlord and Subtenant agree as follows:
RECITALS
A. Sublandlord as tenant and the REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH, a public body, corporate and politic, as successor -in -interest
landlord ("Master Landlord") are parties to that certain Standard Lease Agreement dated for
reference purposes April 19, 2004 and Option Addendum to Standard Lease Agreement dated
April 19, 2004 (the "Original Lease"), as amended by that certain First Amendment to Standard
Lease Agreement dated as of January 23, 2009, but effective as of January 28, 2009 (the "First
Amendment") (collectively, the "Master Lease"), setting forth the terms by which Sublandlord is
leasing the real property commonly known as 7872 Edinger Avenue, Huntington Beach,
California 92647 (the "Property"), owning and operating a Big O Tires retail store and its
business office thereon (the "Edinger Avenue Big O Store"). The obligations of Sublandlord
under the Master Lease are guaranteed by Christopher R. Phillips ("Guarantor") pursuant to the
terms of that certain Guaranty of Lease dated April 19, 2004 ("Lease Guaranty'). The Master
Lease is currently in full force and effect, and copy of the Master Lease, as amended, is attached
hereto as Exhibit A, incorporated herein by this reference and made a part hereof.
B. Under threat of condemnation, Master Landlord and HB Auto I, LLC, a
California limited liability company, the predecessor -in -interest landlord under the Lease
("Predecessor Landlord") completed the negotiations of and entered into that certain Agreement
and Escrow Instructions for Purchase and Sale of Real Property and Addendum to Agreement
and Escrow Instructions for Purchase and Sale of Real Property dated as of December 15, 2008
(the "Master Landlord/Predecessor Landlord Property Acquisition Agreement"), setting forth the
terms and conditions by which Master Landlord acquired all of Predecessor Landlord's rights,
title and interest as the fee owner in and to the Property, on and subject to the terms of the Master
Landlord/Predecessor Landlord Property. Acquisition Agreement, in consideration of the
payment by Master Landlord to Predecessor Landlord of the purchase price consideration for
such acquisition of the Property, on and subject to the terms of the Master Landlord/Predecessor
Landlord Property Acquisition Agreement.
C. In conjunction with Master Landlord's acquisition from Predecessor Landlord of
all of Predecessor Landlord's rights, title and interest as the owner in fee in and to Property,
pursuant to the Master Landlord/Predecessor Landlord Property Acquisition Agreement, Master
Landlord determined that it would be necessary for Sublandlord to permanently cease to occupy
the Property prior to the expiration of the Master Lease; and, under threat of condemnation and
as a condition precedent to the closing and consummation of the transactions pursuant to the
Master Landlord/Predecessor Landlord Property Acquisition Agreement, Master Landlord and
Sublandlord entered into that certain Reinstated Acquisition of Leasehold Interest Agreement
0012M0001t1390727A
dated as of December 29, 2008 (the "Reinstated Master Landlord/Tenant Leasehold Interest
Acquisition Agreement") setting forth the terms and conditions by which Master Landlord shall
acquire Sublandlord's entire leasehold interest in the Property (the "Leasehold Interest")
pursuant to the Master Lease and pay certain compensation as consideration for such acquisition
of the Leasehold Interest and the termination of the Master Lease and the Master Lease Guaranty
and Sublandlord's occupancy of the Property prior to the expiration of the Master Lease.
D. As required under the terms of Reinstated Master Landlord/Tenant Leasehold
Interest Acquisition Agreement, Master Landlord and Sublandlord entered into the First
Amendment which. became effective on January 28, 2009, the date Master Landlord acquired the
Property pursuant to the Master Landlord/Predecessor Landlord Property Acquisition Agreement
(the "Master Landlord Property Acquisition Date'). Under the terms of the Reinstated
Landlord/Tenant Leasehold Interest Acquisition Agreement, the Master Landlord is obligated to
acquire the Leasehold Interest from Sublandlord on or before the date which is five (5) years
following the Master Landlord Property Acquisition Date (the "Master Lease
Termination/Vacation Date').
E. Sublandlord, as seller, and Subtenant, as buyer have entered into that certain
Asset Purchase Agreement and Release of Claims dated and effective as of November 20, 2009
(the "Purchase Agreement"), whereby Subtenant is acquiring certain business assets from
Sublandlord, as seller, including without limitation, the right to sublease and occupy the Property
up and until the Master Lease TerminationNacation Date, on and subject to the terms and
conditions set forth therein. The terms and provisions of this Sublease will not become effective
nor of any force and effect unless and until the acquisition transaction pursuant to the Purchase
Agreement is closed and consummated (the "Effective Date"). In the event the acquisition
transaction pursuant to the Purchase Agreement does not occur, this Sublease will not become
effective and will be null and void and of'no force and effect.
F. In conjunction with the foregoing Recitals, Sublandlord and Subtenant mutually
desire to enter into this Sublease, on and subject to the terms and conditions as shall hereinafter
be set forth. Subtenant desires to sublease the entirety of the Property and is willing to be bound
by the terms, conditions and provisions of this Sublease and those terms, conditions and
provisions of the Master Lease which have been incorporated into this Sublease and made a part
hereof.
G. Capitalized terms not otherwise defined herein shall have the meanings given
them in the Master Lease, the Reinstated Landlord/Tenant Leasehold Interest Acquisition
Agreement, and/or the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, and for such other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Sublandlord and Subtenant hereby agree as follows:
1. PROPERTY; CONDITION TO EFFECTIVENESS. Sublandlord hereby
subleases to Subtenant and Subtenant hereby subleases from Sublandlord the Property.
Notwithstanding anything in this Sublease to the contrary, the effectiveness of this Sublease is
001219.0001\1390727.4 2
conditioned upon (a) the closing and consummation of the acquisition transaction contemplated
by the Purchase Agreement, (b) Master Landlord's consenting to this Sublease by executing the
"Conditional Consent of Master Landlord" attached to this Sublease as Exhibit B, and (c) TBC
Corporation, a Delaware corporation, the parent company of Subtenant, as guarantor
("Guarantor"), executing the Sublease Guaranty attached to this Sublease as Exhibit C (the
"Sublease Guaranty").
2. TERM AND COMMENCEMENT DATE. The term of this Sublease (the
"Term') will commence as of the Effective Date (such Effective Date also being the
"Commencement Date') and terminate on the Master Lease Termination/Vacation Date (the
"Expiration Date"), unless sooner terminated pursuant to the terms of the Master Lease or this
Sublease. Upon receipt from Master Landlord of the required notice by Master Landlord under
the Reinstated Landlord/Tenant Leasehold Interest Acquisition Agreement as to the date on or
before the Master Lease Termination/Vacation Date that it will acquire the Leasehold Interest,
Sublandlord shall promptly notify Subtenant of such acquisition event, and Subtenant shall
promptly vacate the Property.
3. RENT.
(a) Monthly Rent. Subtenant must pay to Sublandlord in advance
commencing on the Commencement Date and on the first day of each and every month
thereafter throughout the Term, as monthly rent, without deduction, set-off, prior notice, or
demand, the (i) sum of Seventeen Thousand Six Hundred and No/100 Dollars ($17,600.00), plus
(ii) the amount of the increase in the monthly rent payable by Sublandlord to Master Landlord as
provided in Section 4(b) of the Master Lease arising from and after the Effective Date. In
conjunction with the foregoing, Subtenant acknowledges that under Section 4(b) of the Master
Lease, the monthly rent payable by Sublandlord to Master Landlord is subject to increase
commencing on (y) July 1, 2010, and (z) July 1, 2013.
(b) ' Proration of Rent. The monthly rent for any month which is a partial
month will be prorated on a thirty (30) day per month. basis.
(c) Rent. All monthly rent, each adjustment thereto and all other monetary
obligations due by Subtenant to Sublandlord under this Sublease will be "Additional Rent."
4. SECURITY DEPOSIT. Upon the Effective Date, Subtenant shall deposit with
Sublandlord, funds in the amount of Fifteen Thousand Dollars ($15,000) (the "Security
Deposit"), to secure Subtenant's performance of its obligations hereunder. If Subtenant is in
default hereunder, Sublandlord may use the Security Deposit, or any portion thereof, to cure such
default, or to compensate Sublandlord for any damage sustained by Sublandlord resulting from
Subtenant's default. Subtenant shall pay to Sublandlord immediately upon demand an amount
equal to the portion of the Security Deposit expended or applied by Sublandlord so as to
maintain the Security Deposit in the amount initially deposited with Sublandlord. Sublandlord's
obligations with respect to the Security Deposit are those of a debtor and not a trustee.
Sublandlord may commingle the Security Deposit with Sublandlord's general and/or other funds,
and Sublandlord shall have no obligation to pay Subtenant interest upon the Security Deposit.
Notwithstanding the foregoing, exercise of any one or more of the rights given Sublandlord
under this Section 4 in no way shall affect or abrogate any other claim or remedy available to
001219.0001 \ 13 90727.4
Sublandlord hereunder or as provided by law or equity. Upon the expiration or any sooner
termination of the Term hereof, (i) if Subtenant is not then in default of any of the provisions of
this Sublease, Sublandlord shall refund to Subtenant any unappropriated balance remaining of
the Security Deposit; (ii) if Sublandlord has a claim upon the Security Deposit only for possible
defaults in the payment of monthly rent, then any remaining portion of the Security Deposit shall
be returned to the Subtenant no later than two (2) weeks after the date the Sublandlord receives
possession of the Property; and (iii) if Sublandlord has a claim upon the Security Deposit which
includes amounts reasonably necessary to repair damages to the Property caused by the
Subtenant or to clean the Property, then any remaining portion of the Security Deposit shall be
returned to the Subtenant at a time as may be mutually agreed upon by Sublandlord and
Subtenant, but in no event later than thirty (30) days from the date the Sublandlord receives
possession of the Property.
S. INCORPORATION BY REFERENCE; ASSUMPTION.
All of the terms and provisions of the Master Lease are hereby incorporated into this
Sublease as if fully set forth in this Sublease, and Subtenant shall be bound by all such terms and
provisions. In conjunction therewith, Sublandlord and Subtenant agree as follows:
(a) For the purpose of incorporating such Master Lease provisions into this .
Sublease, references to "Landlord" and "Tenant" (or equivalent commonly understood terms) in
such Master Lease provisions shall be deemed to be "Sublandlord" and "Subtenant,"
respectively, subject to the provisions of clauses (i) and (ii) below.
(i) With respect to all indemnification provisions of the Master Lease,
Subtenant shall in addition indemnify, hold harmless, defend and protect Sublandlord; and
(ii) With respect to the provisions dealing with insurance to be carried
by Subtenant pursuant to the Master Lease as incorporated into this Sublease, each such policy
shall name Master Landlord and Sublandlord as additional insureds, and each policy of insurance
shall provide that Sublandlord shall be notified in writing thirty (30) days prior to any
termination, modification or cancellation of any such policies.
Sublandlord does not assume the obligations of Master Landlord under the Master Lease
provisions but shall exercise due diligence in attempting to cause Master Landlord to perform its
obligations under the Master Lease for the benefit of Subtenant. The obligations of Master
Landlord under the Master Lease shall in no way be expanded or modified by this Sublease and
Master Landlord's sole obligations are to Sublandlord only pursuant to the terms of the Master
Lease, and not directly to the Subtenant.
6. ASSIGNMENT AND SUBLETTING.
(a) Sublandlord's Consent. Subject to the provisions of Section 6(c) and the
required consent of the Master Landlord pursuant to the terms of the Master Lease, Subtenant
may not voluntarily assign or encumber its interest in this Sublease or in the Property or sublease
all or any part of the Property without first obtaining Sublandlord's prior written consent, which
consent may not be unreasonably withheld or delayed. Any assignment, encumbrance, or
sublease without Sublandlord's prior written consent will be voidable and, at Sublandlord's
001219.0001\1390727.4 4
election, may constitute a default. No consent to any assignment, encumbrance or sublease will
constitute a consent to, or waiver of, the provisions of this Section 6 to any subsequent
assignment, encumbrance or sublet. Sublandlord's waiver or consent to any assignment,
encumbrance or subletting will not relieve Subtenant from any obligation under this Sublease.
If Subtenant is a partnership or limited liability company, a withdrawal or change,
whether voluntary, involuntary, or by operation of law, of any partner of an interest in the
partnership or members of an interest in a limited liability company of more than fifty percent
(50%), or the dissolution (voluntarily or by court order) of the partnership or the limited liability
company, will be deemed a voluntary assignment.
If Subtenant is a corporation, any dissolution, merger, consolidation, or other
reorganization of Subtenant, or the sale or other transfer of a controlling percentage of the capital
stock of Subtenant, or the sale of more than fifty percent (50%) of the value of the assets of
Subtenant, will be deemed a voluntary assignment. The phrase "controlling percentage" means
the ownership of, and the right to vote, and stock possession of more than fifty percent (50%) of
the total combined voting power of all classes of Subtenant's capital stock issued, outstanding,
and entitled to vote for the election of directors. This paragraph does not apply to corporations,
the stock of which is traded through an exchange or over the counter.
(b) Involuntary Assignment. The following acts will constitute an
involuntary assignment:
(i) If Subtenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors, or institutes a proceeding under the Bankruptcy Act in
which the Subtenant is the bankrupt or the debtor party; or if Subtenant is a partnership or
consists of more than one person or entity holding an interest of more than fifty percent (50%), if
any such partner of the partnership or other person or entity is or becomes bankrupt or insolvent,
or makes an assignment for the benefit of creditors.
(ii) If a Writ of Attachment or Execution is levied on this Sublease.
(iii) If in any proceeding or action in which Subtenant is a party, a
receiver is appointed .with authority to take possession of the Property.
An involuntary assignment will constitute a default by Subtenant, and Sublandlord will
have the right to elect to terminate this Sublease; in which case the Sublease will not be treated
as an asset of Subtenant, except as otherwise provided in Section 7 below.
(c) Transferee Information Required. If Subtenant desires to assign its
interest in this Sublease or sublet the Property, or transfer any interest of Subtenant therein, or
permit the use of the Property by another party, or encumber its interest in this Sublease
(hereinafter collectively referred to as a "Transfer), Subtenant must give Sublandlord at least
thirty (30) days prior written notice of the proposed Transfer and of the terms of such proposed
Transfer, including, but not limited to, the name and legal composition of the proposed
transferee, a financial statement of the proposed transferee, the nature of the proposed
transferee's business to be carried on at the Property, the payment to be made or other
consideration to be given to Subtenant on account of the Transfer, the details of the loan, and
00 1219.000 1 \1390727.4 5
such other pertinent information as may be requested by Sublandlord, all in sufficient detail to
enable Sublandlord to evaluate the proposed Transfer and the prospective transferee.
(d) No Further Assignment or Subletting. No consent to any assignment,
encumbrance, sublease or transfer by Sublandlord shall constitute a consent to any subsequent
assignment, encumbrance, sublease or transfer.
(e) Master Landlord's Consent. Subtenant recognizes and agrees that
pursuant to Section 23 of the Master Lease, Sublandlord shall not assign, transfer or encumber
the Master. Lease, or any interest therein, or sublease the Property, or any part thereof, without
first obtaining the written consent of Master Landlord, which consent shall not be unreasonably
withheld by Master Landlord. Sublandlord shall exercise due diligence in attempting to obtain
Master Landlord's consent, but Sublandlord shall not be responsible for any delay in granting or
denying its consent caused by Master Landlord's response time, nor shall Sublandlord be
responsible for failing to receive Master Landlord's consent to any such assignment, transfer or
encumbrance of the Master Lease or any interest therein or sublease of the Property or any part
thereof.
7. . DEFAULT AND REMEDIES.
(a) Default. The occurrence of any one or more of the following events will
constitute a material default and breach of this Sublease by Subtenant:
(i) The failure by Subtenant to make any payment of rent (including
"Additional Rent") or any other payment required to be made by Subtenant hereunder as and
when due, where such failure continues for a period of three (3) days after written notice thereof
from Sublandlord to Subtenant. In the event that Sublandlord serves Subtenant with a Notice to
Pay Rent or Quit pursuant to applicable unlawful detainer statutes such Notice to Pay Rent or
Quit will also constitute the notice required by this Section 7, provided that such Notice to Pay
Rent or Quit will provide Subtenant with a period of at least ten (10) days to perform.
(ii) The failure by Subtenant to observe or perform any of the
covenants, conditions or provisions of this Sublease to be observed or performed by Subtenant,
other than described in Subparagraph (i) above, where such failure continues for a period of
twenty (20) days after written notice thereof from Sublandlord to Subtenant; provided, however,
that if the nature of Subtenant's default is such that more than twenty (20) days are reasonably
necessary for its cure, then Subtenant will not be deemed to be in default if Subtenant
commences such cure within such twenty (20)-day period and thereafter diligently and in good
faith prosecutes such cure to completion.
(iii) (1) The making by Subtenant of any general arrangement or
assignment for the benefit of creditors; (2) Subtenant becomes a "debtor" as defined in 11 U.S.C.
Section 101 or any successor statute thereto (unless, in the case of a petition filed against
Subtenant, the same is dismissed within sixty [60] days); (3) the appointment of a trustee or a
receiver to take possession of substantially all of Subtenant's assets located at the Property or of
Subtenant's interest in this Sublease, where possession is not restored to Subtenant within thirty
(30) days; or (4) the attachment, execution or other judicial seizure of substantially all of
Subtenant's assets located at the Property or of Subtenant's interest in this Sublease, where such
001219.0001\1390727.4 6
seizure is not discharged within thirty (30) days. Provided, however, in the event that any
provision of this subsection (iii) is contrary to any applicable law, such provision will be of no
force or effect.
(iv) The discovery by Sublandlord that any financial statement given to
Sublandlord by Subtenant, any assignee of Subtenant, any Subtenant of Subtenant, any successor
in interest to Subtenant or any guarantor of Subtenant's obligation hereunder, and any of them,
was materially false.
(v) The vacating or abandonment of the Property by Subtenant (failure
to occupy and operate its business at the Property for five (5) consecutive days will be deemed a
vacation or abandonment).
(b) Remedies. Sublandlord will have the following remedies if Subtenant
commits a default. These remedies are not exclusive; they are cumulative and in addition to any
and all remedies now or hereafter allowed hereunder or by law or equity:
Sublandlord can continue this Sublease in full force and effect, this Sublease continuing
in effect as long as Sublandlord does not terminate Subtenant's right to possession of the
Property and Sublandlord will have the right to collect rent as and when due. During the period
Subtenant is in default, Sublandlord can enter the Property and relet them, -or any part of them, to
third parties for Subtenant's account. Subtenant will be liable immediately to Sublandlord for
the costs Sublandlord incurs in reletting the Property, including, without limitation, broker's
commissions and other similar and necessary costs, including, but not limited to, any expenses
for remodeling the Property. Reletting can be for a period shorter or longer than the remaining
Term of this Sublease. Subtenant must pay to Sublandlord the rent due under this Sublease on
the dates the rent is due, less the rent Sublandlord actually receives from any such reletting. No
act by Sublandlord allowed by this Section 7 will terminate this Sublease unless Sublandlord
notifies Subtenant in writing that Sublandlord elects to terminate this Sublease. After
Subtenant's default, and for as long as Sublandlord does not terminate Subtenant's right to
possession of the Property, if Subtenant obtains Sublandlord's consent, Subtenant will have the
right to assign or sublet its interest in this Sublease, but Subtenant will not be released from its
liability hereunder. Sublandlord's consent to a proposed assignment or subletting may not be
unreasonably withheld.
If Sublandlord elects to relet the Property as provided in this Section 7, the rent that
Sublandlord receives from such reletting will be applied towards the payment of the following
and in the following order:
(i) First, for any indebtedness from Subtenant to Sublandlord other
than rent due from Subtenant.
(H) Second, all costs, including maintenance, remodeling and
brokerage fees incurred by Sublandlord in reletting.
(iii) Third, for rent due and unpaid under this Sublease.
001219.0001\1390727.4 7
After deducting the payments referred to in this Section 7, any sum remaining from the
rent Sublandlord receives from such reletting will be held by Sublandlord and applied in
payment of future rent as such rent becomes due under this Sublease. If on the date rent is due
under this Sublease, the rent received from the reletting is less than the rent due on that date,
Subtenant must pay to Sublandlord, in addition to the remaining rent due, all costs, including
maintenance and remodeling costs and brokerage fees, which Sublandlord incurred in reletting
that remain unpaid after applying the rent received from the reletting as provided in this
Section 7.
In the event of any default by Subtenant under the provisions of this Section 7,
Sublandlord can elect to terminate Subtenant's right to possession of the Property. No act by
Sublandlord other than declaring a forfeiture of the Sublease or the taking possession of the
Property for its own account will terminate this Sublease. Acts of maintenance, efforts to relet
the Property, or the appointment of a receiver on Sublandlord's initiative to protect
Sublandlord's interest under this Sublease, will not constitute a termination of Subtenant's right
to possession. On termination, Sublandlord has the right to recover from Subtenant:
(1) The worth, at the time of the award, of the unpaid rent that had
been earned at the time of termination of this Sublease;
(2) The worth, at the time of the award, of the amount by which the
unpaid rent that would have been earned after the date of termination of this Sublease, until the
time of award, exceeds the amount of the loss of rent which Subtenant proves could have been
reasonably avoided;
(3) The worth, at the time of the award, of the amount by which the
unpaid rent for the balance of the then current Term after the time of award exceeds the amount
of the loss of rent that Subtenant proves could have been reasonably avoided; and
(4) Any other amount, and court costs, necessary to compensate
Sublandlord for all detriment proximately caused by Subtenant's default.
"The worth, at the time of the award," as used in subsections (1) and (2) of this
Section 7(b) is to be computed by allowing interest at the maximum rate an individual is
permitted by law to charge. "The worth, at the time of award," as referred to in subsection (3) of
this Section 7(b) is to be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent (1%).
(c) Late Charges. Subtenant acknowledges that late payment by Subtenant
to Sublandlord of rent will cause Sublandlord to incur costs not contemplated by this Sublease,
the exact amount of such costs being extremely difficult and impracticable to fix. Such costs
include, without limitation, processing and accounting charges, and late charges that may be
imposed on Sublandlord by the terms of any encumbrance and note secured by any encumbrance
covering the Property. Therefore, if any installment of rent due from Subtenant is not received
by Sublandlord within ten (10) days of the due date, Subtenant must pay to Sublandlord an
additional sum equal to five percent (5%) of the overdue rent as a late charge. The parties agree
that this late charge represents a fair and reasonable estimate of the costs that Sublandlord will
incur by reason of late payment by Subtenant. The acceptance by Sublandlord of a late charge
001219,000 1\1 390727.4 9
will not constitute a waiver of any other default under this Sublease except the payment of such
installment of rent.
(d) Interest on Unpaid Rent. Rent not paid when due will bear interest from
the date due until paid at the rate of ten percent (10%) per annum; provided, however, interest
will not accrue on the amount owed as a late charge.
8. SUDTENANT'S PERFORMANCE UNDER MASTER LEASE. At any time
and on prior notice to Subtenant, Sublandlord can elect to require Subtenant to perform all or
part of its obligations under this Sublease directly to Master Lessor and Subtenant shall do so on
Sublandiord's election, in which event Subtenant shall send to Sublandlord, from time to time
copies of all notices and other communications it shall send to and receive from Master Lessor.
Notwithstanding the foregoing, as between Master Lessor and Sublandlord, Sublandlord shall
remain fully liable for all of its obligations to Master Lessor pursuant to the terms of the Master
Lease.
9. MASTER LEASE. This Sublease is subject to all of the provisions of the Master
Lease. Neither Sublandlord nor Subtenant shall commit any act or suffer any omission that will
violate any of the provisions of the Master Lease, whether or not such provisions have been
incorporated herein. If the Master Lease expires or terminates, this Sublease shall terminate on
the same date therewith and the parties shall be relieved of all further liabilities and obligations
under this Sublease; except that if the Master Lease, and thereby this Sublease, terminates as a
result of the default of one of the parties to this Sublease, the defaulting party shall be liable to
the nondefaulting party for all damages suffered by the nondefaulting party as a result of such
termination.
10. SURRENDER OF PROPERTY. On the expiration or earlier termination of the
term of this Sublease, as the case may be, Subtenant shall surrender the Property to Sublandlord
in good and broom -clean condition (except for ordinary wear and tear).
11. NO EFFECT ON MASTER LEASE. Any provision contained in this Sublease
that conflicts with any provision contained in the Master Lease will have no effect whatsoever on
the provision in question in the Master Lease, and as between Sublandlord and Subtenant, the
conflicting provision contained in this Sublease shall control.
12. AUTHORITY. Each of the undersigned parties hereby represents and warrants
to each of the other parties that they have proper authority and are empowered to execute this
Sublease on behalf of Sublandlord and Subtenant, respectively, and that this Sublease is a
binding and enforceable obligation of Sublandlord and Subtenant, respectively.
13. TIME OF ESSENCE. Time is of the essence of each and every provision of this
Sublease.
14. SEVERAEILITY. If any term or provision of this Sublease will, to any extent,
be determined by a court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of this Sublease will not be affected thereby, and each of the other terms and
provisions of this Sublease will be valid and enforceable to the fullest extent permitted by law.
001219.0001\1390727.4 9
15. SUCCESSORS. All of the terms and conditions of this Sublease will be binding
upon and inure to the benefit of the parties hereto and their respective successors -in -interest;
provided that any he
or sub -subtenant of Subtenant must be approved by Sublandlord as
provided in Section 6 hereof.
16. INTERPRETATION OF LEASE. This Sublease will be construed and
interpreted in accordance with the laws of the State of California.
17. ENTIRE AGREEMENT; MODIFICATIONS. This Sublease contains the
entire agreement between Sublandlord and Subtenant concerning the Property. This Sublease
supersedes all prior oral or written negotiations between the parties. This Sublease may not be
modified or amended except by a writing executed by all of the parties hereto.
18. NOTICES. Notwithstanding the provisions of Section 37 of the Master Lease to
the contrary, any notice, demand, request, consent, approval, or other communication that either
party desires or is required to give to the other party pursuant to this Sublease must be in writing
and served (i) personally; (ii) sent by recognized overnight courier (e.g., Fedex); or (iii) sent by
prepaid, first-class mail, certified or registered. Any notice, demand, request, consent, approval
or other communication that either party desires or is required to give to the other party will be
addressed to the other party at the address set forth in the introductory paragraph of this
Sublease. Either party may change its address by notifying the other party of the change of
address. Notice is deemed communicated (x) on delivery if hand delivered; (y) on the next
business day if delivered by overnight courier; or (z) within two (2) business days from the time
of mailing if mailed as provided in this Section 18.
19. SURVIVAL OF INDEMNITIES AND WARRANTIES. All representations,
covenants, and warranties, and indemnification obligations, of the parties hereunder will survive
the expiration or earlier termination of this Sublease.
20. COUNTERPARTS; FACSIMILE/E-MAIL SIGNATURE. This Sublease
may be signed in any number of counterparts with the same effect as if the signatures were upon
the same instrument and all such counterparts taken together will constitute one and the same
instrument. The parties agree that signatures of a party transmitted by facsimile or e-mail shall
be binding on such party as if they were original signatures.
21. INCORPORATION OF RECITALS AND EXHIBITS. The Recitals
hereunder are incorporated herein by this reference and made a part hereof. The Exhibits
attached hereto are incorporated herein by this reference and made a part hereof.
[SIGNATURES ON NEXT PAGES]
001219.0001 \1390727.4 10
IN WITNESS WHEREOF, the undersigned parties have executed this Sublease with
the intent to be bound thereby:
SUBLANDLORD: C.S.B. PARTNERSHIP, a California general partnership
By: C.E.P. DEVELOPMENTS, INC.
a California corporation, its General Partner
By:
stopher R Phillip President
By: PHILLIPS & PHIL IPS L.P., a California limited
partnership, its General Partner
By: C. & E. PHILLIPS, INC., a California
corporation, its General Partner
r '
By: _
topher R. Phillips, sident
By: CHRIS & TAD ENTERPRISES, L.P., a California
limited partnership, its General Partner
By: PHILLIPS & PHILLIPS L.P., a California
limited partnership, its General Partner
By: C. & E. PHILLIPS, INC., a
California corporation, its
General Partner
By: a
stopher R. Phillip
President
By: FOUR KYLES, INC.,
a CalifornZZLa—"
ion, its General Partner
By:
Virgil (Tad) K. Kyl AII, President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
00 1219.0001 \1 390727.4 11
By: THREEMMMS, INC.,
a California corporation, its General Partner
By: �'�-- > ✓1
Michael J. H mbach, President
SUBTENANT: BIG O TIRES, LLC, a Nevada limited liability company
Timothy J. Miller, Chief Financial Officer
001219.0001\1390727.4 12
By: THREEMMMS, INC.,
a California corporation, its General Partner
0
Michael J. Humbach, President
SUBTENANT: BIG ® TIRES, LV/,, apevadai ted liability company
, Chief Financial Officer
001219.0001\1390727.4 12
EXHIBIT A
MASTER LEASE
00 1219.0001U 390727.4
FIRST AMENDMENT TO
STANDARD LEASE AGREEMENT
THIS FIRST AMENDMENT TO STANDARD LEASE AGREEMENT (this "First
Amendment") is entered into and executed as of January 23, 2009 (the "Execution Date"), by
and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON .
BEACH, a public body, corporate and politic (the "Landlord") and C.S.B. PARTNERSHIP, a
California general partnership ("Tenant").
RECITALS
A. Pursuant to the terms of that certain Standard Lease Agreement dated for
reference purposes April 19, 2004 and Option Addendum to Standard Lease Agreement
(collectively, the "Lease") entered into by and between Tenant as tenant and HB Auto I, LLC, a
California limited liability company ("HB Auto") and Turn -Key Washes, Inc., a California
corporation (formerly known as Jurtwin, Inc., a California corporation) ("Turn -Key") together as
predecessor in interest landlord, Tenant is leasing that certain real property commonly known as
7872 Edinger Avenue, Huntington Beach, California 92647 (the "Property") owning and
operating a Big O Tires retail store and its business office thereon (the "Edinger Avenue Big O
Store") as a franchisee of Big O Tires, LLC, a Nevada limited liability company (formerly
known as Big O Tire, Inc., a Nevada corporation) ("Big O" or "Franchisor") pursuant to that
certain Franchise Agreement #20466 dated August 1, 2004 (the "Franchise Agreement"). The
obligations of Tenant under the Lease are guaranteed by Christopher R. Phillips ("Guarantor")
pursuant to the terms of that certain Guaranty of Lease dated April 19, 2004 ("Lease Guaranty").
The Lease is currently in full force and effect.
B. Pursuant to that certain Grant Deed dated June 25, 2004,.recorded in the official
real estate records of Orange County, California on June 29, 2004, Instrument
No. 2004000591428 (the "Turn -Key Grant Deed"), Turn -Key granted to Michael Todd Carson
and Rosemary Kathleen Carson, husband and wife, as community property with right of
survivorship (the "Carsons"), Turn-Key's undivided fifty percent (50%) interest in the Property.
In conjunction therewith and pursuant to the terms of that certain Assignment of Lease dated as
of June 25, 2004 between Tum-Key as assignor and the Carsons as assignee (the "Turn-
Key/Carsons Assignment") effective as of the date of the recording of the Turn -Key Grant Deed,
Turn -Key assigned, set over and transferred to the Carson all of its rights, title and interest as a
landlord in, to and under the Lease to the Carsons and the Carsons accepted such assignment and
assumed and agreed to perform Turn-Key's obligations under or with respect to the Lease.
C. Pursuant to that certain Grant Deed dated November 30, 2004, recorded in the
official real estate records of Orange County, California on December 6, 2004, Instrument
No. 2004001083690 (the "Carson Grant Deed"), the Carsons granted to HB Auto, the Carson's
undivided fifty percent (50%) interest in and to the Property. In conjunction therewith, and
pursuant to the terms of that certain Assignment of Lease dated November 11, 2004, between the
Carsons as assignor and HB Auto as assignee (the "Carsons/HB Auto Assignment") effective as
of the date of the recording of the Carsons Grant Deed, the Carsons assigned, set over and
transferred to HB Auto all of their rights, title and interest as the landlord in, to and under the
001219.0001 \846899.8
Lease and HB Auto accepted such assignment and assumed and agreed to perform the Carsons'
obligations under and with respect to the Lease. As a result of the recording of the Carsons
Grant Deed and the Carsons/HB Auto Assignment, HB Auto owns all rights, title and interest in
and to the Property and became the sole landlord under the Lease and shall hereinafter be
referred to as "Predecessor Landlord."
D. Under threat of condemnation, Landlord and Predecessor Landlord completed the
negotiations of and entered into that certain Agreement and Escrow Instructions for Purchase and
Sale of Real Property and Addendum to Agreement and Escrow Instructions for Purchase and
Sale of Real Property dated as of December 15, 2008 (the "New Landlord/Predecessor Landlord
Property Acquisition Agreement"), setting forth the terms and conditions by which Landlord will
acquire all of Predecessor Landlord's rights, title and interest as the owner in fee in and to the
Property on and subject to the terms of the New Landlord/Predecessor Landlord Property
Acquisition Agreement, in consideration of the payment by Landlord to Predecessor Landlord of
the purchase price consideration for such acquisition of the Property on and subject to the terms
of the New Landlord/Predecessor Landlord Property Acquisition Agreement. This First
Amendment will become effective as of the date the acquisition transaction pursuant to the New
Landlord/Predecessor Landlord Property Acquisition Agreement is closed and consummated,
upon which date, Landlord will acquire all of Predecessor Landlord's rights, title and interest as
the owner in fee in and to the Property and succeed to all of the rights and assume all of the
obligations of Predecessor Landlord under the Lease and the Lease Guaranty (the "Effective
Date"). In the event the acquisition transaction pursuant to the New Landlord/Predecessor
Landlord Property Acquisition Agreement is not closed and consummated, this First Amendment
will not become effective and will be null and void and of no force and effect.
E. In conjunction with Landlord's acquisition from Predecessor Landlord of all
Landlord's rights, title and interest as the owner in fee in and to Property, pursuant to the New
Landlord/Predecessor Landlord Property Acquisition Agreement, Landlord has determined that it
will be necessary for Tenant to permanently cease to occupy the Property prior to the expiration
of the Lease; and, as such, Landlord and Tenant have entered into that certain Reinstated
Acquisition of Leasehold Interest Agreement dated as of December 29, 2008 (the "Reinstated
Landlord/Tenant Leasehold Interest Acquisition Agreement") setting forth the terms and
conditions by which Landlord shall acquire Tenant's entire leasehold interest in the Property (the
"Leasehold Interest") pursuant to the Lease and pay certain compensation as consideration for
such acquisition of the Leasehold Interest and the termination of the Lease and the Lease
Guaranty and Tenant's occupancy of the Property prior to the expiration of the Lease. As
required under the terms of Reinstated Landlord/Tenant Leasehold Interest Acquisition
Agreement, Landlord and Tenant are entering into this First Amendment which, as provided in
Recital D, will not become effective nor of any force and effect unless and until the acquisition
transaction pursuant to the New Landlord/Predecessor Landlord Property Acquisition Agreement
is closed and consummated, and Landlord acquires all of Predecessor Landlord's rights, title and
interest as the owner in fee in and to the Property.
F. Section 35 of the Lease provides that any alteration, change or modification of or
to the Lease, in order to become effective, shall be made in writing and executed by Tenant and
Landlord as the successor -in -interest landlord under the Lease.
001219.0001\846899.8 2
G. In conjunction with the foregoing Recitals, Landlord and Tenant mutually desire
to enter into this First Amendment, thereby amending the Lease on and subject to the terms and
conditions as shall hereinafter be set forth.
H. Capitalized terms not otherwise defined herein shall have the meanings given
them in the Lease and the Reinstated Landlord/Tenant Leasehold Interest Acquisition
Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, and for such other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Landlord and Tenant hereby agree as follows:
AGREEMENT
1. ACKNOWLEDGEMENTS AND AGREEMENTS OF LANDLORD AND
TENANT
As of the Effective Date, each of Landlord and Tenant acknowledges and agrees that:
(a) The Recitals set forth in the introductory paragraphs of this First
Amendment are a material component of and integral part of this First Amendment and are
incorporated herein by this reference and made a part hereof.
(b) The Lease is in full force and effect.
(c) Pursuant to the terms of the New Landlord/Predecessor Landlord Property
Acquisition Agreement, Landlord will succeed to all rights and assume all obligations as the
successor -in -interest landlord under the Lease; and, Tenant will recognize Landlord as the
successor -in -interest landlord under the Lease. In the event the acquisition transaction pursuant
to the New Landlord/Predecessor Landlord Property Acquisition Agreement is closed and
consummated, Landlord and Tenant shall execute a written memorandum setting forth the date
which is the Effective Date of this First Amendment. The foregoing notwithstanding, in the
event the acquisition transaction pursuant to the New Landlord/Predecessor Landlord Property
Acquisition Agreement is not closed and consummated, this First Amendment will not become
effective and will be null and void and of no force and effect.
(d) The acquisition of the Property by Landlord pursuant to the New
Landlord/Predecessor Landlord Property Acquisition Agreement does not constitute either a full
or a partial "condemnation," nor a "taking" for purposes of Section 22 of the Lease.
Accordingly, the Lease shall not terminate as a result of Agency's purchase of the Property, nor
shall Tenant be entitled to any abatement of rent; provided that, the Lease as amended by this
First Amendment, shall terminate as provided in Section 1(e) below.
(e) Pursuant to the terms of the Reinstated Landlord/Tenant Leasehold
Acquisition Agreement, and notwithstanding anything contained in the Lease as amended by this
First Amendment to the contrary, in the event the acquisition transaction pursuant to the New
Landlord/Predecessor Landlord Property Acquisition Agreement is closed and consummated,
Landlord and Tenant acknowledge and agree that the Lease as amended by this First Amendment
001219.0001 \846899.8 3
and the Lease Guaranty will terminate on or before the date which is five (5) years from the
Effective Date (defined as the "Lease TerminationNacation Date" in the Reinstated
Landlord/Tenant Leasehold Interest Acquisition Agreement). Landlord and Tenant covenant and
agree to take all required action and to perform each and all of their respective obligations,
covenants, agreements and undertakings under the Reinstated Landlord/Tenant Leasehold
Interest Acquisition Agreement, including, without limitation, to fully and completely effect the
termination of the Lease as amended by this First Amendment and the Lease Guaranty and
Tenant's occupancy of the Property and the payment in full by Landlord to Tenant of the
"Payment Consideration" (as such term is defined in the Reinstated Landlord/Tenant Leasehold
Interest Acquisition Agreement).
(f) Landlord and Tenant hereby reaffirm each and all of their respective
representations, warranties, covenants, agreements, obligations and undertakings under the
Reinstated Landlord/Tenant Leasehold Interest Acquisition Agreement.
2. INSURANCE
Section 18 (a) of the Lease shall be amended to add the following sentence at the end of
that Section:
Notwithstanding anything contained in the foregoing to the contrary,
Landlord shall have the right to provide the foregoing Landlord required
insurance through the Big Independent Cities Excess Pool (`BICEP'), providing
for self insured retention in the amount applicable to all of the members of
BICEP.
3. NOTICES
Section 37 of the Lease shall be deleted in its entirety and replaced with the following:
37. NOTICE. Except as otherwise required by law, any notice or
document required or permitted to be delivered hereunder shall be delivered
personally, sent by a responsible overnight courier (i.e., FedEx or UPS), or sent
by registered or certified mail,.return receipt requested. Any notice, demand,
request, consent, approval, or other communication that either party desires or is
required to give to the other party must be addressed to the other party at the
respective addresses set forth below, or at such other addresses as they have
theretofore specified by written notice delivered in accordance herewith. Notices
will be deemed communicated upon receipt if personally delivered, or the next
business day if sent by responsible overnight courier, or within seventy-two (72)
hours from the time of mailing if mailed as provided in this Section 37. Rejection
or other refusal to accept notice or the inability to deliver notice because of a
changed address (of which no notice was required hereunder) shall be deemed to
be receipt of the notice when sent.
001219.0001\846899.8 4
To Tenant: C.S.B. PARTNERSHIP
7872 Edinger Avenue
Huntington Beach, CA 92675
Attention: Christopher R. Phillips
Copy to: Richard P. Waxman, Esq.
Wendel, Rosen, Black & Dean LLP
1111 Broadway, 24th Floor
Oakland, CA 94607
To Landlord: THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: Executive Director
Copy to: THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: City Attorney
Copy to: THE REDEVELOPMENT AGENCY OF
THE CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: Agency Secretary
4. RATIFICATION AND REAFFIRMATION OF LEASE .
Except as hereby expressly amended by this First Amendment, the Lease shall remain in
full force and effect up and until the Lease as amended by this First Amendment is terminated on
the date which is the Lease Termination/Vacation Date, and the Lease as amended by this First
Amendment, is hereby ratified and reaffirmed.
5. INTERPRETATION
In the event of any conflict between the provisions of the Lease as originally in effect,
and the provisions of this First Amendment, the provisions of this First Amendment shall
control. This First Amendment shall be governed by, and interpreted in accordance with, the
laws of the State of California.
6. EXECUTION IN COUNTERPARTS; FACSIMILE; DELIVERY. TO
ESCROW
This First Amendment may be executed in one (1) or more counterparts, each of which
shall be an original and all of which shall constitute but one and the same instrument. Landlord
and Tenant agree that a facsimile copy of an authorized signature of a party to this First
001219.0001 \846899.8
Amendment will have the same force and effect as the original signature. In conjunction with
Recital D and Section 1(c) of this First Amendment and Section 8(d) of the Reinstated
Landlord/Tenant Leasehold Interest Acquisition Agreement, Landlord and Tenant will each
deliver to the Escrow (as such term is defined in Section 8(d) of the Reinstated Landlord/Tenant
Leasehold Interest Acquisition Agreement) its executed copy of this First Amendment,
specifically instructing the Escrow in writing not to release copies of this First Amendment to
either Landlord or Tenant unless and until the acquisition transaction between Landlord and
Predecessor Landlord pursuant to the New Landlord/Predecessor Landlord Property Acquisition
Agreement is closed and consummated and the Grant Deed from Predecessor Landlord to
Landlord is duly recorded in the official real estate records of Orange County, California.
7. INCORPORATION OF EXHIBITS
All Exhibits and other instruments attached to this First Amendment are incorporated
herein by this reference and made a part hereof.
8. AUTHORITY
Each person signing this First Amendment on behalf of a party to this First Amendment,
warrants and represents that such person is fully authorized to enter into and execute this First
Amendment for and on behalf of such party and that this First Amendment is a binding
obligation on such party.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the dates set forth below.
ATTEST:
By.
Name: Joan Fi n
Title: ency Clerk
REVIE D APPROVED:
By:
Name:
Title: xecutive Director
"AGENCY"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By: ��__ (
Name: Keith Bohr
Title: Chairperson
APPROVED AS TO FORM:
B-
Jemifer McGr h
Title: Agency Counsel Xi 2-121(0
[SIGNATURES CONTINUED ON NEXT PAGE]
001219.0001\846899.8 6
APPROVED AS TO FORM:
LEIBOLD MCCLENDON & MANN, P.C.
Agency Special Counsel
By: f `
arbara Zeid ibol
INITIATED AND APPROVED:
Name: Stanlev Smalewi z
Title: Deputy Executive Director
[SIGNATURES CONTINUED ON NEXT PAGE]
001219.0001 \846899.8 7
"TENANT"
C.S.B. PARTNERSHIP, a California general
partnership
By: C.E.P. DEVELOPMENTS, INC., a
California corporation, its General
Partner
)A By:tj
stopher R. Phillips, President
By: POUR KYLES, INC., a California
corporation, i General Partner
By: r /
Virgil yle K le, Iff, President
By: PHI LLIPS & PHI L LIPS L.P.; a
California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, its General
Partner � •
By:
topher R. Phillip ,
resident
By: JYB ENTERPRISES, INC., a
California corporation, its General
Partner
By:
J n . Berry, siden
By: TRREEIIEMIS, INC., a California
corporation, its General Partner
Michael J. bach, President
[SIGNATURES CONTINUED ON NEXT PAGE]
001219.0001\846899.8 8
By: CHRIS & TAD ENTERPRISES, L.P.,
a California limited partnership, its
General Partner
By: PHILLIPS & PHILLIPS L.P., a
California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, its
General Partner
By: C-/ 042 Y21A
topper R. Phillip
President
001219.0001\W899.8 - 9
STANDARD LEASE AGREEMENT
between
RB AUTO I, LLC,
a California limited liability company
and
JUZTWIN, INC.,
a California corporation
and
C.S.B. PARTNERSHIP,
a California general partnership
"TENANT"
BASIC LEASE PROVISIONS
Each reference in this Lease to any of the terms described in these Basic Lease Provisions
shall mean and refer to the following; however, the other Sections of this Lease contain
numerous other terns which are defined therein as well as numerous refinements and exceptions
which qualify the provisions of the following Paragraphs:
A. Date of Lease for Reference Purposes: April 19, 2004
B. Landlord: HB Auto I, LLC, a California limited liability company, and
Jurtwin, Inc., a California corporation
C. Tenant: C.S.B. Partnership, a California general partnership
D. Tenant's Trade Name: Big O Tires
E. Intentionally Omitted.
F. Premises: The property located at the following address and containing the
following approximate measurements (Section 2):
Address: 7872 Edinger Avenue, Huntington Beach, California
Acreage: Approximately 0.52 acres.
Floor Area of Improvements: Approximately 8,163 square foot building
consisting of five (5) tandem bays and a retail area.
G. Term (Section 3): Ten (10) Lease Years (as defined in Section 4 hereof), plus
two (2) five (5) year options to extend (as described in the Option Addendum to
Standard Lease Agreement ("Addendum") attached hereto).
H. Monthly Minimum Rent (Section 4):
(i) $16,000.00 per month subject to adjustment on the third (3rd) anniversary of
the Commencement Date and on every third (3rd) anniversary thereafter. Upon
the execution hereof, Tenant shall pay the first full month's installment of
Minimum Rent to Landlord.
(ii) Minimum Rent shall commence on the Commencement Date.
I. Percentage Rental Rate: None.
J. Security Deposit (Section 7): $15,000.00 which shall be deposited with Landlord
upon the execution hereof.
. .,��iz�uoaLw9ssfzl. 1 _
K. Use (Section 8): Automotive repair and service facility and uses ancillary
and incidental thereto, including, without limitation, sales and service of tires,
wheels, undercar parts and accessories, and use of the office space located within
the Premises.
L. Intentionally Omitted.
M. Guarantor(s): Christopher R. Phillips.
N. Landlord's Address, Telephone and Facsimile Numbers for Notices (Section 37):
HB Auto 1, LLC
3424 Via Oporto, Suite 204
Newport Beach, California 92663
Attention: Todd Carson
Telephone: (949) 574-71 l2
Facsimile: (949) 574-7113
O. Tenant's Address, Telephone and Facsimile Numbers for Notices (Section 37):
C.S.B. Partnership
27131. Calle Arroyo, Suite 1703
San Juan Capistrano, California 92675
Attention: Christopher Phillips
Telephone: (949) 443-4155
Facsimile: (949) 443-4160
P. Guarantor's Address, Telephone and Facsimile Numbers for Notices (Section 37):
Christopher R. Phillips,
c/o C.S.B. Partnership
27131 Calle Arroyo, Suite 1703
San Juan Capistrano, California 92675
Telephone: (949) 443-4155
Facsimile: (949) 443-416
�. Brokers or Finders (Section 38):
Landlord's Broker - Yvonne V. Fleming, VR Business Brokers
Tenant's Broker - None.
R. Other: N/A
S. Addendum Attached: X .Yes No
If an Addendum is attached, same is incorporated herein by this reference.
00 7 219.000M98457.2
STANDARD LEASE AGREEMENT
1. PARTIES. THIS STANDARD LEASE AGREEMENT is dated for reference
purposes as the date set forth in the Basic Lease Provisions, and is made and entered into by and
between HB AUTO 1, LLC, a California limited liability company, and JUZTWIN, INC., a
California corporation (collectively, "Landlord"), and C.S.B. PARTNERSHIP, a California
general partnership ("Tenant").
2. LEASED PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, that certain real property more particularly described on Exhibit "A"
attached hereto and all improvements now or hereafter constructed thereon (the "Premises"),
including, without limitation, the building presently located on the Premises (the "Building") .
Wherever the term "square feet" or"square footage" is used in this Lease with respect to the
Premises, it shall mean the area of the Premises measured from the boundary line of the legal lot
comprising the Premises to the opposite boundary line. Wherever the term "square feet" or
"square footage" is used in this Lease with respect to the Building, it shall mean the area of the
Building measured from the outside of exterior walls to the center of the interior demising walls
of the Building, without deduction for openings, columns, sprinkler risers, roof drains, vents,
piping, wastelines, conduit, ventilation shafts and other such items serving the Building. Any
statement of square footage set forth in this Lease, or that may have been used in calculating
rental, is an approximation which Landlord and Tenant agree is reasonable, and the rental based
thereon is not subject to change whether or not the actual square footage is more or less. Tenant
hereby accepts the Premises in the condition existing as of the date of possession hereunder, "as -
is", subject to all applicable zoning, municipal, county, state and federal laws, statutes,
ordinances, orders, rules and regulations (collectively "Laws") affecting the Premises and/or the
use thereof, and accepts this Lease subject thereto. Tenant acknowledges that Landlord has not
made any representation or warranty as to the suitability of the Premises for the conduct of
Tenant's business.
3. TERM. The term of this Lease shall be as specified in Paragraph G of the Basic
Lease Provisions or until this Lease is earlier terminated as provided herein. As used herein, the
"Commencement Date" shall be July 1, 2004. In the event that the Commencement Date does
not occur on the first (1 st) day of a calendar month, the term of this Lease shall be extended by
the number of days of the partial month at the commencement of the term such that the Lease
shall end on the last day of a calendar month ("Termination Date"). Notwithstanding the
foregoing, all of Tenant's obligations hereunder, except the payment of Minimum Rent and
Additional Rent, shall commence upon the execution of this Lease. Within five (5) business
days following the Commencement Date, upon Landlord's request, Landlord and Tenant shall
execute and acknowledge an estoppel certificate setting forth the Commencement Date and the
Termination Date. Notwithstanding the foregoing, failure of Tenant to execute such certificate
shall not affect Landlord's determination of the Commencement Date in accordance with the
provisions of this Lease. The "Term" shall also include any extensions or renewals of the
initial Term to the extent expressly authorized pursuant to the terms of this Lease or agreed to in
writing by Landlord and Tenant. Tenant shall have the right to start making its improvements
and alterations to the Premises pursuant to the Tenant Work Letter attached hereto as Exhibit
"B", after Landlord delivers the Premises to Tenant.
001219.0001\6984572
4. MINIMUM RENT; RENT INCREASES.
(a) Tenant shall pay to Landlord as base monthly rent ("Minimum Rent") the
amount described in Paragraph H(i) of the Basic Lease Provisions, which Minimum Rent shall
be due and payable without prior notice or demand, in advance, without deduction or offset
except as provided herein, beginning on the date set forth in Paragraph H(ii) of the Basic Lease
Provisions, and continuing on or before the first day of each calendar month thereafter
throughout the Term. Tenant shall pay the first month's installment of Minimum Rent to
Landlord on the Commencement Date. Minimum Rent for any period during the Term which is
for less than one month shall be prorated on the basis of a thirty (30) day month. No payment by
Tenant or receipt by Landlord of an amount less than the monthly Minimum Rent herein
stipulated shall be deemed to be other than on account of the earliest amounts owing under this
Lease. No endorsement or statement on any check or any letter accompanying any check or
payment shall be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of any amount owing to
Landlord or to pursue any other remedy available to Landlord under this Lease or at law or in
equity.
(b) Commencing as of the beginning of the fourth (4th) Lease Year (as
hereinafter defined) and every thirty-six (36). months thereafter, including during the extension
period(s), if any, pursuant to the Addendum, "Minimum Rent" per month for the Premises shall
be increased by ten percent (10%) from the Minimum Rent paid during the immediately
preceding month. In the event any moratorium is imposed on such increases in rent, such that no
regularly scheduled adjustment can be made or only a partial adjustment may be made, an
adjustment shall immediately take effect on the lifting of such moratorium, and regular
adjustments thereafter shall be made as above provided. For the purposes of this Lease, a Lease
Year is each twelve (12) month period of the Term beginning on the Commencement Date,
provided that if the Commencement Date does not fall on the first day of a month, the first Lease
Year shall be the period commencing upon the Commencement Date and terminating one year
after the last day of the month in which the Commencement Date occurs. Each subsequent
Lease Year shall begin on the day after the end of the preceding Lease Year.
S. ADDITIONAL RENT. This Lease is what is commonly called a "net, net, net
Lease," it being understood that Landlord shall receive the Minimum Rent free and clear of any
and all other impositions, taxes, liens, charges or expenses of any nature whatsoever in
connection with the ownership and operation of the Premises. In addition to the Minimum Rent
payable hereunder, Tenant shall pay to the parties respectively entitled thereto all taxes,
impositions, insurance premiums, operating charges, maintenance charges, security costs, and
other charges, costs and expenses which arise or may be contemplated under any provision of
this Lease or otherwise becoming due by virtue of the activities and/or business of Tenant prior
to and during the Term hereof (collectively "Additional Rent"). In the event Tenant fails to pay
any Additional Rent, Landlord shall have the same rights and remedies as otherwise provided in
this Lease for the failure of Tenant to pay Minimum Rent. It is the intention of the parties hereto
that this Lease shall not be terminable for any reason by Tenant except as expressly set forth
herein, and that Tenant shall in no event be entitled to any abatement of or reduction in
Minimum Rent or Additional Rent payable under this Lease, except as expressly provided
herein. The covenants of Landlord and Tenant hereunder are independent, except that Tenant's
0012M0001169"57.2--
performance of its obligations under this Lease shall be a condition to Landlord's performance
under this Lease. Any present or future law to the contrary shall not alter this agreement of the
parties.
6. INTENTIONALLY OMITTED.
7. SECURITY DEPOSIT. Upon the execution thereof, Tenant shall deposit with
Landlord the Security Deposit described in Paragraph J of the Basic Lease Provisions (the
"Security Deposit") for the performance by Tenant of its obligations hereunder. If Tenant is in
default, Landlord may use the Security Deposit, or any portion thereof, to cure such default, or to
compensate Landlord for any damage sustained by Landlord resulting from Tenant's default.
Tenant.shall pay to Landlord immediately upon demand an amount equal to the portion of the
Security Deposit expended or applied by Landlord so as to maintain the Security Deposit in the
amount initially deposited with Landlord. Landlord's obligations with respect to the Security
Deposit are those of a debtor and not a trustee. Landlord may commingle the Security Deposit
with Landlord's general and/or other funds, and Landlord shall have no obligation to pay Tenant
interest upon the Security Deposit. Notwithstanding the foregoing, exercise of any one or more
of the rights given Landlord under this Section 7 in no way shall affect or abrogate any other
claim or remedy available to Landlord hereunder or as provided by law or equity. Upon the
expiration or any sooner termination of the term hereof, (i) if Tenant is not then in default of any
of the provisions of this Lease, Landlord shall refund to Tenant any unappropriated balance
remaining of the said Security Deposit; (ii) if Landlord has a claim upon the Security Deposit
only for possible defaults in the payment of monthly rent, then any remaining portion of the
Security Deposit shall be returned to the Tenant no later than two (2) weeks after the date the
Landlord receives possession of the Premises; and (iii) if Landlord has a claim upon the Security
Deposit which includes amounts reasonably necessary to repair damages to the Premises caused
by the Tenant or to clean the Premises, then any remaining portion of the Security Deposit shall
be returned to the Tenant at a time as may be mutually agreed upon by Landlord and Tenant, but
in no event later than thirty (30) days from the date the Landlord receives possession of the
Premises.
8. USE; CONDUCT OF BUSINESS. .
(a) The Premises shall be used and occupied only for the use described in
Paragraph K of the Basic Lease Provisions and for no other use or purpose whatsoever, and
Tenant shall operate at the Premises only under the trade name set forth in Paragraph D of the
Basic Lease Provisions. Notwithstanding the foregoing, Tenant may change the use of the
Premises from that described in Paragraph K of the Basic Lease Provisions or the trade name set
forth in Paragraph D of the Basic Lease Provisions with Landlord's prior written approval, which
approval shall not be unreasonably withheld.
(b) No use shall be made or permitted to be made by Tenant of the Premises
and no acts shall be done by Tenant or the Tenant Parties (as defined in Section 9 below) in, on
or about the Premises which will in any way conflict with any Laws (including, without
limitation, those affecting the occupancy or use thereof now in effect or which may hereafter be
enacted or promulgated by any public authority), or which will increase the existing rate of
insurance upon the Premises, or cause a cancellation of any existing rate of insurance upon the
001219.0001\699457.2" - 5 - -
Premises. In no event shall Tenant's use as set forth in Paragraph K of the Basic Lease
Provisions be deemed to increase the existing rate of insurance upon the Premises or cause a
cancellation of any existing rate of insurance upon the Premises. No drug paraphernalia or
pornographic materials shall be sold on or from the Premises. Tenant shall neither sell nor permit
to be kept, used or sold in or about the Premises any article which may be prohibited by any
insurance policies maintained by Landlord or Tenant. Tenant shall not commit, or suffer to be
committed, any waste upon or about the Premises, or any public or private nuisance.
9. COMPLIANCE WITH LAW. Tenant shall, at its sole cost and expense,
promptly comply with all Laws applicable to the Premises and/or the use thereof, including,
without limitation, the obligation to alter, maintain, or restore the Premises in compliance with
such Laws, and Tenant shall promptly comply with all governmental orders or directives for the
correction, prevention or abatement of a nuisance in, upon, or connected with the Premises.
Notwithstanding the foregoing, Tenant shall not be obligated to make any structural alterations to
the Premises unless required as a result of the use or proposed use of the Premises by Tenant or
its officers, directors, shareholders, partners, joint ventures, members, agents, employees,
contractors, licensees, invitees, customers, sublessees and assignees (collectively the "Tenant
Parties"). In the event structural alterations to the Premises are required as a result of any Laws
applicable to the Premises which are not required as a result of the use or proposed use of the
Premises by Tenant or Tenant Parties, Landlord shall undertake such structural alterations at its
cost; provided, however, that the cost of such structural alterations shall be amortized (including
interest on the unamortized cost at the rate of ten percent (10%) per annum) over its useful life as
determined according to generally accepted accounting principles and such amortized cost
passed through to Tenant on a monthly basis during the Term hereof. Such amounts shall be
deemed Additional Rent hereunder.
10. INTENTIONALLY OMITTED.
11. SIGNS. Tenant shall have the right to place, construct, or maintain on the glass
panes or supports of the show windows, the doors, exterior walls or the roof of the Building, or
anywhere else upon the Premises, any signs, advertisements, names, insignia, trademarks,
descriptive material or any other items provided that such signage is in conformance with any
applicable zoning requirements and other applicable Laws. All signs that are permanently
attached to the Premises shall become the property of Landlord at the expiration or earlier
termination hereof; provided, however, that Tenant (i) may remove the portions of such signs
which identify Tenant's business, (ii) shall promptly remove all such signs if Landlord so elects,
and (iii) shall promptly repair all damage to the Premises or the Building caused by such
removal.
12. ALTERATIONS, ADDITIONS AND IMPROVEMENTS.
(a) Tenant shall not create any openings in the roof or exterior walls of the
Building, nor shall Tenant make any exterior or structural alterations, additions or improvements
to the Building (other than painting), nor shall Tenant construct any new structures on the
Premises, without the prior written consent of Landlord, which consent shall not be unreasonably
withheld. In addition, except as otherwise provided in Section 3, and the Tenant Work Letter,
Tenant shall not make interior alterations, additions or improvements to the Building having a
001219.0001\698457.2 6
cost that exceeds $25,000.00 in the aggregate during any twelve (12) month period during the
Term without Landlord's prior written consent thereto, which consent shall not be unreasonably
withheld. Tenant shall, at Landlord's option, remove at the expiration or earlier termination of
this Lease such items so installed or constructed by Tenant and shall repair all damage to the
Premises or the Building caused by such removal. Tenant shall deliver plans and specifications
of the alterations, additions and improvements proposed to be made by Tenant at the Premises,
together with required permits and any other documents and information reasonably required by
Landlord (collectively, the "Tenant's Plans") at least thirty (30) days prior to commencement of
construction thereof. If such alterations, additions or improvements require Landlord's written
consent before Tenant may commence construction thereof, then Tenant shall accompany the
Tenant's Plans with written notice requesting Landlord's written consent thereto, and Tenant
shall not commence such alterations, additions or improvements until Landlord has consented
.thereto in writing. All alterations, additions or improvements made by Tenant shall, unless
Landlord requires their removal as provided above, become the property of Landlord at the
expiration or earlier termination hereof, without compensation of any kind to Tenant. Any trade
fixtures which are installed and paid for by Tenant shall remain the property of Tenant, but
Tenant shall not remove any trade fixtures or personal property from the Premises at any time in
which Tenant is in default of this Lease or an event has occurred which, with the passage of time
or the giving of notice, or both, would become a default by Tenant; provided, however, that if
Tenant has pledged such trade fixtures and/or personal property as collateral to any lender not
affiliated with Tenant, such unaffiliated lender may remove such trade fixtures or personal
property from the Premises upon reasonable prior notice. If Tenant otherwise has the right to
remove trade fixtures installed and paid for by Tenant, such right shall be conditioned upon
Tenant repairing any damage to the remaining portions of the Premises or the Building caused by
the removal of such trade fixtures. Any trade fixtures, moveable furniture or personal property
that Tenant does not remove, or is not allowed to remove, at the expiration or earlier termination
of this Lease shall, at Landlord's option, either become the property of Landlord or be removed
by Landlord at Tenant's sole cost and expense. Tenant hereby grants Landlord a security interest
in all trade fixtures, merchandise, equipment, supplies, furniture and all other personal property
owned by Tenant and used or located at the Premises at any time during the Term and, if
requested, Tenant shall on demand execute any document(s) required to perfect Landlord's
interest therein; provided, however, that Landlord shall subordinate its security interest in such
trade fixtures, merchandise, equipment, supplies, furniture and all other personal property to any
lender not affiliated with Tenant who takes a security interest in such items.
(b) Tenant shall keep the Premises free from any and all liens arising out of
any work performed, materials furnished or obligations incurred by Tenant. Tenant shall provide
Landlord at least ten (10) days' prior written notice of Tenant's commencement of any
alterations, additions or improvements at the Premises, and Landlord shall have the right to file,
post and/or record all appropriate notices of nonresponsibility or other documents having the
effect of protecting the Landlord from any mechanics' or materialmen's liens arising from
Tenant's alterations, additions or improvements.
13. UTILITY SERVICES.
(a) Tenant shall be solely responsible for obtaining, and shall promptly pay
when due, all charges for gas, water, sewer, telephone, electricity, and all other utilities used by
001219.00011698457.2 7
Tenant or consumed at the Premises during the Term. If Tenant refuses or neglects to pay any
such utility charges, Landlord may, at Landlord's option, pay such charges, and Tenant shall,
upon demand, pay to Landlord the amount paid by Landlord and all other costs incurred in
connection therewith.
(b) At all times during the Lease Term, Tenant shall have the right to select
the utility company or companies that shall provide electric services to the Premises and, subject
to all applicable Laws, Tenant shall have the right at any time and from time to time during the
Lease Term to either (a) contract for services from electric service provider(s) other than the
provider with which Landlord has a contract as of the date of this Lease (the "Current Provider"),
or (b) continue to contract for services from the Current Provider. Tenant shall at all times
cooperate with Landlord and any electric service provider with which Landlord has contracted
and, as reasonably necessary, shall allow Landlord or such electric service provider reasonable
access to any electric lines, feeders, risers, wiring and any other machinery upon the Premises.
Landlord shall not be liable in damages or otherwise for any loss, damage or expense that Tenant
may sustain or incur by reason of any change, failure, interference, interruption or defect in the
electric services provided to the Premises unless such change, failure, interference, interruption
or defect is caused by Landlord's active negligence or willful misconduct. No such change,
failure, interference, interruption or defect shall entitle Tenant to terminate this Lease or to abate
the payments Tenant is required to make under this Lease unless such interference is caused by
Landlord's active negligence or willful misconduct, and, with respect to Tenant's right to
terminate this Lease, such change, failure, interference, interruption or defect continues for a
period of seven (7) days after written notice to Landlord.
14. INTENTIONALLY OMITTED.
15. INTENTIONALLY OMITTED.
16. TAXES AND ASSESSMENTS.
(a) Tenant shall pay before delinquency all taxes, assessments, license fees
and other charges that accrue during the Term and which are levied or assessed against Tenant's
Improvements, personal property, fixtures and equipment installed or located in, on or about the
Premises. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
such payment.
(b) Tenant shall also pay all "Taxes" applicable to the Premises accruing
during the Term of this Lease which are levied or assessed against the Premises. The term
"Taxes ' shall mean all general, special, ordinary, supplemental and extraordinary real and
personal property taxes and assessments, license fees and taxes, rental taxes, levies, charges,
penalties, sewer or water charges (hook-up or otherwise), improvement bonds and other
governmental levies imposed by any authority having direct or indirect power to tax, including,
but not limited to, any city, county, state or federal government, or any school, agricultural,
sanitary, fire, street, lighting, drainage or other improvement district, on, against, or with respect
to the Premises, together with any taxes or assessments imposed in addition to, in substitution of
or as a supplement to any taxes or, assessments previously included within the definition of
Taxes, but excluding any federal, state or local personal income, estate or inheritance tax of
001219.0001\693457.2 a
Landlord. The term "Taxes" shall also include any tax, fee, levy, assessment or charge: (i) the
nature of which was hereinbefore included within the definition of Taxes, (ii) which was
imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has
been increased since June 1, 1978, (iii) which is imposed or assessed during the Term as a result
of any and all changes in ownership (as that term is used in Article 13A of the California
Constitution and/or California Revenue and Taxation Code Sections 60, et seq.) of the Premises,
or which is added to a tax or charge hereinbefore included within the definition of Taxes by
reason of such transfer(s), or (iv) which is imposed by any assignments or transfers of this Lease.
(e) Landlord and Tenant shall use good faith efforts to cause Tenant to be
billed directly by the taxing authority for Taxes applicable to the Premises. If, however, Tenant
cannot be billed directly by the taxing authority for the Taxes that are applicable to the Premises
despite the parties good faith efforts, then Landlord shall notify Tenant each year of the Taxes
due and, together with such notice, must furnish Tenant with a copy of the underlying tax bill.
Tenant must pay semiannually to the taxing authority the Taxes due not later than ten (10) days
before the taxing authority's delinquency date for such semiannual payment or ten (10) days
after receipt of the tax bill, whichever is later, and such payments by Tenant to the taxing
authority will be construed as "Additional Rent." If Tenant fails to pay the Taxes on or before
the date that is ten (10) days before the taxing authority's delinquency date for such semiannual
payment or within ten (10) days after receipt of the tax bill, whichever is later, then Landlord
may make such payment of Taxes on behalf of Tenant, and such amount shall accrue interest
pursuant to Section 26(e) below until paid by Tenant to Landlord.
(d) In the event Tenant desires to contest any Taxes which it is obligated to
pay hereunder, Landlord agrees to cooperate and will allow Tenant on behalf of Landlord to
contest any such Taxes; provided, however, that Tenant must pay all costs of such contest,
including attorneys' fees. Tenant may not allow any delinquencies in the payment of Taxes by
reason of such contest, and if Tenant is unsuccessful in any such contest, the Taxes due together
with any and all interest and penalties thereon as a result of such contest must be forthwith
discharged by Tenant. Tenant agrees to indemnify, protect, defend and hold Landlord harmless
from and against any and all costs, penalties, and expenses resulting from Taxes contested by.
Tenant.
(e) Tenant's liability to pay personal property taxes and Taxes will be
prorated on the basis of a three hundred sixty-five (365)-day year to account for any fractional
portion of a fiscal tax year included in the Term at its commencement and at its expiration.
Tenant will only be obligated to pay personal property taxes and Taxes for the period of time
occurring during the Term, and Landlord shall promptly pay its share of Taxes.
17. MAINTENANCE, REPAIRS AND OPERATING EXPENSES.
(a) Tenant shall, at its sole cost and expense, maintain, repair, repaint and
clean all of the interior and all of the exterior areas of the Premises and the Building, including,
without limitation, the roof, foundation, exterior walls, and all structural portions of the Building,
the heating, ventilating and air conditioning systems and equipment servicing all or any portion
of the Building, the plumbing, electrical wiring, windows, window glass, plate glass, doors,
'floors, ceilings, painting and all other portions of the Building and any other improvements
001219.0001%698457.2 9
located upon the Premises (collectively, the "Building Expenses"). Tenant shall install and
maintain in the Premises fire extinguishers of the size and type required by each fire prevention
authority having jurisdiction over the Premises. If Tenant does not maintain or repair the
Premises as required herein, Landlord shall have the right (but not the obligation) to cause
maintenance, repairs, replacements and/or corrections to be made thereto, and all reasonable
costs thereof shall be immediately due and payable by Tenant to Landlord. Landlord first shall
give three (3) days' written notice to Tenant before any such maintenance, repairs, replacements
and/or corrections are made by Landlord, except in the case of an emergency, in which case no
prior notice shall be necessary.
(b) Tenant shall maintain and repair the roof using a licensed contractor (or
contractors) of which Landlord has approved, which approval shall not be unreasonably withheld
or delayed. All repair and maintenance work performed by or on behalf of Tenant shall be in full
compliance with applicable Laws, shall be done by contractors approved in writing by Landlord,
which approval shall not be unreasonably withheld or delayed, and shall be accompanied by a
guaranty approved by Landlord from the contractors performing the work which guaranty shall
name Landlord as an additional beneficiary thereof. Tenant shall indemnify, defend and hold
Landlord harmless from and against all costs, damages and liabilities caused by, or incurred in
connection with, all activities on the roof conducted by or on behalf of Tenant.
(c) Tenant's obligations set forth in this Section 17 form a material part of the
consideration for this Lease, and Tenant hereby waives all rights to make repairs at the expense
of Landlord as provided by any Laws now or hereafter in effect, including, but not limited to,
California Civil Code Sections 1941 and 1942.
18. INSURANCE.
(a) Landlord shall obtain and maintain an insurance policy or policies
covering fire, lightning, vandalism, malicious mischief, extended coverage, boiler and
machinery, commercial or comprehensive general liability coverage, and such other risks which
.Landlord or its lender shall reasonably require for the full replacement value of the Premises.
Landlord's lender shall be named as an additional insured under such policy(ies) and shall be
named as the loss payee/mortgagee. Such policy(ies) shall also include rental interruption
insurance coverage for any period up to twelve (12) months during which the Building is
partially or totally untenantable. Such insurance is sometimes referred to as the "Insurance."
Tenant shall reimburse Landlord for the cost of such Insurance coverage as Additional Rent in
the manner set forth in Section 18(b) below. Tenant acknowledges it will not be an additional
insured or loss payee under such Insurance.
(b) Landlord shall furnish to Tenant, annually, a statement setting forth the
actual costs for Insurance incurred by Landlord for the annual period covered by the statement.
Tenant shall, within ten (10) days after delivery of such statement to Tenant, pay Landlord the
amount of such Insurance. The failure or delay by Landlord to furnish any one or more
statements setting forth the actual costs for Insurance shall in no way excuse Tenant from its
obligation to pay.such costs within ten (10) days after delivery of such statement to Tenant or
constitute a waiver of Landlord's rights to bill and collect such costs from Tenant.
001219.0001%699457.2 10
(c) At all times during the Term, Tenant shall, at Tenant's sole cost and
expense, procure and maintain in full force and effect Two Million Dollars ($2,000,000)
combined single limit commercial or comprehensive general liability insurance covering death or
injury to one or more persons and damage to property, and also covering the performance by
Tenant of the indemnity provisions of this Lease, with insurance companies licensed to do
business in the State of California rated A-X or better by Best's Insurance Guide. Said Two
Million Dollars ($2,000,000.00) minimum coverage shall be subject to adjustment by the "CPT
Adjustment." The term "CPI Adjustment" means adjustments at five (5) year intervals,
commencing on the first (Ist) day of the fifth year of the Term and continuing on each fifth (5th)
anniversary of such date ("Adjustment Dates") by a percentage equal to the percentage increase
from the "Base Period" of the United States Department of Labor, Bureau of Labor Statistics,
Consumer Price Index, All Urban Consumers (All Items) for the Los Angeles -Anaheim -
Riverside Metropolitan Area (1982-1984 =100). Said Consumer Price Index (the "CPI") for
January, 2004 shall be considered the "Base Period." Said adjustment shall be made by
comparing the CPI for the Base Period to the CPI for the month of January preceding each such
Adjustment Date. If at any time there shall not exist the CPI, Landlord and Tenant shall
substitute any official index published by the Bureau of Labor Statistics, or successor or similar
governmental agency, as may then be in existence, and shall be most nearly equivalent thereto.
For purposes of the level of coverage, the result of such calculation shall be rounded up to the
nearest one hundred thousand dollar increment. Such insurance policy or policies shall name
Landlord and Landlord's lender as additional insureds, and certificate(s) indicating such
coverage issued by the insurer(s) shall be delivered to Landlord and Landlord's lender prior to
the date on which Landlord tenders delivery of the Premises to Tenant and renewal certificate(s)
shall be delivered to Landlord at least ten (10) business days prior to the expiration of such
policy or policies. Such certificates of insurance shall require thirty (30) days' prior written
notice to Landlord before the policy or policies can be terminated or coverage reduced for any
reason. Landlord may periodically require that Tenant reasonably increase the coverage required
by this Section 18(c). If Tenant fails to maintain the insurance required by this Section 18(c),
Landlord shall have the right (but not the obligation) to obtain such insurance on Tenant's behalf,
and all reasonable costs thereof shall be due and payable by Tenant to Landlord as described in
Section 18(b) above. Landlord first shall give three (3) days' written notice to Tenant before any
such insurance is obtained by Landlord, during which time Tenant may obtain such insurance.
(d) Tenant shall be entitled to fulfill its insurance obligations hereunder by
maintaining a so-called "blanket" policy or policies of insurance in such form as to provide by
specific endorsement coverage not less than that which is required hereunder for the particular
property or interest referred to herein.
(e) Tenant shall not do, bring, or keep anything in or about the Premises that
will cause the cancellation of or an increase in the cost of any insurance covering the Premises.
In no event shall Tenant's use as set forth in Paragraph K of the Basic Lease Provisions be
deemed to cause the cancellation of or an increase in the cost of any insurance covering the
Premises.
(f) Each party shall cause each insurance policy obtained by it pertaining to
the Premises to provide that the insurance company waives in writing all right of recovery by
way of subrogation against either party in connection with any damage covered by any policy.
001219.0001W984571 _ I I
Neither party shall be liable to the other for any damage caused by fire or any of the risks insured
against under any insurance policy required by this Lease. The parties hereto release each other
and their respective authorized representatives from any claims for damage to any person or to
the Premises and other improvements located in the Premises, and to the fixtures, personal
property, improvements and alterations of either Landlord or Tenant in or upon the Premises,
that are caused by or result from risks insured against under any insurance policies carried by the
parties and in force at the time of any such damage.
19. INTENTIONALLY OMITTED.
20. INDEMNIFICATION; WAIVER.
(a) Tenant hereby agrees to indemnify and hold Landlord and the Landlord
Parties harmless from and against any and all liabilities, damages, losses, demands, claims,
costs, expenses (including reasonable attorneys' fees and costs), obligations, liens, actions,
causes of action and lawsuits (herein collectively "Liabilities"), which Landlord may suffer or
incur arising out of, in connection with or resulting from this Lease, including, but not limited to,
Tenant's and the Tenant Parties' failure to observe or comply with any Laws, the conduct of
Tenant's business, any activity, work or other things done, permitted or suffered by Tenant or the
Tenant Parties in or about the Premises, or the breach or default of any of Tenant's obligations
under this Lease. Tenant further agrees that in case of any one or more Liabilities, threatened or
actual, arising against Landlord,. Tenant shall, upon notice from Landlord, defend Landlord at
Tenant's sole cost and expense by counsel satisfactory to Landlord. Tenant's indemnification
shall not include an indemnification for liability to the extent arising from the willful misconduct
or active negligence of Landlord.
(b) Tenant, as a material part of the consideration to Landlord for this Lease,
hereby assumes all risk of damage to property or injury to or death of persons, in, upon or about
the Premises from any cause, including, but not limited to, fire, explosion, falling plaster, steam,
gas, electricity, dampness, water or rain (whether same may leak from any part of the Building or
from the pipes, appliances or plumbing works therein, or from the roof, street or subsurface, or
from any other place), and Tenant hereby waives any and all claims with respect thereof against
Landlord and the Landlord Parties. Landlord and the Landlord Parties shall not be liable for
interference with the light or other incorporeal hereditaments, loss of business or profits of
Tenant, damage to property entrusted to Landlord or the Landlord Parties, or for loss of or
damage to any property, by theft or otherwise, resulting from any cause whatsoever, except to
the extent arising from the willful misconduct or active negligence of Landlord or Landlord's
agents or employees. Landlord and the Landlord Parties shall not be liable for any one or more
latent or patent defect(s) in the Premises. Tenant shall give prompt notice to Landlord in case of
fire or accidents occurring in, on or about the Premises.
(c) Landlord hereby agrees to indemnify and hold Tenant and the Tenant
Parties harmless from and against any and all Liabilities, which Tenant may suffer or incur
arising out of, in connection with or resulting from Landlord's and the Landlord Parties' failure
to observe or comply with any Laws, any activity, work -or other things undertaken by Landlord
or the Landlord Parties in or about the Premises, or the breach or default of any of Landlord's
obligations under this Lease. Landlord further agrees that in case of any one or -more Liabilities,
001219.000116984572 12
threatened or actual, arising against Tenant, Landlord shall, upon notice from Tenant, defend
Tenant at Landlord's sole cost and expense by counsel satisfactory to Tenant. Landlord's
indemnification shall not include an indemnification for liability to the extent arising from the
willful misconduct or negligence of Tenant.
21. DAMAGE OR DESTRUCTION.
(a) If the Premises or the Building are totally or partially damaged or
destroyed by a risk covered by the insurance expressly set forth in Section 18(a), rendering the
Premises totally or partially inaccessible or unusable, Landlord shall promptly repair, replace or
restore the Premises or the Building to substantially the same condition as they were in
immediately before such damage or destruction. Such damage or destruction shall not terminate
this Lease. However, if the Premises or the Building do not appear to be capable of being
repaired, replaced or restored within six (6) months after the date of damage or destruction, as
determined by Landlord in the exercise of its reasonable judgment within sixty (60) days
following such damage or destruction, then either party may terminate this Lease. Such
termination shall occur, if at all, by written notice thereof delivered to the other party within ten
(10) days after written notice of Landlord's determination is delivered to Tenant. If this Lease is
so terminated, then all insurance proceeds relating to the Premises or the Building and any other
property of Landlord shall be paid to Landlord, and neither party shall be liable to the other
except with respect to accrued but unpaid obligations, and except as provided in Section 18(d).
During any period that the Premises are totally or partially inaccessible or unusable, there shall
be equitable abatement of Minimum Rent and Additional Rent.
(b) If the Premises or the Building are totally destroyed or materially damaged
by a risk not covered by the insurance expressly described in Section l 8(a) or such additional
insurance as was then actually in effect, Landlord shall have the right to either repair, replace or
restore the Premises or Building or to terminate this Lease. However, if the Premises or the
Building do not appear to be capable of being repaired, replaced or restored by Landlord within
six (6) months after the date of such uninsured damage or destruction, as determined by Landlord
in the exercise of its reasonable judgment within sixty (60) days following such uninsured
damage or destruction, then either party may terminate this Lease. Such termination shall occur,
if at all, by written notice thereof delivered to the other party within ten (10) days after written.
notice of Landlord's determination is delivered to Tenant. If this Lease is so terminated, then
neither party shall be liable to the other except with respect to accrued but unpaid obligations,
and except as provided in Section 18(d). Notwithstanding the foregoing, Tenant, within thirty
(30) days after receiving Landlord's notice to terminate, may provide Landlord with notice of its
intent to fund such shortfall in insurance proceeds, in which case Landlord shall promptly repair,
replace or restore the Premises or the Building to substantially the same condition as they were in
immediately before such damage or destruction and this Lease shall continue in full force and
effect.
(c) Nothing contained in this Section shall obligate Landlord to repair or
restore any of Tenant's equipment, -materials, supplies, inventory or other personal property.
(d) Notwithstanding anything herein to the contrary, if the Premises or the
Building are damaged during the final two years of the Term to the extent that the cost of repair,
007219.000IN698457.2 13
replacement or restoration of the damaged areas as reasonably estimated by Landlord exceeds
thirty percent (30%) of the replacement cost of the Premises or the Building respectively, then
either Landlord or Tenant may terminate this Lease upon ten (10) days' written notice to the
other party; provided, however, that Landlord's election to terminate this Lease as provided
herein shall be automatically withdrawn if Tenant delivers notice to Landlord of Tenant's
election to exercise its option to extend the Term (if applicable) within five (5) days after receipt
of Landlord's election to terminate.
(e) Tenant waives the provisions of California Civil Code Sections 1932(2)
and 1933(4) with respect to any damage to or destruction of the Premises.
22. CONDEMNATION.
(a) If all or any part of the Premises or any interest therein is taken by
condemnation, or is sold to the condemning authority under threat of condemnation (collectively
a "taking"), the rights and obligations of Landlord and Tenant shall be determined pursuant to
this Section 22, and the parties hereby waive the provisions of California Code of Civil
Procedure Section 1265.130. If there is a total taking of the Premises, this Lease shall terminate
on the date of such taking. If there is not a total taking of the Premises, but there has been a
partial taking of the Premises, Landlord may, in its sole discretion, either (i) restore the
remaining portion of the Premises to the extent of severance damages actually received by
Landlord (excluding the amount applied to the outstanding amounts owing to a lienholder with
an encumbrance upon all or any portion of the Premises ), in which case this Lease shall remain
in full force and effect, or (ii) terminate this Lease at any time thereafter upon ten (10) days'
written notice to Tenant.
(b) •If any portion of the Premises is taken and this Lease remains in full force
and effect, the Minimum Rent shall be abated in proportion to the degree to which Tenant's
reasonable use of the Premises is impaired. Except for such abatement, if any, Tenant shall have
no claim against Landlord in the event of any taking, and Tenant hereby assigns to Landlord all
awards and other consideration paid with respect to any taking of all or any portion of the
Premises, except any award, or portion thereof, relating to the unamortized value of
improvements (including trade fixtures) that Tenant has a right to remove at the expiration or
earlier termination of this Lease, but elects not to remove.
23. ASSIGNMENT AND SUBLETTING. Except as otherwise set forth herein,
Tenant shall not assign, transfer or encumber (collectively, "assign") this Lease, or any interest
herein, and shall not sublet the Premises, or any part thereof, or permit any other person or entity
(except the employees of Tenant) to occupy or use the Premises, or any portion thereof, without
first obtaining the written consent of Landlord, which consent shall not be unreasonably
withheld. In determining whether to consent or object to an assignment or sublease, it shall be
deemed reasonable for Landlord to object to a proposed assignment or subletting if.
(a) The proposed assignee -or sublessee has inadequate financial strength or
lacks business or management experience or reputation.
001219.00O1\699457.2 14
(b) The proposed assignee or sublessee. would, in Landlord's sole discretion,
likely violate one or more of the terms, covenants, conditions or restrictions imposed upon
Tenant under this Lease or on Landlord as set forth in any other lease, license, occupancy or
other agreement for the lease or use of space within, or other agreement entered into with respect
to, the Premises.
The foregoing shall not restrict Landlord from reasonably deciding not to consent for any
reason other than those designated above. Consent by Landlord to any assignment or subletting
shall not be deemed to be a consent to any subsequent assignment or subletting. Consentby
Landlord.to an assignment or subletting shall not release the original Tenant or any of Tenant's
permitted successors or assigns from liability hereunder, and the original Tenant and all
successors and assigns shall be primarily liable, jointly and severally, for all obligations of
Tenant under this Lease.
Notwithstanding the foregoing, Landlord hereby consents to any assignment or sublease
by Tenant to an assignee or subtenant in which Tenant or its principals has an ownership interest
or affiliated business arrangement and which is engaged in the business of automotive repair or
wholesale sales to entities affiliated with Tenant. Tenant shall promptly notify Landlord in
writing of any such assignment or sublease and deliver Landlord a copy of the documentation
evidencing such assignment or sublease.
As a condition to Landlord's consent to an assignment of this Lease or a subletting of the
Premises, Landlord shall have the option to require that seventy-five percent (75%) of any
increased rental or other payments or consideration payable to Tenant pursuant to such
assignment or subletting (excluding any payments or consideration associated with or pursuant to
any related transactions, such as the sale of Tenant's business in the Premises) be paid to
Landlord as additional rent hereunder; provided, however, that the foregoing shall not apply to
any increased rental or other payments or consideration payable to Tenant pursuant to an
assignment or sublease entered into with an assignee or subtenant in which Tenant or its
principals has an ownership interest or affiliated business arrangement and which is engaged in
the business of automotive repair or wholesale sales to entities affiliated with Tenant. Tenant
shall reimburse Landlord for Landlord's reasonable expenses (including, without limitation, all
reasonable attorneys' fees incurred by Landlord) relating to any assignment or subletting or the
activities of Landlord in considering whether to consent to the same, not to exceed one thousand
dollars ($1,000). Such sums shall be payable whether or not Landlord consents to Tenant's
request to assign or sublet and shall be deemed Additional Rent hereunder. Any attempted
assignment or subleasing without Landlord's consent shall be null and void, and any acceptance
of rent from any person other than Tenant shall not be construed as Landlord's consent to any
assignment or sublease.
If Tenant is a partnership or limited liability company, a withdrawal or change, whether
voluntary, involuntary, or by operation of law, of any partner of an interest in the partnership or
members of an interest in a limited liability company of more than fifty percent (500/o), or the
dissolution (voluntarily or by court order) of the partnership or limited liability company (as
applicable), will be deemed a voluntary assignment.
001219.0001\699457.2 15
If Tenant is a corporation, any dissolution, merger, consolidation, or other reorganization
of Tenant, or the sale or other transfer of a controlling percentage of the capital stock of Tenant,
or the sale of more than fifty percent (50%) of the value of the assets of Tenant, will be deemed a
voluntary assignment. The phrase "controlling percentage" means the ownership of, and the
right to vote, and stock possession of more than fifty percent (501/o) of the total combined voting
power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the
election of directors. This paragraph does not apply to corporations, the stock of which is traded
through an exchange or over the counter.
24. SURRENDER OF PREMISES BY TENANT. Upon the expiration or earlier
termination hereof, Tenant shall surrender the Premises to Landlord in broom clean condition,
and all of Tenant's Improvements and alterations shall be in good condition (except for ordinary
wear and tear, and except for alterations that Tenant has the right or is obligated to remove under
the provisions of Section 12 hereof). Any damage or deterioration shall not be considered
ordinary wear and tear if same could have been prevented by good maintenance and repair
practices of Tenant. Prior to the expiration or earlier termination of this Lease, Tenant shall
remove all of its personal property from the Premises and shall perform all repairs and
restoration of the Premises made necessary by the removal of any of Tenant's Improvements,
alterations or personal property iri order to cause the Premises to be restored to its original
condition at the time the Tenant's Improvements were completed.
25. BOLDING OVER. If Tenant, with Landlord's consent, remains in possession of
the Premises after expiration or earlier termination of the Term, or after the date set forth in any
notice given by Landlord to Tenant terminating this Lease, such possession by Tenant shall, in
the absence of a written notice to the contrary from Landlord, be deemed to create a month -to -
month tenancy on all of the terms hereof applicable to a month -to -month tenancy, including,
without limitation, the payment of all Minimum Rent, Additional Rent and all other fees, costs
and charges required hereunder; provided, however, that the Minimum Rent shall be increased to
one hundred twenty-five percent (125%) of the Minimum Rent in effect immediately prior to
such expiration or earlier termination. If Tenant fails to surrender possession of the Premises to
Landlord on the expiration or earlier termination of this Lease, and Landlord does not consent
thereto in writing, then Tenant hereby agrees to indemnify, defend, protect and hold Landlord
harmless from and against any and all Liabilities arising out of or resulting from such failure,
including, without limitation, the claims by any succeeding tenant or tenants, delays in
Landlord's ability to deliver the Premises or any portion thereof to a succeeding tenant or tenants
and all consequential damages relating thereto.
26. DEFAULT.
(a) The occurrence of any of the following shall constitute a material default
by Tenant:
(i) Tenant fails to pay any installment of the Minimum Rent,
Additional Rent, or any other fee, cost or charge payable by Tenant hereunder_ (collectively,
"Rent"); on the date that same is due, and such failure shall continue for a period of five (5)
business days after written notice thereof to Tenant. ;Any notice given pursuant to the foregoing
001219.0001\698457.2 16
provision shall constitute the notice required by Section 1161 of the California Code of Civil
Procedure.
(ii) Tenant fails to comply with any term, covenant or condition of this
Lease, other than the payments described in Section 26(a)(i) above or as otherwise specifically
provided herein and does not cure such failure within thirty (30) days after written notice thereof
to Tenant. If such failure cannot reasonably be cured within thirty (30) days, Tenant shall not be
in default hereof if Tenant commences to cure the default within the thirty (30) period and
diligently and in good faith prosecutes such cure to completion within a reasonable period
thereafter.
(iii) The failure by Tenant to pay its obligations as they become due;
the making of any general assignment or general arrangement for the benefit of creditors by
Tenant; Tenant becomes insolvent or makes a transfer in fraud of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition for
reorganization or arrangement under bankruptcy Iaw or law affecting creditor's rights unless, in
the case of a petition filed against Tenant, such petition is dismissed within one hundred twenty
(120) days; the appointment of a trustee or a receiver to take possession of the Premises, where
possession is not restored to Tenant within sixty (60) days; or the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged in sixty (60) days.
(iv) The failure by Tenant to make any payment of Rent required to be
made by Tenant hereunder, or to satisfy any other obligation imposed on it under this Lease, as
and when due, and whether or not subsequently cured, where such failure occurs on more than
three (3) occasions during any consecutive period of twelve (12) months during the Term of the
Lease. Tenant acknowledges that the purpose of this provision is to prevent repetitive defaults
by Tenant hereunder, because such repetitive defaults likely will impose a hardship upon
Landlord.
(b) Upon the occurrence of a default by Tenant, Landlord shall have the
option to pursue any one or more of the following remedies:
(i) Landlord may continue this Lease in full force and effect as long as
Landlord does not terminate Tenant's right to possession, and Landlord shall have the right to
collect any and all Rent as and when it becomes due or payable hereunder. During the period
Tenant is in default, Landlord can enter the Premises and relet them, or any portion thereof, to
third parties for Tenant's account. Tenant shall be liable immediately to Landlord for all costs
that Landlord incurs in reletting the Premises, including, without limitation, costs of recovering
possession, advertising costs, brokers' commissions, expenses of remodeling the Premises
required by the reletting, and like costs. Reletting can be for a period shorter or longer than the
remaining Term. Tenant shall pay to Landlord all Rent due hereunder on the dates same is due,
reduced by any net amount that Landlord receives from any reletting. No act by Landlord
allowed by this Section 26 shall terminate this Lease unless Landlord notifies Tenant in writing
that Landlord elects to terminate this Lease.
001219.0001\698457.2 17
(ii) Landlord may terminate Tenant's right to possession of the
Premises at any time. However, no act by Landlord other than giving written notice of
termination to Tenant shall terminate this Lease. Upon termination, Landlord may recover any
damages proximately caused by Tenant's failure to perform under this Lease, or which are likely
in the ordinary course of business to be incurred, including any amount expended or to be
expended by Landlord in an effort to mitigate damages, as well as any other damages to which
Landlord is entitled to recover under any statute now or later in effect (including, without
limitation, California Civil Code Section 1951.2). Landlord's damages include the worth, at the
time of any award, of the amount by which the unpaid Minimum Rent, Percentage Rent, if any,
Additional Rent and all other fees, costs and charges for the balance of the Term after the time of
the award exceeds the amount of the rental loss that the Tenant proves could be reasonably
avoided. The worth at the'time of award shall be determined by discounting to present value
such amount at one percent (1 %) more than the discount rate of the Federal Reserve Bank in San
Francisco in effect at the time of the award. Other damages to which Landlord is entitled shall
bear interest at the maximum rate allowed by law.
(iii) Landlord, at any time after Tenant commits a default, may have a
receiver appointed to collect Rent, and to conduct Tenant's business. Neither the filing of a
petition for the appointment of a receiver nor the appointment itself shall constitute an election
by Landlord to terminate this Lease.
(iv) Landlord, at any time after Tenant commits a default, may cure the
default at.Tenant's cost. If Landlord at any time, by reason of Tenant's default, incurs any costs,
including, without limitation, attorney's fees and/or costs to cure any defaults of Tenant, the
costs so incurred by Landlord shall be immediately due and payable from Tenant to Landlord.
(v) If Tenant becomes a debtor under any bankruptcy taw or otherwise
becomes subject to any bankruptcy law, Landlord shall have the right to apply the Security
Deposit first toward the payment of unpaid pre -petition Rent, and the balance of such Security
Deposit, if any, shall be applied toward post -petition administrative claims for such amounts
owing hereunder.
(c) In accordance with California Civil Code Section 1951.4 (or any successor
statute), Tenant acknowledges that in the event Tenant breaches this Lease and abandons the
Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's
right to possession, and Landlord may enforce all of its rights and remedies under this Lease,
including, without limitation, the right to recover Rent as it becomes'due under this Lease. Acts
of maintenance or preservation or efforts to re -let the Premises or the appointment of a receiver
upon initiative of Landlord to protect Landlord's interests under this Lease shall not constitute a
termination of Tenant's right to possession.
(d) Pursuit of any of the foregoing remedies set forth in Subsection 26(b) shall
not preclude pursuit of any of the other remedies provided in this Lease, or any other remedies
currently or hereafter provided by law or equity, nor shall pursuit of any remedy herein provided
constitute a forfeiture or wai-ver of any --Rent due to Landlord hereunder, or of any damages
accruing to Landlord by reason of the violation of any of the terms, covenants or conditions
001219.0001\6984.57.2 18
contained herein. No notice given to Tenant by Landlord under this Section 26 shall be deemed
a forfeiture or termination hereof unless Landlord expressly so states in writing.
(e) Any sum accruing to Landlord under the terms and provisions of this
Lease which is not paid when due shall bear interest until paid at the rate of ten percent (10%)
per annum; provided, however, interest will not accrue on the amount owed as a late charge.
Accrual of a late charge as provided under the terms and provisions of this Lease shall not be
construed as prohibiting accrual of interest as stated herein. Acceptance of such interest shall in
no event constitute a waiver of Tenant's default with respect to such overdue amount, nor
prevent Landlord from exercising any of the other rights and remedies granted hereunder.
(f) Tenant hereby acknowledges that late payment by Tenant to Landlord of
Rent due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include, but are not limited
to, processing and accounting charges, and late charges which may be imposed upon Landlord
by the terms of any mortgage or deed of trust covering the Premises or any portion thereof.
Accordingly, if any installment of Rent due from Tenant or any portion thereof shall not be
received by Landlord or Landlord's designee within ten (10) days following the date same is due,
then Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue
amount. Acceptance of such late charges by Landlord shall in no event constitute a waiver of
Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any
of the other rights and remedies granted hereunder or at law or equity.
27. WAIVER. Failure by Landlord to insist upon compliance with any of the
provisions of this Lease shall not be deemed a waiver by Landlord of such provisions nor shall
any waiver by Landlord of any right or power hereunder at any one or more times be a waiver by
Landlord of such rights or powers at any other time(s) or under any other circumstances. No
waiver by the parties hereto of the default of any term, covenant or condition of this Lease shall
be deemed to be a waiver of any subsequent default of the same or any other term, covenant or
condition contained herein. The subsequent acceptance by Landlord of Rent or any other
payment hereunder shall not be deemed to be a waiver of any preceding default by Tenant of any
term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular
Rent or other payment so accepted, regardless of Landlord's knowledge of such preceding
default at the time of acceptance of such Rent or other payment.
28. SUBORDINATION.
(a) Tenant accepts this Lease subject to and subordinate to any recorded
mortgage, deed of trust, ground or master lease, or other lien presently encumbering the
Premises. Landlord is hereby vested with full power and authority to subordinate Tenant's
interest hereunder to any mortgage, deed of trust, ground or master lease, or other lien hereafter
placed on the Premises, in which event, Tenant agrees to attorn to the holder of such mortgage,
deed of trust, ground or master lease in the event such holder assumes the rights of Landlord
hereunder pursuant to such docu nent; provided, however, that as a condition to such _
subordination of Tenant's interest hereu.nd.cx, the. -holder of such recorded mortgage, deed of trust,
ground or master lease, shall execute a commercially reasonable non -disturbance agreement
which provides substantially the following:
001219.0001\698457-2 19
As long as Tenant performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under
the encumbrance, and no steps or procedures taken under the
encumbrance, will affect Tenant's rights under this Lease.
Subject to the foregoing, Tenant agrees upon demand to execute and deliver to Landlord
such instruments subordinating this Lease as Landlord may reasonably request or, if Landlord
shall so request, Tenant shall upon demand execute and deliver to Landlord such instruments
making this Lease prior to any mortgage, deed of trust, ground or master lease, or other lien
affecting the Premises. In the event any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by Landlord
covering the Premises, or eviction of Landlord or its successors or other termination of their
rights under any ground lease, Tenant shall attorn to the purchaser upon any such foreclosure or
sale or ground lessor under such ground lease, respectively, and recognize such purchaser or
ground lessor, as the case may be, as Landlord under this Lease. Landlord agrees that, so long as
Tenant shall continue to duly perform all of its obligations hereunder, Tenant's right of
possession of the Premises shall not be disturbed unless this Lease is otherwise terminated
pursuant to its terms. If Tenant fails to execute and deliver to Landlord any instruments required
to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of
trust, ground or master lease, or other lien, as the case may be, and such failure continues for
fifteen (15) days after written demand, then notwithstanding the provisions of Section 26(a)(ii)
above, Tenant shall be in default of this Lease for failure to timely deliver such instruments.
(lb) Tenant shall not cause or allow to be filed or recorded any Uniform
Commercial Code C UCC") financing statements which encumber Tenant's removable personal
property, fixtures or other property and which contain the legal description of the Premises,
unless such UCC financing statements expressly disclose that the security interest is limited to
Tenant's interest in the assets and property of the Tenant, now owned or hereinafter acquired and
all additions and accessions thereto and substitutons and replacements thereof, and does not
extend to the interests of Landlord in the Premises. Tenant represents and warrants that Tenant
has not, prior to the date of this Lease, entered into, caused to be filed or recorded, or allowed to
be filed or recorded, any such UCC financing statement. In the event any such UCC financing
statement is filed or recorded against the Premises or any portion thereof or against any of
Landlord's property or any property in which Landlord may have an interest, Tenant shall,
within five (5) days after a written or oral request from Landlord, immediately cause such UCC
financing statement to be released from Landlord's property and from the Premises.
(c) Except as otherwise set forth herein, in no event shall this Lease, or any of
Landlord's rights and remedies hereunder, be subject or subordinate to any lien, leasehold deed
of trust, chattel mortgage or other encumbrance against Tenant's interest in the leasehold created
by this Lease or encumbering any property of Tenant located in or about the Premises, it being
expressly understood and agreed that nothing contained in this Lease shall expressly or impliedly
obligate Landlord to subordinate or waive any of Landlord's rights under this Lease or under the
laws of the jurisdiction in which-ffie Premises -are loeated.
.1
29. TRANSFER BY LANDLORD; LANDLORD'S LIMITED LIABILITY.
001219.0001\698457.2 20
(a) If Landlord sells or transfers its interest in the Premises, Landlord on
consummation of the sale or transfer shall be released from any and all liability thereafter
accruing hereunder provided the transferee assumes all obligations of Landlord hereunder from
and after the date of such transfer. If any Security Deposit, prepaid rent or other sums have been
paid by Tenant, Landlord can transfer the Security Deposit, prepaid rent or other sums to
Landlord's successor, and on such transfer Landlord shall be discharged from any further
liability relating to such Security Deposit, prepaid rent or other sums.
(b) Tenant agrees that if Landlord is a general or limited partnership, a limited
liability partnership or a joint venture, or if Landlord at any time becomes a general partnership,
limited partnership, limited'hability partnership or joint venture, Tenant shall not make any
claims against any partner (whether general or limited) or joint venturer thereof by reason of any
matter arising under the terms of this Lease or arising in connection with the use or occupancy of
the Premises. No personal asset of any partner (whether general or limited) in such partnership
or joint venturer in such joint venture shall be subject to levy, execution, attachment or other
enforcement procedures by Tenant or any successor or assignee of Tenant on account of any
matter whatsoever relating to this Lease or the use or occupancy of the Premises. Consistent
with the intention expressed in the preceding portion of this Section, and notwithstanding
anything to the contrary contained in this Lease, Tenant agrees that in all events it shall look
solely to the estate and property of Landlord in the Premises, regardless of whether the entity
constituting Landlord is a corporation, partnership, limited liability partnership, limited liability
company, joint venture, trust, individual or otherwise, for the collection of any judgment or other
judicial process requiring the payment of money by Landlord with respect to any of the terms,
covenants or conditions of this Lease, and no other property or assets of Landlord shall become
subject to levy, execution, attachment or other enforcement procedures for the satisfaction of
Tenant's remedies.
30. ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS.
(a) Tenant shall upon fifteen (1.5) days' written notice from Landlord execute,
acknowledge before a notary public and deliver to Landlord or any then existing or potential
lessor, purchaser, or encumbrancer of the Premises a Tenant's Estoppel Certificate in the form of
or containing the information and covenants set forth in Exhibit "C" attached hereto and
incorporated herein by this reference, together with such other information and covenants as
reasonably requested by Landlord or any then existing or prospective lessor, purchaser or
encumbrancer of the Premises. Any such statement may be relied upon by a then existing or
prospective lessor, purchaser or encumbrancer of all or any portion of the Premises. Tenant's
failure to deliver such statement within such time period shall constitute an acknowledgement by
Landlord that the statements included in the estoppel certificate are true and correct, without
exception. If Tenant thereafter fails to deliver such a statement within fifteen (15) days after
written notice from Landlord of Tenant's failure to timely deliver the statement, then Tenant
does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney -in -fact and
in Tenant's name, place and stead to execute such a statement; provided, however, such
appointment shall not relieve Tenant.of its obligation•taprovide-such a statement.
(b) Landlord shall upon fifteen (15) days' written notice from Tenant execute,
acknowledge before a notary public and deliver to Tenant a Landlord's Estoppel Certificate in
001219.0001%698457.2 1 21
the form of or containing the information and covenants set forth in Exhibit "D" attached hereto
and incorporated herein by this reference, together with such other information and covenants as
reasonably requested by Tenant. Landlord's failure to deliver such statement within such time
period shall constitute an acknowledgement by Landlord that the statements included in the
estoppel certificate are true and correct, without exception. If Landlord thereafter fails to deliver
such a certificate within fifteen (15) days after written notice from Tenant of Landlord's failure
to timely deliver the certificate, then Landlord does hereby make, constitute and irrevocably
appoint Tenant as Landlord's attorney -in -fact and in Landlord's name, place and stead to execute
such a statement; provided, however, such appointment shall not relieve Landlord of its
obligation to provide such a statement.
(c) From time to time after the date of execution of this Lease and continuing
until the end of the Term, Tenant shall, upon fifteen (15) days' prior written notice from
Landlord, provide Landlord with the most recent annual financial statement of Tenant, and
annual financial statements of Tenant for the two (2) years preceding the period covered by the
current financial statement, all of which financial statements shall be certified in writing by
Tenant, as applicable, to be true and correct. Such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied, and, if such is
the, normal practice of Tenant, shall be audited by an independent certified public accountant. In
addition, Tenant hereby authorizes Landlord to submit for and obtain credit reports at any time
and from time to time from any one or more credit reporting agencies which will disclose the
credit worthiness and payment histories of Tenant.
31. INTENTIONALLY OMITTED.
32. LANDLORD'S RIGHT OF ENTRY. Landlord, or its authorized agents, shall
have the right, upon reasonable notice, to enter the Premises during normal working hours (or at
any time in the case of an emergency) for the following purposes: (a) inspecting the general
condition and state of repair of the Premises, (b) making repairs required by Landlord, and (c)
showing the Premises to any prospective purchaser or lessee. If Tenant has not renewed or
extended this Lease prior to the final ninety (90) days of the Term, Landlord, or its authorized
agents, shall have the right to erect on or about the Premises a customary sign advertising the
Premises for lease or for sale. At all times Landlord shall have a key or keys with which to
unlock the doors on the Premises, excluding Tenant's vaults and safes.
33. SUCCESSORS. The terms, covenants and conditions contained in this Lease
shall apply to, inure to the benefit of, and be binding upon the parties hereto and their respective
successors in interest and legal representatives, except as otherwise expressly provided herein.
All rights, powers, privileges and duties of Landlord under this Lease, including, but not limited
to, any notice required or permitted to be delivered by Landlord to Tenant hereunder may, at
Landlord's option, be exercised or performed by LandIord's agent or attorney.
34. AUTHORITY TO EXECUTE. Landlord and Tenant each represents and
warrants: (a) that the individual(s) signing on behalf of such.RWyj§/gre duly authorized to
execute and deliver this Lease on behalf of such party in accordance with: (i)-a duly adopted
resolution of such party's board of directors, (ii) in accordance with such party's .by-laws, or (iii)
pursuant to such party's partnership agr_oement or other controlling documents, and (b) that this
001219.0001\698457.2 22
Lease is binding upon Landlord and Tenant in accordance with its terms. Each party shall
deliver to the other party upon request a copy of such documents establishing the authority of the
signatories of such party.
35. ENTIRE AGREEMENT; LEASE NOT OFFER. This Lease, together with
any exhibits, attachments or addenda, contains all of the agreements of the parties with respect to
the subject matter hereof. No prior agreement or understanding pertaining to the subject matter
hereof shall be effective unless set forth herein. Statements, agreements, representations or
warranties, if any, by any agents or brokers of Landlord shall have no effect whatsoever and shall
not be binding upon Landlord unless expressly contained in this Lease. This Lease may be
amended in writing only, signed by the parties in interest at the time of such amendment.
Preparation of this Lease by Landlord and the submission of same to Tenant shall not be deemed
an offer to lease the Premises or any other premises to Tenant. This Lease shall become binding
upon Landlord and Tenant only when fully executed by both parties.
36. ATTORNEYS' FEES. In the event suit is brought to enforce or interpret any
part of this Lease, the prevailing party shall be entitled to recover as an element of its costs of
suit, and not as damages, all attorneys' fees and costs of suit (including, without limitation,
expert witness fees) actually incurred (regardless of any otherwise applicable court schedule for
the determination thereof). In addition, should it become necessary for Landlord to utilize legal
counsel to collect any sums from Tenant or to enforce any of the provisions contained herein,
Tenant agrees to pay all reasonable legal fees and other third party costs incurred by Landlord,
whether or not a suit is instituted or prosecuted to final judgment.
37. NOTICE. Except as otherwise required by law, any notice or document required
or permitted to be delivered hereunder shall be delivered personally, sent by a responsible
overnight courier (i.e., FedEx), or sent by mail. Any notice, demand, request, consent, approval,
or other communication that either party desires or is required to give to the other party must be
addressed to the other party at the respective addresses set forth in Paragraphs M and N of the
Basic Lease Provisions, or at such other addresses as they have theretofore specified by written
notice delivered in accordance herewith. Notices will be deemed communicated upon receipt if
personally delivered, or the next business day if sent by responsible overnight courier, or within
seventy-two (72) hours from the time of mailing if mailed as provided in this Section 37
Rejection or other refusal to accept notice or the inability to deliver notice because of a changed
address (of which no notice was given as required hereunder) shall be deemed to be receipt of
the notice when sent.
38. BROKERS. Each party hereby represents and warrants to the other party that it
has not had dealings with any broker, finder, or other person except those persons or entities
described in Paragraph Q of the Basic Lease Provisions in locating the Premises or negotiating
this Lease and that it knows of no other person who is or might be entitled to a commission,
finder's fee or other like payment in connection herewith.
- 39. RELATIONSHIP. OF PARTIES. Neither the,method_of computation of rent
s nor any other provisions contained in this Lease nor any acts of the parties shall be deemed or
construed by the parties or by any third person to create the relationship of principal and agent or
001219.0001\69W71 23
of partnership or of joint venture or of any association between Landlord and Tenant, other than
the relationship of landlord and tenant.
40. RECORDING. Concurrently with the execution of this Lease, Landlord and
Tenant shall execute and acknowledge a short form memorandum of this Lease for recording
purposes. On termination of this Lease, Tenant shall execute and deliver to Landlord
immediately upon Landlord's request a quitclaim deed in recordable form transferring to
Landlord all interest, if any, of Tenant in the Premises.
41. INTENTIONALLY OMITTED.
42. SECURITY. Landlord does not assume any responsibility to provide any
security measures, and shall not have any liability for failure to provide same or for any
inadequacy thereof with respect to the Premises.
43. 'TENANT'S RESPONSIBILITY REGARDING HAZARDOUS
MATERIALS. Tenant shall not (either with or without negligence) cause or permit the escape,
disposal or release of any biologically or chemically active or other hazardous substances or
materials or substances or materials now or subsequently found to have an adverse effect on the
environment or the health or safety of persons (collectively, "Hazardous Materials'). Tenant
shall not allow the storage or use of Hazardous Materials in any manner not sanctioned by law.
Landlord's approval shall not be required for (i) ordinary cleaning products which are not
regulated by governmental authorities and are used in the ordinary course of Tenant's business,
or (ii) those items and amounts which are reasonably necessary to the business of Tenant at the
Premises, which items and amounts Tenant agrees to properly use, store and dispose of in the
manner required by law. Without limitation, the term "Hazardous Materials" shall include those
described in the Comprehensive Environmental Response, compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 6901, et seq., any applicable state or local laws, and the
regulations adopted under those acts. If Tenant or the Tenant's Parties cause any Hazardous
Materials contamination of the Premises, Tenant shall, at its sole cost and expense, remove such
Hazardous Materials and remediate the Premises in compliance with all Laws. If any lender or
governmental agency shall ever require testing to ascertain whether or not there has been any
release of Hazardous Materials during the term of this Lease, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as additional rent if such requirement
applies to the Premises. In addition, Tenant shall execute affidavits, representations and the like
from time to time at Landlord's request concerning Tenant's best knowledge and belief
regarding the presence of Hazardous Materials on the Premises. In all events, Tenant shall
indemnify, defend and hold Landlord and the Landlord Parties harmless from and against any
and all liabilities, costs, expenses, claims, actions, causes or action, judgments, damages,
penalties, fines or losses (including, without limitation, diminution in value of the Premises,
damages arising from any adverse impact on marketing of the Premises, and sums paid in
settlement of claims, attorneys' fees, consultants' fees and experts' fees) if caused by Tenant, the
Tenant Parties or persons acting under Tenant. Tenant shall not be liable for any Hazardous
Materials located on the Premises as of the Commencement Date or migrating onto the Premises
from adjacent property. The within covenants shall survive the expiration or earlier termination_.
of the Term of this Lease.
001219.0001\698457.2 24
44. SPECIFIC PERFORMANCE. With respect to any provision of this Lease
which provides, in effect, that Landlord shall not unreasonably withhold or unreasonably delay
any consent or any approval, Tenant, in no event, shall be entitled to make, nor shall Tenant
make, any claim for, and Tenant hereby waives any claim for, money damages; nor shall Tenant
claim any money damages by way of setoff, rent abatement, counterclaim or defense, based upon
any claim or assertion by Tenant that Landlord has unreasonably withheld or unreasonably
delayed any consent or approval; Tenant's sole remedy shall be an action or proceeding for
specific performance, injunction or declaratory relief to enforce such provision.
45. WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT DO HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER, ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT, THE RELATIONSHIP OF LANDLORD AND TENANT, OR
TENANT'S USE OR OCCUPANCY OF THE PREMISES.
46. GUARANTOR. If any guarantor(s) are listed in the Basic Lease Provisions, then
the obligations of Tenant under this Lease shall be guaranteed by such guarantor(s) on the
Guaranty of Lease form attached hereto as Exhibit "E" and incorporated herein by this reference,
or such other form as is acceptable to Landlord in its sole discretion.
47. NONDISCRIMINATION. Tenant herein covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through it, and this
Lease is made and accepted upon and subject to the following conditions: There shall be no
discrimination against or segregation of any person or group of persons on account of race, color,
creed, religion, sex, marital status, handicap, ancestry or national origin in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises herein leased nor
shall Lessee itself, or any person claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the Premises
herein leased.
48. FORCE MAJEURE. Except for the payment of monetary obligations
hereunder, neither Landlord nor Tenant shall be chargeable with, liable for, or responsible to the
other parry for anything or in any amount for any delay caused by fire or other casualty,
earthquake, flood, inclement weather, explosion, acts of God or the public enemy, any action,
inaction, delay or interference by governmental authorities (including, without limitation, delays
in promptly obtaining the permits and approvals required for any construction), war, invasion,
insurrection, rebellion, riots, strikes or lockouts, acts or omissions of the other party or any other
cause, whether similar or dissimilar to the foregoing, which is beyond the reasonable control of
such party (collectively, "Force Majeure Delays"). Any delay in either party's performance of
non -monetary obligations under this Lease arising out of or in connection with Force Majeure
Delays shall not be deemed to be a breach by such party under this Lease, and any time period
within which such party is obligated to perform under the Lease shall be extended for a period of:_._
time which is reasonable in..light of such Force Majeure Delays (which extension shall in no
event be less than the duration of the events causing such delay).
001219.0001\6984571 25
49. MISCELLANEOUS PROVISIONS. The invalidity, illegality, or
unenforceability of any provision of this Lease shall in no way affect the validity, legality or
enforceability of any other provision hereof. If more than one person or entity is Tenant, the
obligations imposed on each such person or entity shall be joint and several. This Lease shall be
construed and interpreted in accordance with the laws of the State of California in force from
time to time. Time is of the essence in this Lease. The captions of the paragraphs of this Lease
are for convenience only and are not a part of this Lease and do not in any way limit or amplify
the terms and provisions of this Lease. The voluntary or other surrender of this Lease by Tenant,
or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies. Any uncertainty or ambiguity
existing herein shall not be interpreted against either party because such party prepared any
portion of this Lease, but shall be interpreted according to the application of rules of
interpretation of contracts generally. Where the context so indicates, references to the singular
includes the plural; references to the masculine includes the feminine and neuter, and references
to the neuter includes the masculine and feminine. Each term and provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition to Landlord's
performance hereunder.
50. CONTINGENCIES.
(a) Tenant's obligation to enter into this Lease is contingent upon Tenant,
through its reasonable and diligent efforts, being able to obtain all necessary government
approvals (collectively "Approvals") necessary to allow Tenant's permitted use in the Premises
as described in Paragraph K of the Basic Lease Provisions. Upon request by Tenant, Landlord
shall take reasonable steps to assist and cooperate with Tenant's efforts to obtain necessary
Approvals. If Tenant is unable to obtain all Approvals on or before May 17, 2004 ("Contingency
Date"), Tenant, in its sole discretion, may elect to terminate this Lease by written notice to
Landlord delivered on or before the Contingency Date. If Tenant elects to terminate this Lease
pursuant to this Section 50(a), such termination shall become effective upon Landlord's receipt
of Tenant's termination notice. Tenant's failure to deliver such notice on or before the
Contingency Date shall constitute Tenant's waiver of Tenant's right to terminate the Lease
pursuant to this Section 50(a).
- (b) Landlord and Tenant acknowledge that Tenant has been unable to conduct
a satisfactory inspection and review of the Premises prior to delivery of the Premises to Tenant,
and that Landlord has been unable to provide Tenant with as -built and/or City -approved plans of
the Building and other improvements on the Premises. Prior to the Contingency Date, Tenant
may perform such due diligence of the Premises as Tenant shall reasonably desire. If Tenant
determines, through such due diligence, that the Premises and/or the condition thereof is not
satisfactory, Tenant, in its sole discretion, may elect to terminate this Lease by written notice to
Landlord delivered on or before the Contingency Date. If Tenant elects to terminate this Lease
pursuant to this Section 50(b), such termination shall become effective upon Landlord's receipt
of Tenant's term, ir:ation notice. -Tenant's failure to deliver such notice on or before the
Contingency Date shall eonstte-Tenant's waiver of Tenant's right to terminate the Lease
pursuant to this Section 50(b).
001219.0001\698457.2 .26
(c) If Tenant exercises its rights to terminate the Lease under Sections 50(a)
or 50(b), Landlord agrees to reimburse Tenant an amount equal to (i) Tenant's reasonable costs
incurred in preparing its plans for the tenant improvements, and (ii) the cost of any
improvements installed by Tenant prior to the termination hereof. The provisions of this Section
50(c) shall survive termination of this Lease.
(d) Tenant's obligation to enter into this Lease is further contingent upon
Tenant, through its reasonable efforts, being able to obtain all necessary approvals from Big O
Tires, Inc., a Nevada corporation for (i) use of the Premises as a site for a Big O Tire store, and
(ii) execution of a franchise agreement between Big O Tires, Inc., and Tenant for such use. If
Tenant is unable for any reason to obtain such approvals within thirty (30) days from the date
this Lease is signed by Landlord and Tenant, this Lease shall terminate and be of no further force
and effect.
51. FRANCHISOR'S RIGHT TO CURE. It is expressly understood and agreed by
Landlord and Tenant that in accordance with that certain Big O Tires, Inc. Franchise Agreement
by and between Tenant, as Franchisee, and Big O Tires, Inc., as Franchisor, with respect to the
Premises, that in the event of any breach or claim of breach hereunder by Tenant, Landlord is
obligated to notify Big O Tires, Inc. at 12650 East Briarwood Avenue, Suite #2-D, Englewood,
Colorado 80112 or at such other address as Big O Tires, Inc. may notify Landlord of in writing
from time to time, of any such breach or claim of breach, of which Landlord has knowledge.
Within fifteen (15) days after its receipt of such notice and so long as it has cured all breaches
and defaults with respect to this Lease, Big O Tires, Inc. shall be obligated to: (i) assume
Tenant's rights and obligations under this Lease, including but not limited to..the payment to
Landlord of any accrued and unpaid rent and Additional Rent and the curing of Tenant's other
obligations required under the terms and provisions of this Lease; and (ii) have the right to
sublease the Premises to another authorized franchisee of Big O Tires, Inc. subject to the
approval of Landlord, which approval by Landlord may not be unreasonably withheld.
001219.0MA699457.2 27
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date set
forth beneath each party's respective signature hereon, but such execution shall be as of the date
first mentioned above.
Landlord:
BB AUTO I, LLC,
a California limipeA liability company
B.
Name: -7'oDP�SaIV
Title: :A& kA
JUZTWIN, INC.,
a California corporation
By:
Name:
Title:
C.S.B. PARTNERSHIP,
a California general partnership
By: C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General Partner
By: 1 &,.& )
C topher R. Phillip , President
By: FOUR KYLES, INC.,
a California co orati n, its General Partner
By:
Virgil K e Kyle, I, resident
By: PHILLIPS & PHILLIPS, L.P.,
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By: Aew,
C ' opher R. Phillip , President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By: At�
Jas Y. Berry, Presid t
001219.0001\6994571 28
EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
To be supplied by Landlord at a fixture time.
001219.0001\698457.2
EXHIBIT "B"
TENANT WORK LETTER AGREEMENT
This TENANT WORK LETTER AGREEMENT ("Work Letter Agreement") is entered
into as of April 2004 by and between 1113 AUTO 1, LLC, a California limited liability
company, and JUZTWIN, INC., a California corporation (collectively, "Landlord"), and C.S.B.
PARTNERSHIP, a California general partnership ("Tenant").
RECITALS:
A. Concurrently with the execution of this Tenant Work Letter Agreement, Landlord
and Tenant have entered into a lease (the "Lease") covering certain premises (the "Premises")
more particularly described in Exhibit "A" attached to the Lease. All terms not defined herein
have the same meaning as set forth in the Lease. To the extent applicable, the provisions of the
Lease are incorporated herein by this reference.
B. in order to induce Tenant to enter into the Lease and in consideration of the
mutual covenants hereinafter contained, Landlord and Tenant agree as follows:
1. TENANT'S WORK. Subject to Force Majeure Delays as described in
Section 48 of the Lease and subject to any Landlord Delays as described below, Tenant shall, at
its sole cost and expense, undertake construction of the Tenant Improvements. As used herein,
"Landlord Delays" shall mean any delays in the completion of the Tenant Improvements which
is caused by or results from Landlord's failure to timely perform any of its obligations pursuant
to the Lease or this Work Letter.
2. TENANT IMPROVEMENTS. Reference herein to "Tenant
Improvements" shall mean the improvements attached hereto as Exhibit `13-1".
3. DESIGN AND APPROVAL OF TENANT IMPROVEMENTS. The
Tenant Improvements to be constructed on the Premises by Tenant shall be constructed at
Tenant's sole cost and expense, in a good and workmanlike manner, using all new materials, in
compliance with all applicable laws, statutes, rules, regulations and building codes, and in
accordance with plans and specifications for such improvements that have been approved by the
applicable governmental authorities and by Landlord pursuant to the provisions of this Section 3.
(a) Tenant shall prepare final plans, specifications and working
drawings for construction of the Tenant Improvements and submit said final plans, specifications
and working drawings to Landlord for approval. Landlord shall provide written approval within
fifteen (15) business days of receipt of the final plans, which approval shall not be unreasonably
withheld, or shall provide written objections to those final plans within that time period. The
failure of Landlord to provide approval or written objections to the final plans within such fifteen
(15) business day period shall be deemed Landlord's approval of the final plans.
(b) Following approval of the final plans by Landlord,.the final plans
shall be submitted by Tenant to the City for approval, to the extent such approval is required
under applicable law. The final plans -approved by Landlord and -the City shall be referred to
001219.0001W99457.2
hereinafter as the "Approved Plans". All construction of the Tenant Improvements by Tenant
shall be substantially in accordance with the Approved Plans, and no change may be made in the
Approved Plans that constitutes a material change to the Tenant Improvements without
Landlord's prior written approval, which approval shall not be unreasonably withheld. Upon
completion of the construction of the Tenant Improvements, Tenant shall provide Landlord with
two (2) sets of "as built" plans.
C. CONSTRUCTION OF TIRE IMPROVEMENTS. After Tenant has obtained
all required governmental approvals and permits allowing construction of the Tenant
Improvements on. the Premises, Tenant shall contract with a general contractor (the
"Contractor") licensed by the State of California to construct the Tenant Improvements on the
Premises in accordance with the Approved Plans. Tenant shall furnish Landlord with a true copy
of Tenant's contract with the Contractor, together with evidence of the Contractor's financial
condition and evidence that Tenant has sufficient funds committed to complete the construction.
Tenant's contract with the Contractor shall (i) give Landlord the right, but not the obligation, to
assume Tenant's obligations and rights under that contract if Tenant is in material default under
the contract or this Lease after the expiration of all applicable cure periods, if any; and (ii)
provide that in the event of such default by Tenant then Landlord, its agents and representatives,
may enter the Premises at any reasonable time thereafter to cause completion of the construction.
In the event Landlord exercises the foregoing right to cause completion of the construction,
Tenant shall assign to Landlord for its use the general contract, and Tenant shall deliver to
Landlord an acknowledgment and acceptance by the Contractor to the assignment to Landlord,
said acknowledgment and acceptance to be in such form as Landlord in its commercially
reasonable discretion may require. Landlord shall have the right to post and maintain on the
Premises any notice of non -responsibility provided for under applicable law, and to inspect the
Premises or the Tenant. Improvements in relation to such work at any reasonable time upon prior
notice to Tenant. The Tenant Improvements shall be completed by Tenant in a good and
workmanlike manner, free of liens and substantially in accordance with the Approved Plans and
applicable laws using quality materials. Tenant shall obtain and deliver to Landlord upon
completion of the Tenant Improvements unconditional lien releases from the Contractor and all
subcontractors who constructed the Tenant Improvements and from materialmen which supplied
materials as part of the construction of the Tenant Improvements.
D. MISCELLANEOUS CONSTRUCTION COVENANTS.
(a) Diligent Construction. Tenant will promptly, diligently and
continuously pursue construction of the Tenant Improvements to successful completion in full
compliance with the Lease. Landlord and Tenant shall cooperate with one another during the
construction of the Tenant Improvements to effectuate such work in a timely and compatible
manner.
(b) Compliance with Laws. Tenant will construct the Tenant
Improvements in a safe and lawful manner. Tenant shall, at its sole cost and expense, comply
with all applicable laws and all regulations and requirements of, and all licenses and permits
,.. � ..issued by, all municipal or other governmental bodies with jurisdiction which pertain_to the
construction of the Tenant Improvements.
001219.OW1\698457.2 2
(c) Coordination with Lease. Nothing.herein contained shall be
construed as (i) constituting Tenant as Landlord's agent for any purpose whatsoever, or (ii) a
waiver by Landlord or Tenant of any of the terms or provisions of this Lease.
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this
Tenant Work Letter Agreement to be duly executed by their duly authorized representatives as of
the date of the Lease.
Landlord:
C.S.B. PARTNERSHIP,
a California general partnership
HB AUTO I, LLC,
a California limited liability company By:
By
Name: � D C� Ct
Title: VwAnt �� !?
C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General Partner
By:, - 'J' 2 � LL
C ' her R. Phillips, tresident
By: FOUR KYLES INC.,
JUZTWIN, INC., a California rporati , its General Partner
a California corporation
By:
By: Virgil KyTe Kyle, I, Presid nt
Name:
Title: By: PHILLIPS & PHILLIPS, L.P.,
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By: — '-.0"aa -
C topher R. Philli s, President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By:
Jaso Y. Berry, Presid nt
001219.OWIt699457.2 3
EXHIBIT "B-1"
SCHEDULE OF TENANT IMPROVEMENT WORK
[to be inserted]
001219.0001\698457.2
EXHIBIT "C"
TENANT'S ESTOPPEL, CERTIFICATE
TO: , or its assigns ("Landlord");
or its assigns ("Buyer"); and
, or its assigns ("Lender");
RE: That certain Lease dated , by and between
as "Landlord" and
as "Tenant" for a ^ year term
which commenced on and will terminate on (the
"Lease") of the premises commonly referred to as (the "Premises")
containing square feet of the project commonly referred to as
(the "Project").
Tenant understands that [Buyer is proposing to purchase the Project from Landlord
pursuant to that certain Agreement of Purchase and Sale, dated , as amended (the
"Purchase Agreement") by and between Landlord, as "Seller" and Buyer as "Buyer"], [Lender is
proposing to make a loan secured by Landlord's interest in the Project], and in connection
therewith Tenant is delivering this Estoppel Certificate (the "Certificate"). Tenant has been
advised and understands that Buyer and/or Lender will act in material reliance upon this
Certificate and the representations, warranties, certifications, acknowledgments and agreements
of Tenant set forth herein in the consummation of the [acquisition of the Project from Landlord
and] [loan to Landlord]. This Certificate shall be for the benefit of, and shall be relied upon by,
Buyer, its partners, successors and assigns, and any lender or group of lenders designated by
Buyer, including, without limitation, Lender and its successors and assigns.
Tenant hereby certifies that the above description of the Lease, and the description of the
Premises therein demised, is a true and correct description of the same and that the Lease
constitutes the only agreement between Landlord and Tenant with respect to the Premises.
Further, Tenant hereby represents, warrants, certifies, acknowledges and agrees as
follows: -
1. A true and complete copy of the Lease is attached hereto. There have been no
amendments, modifications; extensions, renewals or replacements of the Lease, except as
follows: . Tenant has no right, title or interest with respect to the Premises
other than as tenant under the Lease.
2. The Lease commenced on , and the term of the Lease shall expire on
. Tenant is entitled to the following renewal options under the Lease:
options to extend for period of years each, pursuant to the terms of Paragraph of the
Lease.
001219.000 J \698457.2
3. Tenant has not assigned the Lease nor sublet all or any portion of the Premises,
except as follows:
4. Other than those representations and warranties set forth in writing in the Lease,
there have been no representations, warranties or covenants made by Landlord to Tenant, either
oral or in writing.
5. The Lease is in full force and effect. Tenant has accepted the Premises, presently
occupies the same, and is paying rent and other amounts due pursuant to the Lease on a current
basis; Tenant has no knowledge of any set -offs, claims or defenses to the enforcement of the
Lease; and there are no periods of free rental applicable to the term of the Lease.
6. Tenant is not in default in the performance of the Lease, has not committed any
breach of the Lease that has not been fully cured, no notice of default has been given to Tenant,
and Tenant is not the subject of any federal or state bankruptcy, insolvency or liquidation
proceeding.
7. Landlord is not, to Tenant's knowledge, in default in the performance of the
Lease; Landlord has not, to Tenant's knowledge, committed any breach of the Lease that has not
been fully cured; no notice of default has been given to Landlord; and Landlord has fulfilled all
representations and warranties and all finish work on the Premises required of Landlord.
8. Tenant's Minimum Rent under the Lease is $ per month. Tenant's
last payment of Minimum Rent was made on or about
9. The next increase in monthly Minimum Rent is scheduled to occur on
after which the monthly Minimum Rent under the Lease will be $
10. No rent has been paid by Tenant in advance under the Lease except for
$ applicable to the months of the term, and to Tenant's knowledge, Tenant
has no claim of offset or credits against rentals under the Lease.
11. A security deposit has been made with Landlord in the amount of $
which is refundable under the terms of the Lease.
12. Tenant is not entitled to any option or right of first refusal to purchase all or any
part of the Premises or all or any part of the Building or other property of which the Premises is a
part.
13. Tenant shall sign any and all documents necessary to amend or further confirm
the terms of this Certificate within ten (10) days following request therefor by Landlord.
14. If Buyer acquires the Premises and/or if Lender makes the loan to Landlord, then
Tenant shall not, without the prior written consent of Lender and any and all other lenders with a
security interest against any porlimof the Project, pay Minimum Rent or its pro rata share of the
estimated monthly Operating Expenses, more than one (1) month in advance, nor agree to any
modifications to the term of the Lease or other material economic provisions of the Lease.
001219.0001\698457.2 2
15. In the event that Lender or any other lenders with a security interest in the Project
or any portion thereof succeeds to the interest of Landlord under the Lease or in the Project,
Tenant shall attorn to such successor and recognize such successor as the new landlord under the
Lease and make all payments of Minimum Rent, Operating Expenses and other sums under the
Lease to such successor.
lb. Tenant has not relied upon any representation (either oral or in writing) of
Landlord or Buyer in executing the Lease or this Certificate, except as expressly set forth
respectively in the Lease or this Certificate, if any.
The person(s) signing this Certificate hereby represent and warrant that it [he] [she]
[they] is [are] authorized to execute this Certificate on behalf of the undersigned.
Dated this day of
Very truly yours,
By:
Name:
Title:
Name:
Title:
"Tenant"
[provide evidence of signature authority]
001219.OW,\698457.2 3
EXHIBIT "D"
LANDLORD'S ESTOPPEL CERTIFICATE
Ladies and Gentlemen:
The undersigned, , a
("Landlord"), as Landlord under a lease (the "Lease") of certain premises (the "Premises") dated
, executed by Landlord and , a
("Tenant"), hereby states, declares, represents and warrants to the
addressee of this Estoppel Certificate and its successors and assigns as follows:
1. The copy of the Lease (with all amendments, riders or side agreements attached
thereto) attached to this Estoppel Certificate as Attachment A is a true and correct copy of the
Lease, constitutes the only agreement between Landlord and Tenant with respect to the Premises,
is in full force and effect, and has not been otherwise amended, supplemented or modified
except, if at all, as follows:
2. Landlord has delivered possession of the Premises to Tenant and any
improvements required by the terms of the Lease to be made by Landlord have been completed
in accordance with the terms of the Lease.
3. Rental and other amounts due and payable from Tenant under the Lease have
been paid to the date of Landlord's execution of this Estoppel Certificate.
. 4. Tenant is not in default under any of the terms, conditions or covenants of the
Lease, except, if at all, as follows:
5. No notice has been received or given by Landlord of any default under the Lease
by either Landlord or Tenant that has not been cured, and there are no circumstances that with
the passage of time or giving of notice, or both, would constitute a default by Landlord or Tenant
001219.00011698457.2
in the performance of any of the terms, conditions and/or covenants under the Lease, except, if at
all, as follows:
6. The address for notices to Landlord is set forth in the Lease.
7. Tenant has no charge, lien, or claim of offset under the Lease or against rent or
other charges due under the Lease, and Tenant has no outstanding claim for credit or
reimbursement on account of Tenant's improvements to the Premises, except as follows:
8. Tenant has no right or option to purchase the Premises or any part or all of the
Building of which they are a part, or to renew or extend the Lease, or to expand the Premises,
except, if at all, as follows:
9. Landlord has not received notice of any assignment, sublease, hypothecation,
mortgage or pledge of Tenant's interest in the Lease, except, if at all, as follows:
10. The amount of any security or other deposit returnable to the Tenant pursuant to
the Lease is set forth in the Lease and the amount of any Rent and other amounts paid more than
thirty (30) days prior to the date on which they are due under the Lease are also set forth in the
Lease.
11. Landlord is not in default under any mortgage, deed of trust, ground lease or other
security instrument secured by Landlord's interest in the Premises.
001219.0001\69"57.2 2
The person(s) signing this Certificate hereby represent and warrant that it [he] [she]
[they] is [are] authorized to execute this Certificate on behalf of the undersigned.
Dated this - day of
EXECUTED:
By:
Name:
Its:
001219.0001\699457.2
OPTION ADDENDUM
TO
STANDARD LEASE AGREEMENT
THIS OPTION ADDENDUM TO STANDARD LEASE AGREEMENT ("Addendum")
is attached to and made a part of that certain Lease between HB AUTO I, LLC, a California
limited liability company, and JUZTWIN, INC., a California corporation (collectively,
"Landlord"), and C.S.B. PARTNERSHIP, a California general partnership ("Tenant"), which is
dated April _ , 2004 ("Lease"). Landlord and Tenant desire to modify the Lease in the
following particulars only. As such, Landlord and Tenant hereby agree that the following shall
be included as part of said Lease:
1. Tenant is hereby granted two (2) option(s) to extend the term of this Lease upon
all of the provisions contained in the Lease, except for Minimum Rent, for a period of five (5)
years per option. Such options shall be exercised, if at all, by Tenant giving written notice to
Landlord of the exercise of each of such options ("Option Notice") at least ninety (90) days but
not more than one hundred eighty (180) days before the expiration of the initial Term or
previously exercised extension period (if any), as the case may be. Tenant cannot exercise more
than one option at a time, and Tenant can only exercise the option for the extension period
arising immediately following the end of the existing Term. Reference to the "Term" of the
Lease as used in the Lease shall include all extension period(s) for which options to extend are
exercised in accordance herewith. Tenant shall have no other right to extend the Term except as
set forth in this Addendum.
2. MINIMUM RENT DURING EXTENSION PERIOD(S). In the event Tenant
exercises one or both of its options to extend the Term of the Lease, Minimum Rent during such
extension periods shall be adjusted as necessary in accordance with Section 4(b) of the Lease.
3. INTENTIONALLY OMITTED.
4. MULTIPLE OPTIONS. In the event that Tenant has multiple options to extend
the Term of the Lease, a later option cannot be exercised unless the prior option to extend has
been so exercised.
5. EFFECT OF DEFAULT ON OPTIONS.
(a) Tenant shall have no right to give Landlord the written notice referred to
in Section 1 above, notwithstanding any provision herein to the contrary, at any time when
Tenant is in default of any of the terms, conditions or covenants contained in Lease beyond any
applicable cure period, and Tenant's right to extend the Lease pursuant to this Addendum shall
not be valid if, at the time such extended term would commence, (i) Tenant is in default of any of
the terms, conditions or covenants contained in Lease beyond any applicable cure period or (ii)
Landlord has given to Tenant three or more notices of default under Section 26 of the Lease
during the prior twelve (12) month period, whether or not such defaults are cured.
001219.0001\699457.2
(b) The period of time within which an option may be exercised shall not be
extended or enlarged by reason of Tenant's inability to exercise an option because of the
provisions of Section 6(a) hereinabove.
6. MISCELLANEOUS. All terms used herein shall have the same meanings as
used in the Lease. In the event of a conflict between the terms of the Lease and those of this
Addendum, the terms of this Addendum will control. Except as hereinabove provided, said
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum, as of the
date of the Lease.
Landlord:
C.S.B. PARTNERSHIP,
a California general partnership
HB AUTO I, LLC,
a California limit d liability company By;
Name: ?ed!> ('A14f�1C%
Title:
C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General Partner
By:
C opher R. Phillips, president
By: FOUR KYLES INC.,
JUZTWIN, INC., a California c oration, its General Partner
a California corporation `
By:
By: Virgil K le Kyl , 111, widen'
Name: = By: PHILLIPS & PHILLIPS, L.P.,
Title:
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By:
C ' opher R. Phillipj President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By:
Jasf Berry, Presi n
001219.0001\69M57.2 2
GUARANTY OF LEASE
THIS GUARANTY OF LEASE ("Guaranty") is made and entered into as of the 19th day
of April, 2004, by CHRISTOPHER R. PHILLIPS ("Guarantor") in favor of HB AUTO 1, LLC, a
California limited liability company, and JUZTWIN, INC., a California corporation
(collectively, "Lessor" ), with respect to certain obligations of C.S.B. PARTNERSHIP, a
California general partnership ("Lessee").
RECITALS
Guarantor is financially interested in Lessee, and in order to induce Lessor to enter into
that certain Lease dated April 19, 2004 ("Lease"), by and among Lessor and Lessee with regard
to the real property described therein, Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, for good and valuable consideration, the parties hereto agree as
follows:
1. Guaranty. In order to induce Lessor to enter into the Lease, Guarantor
unconditionally, absolutely and irrevocably guarantees and promises to Lessor full and complete
performance by Lessee of all covenants, terms and conditions of the Lease, as the same may
hereafter be modified, amended, extended or renewed, including, but not limited to, payment
when due of rent and other sums due under the Lease, and payment of any and all legal fees and
expenses incurred by Lessor in endeavoring to collect or enforce any of the foregoing against
Lessee, Guarantor or any other person liable thereon (whether or not suit be brought), or in
connection with any property securing any or all of the foregoing or this Guaranty. All sums due
under this Guaranty shall bear interest from the date due until the date paid at the maximum
contract rate permitted by law. This is a continuing guaranty which shall remain in full force and
effect during the term of the Lease, as renewed or extended, and thereafter until Lessee's
obligations are fully satisfied.
2. Consents. Guarantor consents and agrees that Lessor may, without notice or
demand and without affecting its liability hereunder, from time to time (a) renew, compromise or
settle, extend, accelerate or otherwise change the Lease or any of Lessee's obligations
thereunder; (b)'take, hold, release, waive, exchange, modify or enforce any security for the
payment and performance of this Guaranty or the performance of the Lease and make elections
under. the federal bankruptcy laws concerning any such security; (c) apply such security and
direct the order or manner of sale thereof as Lessor in its discretion may determine and (d)
release or substitute any one or more of the persons liable for Lessee's obligations under the
Lease or guarantors of the Lease. Lessor may without notice assign this Guaranty in whole or in
part. The Lease may be assigned or the premises sublet in whole or in part without Guarantor's
consent and without affecting the liability of Guarantor hereunder.
3. Waivers.
(a) Guarantor waives and relinquishes, any right to require Lessor to (i)
proceed against Lessee; (ii) proceed against or exhaust any security for the Lease or this
Guaranty or (iii) pursue any other remedy in Lessor's power whatsoever.
(b) Until all of Lessee's obligations to Lessor shall have been paid and
performed in full, Guarantor shall not have, and hereby waives (i) any right of subrogation, (ii)
any right to any remedy which Lessor now has or may hereafter have against Lessee and (iii) any
benefit of any security now or hereafter held by Lessor.
(c) Guar x,)r waives (i) all presentments, demands for performance, notices
of non-performance, prote� .s, notices of protests and notices of dishonor; (ii) all other notices
and demands to which Gu: rantor might be entitled, including, without Iimitation, notice of all of
the following: the acceptance hereof; any adverse change in Lessee's financial position; any
other fact which might increase Guarantor's risk; any default, partial payment or non-payment
under the Lease; any and all agreements and arrangements between Lessor and Lessee and any
changes, modifications or extensions thereof; and any revocation, modification or release of any
guaranty of any or all of the Lease by any person; (iii) any defense arising by reason of any
failure of Lessor to obtain, perfect, maintain or keep in force any security interest in any property
of Lessee, Guarantor or any other person; (iv) any defense based upon or arising out of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against Lessee or any other guarantor or any person
liable under the Lease, including, without limitation, any discharge of, or bar against collecting,
any of the obligations guaranteed hereby in or as a result of any such proceeding; (v) any defense
arising by reason of any disability or other defense of Lessee or any other guarantor or any other
person or by reason of the cessation from any cause whatsoever of the liability of Lessee or any
other guarantor or any other person; (vi) the right to a jury trial in any action hereunder or
relating hereto, and (vii) the benefit of any and all statutes of limitation with respect to any action
based upon, arising out of or related to this Guaranty. Without limiting the generality of the
foregoin, or any other provision hereof, Guarantor hereby expressly waives any and all benefits
which might otherwise be available to Guarantor under California Civil Code Sections 2809,
2810, 2815, 2819, 2839, 2845, 2849, 2850, 2899 and 3433 and California Code of Civil
Procedure Sections 580(a), 580(b), 580(d) and 726.
4. Independent Liability; Joint and Several Liability. Guarantor hereby agrees that
one or more successive or concurrent actions may be brought hereon against Guarantor, in the
same action in which Lessee may be sued or in separate actions, as often as deemed advisable by
Lessor. The obligations hereunder are joint and several, and independent of the obligations of
Lessee.
5. Remedies Cumulative: No Waiver. Lessor shall have the right to seek recourse
against Guarantor to the full extent provided for herein and in any other instrument or agreement
evidencing obligations of Guarantor to Lessor, and against Lessee to the full extent of the
obligations guaranteed hereby. No election in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of Lessor's right to proceed in any other
form of action or proceeding or against any other party. The failure of Lessor to enforce any of
the provisions of this Guaranty at any time or for a period of time shall not be construed to be a
waiver of any such provision or the right thereafter to enforce the same. All remedies hereunder
shall be cumulative and shall be in addition to all rights, powers and remedies given to Lessor by
Iaw or under any other instrument or agreement.
6. Financial Condition of Lessee. Guarantor acknowledges that certain facts
concerning Lessee and Lessee's financial condition may be known or become known to Lessor.
Guarantor waives any right to require Lessor to furnish such information to Guarantor and agrees
not to assert any defense Guarantor may have based upon Lessor's failure to furnish such
information. Guarantor acknowledges that, in executing this Guaranty and at all times hereafter,
Guarantor relies and will continue to rely upon its own investigation and sources other than
Lessor for all information and facts relating to Lessee and Lessee's financial condition.
7. Subordination. Any indebtedness of Lessee now or hereafter held by Guarantor is
hereby subordinated to Lessee's obligations under the Lease. Such indebtedness of Lessee to
Guarantor, if Lessor so requests, shall be collected, enforced and received by Guarantor as
trustee for Lessor and be paid over to Lessor on account of the obligations owed by Lessee to .
Lessor but without reducing or affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty; provided, however, that Lessee shall be entitled to make, and
Guarantor shall be entitled to receive, payments on any such indebtedness of Lessee held by
http://webmail.svn.com/exchange/todd.carson/Inbox/RE: C.S.B. Partnership xFSFF AB Auto 1, LLC;
Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
6.EML/1 multipart_xF8FF_2_Guaranty.doc/C58EA28C-18C0-4a97-9AF2-036E93DDAFB3/Guaranty.doc?attach=l
Guarantor and incurred in the ordinary course of Lessee's business, so long as no event of default
under the Lease has occurred and is continuing.
8. Successors and Assigns; Amendment. All rights, benefits and privileges
hereunder shall inure to the benefit of and be enforceable by Lessor and its successors and
assigns and shall be binding upon Guarantor and each of its heirs, representatives, successors and
assigns. The terms and provisions hereof may not be waived or amended except in a writing
executed by Guarantor and a duly authorized representative of Lessor.
9. Reports and Financial Statements of Guarantor. Guarantor shall, at its sole cost
and expense, at any time and from time to time, but not more often than once annually, deliver to
Lessor upon Lessor's request (a) such financial statements and reports concerning Guarantor for
such periods of time as Lessor may designate and (b) copies of any and all foreign, federal, state
and local tax returns and reports of or relating to Guarantor as Lessor may from time to time
request. Guarantor shall immediately give written notice to Lessor of any adverse change in
Guarantor's financial condition and of any condition or event which constitutes a default of any
of Guarantor's obligations under this Guaranty. Whenever requested, Guarantor shall further
deliver to Lessor a certificate signed by Guarantor and by the president and chief financial
officer of Guarantor in their individual capacities, warranting and representing that all reports,
financial statements and other documents and information delivered or caused to be delivered to
Lessor under this Guaranty are complete, correct and thoroughly and accurately present the
financial condition of Guarantor, and that there exists on the date of delivery of said certificate to
Lessor no condition or event which constitutes a default of Guarantor's obligations under this
Guaranty. Guarantor shall also be required to deliver estoppel certificates, in the form and at the
times when Lessee shall be required to deliver estoppel certificates under the Lease, which may
include a statement to the effect that this Guaranty remains in effect and that Guarantor has no
rights of offset or defenses to enforcement of this Guaranty.
10. Representations and Warranties. Guarantor hereby represents and warrants to
Lessor that (a) Guarantor is duly organized, validly existing and in good standing under the laws
of the State of California, (b) it is in Guarantor's direct interest to assist Lessee in procuring the
Lease, because Lessee has a direct or indirect corporate or business relationship with Guarantor,,
(c) this Guaranty has been duly and validly authorized, executed and delivered and constitutes
the binding obligation of Guarantor, enforceable in accordance with its terms, and (d) the
execution and delivery of this Guaranty does not violate (with or without the giving of notice, the
passage of time or both) any order, judgment, decree, instnunent or agreement to which
Guarantor is a party or by which it and/or its assets are affected or bound.
11. Construction; Severability; Integration. Words used herein in the masculine or
neuter gender shall include the masculine, neuter and feminine gender, and words used herein in
the singular shall include the plural and vice versa, wherever the context so reasonably requires.
If any provision of this Guaranty or the application thereof to any party or circumstance is held
invalid, void, inoperative or unenforceable, the remainder of this Guaranty and the application of
such provision to other parties or circumstances shall not be affected thereby, the provisions of
this Guaranty being severable in any such instance. This Guaranty is the entire and only
agreement between Guarantor and Lessor respecting the guaranty of the Lease, and all
representations, warranties, agreements or undertakings heretofore or contemporaneously made,
which are not set forth herein, are superseded hereby.
12. Governing Law, Jurisdiction. This Guaranty shall be governed by and construed
according to the laws of the State of California. In order to induce Lessor to accept this
Guaranty, and as a material part of the consideration therefor, Guarantor (a) agrees that all
actions or proceedings relating directly or indirectly hereto shall, at the option of Lessor, be
litigated in courts located within the County of Grange, State of California, and (b) consents to
the jurisdiction of any such court and consents to the service of process in any such action or
proceeding by personal delivery or any other method permitted by law.
http://webmail.svn.com/exchange/todd.carson/Inbox/RE: C.S.B. Partnership_xF8FF_HB Auto I, LLC;
Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
6.EML/1_mul tip art_xF8FF_2_Guaranty.doc/C58EA28C-18C0-4a97-9AF2-036E93DDAFB3/Guaranty.doc?attach-1
13. Paragraph Headings. Paragraph headings are used herein for convenience only
and shall not be used in any manner to construe, limit, define or interpret any term or provision
hereof
14. Time of Essence. Time is of the essence in the performance by Guarantor of each
and every obligation under this Guaranty.
15. Notices. Any notice which a party shall be requested or shall desire to give to the
other hereunder shall be given by personal delivery or by depositing the same in the United
States mail, first class postage pre -paid, addressed to Lessor at the address set forth in the Lease
or to Guarantor at the last known address of Lessee, and such notices shall be deemed duly given
on the date of personal delivery or three (3) days after the date of mailing as aforesaid. Lessor
and Guarantor may change their address for purposes of receiving notices hereunder by giving
written notice thereof to the other party in accordance herewith. Guarantor shall give Lessor
immediate written notice of any change in its address.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year
first above written.
GUARANTOR: 11Z A�#�
CH64TOPHER R. P LLIPS
4
http://webmai1.svn.con/ exchange/ todd.car son/ Inbox/RE: G.S.B. Partnership_XF8FF HB Auto I, LLC;
Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
6.EML/1_multipart_xF8FF 2_Guaranty.doc/C58EA28C-18CO-4a97-9AF2-036E93DDAFB3/Guaranty.doc?attach=l
EXHIBIT B
CONSENT OF MASTER LANDLORD
The undersigned "Master Landlord" hereby acknowledges that it has read this Sublease,
understands, accepts and agrees to its terms and conditions, and consents to this Sublease and to
all of the provisions herein without waiver of the restriction concerning farther subletting as set
forth in the Master Lease.
ATTEST:
By: 1&.74) CY �
NamAoe,-.t
e:_"__ , ., a n L. F l n n
Title: Ig cy Clerk
BY: d VYL—
Name: Fred Wilson
Title: Lcutive Director
00 1219.000 1 \ 1390727.4
"MASTER LANDLORD"
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
By: MZ
Name: Cat e n
Title: Chairperson
APPROVED AS TO FORM:
APPROVED AS TO FORM:
LEIBOLD MCC ND N & MANN, P.C.
Agency Special Co 1
By:
B ara Zeid Leib ld
INITIATED D APPROV
Name: S G � r
Title: Deputy Executive Director
EXHIBIT C
SUBLEASE GUARANTY
00 1219.0001 \1390727.4
GUARANTY OF SUBLEASE
THIS GUARANTY OF SUBLEASE ("Guaranty") is being executed as of the -1 day
of December, 2009, by TBC CORPORATION, a Delaware corporation ("Guarantor"), under the
following circumstances:
A. BIG O TIRES, LLC, a Nevada limited liability company ("Subtenant"), is a
wholly -owned subsidiary of Guarantor.
B. C.S.B. PARTNERSHIP, a California general partnership, as Subtenant
("C.S.B."), and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, a public body, corporate and politic, as successor -in -interest landlord ("Master
Landlord"), are parties to that certain Standard Lease Agreement dated for reference purposes
April 19, 2004 and Option Addendum to Standard Lease Agreement, as amended by that certain
First Amendment to Standard Lease Agreement dated and executed as of January 23, 2009
(collectively, "Master Lease"), for the real property commonly known as 7872 Edinger Avenue,
Huntington Beach, California 92680 (the "Property").
C. Contemporaneously with the execution of this Guaranty, Subtenant, as subtenant,
and C.S.B., as sublandlord, are executing a Sublease Agreement and the Master Landlord's
Consent attached to the Sublease Agreement as Exhibit B (collectively, the "Sublease"), pursuant
to the terms of which (I) C.S.B. is subleasing to Subtenant, the Property, and (II) Master
Landlord is consenting to the Sublease by executing the "Consent of Master Landlord" attached
to the Sublease.
D. Guarantor's execution of this Guaranty is a condition precedent to (I) C.S.B.'s
obligation to execute the Sublease, and (II) Master Landlord's obligation to execute the Consent
of Sublandlord attached to the Sublease.
AGREEMENT
NOW THEREFORE, in consideration of, and as an inducement for, C.S.B.'s and
Sublandlord's execution of the Sublease and Landlord's execution of the Consent of Sublandlord
attached to the Sublease, Guarantor hereby guarantees to Sublandlord the full and timely
payment of all rent and other sums and charges payable by Subtenant under the Sublease, and the
full and timely performance and observance of all covenants, terms, conditions, and agreements
to be performed or observed by Subtenant under the Sublease.
Guarantor hereby covenants to Sublandlord and agrees that, if Subtenant shall at any time
default in the payment of any rent or other sums and charges payable by Subtenant under the
Sublease or in the full and timely performance and observance of any covenants, terms,
conditions, and agreements to be performed or observed by Subtenant under the Sublease,
Guarantor will forthwith pay such rent or other sums and charges to Sublandlord, and will
forthwith faithfully perform and fulfill all of such covenants, terms, conditions, and agreements.
This Guaranty is an absolute and unconditional guaranty of payment and of performance.
It shall be enforceable against Guarantor without the necessity for any suit or proceedings of any
001219.0001\1391067.1
kind or nature whatsoever against Subtenant or against any security for Subtenant's obligations,
and without the necessity of any notice of non-payment, non-performance, or non -observance, or
of any notice of acceptance of this Guaranty or of any other notice or demand, all of which
Guarantor hereby expressly waives. Guarantor hereby agrees that the validity of this Guaranty
and its obligations hereunder shall in no way be terminated, affected, diminished, or impaired by
reason of Sublandlord's assertion or failure to assert any rights or remedies against Subtenant
under the Sublease. No act or omission on the part of Sublandlord shall in any way affect or
impair this Guaranty.
This Guaranty shall be a continuing Guaranty. The liability of Guarantor hereunder shall
in no way be affected, modified, or diminished by reason of any assignment, renewal,
amendment, modification, or extension of the Sublease; any extension of time or waiver that may
be granted by Sublandlord to Subtenant; or any dealings or transactions or matter or thing
occurring between the parties thereto, whether or not notice thereof is given to Guarantor.
This Guaranty shall be binding upon Guarantor and its successors and assigns and shall
inure to the benefit of Sublandlord and its successors and assigns.
Sublandlord's rights hereunder shall not be impaired as a result of any dissolution of .
Subtenant or any bankruptcy or insolvency proceedings involving Subtenant (including without
limitation, any discharge of Subtenant or its debts in any such proceedings).
Any litigation concerning this Guaranty shall be initiated in a court of competent
jurisdiction in the county in which the Property are located and Guarantor consents to the
jurisdiction of such court. This Guaranty shall be governed by the laws of the State in which the
Property are located and for the purposes of any rules regarding conflicts of law the parties shall
be treated as if they were all residents or domiciles of such State.
In the event of any action be brought by said Sublandlord against said Guarantor
hereunder to enforce the obligations of the Guarantor hereunder, the unsuccessful party in such
action shall pay to the prevailing party therein a reasonable attorney fee. The attorney's fee
award shall not be computed in accordance with any court fee schedule, but shall be such as to
fully reimburse all attorney's fees reasonably incurred.
This Guaranty may not be modified or amended except by a writing signed by both
Sublandlord and Guarantor. No delay on Sublandlord's part in exercising any right, privilege, or
power under the Sublease or this Guaranty shall operate as a waiver of any such right, privilege,
or power, or any other right, privilege, or power.
(Signature Page to Follow)
001219.0001 \1391067.1 2
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date set
forth above.
Signed in the presence of.-
By:
Printed Name: L "� ar �v-
By: z �0-'P�r 4
Prin ame: va✓�Zde(
001219.0001\1391067.1
TBC CORPORATION, a Delaware
corporation
By:
Print
Title
INITIATING DEPARTMENT: Economic Development
SUBJECT: Approve Sublease of 7872 Edinger Avenue
COUNCIL MEETING DATE: <ia Ilnv.. ��
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Attached
❑
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Attached
❑
Not Applicable
Tract Map, Location Map and/or other Exhibits
Attached
❑
Not Applicable
Contract/Agreement (w/exhibits if applicable)
Attached
(Signed in full by the City Attorney)
Not Applicable
❑
Subleases, Third Party Agreements, etc.
Attached
❑
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Attached
❑
Not Applicable
❑
Fiscal Impact Statement (Unbudgeted, over $5,000)
Attached
❑
Not Applicable
Bonds (If applicable)
Attached
❑
Not Applicable
Staff Report (If applicable)
Attached
❑
Not Applicable
Commission, Board or Committee Report (If applicable)
Attached
❑
Not Applicable
Findings/Conditions for Approval and/or Denial
Attached
Not Applicable
❑
RCA Author: Doris Powell