HomeMy WebLinkAboutHB Auto I, LLC and C.S.B. Partnership - 2008-12-15 (14)Council/Agency Meeting Held:_/—Z&�Z0/0
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Council Meeting Date: December 20, 2010
Department ID Number: ED 10-059
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Chairman and Agency Members
SUBMITTED BY: Fred A. Wilson, Executive Director
PREPARED BY: Stanley Smalewitz, Deputy Executive Director
SUBJECT: Approve and authorize execution of the First Amendment to
Reinstated Acquisition of Leasehold Interest Agreement between the
Redevelopment Agency and C.S.B. Partnership; and, authorize
transfer of funds
Statement of Issue: Approve First Amendment to Reinstated Acquisition of Leasehold
Interest Agreement between the Redevelopment Agency and C.S.B. Partnership to terminate
the leasehold interest with C.S.B. Partnership and assign Big O Tire, LLC as the new leasee.
Financial Impact: Utilization of $1,100,000 in budgetary fund equity in Fund 407 will
generate $200,000 in savings to the Agency.
Redevelopment Agency Recommended Action: Motion to:
A) Approve First Amendment to Reinstated Acquisition of Leasehold Interest Agreement
between the Redevelopment Agency and C.S.B. Partnership; and,
B) Increase Redevelopment Debt Service Fund 407 appropriations by $1,100,000; and,
C) Transfer $1,100,000 from Redevelopment Debt Service (Fund 407) into a Redevelopment
Administrative Fund 305 revenue and corresponding budgetary expenditure accounts; and,
D) Authorize the Chairperson, Executive Director, and Agency Secretary to sign and execute
the Agreement as approved by the City Attorney's Office; and,
E) Authorize the Executive Director or designee to take any action and execute any and all
documents and agreements necessary to implement this Agreement.
Alternative Action(s):
Do not approve the Lease Amendment and Lease Reassignment Agreement and/or direct
staff accordingly.
HB -339- Item 15. - 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 12/20/2010 DEPARTMENT ID NUMBER: ED 10-59
Analysis:
On December 15, 2008, the Agency Board approved an Acquisition of Leasehold Interest
Agreement between the Redevelopment Agency and C.S.B. Partnership (Attachment 2), the
operator of the Big O Tire located at 7872 Edinger Ave. Under the terms of this Agreement,
the Agency is obligated to pay C.S.B. Partnership a total compensation of $1,350,000, of
which an initial deposit of $50,000 has been paid by the Agency. The Agreement allows for a
90 day notice from the Agency to C.S.B. Partnership to vacate the site. On April 5, 2010, the
Agency approved a C.S.B. Partnership sublease to Big O Tires, LLC under the same terms
and conditions of the master lease with C.S.B. Partnership.
On October 2, 2009, Agency published a Request for Proposals seeking qualified hotel
developers to acquire, -and -develop the site. The Agency selected Ayres Holdings, LLP
(Ayres) as winning bidder. On June 21, 2010 the Agency approved a 90-day Exclusive
Negotiating Agreement with Ayres to complete substantial site analysis with a guarantee that
Agency will not market the project to other developers. As of November 2010, the Agency
and Ayres could not reach an agreement and the ENA has been terminated. The Agency is
actively pursuing other hotel developers.
On August 24, 2010, C.S.B. Partnership requested from the Agency an early buyout of its
leasehold interest. The Agency and C.S.B. Partnership have agreed to an early buyout at
reduced payment of $1,100,000, equating to a $200,000 savings for the Agency. Upon
execution of the First Amendment to Reinstated Acquisition of Leasehold Interest
Agreement, Big O Tires, LLC shall be the Assignee of the lease. The Big O Tires, LLC lease
shall operate under the same terms of the original C.S.B. Partnership Agreement previously
approved by the Agency on December 15, 2008, with the following changes:
1. Rent payments shall increase by 16 percent from $19,360 per month ($232,320
annually) to $22,445 per month ($269,341 annually).
2. If the five year lease extension is exercised, rent payments increase accordingly:
a. July 1, 2014, to June 30, 2016, - $24,700 per month ($296,407 annually)
b. July 1, 2016, onward - $27,188 per month ($326,261 annually)
3. Lease shall terminate on June 30, 2014.
4. Agency shall have the right to terminate the lease upon 120 day notice.
5. The 120 day termination right shall occur no earlier than nine months after execution
of the Agreement.
6. Big O Tires, LLC will have one five year lease extension option.
7. Big O Corporate remains as the corporate guarantor.
8. Big O Tires, LLC shall waive all and any rights to relocation or goodwill.
Staff is recommending approval of the First Amendment to Reinstated Acquisition of
Leasehold Interest Agreement. Approval of this Agreement shall provide a savings of
Item 15. - 2 HB -340-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 12/20/2010 DEPARTMENT ID NUMBER: ED 10-59
$200,000 from the C.S.B. Partnership Agreement. In addition, the new lease with Big O
Tires, LLC will provide a 16 percent increase in rent revenue.
Environmental Status: Not applicable
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
1. 1 First Amendment to Reinstated Acquisition of Leasehold Interest Agreement
2. December 15, 2008 Council Action — Approval Agreement with HB Auto I, LLC for
Purchase of Property and C.S.B. Partnership for Purchase of Leasehold Interest Located
at 7872 Edinger Avenue — December 15, 2008
HB -341- Item 15. - 3
ATTACHMENT #1
Item 15. - 4 HB -342-
FIRST AMENDMENT TO REINSTATED ACQUISITION OF
LEASEHOLD INTEREST AGREEMENT
This FIRST AMENDMENT TO REINSTATED ACQUISITION OF LEASEHOLD
INTEREST AGREEMENT ("First Amendment") is made and entered into as of December 23,
2010 by and between the REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH, a public body, corporate and politic ("Agency") and C.S.B.
PARTNERSHIP, a California general partnership ("Tenant"). Agency and Tenant are
hereinafter sometimes referred to individually as a "Party" and collectively as the "Parties".
RECITALS
A. Agency and Tenant are Parties to that certain Reinstated Acquisition of Leasehold
Interest Agreement made and entered into as of December 29, 2008 (the "Leasehold Interest
Acquisition Agreement") setting forth the terms by which Agency will acquire Tenant's entire
leasehold interest (the "Leasehold ,Interest") in that certain improved real property commonly
known as 7872 Edinger Avenue, Huntington Beach, California 92647 (the "Property"), which
Leasehold Interest is owned and held by Tenant pursuant to the terms of that certain Standard
Lease Agreement dated for reference purposes April 19, 2004 and Option Addendum to Standard
Lease Agreement (the "Original Lease") as amended by that certain First Amendment to
Standard Lease Agreement entered into and executed as of January 23, 2009 (the "First Lease
Amendment" and together with the Original Lease, the "Lease"). The obligations of Tenant
under the Lease are guaranteed by Christopher R. Phillips, an individual ("Guarantor") pursuant
to that certain Guaranty of Lease dated as of April 19, 2004 (the "Phillips Guaranty").
W The transactions pursuant to the Leasehold Interest Acquisition Agreement were
entered into in conjunction with Agency's acquisition of HB Auto I, LLC, a California limited
liability company's ("HB Auto") rights, title and interest as the owner in fee of the Property
pursuant to the terms of 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 (collectively, the "New Landlord/Predecessor
Landlord Property Acquisition Agreement").
C. The purchase and sale transactions pursuant to the New Landlord/Predecessor
Landlord Property Acquisition Agreement were closed and consummated on January 28, 2009,
upon which date Agency became the owner in fee- of the Property. Immediately following such
closing and consummation of the New Agency/Predecessor Landlord Property Acquisition
Agreement, the transactions pursuant to the Leasehold Interest Acquisition Agreement were
closed and consummated. As part of such closing and consummation of the Leasehold interest
Acquisition Agreement, Agency, as the successor in interest Landlord, and Tenant entered into
and became fully bound by the terms of the First Lease Amendment.
D. In conjunction with certain transactions between Big O Tires, LLC, a Nevada
limited liability company (formerly known as Big O Tires, Inc., a Nevada corporation) ("Big O")
and Tenant pursuant to which Big O purchased and acquired from Tenant the assets subject to
certain liabilities which comprised the retail Big O Tire store owned and operated by Tenant on
the Property effective as of December 1, 2009 (the "Edinger Avenue Big O Store Transaction"),
001219.0001\1695809.2
Tenant as "Sublandlord" and Big O as "Subtenant" entered into that certain Sublease Agreement
and Master Landlord's Consent Thereto dated as of December 1, 2009 (the "Sublease"); and,
Agency, as the "Master Landlord," consented to Big O subleasing the Property pursuant to the
terms of the Sublease.
E. Under the terms of the Leasehold Interest Acquisition Agreement, and in
consideration of Tenant agreeing to the terms of the Leasehold Interest Acquisition Agreement
and assigning, transferring, conveying and delivering to Agency, the Leasehold Interest in the
Property pursuant to the Lease, Agency agreed to pay to Tenant the sum of One Million Three
Hundred Fifty Thousand Dollars ($1,350,000) as total compensation for relocation assistance
and any and all related compensation and expenses (defined as the "Payment Consideration"
under the Leasehold Interest Acquisition Agreement). That portion of the Payment
Consideration in the amount of Fifty Thousand Dollars ($50,000) (defined as the "Payment
Consideration Deposit" in the Leasehold Acquisition Agreement) was paid to Tenant on the
closing date of the transactions pursuant to Section 9 of the Leasehold Interest Acquisition
Agreement. The balance of the Payment Consideration in the amount of One Million Three
Hundred Thousand Dollars ($1,300,000) (the "Payment Consideration Balance") is payable by
Agency to Tenant on or before the date which is five (5) years from the date Agency acquired the
Property from HB Auto pursuant to the New Landlord/Predecessor Landlord Property
Acquisition Agreement, which Property acquisition date was, pursuant to Recital C, January 28,
2009, meaning that the acquisition by Agency of the Leasehold Interest must occur on or before
January 28, 2014 (defined as the "Lease Termination/Vacation Date" in the Leasehold Interest
Acquisition Agreement); and, upon the date of such acquisition, the Lease and the Phillips
Guaranty will terminate. In connection with the foregoing, and pursuant to the terms of Section
5(b) of the Leasehold Interest Acquisition Agreement, Agency is obligated to send written notice
of such termination at least ninety (90) days prior to the date which is the Lease
Termination/Vacation Date (defined as the "Lease Termination/Vacation Notice" in the Lease).
F. Agency and Tenant have been negotiating a possible amendment to the Leasehold
Interest Acquisition Agreement pursuant to which the Agency would acquire the Leasehold
Interest in the Property on or before December 31, 2010.notwithstanding Agency's right under
the terms of the Leasehold Interest Acquisition Agreement to acquire the Leasehold Interest no
later than the Lease Termination/Vacation Date (January 28, 2014); and, in consideration of
Agency's agreement to acquire the Leasehold Interest in the Property on or before December 31,
2010, Tenant would agree to reduce the Payment Consideration by the amount of Two Hundred
Thousand Dollars ($200,000) thereby reducing the Payment Consideration to the amount of One
Million One Hundred Fifty Thousand Dollars ($1,150,000) ($1,350,000 - $200,000 =
$1,150,000). As part of such negotiations, Agency and Tenant negotiated the possible amending
of the Leasehold Interest Acquisition Agreement to provide that the Lease would not terminate
on the date Agency acquires the Leasehold Interest in the Property; rather, Tenant would assign
and transfer its rights, title and interest as.the tenant under the Lease to Agency and Agency
would immediately following such assignment and transfer, assign and transfer its newly
acquired leasehold interest in the Property as the successor -in -interest tenant pursuant to the
Lease to Big O and, in connection therewith, the Sublease would be terminated concurrently
therewith. As part of such negotiations, Agency negotiated with Big O the possible termination
of the Sublease and the assignment and transfer by Agency to Big O of its leasehold interest in
the Property as the successor -in -interest tenant pursuant to the Lease. All of such negotiations
001219.0001 \16958092 2
have been concluded and Agency and Tenant mutually desire to enter into this First Amendment
for the purpose of amending the Leasehold Interest Acquisition Agreement to set forth terms and
conditions by the Leasehold Interest Acquisition Agreement will be amended, all on and subject
to the terms and conditions as shall hereinafter be set forth.
G. Capitalized terms not otherwise defined herein -shall have the means given them in
the Leasehold Interest Acquisition Agreement.
NOW THEREFORE, in consideration of the foregoing Recitals and for such other
good and valuable consideration the receipt, adequacy, and sufficiency of which is hereby
acknowledged, Agency and Tenant hereby agree as follows:
AGREEMENT
1. Incorporation of Recitals. The Recitals set forth in the introductory paragraphs
of this First Amendment are a material component of and an integral part of this First
Amendment, and are incorporated herein by this reference and made a part hereof.
2. Leasehold Interest Acquisition Adjustment Payment Consideration.
Notwithstanding anything contained in Section 4(a) of the Leasehold Interest Acquisition
Agreement, and in consideration of Agency agreeing, on and subject to the terms of this First
Amendment to the contrary, to acquire Tenant's Leasehold Interest in the Property on or before
December 31, 2010 (the "Leasehold Interest Acquisition Date"), Agency and Tenant agree that
on and subject to the full satisfaction or affirmative waiver of all Conditions Precedent set forth
in Section 8 hereof, the Payment Consideration for the Leasehold Interest set forth in the
Leasehold Interest Acquisition Agreement in the amount of One Million Three Hundred and
Fifty Thousand Dollars ($1,350,000) shall be reduced by the amount of Two Hundred Thousand
Dollars ($200,000) thereby resulting in the total payment consideration payable by Agency to
Tenant for the acquisition by Agency of the Leasehold Interest shall be in the amount of One
Million One Hundred Fifty Thousand Dollars ($1,150,000) (the "Adjusted Payment
Consideration"). The Parties agree that for all purposes under the Leasehold Interest Acquisition
Agreement, all references to the term "Lease Termination/Vacation Date" in the Leasehold
Interest Acquisition Agreement shall mean the Leasehold Interest Acquisition Date, as such term
is defined in this Section 2.
3. Payment Terms for Adjusted Payment Consideration. Agency and Tenant
agree that on and subject to the full satisfaction or affirmative waiver of all Conditions Precedent
set forth in Section 8 hereof, Agency and Tenant agree that the Adjusted Payment Consideration
shall be payable on the Closing Date by Agency's acquisition of the Leasehold Interest, as
follows: (i) Agency and Tenant acknowledge and agree that Tenant has already received
payment in the amount of Fifty Thousand Dollars ($50,000) representing the Payment
Consideration Deposit, which Payment Consideration Deposit shall be applied against the
Adjusted Payment Consideration thereby reducing the balance payable of the Adjusted Payment
Consideration to One Million One Hundred Thousand Dollars ($1, ] 00,000); and (iii) the balance
payable of the Adjusted Payment Consideration in the amount of One Million One Hundred
Thousand Dollars ($1,100,000) shall be payable by Agency to Tenant in full by a wire transfer or
cashiers check (the "Adjusted Payment Consideration Balance") by and through the Escrow
Agent as provided in Section 5(c) hereof at the Closing.
001219.0001\1695809.2 3
4. Adjusted Payment Consideration as Full Compensation. Tenant agrees that
upon receipt of payment in full of the Adjusted Payment Consideration pursuant to Section 3
hereof, the Adjusted Payment Consideration represents payment in full for all compensatory
items (including without limitation, leasehold interest, tenant improvements, fixtures, bonus
value, lease termination, goodwill and relocation assistance) required under the Relocation
Assistance Act (Government Code Section 7260 et seq.), the Uniform Relocation Assistance and
Real Property Acquisition Policies Act 1970.(42 U.S.C. Section 4601, et seq.), and any other
applicable federal, state or local enactment, regulation or practice providing for relocation
assistance or compensation for property. The Parties agree that the Adjusted Payment
Consideration will be allocated as follows: (i) the amount of Fifty Thousand Dollars ($50,000)
shall be allocated to relocation assistance to cover the expenses the Parties anticipate Tenant will
incur in connection with relocation of the Edinger Avenue Big O Store business operations from
the Property, and (ii) the amount of One Million One Hundred Thousand Dollars ($1,100,000)
shall be allocated to Tenant's Leasehold Interest pursuant to the Lease. Upon Tenant's receipt of
payment in full of the Adjusted Payment Consideration specified in Section 3 hereof, Tenant, for
itself and on behalf of anyone claiming by through or under Tenant (collectively, "Tenant
Related Parties") (which Tenant Related Parties shall include, without limitation Tenant's
partners, members, shareholders, managers, officers, directors, employees, contractors,
guarantors [including without limitation, Guarantor], agents, franchisors, representatives,
assigns, administrators, attorneys, heirs, beneficiaries and successors in interest) hereby forever
waives and agrees not to make any claims for acquisition or relocation and related benefits
including but not limited to any leasehold interest in the Property, payment for personal property,
fixtures and equipment, relocation benefits or assistance of any compensation based upon loss of
goodwill, or any other damages of any nature. Any such claims are released as set forth in
Section 6 hereof.
5. Termination of Sublease; Lease Assignment, Assumption and
Amendment/No Merger; Continued Leasing of the Property by Big O; Escrow of Adjusted
Payment Consideration Balance; Leasehold Interest Assignment/Transfer; Security
Deposit; Memorandum.
(a) Termination of Sublease and Lease Assignment, Assumption
and Amendment; No Merger. Agency and Tenant hereby covenant and agree that on and
subject to the satisfaction in full or affirmative waiver of all Conditions Precedent set forth in
Section S hereof, on the Closing Date of Agency's acquisition of the Leasehold Interest, and
pursuant to the terms of the Leasehold Interest Acquisition Agreement as amended by this First
Amendment, (i) Agency and Tenant shall enter into and execute the Assignment, Transfer and
Conveyance of Leasehold Interest in the form attached hereto as Exhibit A (the "Leasehold
Interest Assignment/Transfer") (The Leasehold Interest Assignment/Transfer shall replace and
supersede in its entirety, the Assignment, Transfer and Conveyance of Leasehold Interest
attached to the Leasehold Interest Acquisition Agreement as Exhibit D), pursuant to which
Tenant shall assign, transfer and convey the Leasehold Interest in the Property to Agency
pursuant to the Lease and Agency shall accept such assignment, transfer and conveyance of the
Leasehold Interest in the Property pursuant to the Lease and assume, keep, perform and fulfill all
of Tenant's obligations under the Lease accruing and arising from and after the Effective Date
(as such term is defined Section 9(a) hereof); and (ii) concurrently therewith, Agency, Tenant
and Big O shall enter into and execute and be fully bound by that certain Termination of
001219.0001\1695809.2 4
Sublease and Assignment, Assumption, and Amendment of Lease in the form attached hereto as
Exhibit B (the "Sublease Termination and Lease Assignment/Assumption/Amendment")
pursuant to which (A) the Sublease shall be terminated; (B) Agency shall assign and transfer to
Big O all of its rights, title and interest as the successor -in -interest tenant under the Lease as
amended by the Sublease Termination and Lease Assignment/Assumption Amendment and Big
O will accept such assignment and assume and be fully bound by the obligations of Agency as
the successor -in -interest tenant under the Lease amended by the Sublease Termination and Lease
Assignment/Assumption Amendment accruing and arising from and after the Effective Date;
(C) Agency and Big O shall agree to certain amendments to the Lease; and (D) Agency, Tenant
and Big O shall agree upon such other terms and conditions, all as set forth in the Sublease
Termination and Lease Assignment/Assumption/Amendment. Agency and Tenant agree that
neither to Leasehold Interest Assignment/Transfer nor the Sublease Termination and Lease
Assignment Assumption Amendment will, in conjunction with the Conditions Precedent set forth
in Section 8 of this First Amendment, become effective unless and until the acquisition by
Agency of the Leasehold Interest in the Property is fully closed and consummated pursuant to
the terms of the Leasehold Interest Acquisition Agreement as amended by this First Amendment.
Agency and Tenant acknowledge and agree that it is the intent of Agency and Tenant that in
conjunction with the transactions contemplated by the Leasehold interest Acquisition Agreement
as amended by this First Amendment and the terms of the Leasehold Interest
Assignment/Transfer and Sublease Termination and Lease
Assignment/Assumption/Amendment, that notwithstanding the fact that until Agency assigns
and transfers its leasehold interest in the Property acquired from Tenant under the terms of the
Leasehold Interest Acquisition Agreement as amended by this First Amendment to Big O
pursuant to the Sublease Termination and Lease Assignment/Assumption Amendment, Agency's
(x) leasehold interest in Property and (y) fee interest in the Property will remain separate and
distinct from and will not merge with the other such interests or any other interest, elements or
estates in the Property that Agency now holds or may hereinafter acquire.
(b) Continuing Lease Following Agency's Acquisition of Tenant's
Leasehold Interest. In conjunction with Section 5(a) hereof, Agency and Tenant agree that
notwithstanding anything contained in the Leasehold Interest Acquisition Agreement to the
contrary, the Lease, as amended by the Sublease Termination and Lease
Assignment/Assumption/Amendment shall remain in full force and effect between Agency as
successor -in -interest landlord and Big O as the assignee and successor -in -interest tenant, on and
subject to its terms and conditions; and, that pursuant to the terms of the Leasehold Interest
Assignment/Transfer, Tenant and Guarantor shall be fully and forever released from any further
obligations under the Lease as amended by the Sublease Termination and Lease
Assignment/Assumption/Amendment, accruing or arising from and after the Effective Date.
(c) Escrow of Adjusted Payment Consideration Balance.
Notwithstanding anything contained in the Leasehold Interest Acquisition Agreement to the
contrary, concurrently with the execution and delivery of this First Amendment, Agency shall
deposit the Reduced Payment Consideration Balance in the amount of One Million One Hundred
Thousand Dollars ($1,100,000) (the "Escrowed Portion of the Reduced Payment Consideration")
in the escrow account to be established by Stewart Title California, Inc., 2010 Main Street, Suite
250, Irvine, CA 92614, Grace Kim, Escrow Officer, Telephone No: 949-476-0777; Facsimile:
714-242-9886; Escrow No. 165821 ("Escrow Agent"), with written instructions requiring the
001219.0001\1695809.2
release of the Escrowed Portion of the Reduced Payment Consideration to Tenant on the
Effective Date. Up and until the Effective Date, Tenant agrees to continue pay, directly or
indirectly by and through Big O pursuant to the Sublease, all monetary payment obligations
under the Lease, including rent, and directly or indirectly by and through Big O pursuant to the
Sublease, perform all of its other obligations under the Lease through the date which is the
Effective Date. As the successor in interest landlord under the Lease, Agency shall perform all
of the obligations of the landlord under the Lease through the date which is the Effective Date.
The Parties acknowledge that in conjunction with Big O having acquired all of the Retained
Tenant Assets (as such term is defined in Section 3 of the Leasehold Interest Acquisition
Agreement), the removal of the Retained Tenant Assets shall be the obligation of Big O under
the terms of the Lease as amended by the Sublease Termination and Lease
Assignment/Assumption/Amendment.
(d) Leasehold Interest Assignment/Transfer. On the Effective Date,
Tenant shall (i) assign, transfer, convey and deliver to Agency, the Leasehold Interest, pursuant
to the Leasehold Interest Assignment/Transfer; and (ii) pay or cause to be paid all outstanding
rent and other monetary obligations accruing under the Lease for any period prior to the
Effective Date.
(e) Security Deposit. On the Effective Date, if and as required in
accordance with Section 7 of the Lease, Agency shall deliver to Tenant the Security Deposit
under the Lease in the amount of Fifteen Thousand Dollars ($15,000). The Parties agree that in
conjunction with the fact that Tenant is currently holding a security deposit in the amount of
Fifteen Thousand Dollars ($15,000) which Big O deposited with Tenant pursuant to and as
required by Section 4 of the Sublease (the " Big O Sublease Security Deposit"), Tenant shall
retain the Big O Sublease Security Deposit and treat such retention as the return by Agency to
Tenant of the Security Deposit under the Lease; and, from and after the Effective Date, Agency
shall hold the Security Deposit under the Lease to secure Big O's obligations as the successor -in -
interest tenant under the Lease.
(f) Tenant/Tenant Parties Releases. Except as expressly provided
otherwise in Section 6(a) hereof and notwithstanding anything contained in the Leasehold
Interest Acquisition Agreement to the contrary, on the Effective Date and provided that Tenant
has received the entire Adjusted Payment Consideration Balance from the Escrow Agent and the
Security Deposit from Agency if and as required under Section 7 of the Lease pursuant to
Section 5(e) hereof, and all Conditions Precedent set forth in Section 8 hereof have been fully
satisfied of affirmatively waived, the releases and discharges by Tenant and Tenant Related
Parties of Agency and Agency Parties set forth in Section 6(a) hereof shall become effective.
(g) Agency and Agency Parties Releases. Except as expressly
provided otherwise in Section 6(b) hereof and notwithstanding any contained in the Leasehold
Interest Acquisition Agreement to the contrary on the Effective Date and provided that all
Conditions Precedent set forth in Section 8 hereof have been fully satisfied, or affirmatively
waived, all monetary and non -monetary obligations of Tenant under the Lease and all obligations
of Guarantor under the Phillips Guaranty shall terminate and be of no further force and effect as
of the Effective Date, and the releases and discharges by Agency and Agency Parties of Tenant
and Tenant Related Parties set forth in Section 6(b) hereof shall become effective.
001219.0001 U 695809.2 6
(h) Memorandum Confirming Effective Date Tenant's Leasehold
Interest Acquisition. On the date which is the Effective Date, Tenant and Agency shall execute
a written memorandum setting forth the date which is the Effective Date of the closing and
consummation of Agency's acquisition of the Leasehold Interest from Tenant pursuant to the
Leasehold Interest Acquisition Agreement as amended by this First Amendment.
6. Releases. Agency and Tenant agree that Section 6 of the Leasehold Interest
Acquisition Agreement is hereby deleted in its entirety and replaced with the following new
Section 6.
"Section 6. Releases
(a) By Tenant. Effective on the date which is the Effective Date, and
provided that Tenant has received from the Escrow Agent payment in full of the Adjusted
Payment Consideration Balance specified in Section 3 hereof and if and as required in
accordance with Section 7 of the Lease, the Security Deposit is returned pursuant to Section 5(e)
hereof, and in consideration of the promises and covenants contained herein, the Leasehold
Interest Acquisition Agreement as amended by this First Amendment shall serve as a full release
and discharge by Tenant, on behalf of itself and all Tenant Related Parties, in consideration of
the covenants and promises contained herein, of Agency and the members of Agency's Board of
Directors, the City of Huntington Beach ("City"), the members of the Huntington Beach City
Council and the governing Board of the Agency, and of City's and Agency's officers, agents,
representatives, assigns, employees, consultants, insurers, attorneys, and successors in interest
(collectively, the "Agency Parties"), from all rights, claims, debts, liabilities, demands,
obligations, costs, expenses, actions and causes of action of every nature, character and
description, known or unknown, including those for damages, compensation, relocation
assistance, relocation benefits, consequential damages, punitive damages, interest, costs,
attorneys' and appraisal fees, injunctive or declaratory relief, or for relief by way of writ of
mandate, or for demands, damages, refunds, debts, liabilities, reckonings, accounts, obligations,
costs, expenses, liens, actions, causes, and causes of action of whatever kind, at law or in equity,
which Tenant or any of the Tenant Related Parties now has or may have in the future against
Agency and all of the Agency Parties out of or pertaining to any occurrence, event, circumstance
or matter of any kind or nature arising out of the acquisition by Agency from HB Auto of all of
HB Auto's rights, title and interest in and to the Property pursuant to the New
Agency/Predecessor Landlord Property Acquisition Agreement and the acquisition by Agency of
the Leasehold Interest in the Property from Tenant pursuant to the Leasehold Interest Acquisition
Agreement as amended by this First Amendment or from the facts and circumstances described
in the Leasehold Interest Acquisition Agreement as amended by this First Amendment,
including, but not limited to, claims for further compensation, claims for any acquisition or
relocation related benefits, including, but not limited to, compensation for personal property, any
leasehold interest in the real property, payment for personal property, .fixtures and equipment (if
applicable), relocation benefits or assistance or any compensation based upon loss of goodwill,
interest, costs, attorneys' and appraisal fees or any other damages of any nature. Tenant, for
itself and all of the Tenant Related Parties, hereby specifically waives and releases any relocation
benefits, assistance and/or payments under the Relocation Assistance Act (Government Code
section 7260 et seq.), the Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970 (42 U.S.C. Section 4601, et seq.), and any other applicable federal, state or local
enactment, regulation or practice providing for relocation assistance, moving expenses, or
001219.0001 \1695809.2 7
compensation for property (including, without limitation, loss of goodwill and/or furnishings,
fixtures and equipment); except that, nothing contained in this Section 6(a) shall operate as a
release or waiver of Agency's obligations as the successor -in -interest landlord under the Lease as
amended by the Sublease Termination and Lease Assignment/Assumption/Amendment pursuant
to Section 5(a) hereof, including, without limitation, those obligations which pursuant to the
terms of the Lease as amended by the Sublease Termination and Lease
Assignment/Assumption/Amendment survive the termination of the Lease as amended by the
Sublease Termination and Lease Assignment/Assumption/Amendment, including, without
limitation, any debts, liabilities, demands, obligations, costs, expenses, actions or causes of
action of every nature, character of description, known or unknown, including those for
damages, compensation, consequential damages, punitive damages, interest, costs, attorneys' and
appraisal fees, injunctive or declaratory relief, or for relief by way of writ of mandate, or for
demands, damages, refunds debts, liabilities, reckonings, accounts, obligations, costs, expenses,
liens, actions, causes, causes of action of whatever kind at law or in equity of or relating to the
physical conditions of the Property, including, without limitation, the presence of Hazardous
Materials (as such term is defined in the Lease as amended by the Sublease Termination and
Lease Assignment/Assumption/Amendment) or other environmental conditions on, beneath,
migrating to or emanating from the Property or other real property adjacent thereto not caused by
Tenant.
(b) By Agency. Effective on the Effective Date and payment in full
by Agency to Tenant of the entire Reduced Payment Consideration Balance specified in
Section 3 hereof and the Security Deposit pursuant to Section 5(e) hereof, and in consideration
of the covenants and promises contained herein, the Leasehold Interest Acquisition Agreement
as amended by this First Amendment, shall serve as a full release and discharge by Agency and
all of the Agency Parties of Tenant and all of the Tenant Related Parties, from all rights, claims,
debts, liabilities, demands, obligations, costs, expenses, actions and causes of action of every
nature, character and description known or unknown including those for damages, compensation,
consequential damages, punitive damages, interest, costs, attorneys' and appraisal fees,
injunctive or declaratory relief by way of writ of mandate, or for demands, damages, refunds,
debts, liabilities, reckonings, accounts, obligations, costs, expenses, liens, actions, causes and
causes of action of whatever kind, at law or in equity, which Agency or any of the Agency
Parties now have or may have in the future against the Tenant and all of the Tenant Related
Parties out of or pertaining to any occurrence, event, circumstance or matter of any kind or
nature arising out of the acquisition by Agency from HB Auto of all of HB Auto's rights, title
and interest in and to the Property pursuant to the New Agency/Predecessor Landlord Property
Acquisition Agreement and the acquisition by Agency from Tenant of the Leasehold Interest in
the Property pursuant to the Leasehold Interest Acquisition Agreement as amended by this First
Amendment or from the facts and circumstances described in the Leasehold Interest Acquisition
Agreement as amended by this First Amendment, or other real property adjacent thereto; except
that, nothing contained in this Section 6(b) shall operate as a release or waiver of Tenant's
obligations under the Lease accruing during the period from and after July 1, 2004, which is the
commencement date of the term of the Lease, up and until the Effective Date, including, without
limitation, any debts, liabilities, demands, obligations, costs, expenses, actions or causes of
action of every nature, character or description, known or unknown, including those for
damages, compensation, consequential damages, punitive damages, interest, costs, attorneys' and
appraisal fees, injunctive or declaratory relief, or for relief by way of writ of mandate or for
001219.0001 \ 1695809.2
demands, damages, refunds, debts, liabilities, reckonings, accounts, obligations, costs, expenses,
liens, actions, causes, causes of action of whatever kind, at law or in equity of or relating to the
physical conditions of the Property, including, without limitation, the presence of Hazardous
Materials (as such term is defined in the Lease) or other environmental conditions on, beneath,
migrating or emanating from the Property or other real property adjacent thereto caused by
Tenant.
(c) Release of Claims. It is intended that the Leasehold Interest
Acquisition Agreement as amended by this First Amendment shall be effective as a bar to each
and every action, cause of action, claim, loss and damage whether now known or unknown,
foreseen or unforeseen, suspected or unsuspected that any Party may have against any other
Party arising out of or in any way connected with the acquisition by Agency of all of H13 Auto's
rights, title and interest in and to the Property pursuant to the New Agency/Predecessor Landlord
Property Acquisition Agreement and the acquisition by Agency of the Leasehold Interest in the
Property pursuant to the Leasehold Interest Acquisition Agreement as amended by this First
Amendment or from the facts and circumstances described in the Leasehold Interest Acquisition
Agreement as amended by this First Amendment, and each of the Parties expressly waives any
and all rights and claims under Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE
1 1,
Initials of Tenant:
Vhairson)
. Phillips) (Virgil Kyle Kyle, III) (Jason Y. Berry) /ichh II J``1 mbach)
Initials of Agency: �' \
(Exe ti e Director) en Counsel) (Deputy Executive D— tor)
(Ager5cy'S'pecial Counsel)
(d) Reliance by Parties. Except as expressly set forth herein, none of
the Parties or their respective agents nor any related entities have made any statement,
representation, warranty or promise to the other regarding any fact relied upon in entering into
the Leasehold Interest Acquisition Agreement as amended by this First Amendment and the
Parties, and each of them, expressly do not rely upon any statement, representation, warranty or
promise of any other Party or any Party's agent or related entities in executing the Leasehold
Interest Acquisition Agreement as amended by this First Amendment, except as is expressly set
forth in the Leasehold Interest Acquisition Agreement as amended by this First Amendment.
Each of the Parties has made such investigation of the facts and law pertaining to the subject
matter of the Leasehold Interest Acquisition Agreement as amended by this First Amendment as
it deems necessary, and has consulted with legal counsel of its own choosing concerning these
matters.
001219.0001\1695809.2 9
demands, damages, refunds, debts, liabilities, reckonings, accounts, obligations, costs, expenses,
liens, actions, causes, causes of action of whatever kind, at law or in equity of or relating to the
physical conditions of the Property, including, without limitation, the presence of Hazardous
Materials (as such term is defined in the Lease) or other environmental conditions on, beneath,
migrating or emanating from the Property or other real property adjacent thereto caused by
Tenant.
(c) Release of Claims. It is intended that the Leasehold Interest
Acquisition Agreement as amended by this First Amendment shall be effective as a bar to each
and every action, cause of action, claim, loss and damage whether now known or unknown,
foreseen or unforeseen, suspected or unsuspected that any Parry may have against any other
Party arising out of or in any way connected with the acquisition by Agency of all of HB Auto's
rights, title and interest in and to the Property pursuant to the New Agency/Predecessor Landlord
Property Acquisition Agreement and the acquisition by Agency of the Leasehold Interest in the
Property pursuant to the Leasehold Interest Acquisition Agreement as amended by this First
Amendment or from the facts and circumstances described in the Leasehold Interest Acquisition
Agreement as amended by this First Amendment, and each of the Parties expressly waives any
and all rights and claims under Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
Initials of Tenant: e..
(Christopher R. Phillips)
irgil K- e Kyle, III)
(�a's n Y. Berry)
(Michael f. Humbach)
Initials of Agency:
(Chairperson) (Executive
Director) (Agency Counsel) (Deputy Executive Director)
(Agency Special Counsel)
(d) Reliance by Parties. Except as expressly set forth herein, none of
the Parties or their respective agents nor any related entities have made any statement,
representation, warranty or promise to the other regarding any fact relied upon in entering into
the Leasehold Interest Acquisition Agreement as amended by this First Amendment and the
Parties, and each of them, expressly do not rely upon any statement, representation, warranty or
promise of any other Party or any Party's agent or related entities in executing the Leasehold
Interest Acquisition Agreement as amended by this First Amendment, except as is expressly set
forth in the Leasehold Interest Acquisition Agreement as amended by this First Amendment.
Each of the Parties has made such investigation of the facts and law pertaining to the subject
matter of the Leasehold .Interest Acquisition Agreement as amended by this First Amendment as
it deems necessary, and has consulted with legal counsel of its own choosing concerning these
matters.
001 219.0001\1 695809.2 9
(e) No Third Party Claims. Each Party hereby represents and
warrants to the other Party that as of the date of this Agreement and as of the Closing Date (i) to
its actual knowledge, no other entity or person now has or will as of the Closing Date have any
rights, title, or interest whatsoever in the released claims; and (ii) there has been no and as of the
Closing Date there will be no assignment, transfer, conveyance or other disposition by such Party
of any of the released claims.
(f) No Admission of Liability. The Leasehold Interest Acquisition
Agreement as amended by this First Amendment represents a settlement of claims between the
Parties and does not constitute any admission of liability by either Party to the Leasehold Interest
Acquisition Agreement as amended by this First Amendment.
7. Representations and Warranties of Parties. Each Party hereby reaffirms and
confirms the representations and warranties made by it in Section 7 of the Leasehold Interest
Acquisition Agreement and makes the following additional representations and warranties:
(a) By Agency. Agency represents and warrants to Tenant that the
statements contained in this Section 7(a) are true, correct and complete as of the date of this First
Amendment and will be true, correct and accurate as of the Closing Date.
(i) Agency is a public body, corporate and politic duly
organized, authorized to exercise the power of eminent domain, validly existing and in good
standing under the laws of the State of California, and has full power and authority and all
authorizations necessary to carry out and perform its obligations under this First Amendment.
(ii) Agency and the person(s) signing this First Amendment on
behalf of Agency, have full legal capacity, right, power and authority, without any further action
or consent required, to execute and deliver this First Amendment and to carry out the
transactions contemplated hereby. Any actions required to be taken by Agency to authorize the
execution, delivery and performance of this First Amendment and the consummation of the
transactions contemplated hereby have been, or will have been duly taken.
(iii) The information contained in the Recitals set forth in the
introductory paragraphs of this First Amendment regarding Agency is true, correct and accurate.
(iv) Except as provided otherwise in this First Amendment,
neither the execution and delivery of, or the performance by Agency of its obligations under this .
First Amendment, or the consummation of the transactions contemplated hereby are prohibited
by, or require Agency to obtain any consent, authorization, approval or registration under any
law, rule, regulation, judgment, order, writ, injunction or decree that is binding upon Agency.
(v) In conjunction with Section 5(h) of the Leasehold Interest
Acquisition Agreement, Agency acknowledges and represents that it has been provided and will
be provided up and through the Leasehold interest Acquisition Date full and complete access by
Tenant to the Property and has had and will have had an opportunity to fully and completely
conduct such inspections, tests, verifications and other due diligence regarding title to the
Property and all of the economic, physical and legal attributes and condition with respect to the
Property, including, without limitation, the presence of Hazardous Materials (as such term is
001219.0001\16958092 10
defined in the Lease) or other environmental conditions on, beneath, migratory to or emanating
from the Property or other real property adjacent thereto.
(b) By Tenant. Tenant represents and warrants to Agency, that the
statements contained in this Section 7(b) are true, correct and complete as of the date of this First
Amendment and will be true, correct and accurate as of the Closing.
(i) Tenant is a California general partnership, duly organized,
validly existing and in good standing under the laws of the State of California. Tenant is duly
authorized to conduct and operate its businesses and is in good standing under the laws of each
jurisdiction where such qualification is required and where the failure to be so qualified would
have a material adverse effect on the businesses, operations, results of operation, financial
condition or assets and property of Tenant. Tenant has full power and authority and all material
licenses, permits and authorizations necessary to carry on the businesses on which it is engaged.
(ii) Tenant and the persons signing this First Amendment on
behalf of Tenant, have full legal capacity, right, power and authority, without the consent of any
other person required and without any further action required, to execute and deliver this First
Amendment and to carry out the transactions contemplated hereby. Any actions required to be
taken by Tenant to authorize the execution, delivery and performance of this First Amendment
and the consummation of the transactions contemplated hereby by Tenant have been, or will
have been duly taken. This First Amendment and the terms and provisions hereof, constitute the
valid and legally binding obligations of Tenant, enforceable in accordance with its terms,
conditions and provisions, subject to limitations imposed by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors' rights generally and
to the general principles of equity.
(iii) The information contained in the Recitals set forth in the
introductory paragraphs regarding Tenant is true, correct and accurate.
(iv) Other than with respect to the rights of Big O as the
subtenant under the Sublease, Tenant has good and marketable title to Tenant's Leasehold
Interest free and clear of all liens and encumbrances.
(v) Except provided otherwise in this First Amendment, neither
the execution and delivery of, or the performance by Tenant of its obligations under this
Agreement, or the consummation of the transactions contemplated hereby (i) are prohibited by,
or require Tenant to obtain any consent, authorization, approval or registration under any law,
rule, regulation, judgment, order, writ, injunction or decree that is binding upon Tenant; or
(ii) violate any provision of, result in any default or acceleration of any obligations under, result
in the creation or imposition of any lien or require any consent under, any material agreement to
which Tenant is a party or is otherwise bound.
8. Conditions Precedent.
(a) Agency Conditions Precedent. The obligations of Agency under
this First Amendment are subject to the satisfaction of all of the conditions precedent set forth in
this Section 8(a) within the time periods if any, provided therefore (each a "Condition
001219.0001\1695809.2 11
Precedent" and collectively, the "Conditions Precedent"). Agency may waive any or all of such
Conditions Precedent in whole or in part but any such waiver shall be effective only if made in
writing. No such waiver shall constitute a waiver by Agency of any of its rights or remedies if
Tenant defaults in the performance of any covenant or agreement to be performed by Tenant
under this First Amendment or if Tenant breaches any representation or warranty made by
Tenant in this First Amendment. If any Condition Precedent set forth in this Section 8(a) is not
fully satisfied or affirmatively waived by Agency in writing on the Closing Date (or by an earlier
date provided with respect to such Condition Precedent), Agency shall have the right, provided
that it is not in default hereunder, to terminate this First Amendment and be released from all
obligations to Tenant under this First Amendment arising after such termination; provided
further that, in the event of such termination, the Leasehold Interest Acquisition Agreement shall,
notwithstanding such termination, remain in full force and effect under its terms and conditions
and the Parties shall remain fully bound thereby.
(i) On the Closing Date, Tenant shall not be in material default
in the performance of any covenant or agreement to be performed by Tenant under this First
Amendment on or before that date.
(ii) On the Closing Date, all representations and warranties
made by Tenant under this First Amendment shall be true and correct in all material respects as
if made on or as of the Closing Date.
(iii) On the Closing Date, Tenant shall have executed and
delivered to Agency the Leasehold Interest Assignment/Transfer substantially in the form
attached hereto as Exhibit A.
(iv) On the Closing Date, (x) Tenant and Big O shall have
executed and delivered to Agency, the Sublease Termination and Lease
Assignment/Assumption/Amendment, in substantially in the form attached hereto as Exhibit B;
and (y) TBC Corporation, a Delaware corporation ("TBC") shall have executed and delivered to
Agency the Guaranty of Lease in the form attached hereto as Exhibit C (the "TBC Lease
Guaranty").
(v) On or before the Closing Date, Tenant shall have executed
and delivered to Agency and Escrow Agent the Amended/Restated Joint Escrow Instructions as
provided in Section 9(b) hereof.
(b) Tenant's Conditions Precedent. The obligations of Tenant under
this First Amendment are subject to the satisfaction of all of the Conditions Precedent set forth in
this Section 8(b) within the time periods, if any, provided therefore. Tenant may waive any or
all such Conditions Precedent in whole or in part but any such waiver shall be effective if only
made in writing. No such waiver shall constitute a waiver by Tenant of its rights or remedies if
Agency defaults in the performance of any covenant or agreement to be performed by Agency
under this First Amendment. If any Condition Precedent set forth in this Section 8(b) is not fully
satisfied or affirmatively waived by Tenant in writing by the Effective Date (or by any earlier
date provided with respect to such Condition Precedent), Tenant shall have the right provided
that it is not in default hereunder, to terminate this First Amendment and be released from any
further obligations to Agency under this First Amendment; provided further that, in the event of
001219.0001 \1 695809.2 12
such termination, the Leasehold Interest Acquisition Agreement shall, notwithstanding such
termination, remain in full force and effect under its terms and conditions and the Parties shall
remain fully bound thereby.
(i) On the Closing Date, Agency shall not be in material
default in the performance of any covenant or agreement to be performed by Agency under this
First Amendment on or before that date.
(ii) On the Closing Date, all representations and warranties
made by Agency in this First Amendment shall be true and correct with all material respects as if
made on and as of the Closing Date.
(iii) On the Closing Date, Agency shall have executed and
delivered to Tenant the Leasehold Interest Assignment/Transfer substantially in the form
attached hereto as Exhibit A.
(iv) On the Closing Date, (x) Agency and Big O shall have
executed and delivered to Tenant the Termination of Sublease and
Lease/Assignment/Assumption/Amendment substantially in the form attached hereto as
Exhibit B; and(y) TBC shall have executed and delivered to Tenant the TBC Guaranty in the
form attached hereto as Exhibit C.
(v) On or before the Closing Date, Agency shall have delivered
(x) the Reduced Payment Consideration Balance into the Escrow Agent and (y) pursuant to
Section 5(e) hereof, caused the Security Deposit held by it under the Lease to be held to secure
Big O's obligations as the successor -in -interest tenant under the Lease as amended by the
Sublease Termination and Lease Assignment/Assumption/Amendment to Tenant.
(vi) On or before the Closing Date, Agency shall have executed
and delivered to Tenant and Escrow Agent the Amended/Restated Joint Escrow Instructions as
provided in Section 9(b) hereof.
9. Closing Matters.
(a) Closing/Closing Date; Effective Date. The closing of the
transactions contemplated by this First Amendment (the "Closing" or the "Closing Date") shall
be the date all Conditions Precedent have been satisfied or affirmatively waived by the Party
whose favor the applicable Conditions Precedent have been given as provided in Section 8
hereof but in no event no later than December 31, 2010. In the event the Closing does not occur
on or before December 31, 2010, this First Amendment shall terminate and be of no further force
and effect; provided that, the Leasehold interest Acquisition Agreement and the Lease and the
Sublease shall, notwithstanding such termination of the First Amendment, remain in full force
and effect and the Parties agree to be fully bound thereby. The Parties agree that the date which
is the Closing Date shall be the effective date of this First Amendment (the "Effective Date").
(b) Escrow )Fees and Related Costs. Agency shall be responsible for
(i) any and all escrow fees charged by Escrow Agent; (ii) any and all costs for all title work with
respect to the Property; and (iii) any all applicable sales and use taxes payable with respect to the
001219.0001\1695809.2 43
transfer of the Leasehold Interest. Agency shall also be responsible for any and all recording
fees for the recordation of the Leasehold Interest Assignment/Transfer and any transfer taxes
payable with respect to the assignment, transfer and conveyance of Tenant's Leasehold Interest
in the Property. Any and all costs incurred by either Party shall be paid by the Party incurring
such cost. In conjunction with the foregoing, Agency and Tenant agree to jointly execute and
deliver to the Escrow Agent the amended and restated joint escrow instructions in the form
attached hereto as Exhibit D (the "Amended/Restated Joint Escrow Instructions"), which
Amended/Restated Joint Escrow Instructions shall replace and supersede in their entirety the
Joint Escrow Instructions attached to the Leasehold Interest Purchase Agreement as Exhibit G
and previously delivered to the Escrow Agent.
(c) Rent, Taxes, Assessments, Etc. All rent, current taxes,
assessments, utilities, maintenance and other similar charges associated with Tenant's Leasehold
Interest in the Property pursuant to the terms of the Lease shall be pro -rated between Tenant and
Agency as of the Effective Date.
Such pro -ration shall be adjusted, if necessary, and completed after the Effective Date as
soon as final information to enable the Party to determine such pro -rations becomes available.
Agency and Tenant agree to cooperate and use their commercially reasonable efforts to complete
such pro -rations no later than thirty (30) days after the date which is the Effective Date. Agency
and Tenant shall their commercially reasonable efforts prior to the date which is the Effective
Date to prepare a schedule of pro -rations covering as many items to be pro -rated as practical so
such pro -rations can be made at the Closing, if possible.
(d) Leasehold Interest Assignment/Transfer Sublease Termination
and Lease Assignment/Assumption/Amendment. With regard to the Leasehold Interest
Assignment/Transfer and the Sublease Termination and Lease
Assignment/Assumption/Amendment, in conjunction with Section 5(a) hereof, on or before the
Closing Date, Agency and Tenant will each conditionally deliver to the Escrow Agent its
originally executed copy of the Leasehold Interest Assignment/Transfer and the Sublease
Termination and Lease Assignment/Assumption Amendment and cause an originally executed
copy of the Sublease Termination and Lease Assignment/Assumption/Amendment, which has
been executed by Big O to also be delivered to the Escrow Agent, specifically instructing the
Escrow Agent not to release copies of the Leasehold Interest Assignment/Transfer or the
Sublease Termination and Lease Assignment/Assumption/Amendment to either Party or Big O
(as applicable) until all Conditions Precedent set forth in Section 8 hereof of this First
Amendment have been fully satisfied or otherwise waived as provided in Section 8 hereof.
10. Indemnity. Section 10 of the Leasehold Interest Acquisition Agreement is
hereby deleted in its entirety and replaced with the following new Section 10:
"Section 10. Indemnity
(a) By Tenant. Tenant shall indemnify, defend, protect and hold
Agency and the Agency Parties harmless from and against any claims, damages, demands,
liabilities, losses, judgments, expenses and attorneys' fees and/or costs resulting from (i) any
breach of the Leasehold Interest Acquisition Agreement as amended by this First Amendment,
including, without limitation, the falsity of any representation or warranty made by Tenant in the
001219.0001\1695809.2 14
Leasehold Interest Acquisition Agreement as amended by this First Amendment; (ii) any third
party claims arising in connection with the Leasehold Interest Acquisition Agreement as
amended by this First Amendment; (iii) any claims between Tenant and any Tenant Related
Parties arising in connection with the Leasehold Interest Acquisition Agreement as amended by
this First Amendment.
(b) By Agency. Agency shall indemnify, defend, protect and hold
Tenant and the Tenant Related Parties harmless from and against any claims, damages, demands,
liabilities, losses, judgments, expenses and attorneys' fees and/or costs resulting from (i) any
breach of the Leasehold Interest Acquisition Agreement as amended by this First Amendment,
including, without limitation the falsity of any representation or warranty under the Leasehold
Interest Acquisition Agreement as amended by this First Amendment; (ii) any third party claims
arising in connection with the Leasehold Interest Acquisition Agreement as amended by this
First Amendment; (iii) any claims between Agency and the Agency Parties arising in connection
with the Leasehold Interest Acquisition Agreement as amended by this First Amendment.
11. Notices. The address for Tenant set forth in Section 25 of the Leasehold Interest
Acquisition Agreement is changed as follows:
To Tenant: C.S.B. Partnership
33791 Glocamora Lane
San Juan Capistrano, CA 92675
Attention: Christopher R. Phillips
12. Ratification and Confirmation and Reaffirmation of Leasehold Interest
Acquisition Agreement. Agency and Tenant agree that except as expressly amended by this
First Amendment the Leasehold Interest Acquisition Agreement shall remain in full force and
effect and the Leasehold Interest Acquisition Agreement as amended by this First Amendment is
hereby ratified and confirmed and reaffirmed.
13. Interpretation. In the event of any conflict between the provisions of the
Leasehold Interest Acquisition Agreement as originally in effect and the provisions of this First
Amendment, the provisions of this First Amendment shall control and prevail. This First
Amendment shall be governed by, and interpreted in accordance with, the laws of the State of
California.
14. Entire Agreement. The Leasehold Interest Acquisition Agreement as amended
by this First Amendment contain the entire agreement of the Parties concerning the subject
matter of the Leasehold Interest Acquisition Agreement as amended by the First Amendment and
supersedes any prior written or oral agreements between them.
15. Incorporation of Exhibits. All Exhibits and other instruments attached to this
First Amendment are incorporated herein by this reference and made a part hereof.
16. Authority to execute this First Amendment. Each person signing this First
Amendment on behalf of an entity or other organization represents that he or she is authorized to
execute First Amendment on behalf of that entity or other organization and to bind that entity or
other organization to the terms of this First Amendment.
001 219.0001\1695809.2 15
17. Construction. Each Party has cooperated in the drafting and preparation of this
First Amendment. In any construction to be made of this First Amendment, or any of its terms
and provisions, the same shall not be construed against any party.
18. Counterparts Facsimile/Electronic Transmission. This First Amendment may
be executed in counterparts, each of which shall be deemed an original and when taken together
with other signed counterparts, shall constitute one agreement, which shall be binding upon and
effective as to all Parties. A facsimile or electronic transmission (email) copy of an authorized
signature of a Party to this First Amendment will have the same force and effect as the original
signature.
19. Voluntary First Amendment. The Parties, in each of them, and each constitute
partner of Tenant, further represent and declares that they have carefully read this First
Amendment and the contents thereof and they sign this First Amendment freely and voluntarily.
20. Advice of Counsel.
THE PARTIES, AND EACH OF THEM, AND EACH CONSTITUENT PARTNER OF
TENANT, ACKNOWLEDGE THAT IN CONNECTION WITH THE NEGOTIATION AND
EXECUTION OF THIS FIRST AMENDMENT, THEY HAVE EACH BEEN REPRESENTED
BY INDEPENDENT COUNSEL OF THEIR OWN CHOOSING AND THE PARTIES, AND
EACH OF THEM, AND EACH CONSTITUENT PARTNER OF TENANT, EXECUTED THIS
FIRST AMENDMENT AFTER REVIEW BY SUCH INDEPENDENT COUNSEL; OR, IF
THEY WERE NOT SO REPRESENTED, SAID NON -REPRESENTATION IS AND WAS
THE VOLUNTARY, INTELLIGENT AND INFORMED DECISION AND ELECTION OF
THE PARTY OR CONSTITUENT PARTNER NOT SO REPRESENTED; AND, PRIOR TO
EXECUTING THIS FIRST AMENDMENT, EACH PARTY, AND EACH CONSTITUENT
PARTNER OF TENANT, HAS HAD AN ADEQUATE OPPORTUNITY TO CONDUCT AN
INDEPENDENT INVESTIGATION OF ALL THE FACTS AND CIRCUMSTANCES WITH
RESPECT TO THE MATTERS WHICH ARE THE SUBJECT OF THIS FIRST
AMENDMENT INCLUDING BUT NOT LIMITED TO THE ADVISABILITY OF
ENTERING INTO THIS FIRST AMENDMENT AND THE MEANING OF CALIFORNIA
CIVIL CODE SECTION 1542.
Initials of Tenant(
_
(C to her R. Phillips (Virgil Kyle Kyle, III) (Jason Y. Berry✓ (Michael J. Huinbach)
Initials of Agenc
(ChiVn)(Eve Director) c Counsel) (Deputy Executive Director)
gen
21. Third Party Beneficiaries. This First Amendment is made and entered into for
the sole protection and benefit of the City and Agency, their successors and assigns, and Tenant
and its permitted successors and assigns and no other person or persons shall have any right of
action thereon.
[SIGNATURES OF FOLLOWING PAGES]
001219.0001\1695809.2 16
17. Construction. Each Party has cooperated in the drafting and preparation of this
First Amendment. In any construction to be made of this First Amendment, or any of its terms
and provisions, the same shall not be construed against any party.
18. Counterparts Facsimile/Electronic Transmission. This First Amendment may
be executed in counterparts, each of which shall be deemed an original and when taken together
with other signed counterparts, shall constitute one agreement, which shall be.binding upon and
effective as to all Parties. A facsimile or electronic transmission (email) copy of an authorized
signature of a Party to this First Amendment will have the same force and effect as the original
signature.
19. Voluntary First Amendment. The Parties, in each of them, and each constitute
partner of Tenant, further represent and declares that they have carefully read this First
Amendment and the contents thereof and they sign this First Amendment freely and voluntarily.
20. Advice of Counsel.
THE PARTIES, AND EACH OF THEM, AND EACH CONSTITUENT PARTNER OF
TENANT, ACKNOWLEDGE THAT IN CONNECTION WITH THE NEGOTIATION AND
EXECUTION OF THIS FIRST AMENDMENT, THEY HAVE EACH BEEN REPRESENTED
BY INDEPENDENT COUNSEL OF THEIR OWN CHOOSING AND THE PARTIES, AND
EACH OF THEM, AND EACH CONSTITUENT PARTNER OF TENANT, EXECUTED THIS
FIRST AMENDMENT AFTER REVIEW BY SUCH INDEPENDENT COUNSEL; OR, IF
THEY WERE NOT SO REPRESENTED, SAID NON -REPRESENTATION IS AND WAS
THE VOLUNTARY, INTELLIGENT AND INFORMED DECISION AND ELECTION OF
THE PARTY OR CONSTITUENT PARTNER NOT SO REPRESENTED; AND, PRIOR TO
EXECUTING THIS FIRST AMENDMENT, EACH PARTY, AND EACH CONSTITUENT
PARTNER OF TENANT, HAS HAD AN ADEQUATE OPPORTUNITY TO CONDUCT AN
INDEPENDENT INVESTIGATION OF ALL THE FACTS AND CIRCUMSTANCES WITH
RESPECT TO THE MATTERS WHICH ARE THE SUBJECT OF THIS FIRST
AMENDMENT INCLUDING BUT NOT LIMITED TO THE ADVISABILITY OF
ENTERING INTO THIS FIRST AMENDMENT AND THE MEANING OF CALIFORNIA
CIVIL CODE SECTION 1542.
Initials of Tenant:
Initials of Agency:
C - 9-
111W -0
(Virgil Kyle Kyle, III)
A f'/7)
-
(Michael I umbach)
Y. Berry)
(Christopher R_ Phillips)
Vo
(Chairperson) (Executive Director) (Agency Counsel) (Deputy Executive Director)
(Agency Special Counsel)
21. Third Party Beneficiaries. This First Amendment is made and entered into for
the sole protection and benefit of the City and Agency, their successors and assigns, and Tenant
and its permitted successors and assigns and no other person or persons shall have any right of
action thereon.
[SIGNATURES OF FOLLOWING PAGES)
001219.0001 \1695809.2 16
IN WITNESS WHEREOF, the Parties have executed this First Amendment as of the
date first written above.
AGENCY:
ATTEST: REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH, a public
body, corpo �niitic�
ZntNa
l By:
recy
Joan Fl nn Print me: J e Carchio
Title: lerkTitle: /Chairper on
REVIENY" AND APPROVED:
By: / / 0I
Print a e Fred Wilson
Title: Executive Director
APPROVED AWTO FORM:
By•
r 1�
Fr%DLName: JEinnit
Title: Agency Counsel
LEIBOLD MCCLENDON & MANN, P.C.,
Agency Special Counsel
By:
arbara Zeid ' eibol
INITIATED AND APPROVED:
By:
Print Name: St a ley Smalewitz
Title: Deputy Executive Director
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
001219.0001\1695809.2 17
TENANT:
C.S.B. PARTNERSHIP, a California general
partnership
By: C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General
Partner
01
By:
h 'topher R. Phillips,
'TIresident
By: FOUR KYL , INC., a California
cor4iits 7;�,'
aP%artner
By: 1/
e K e, iII, President
By: PHILLIPS & PHILLIPS L.P., a
California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, its
General Partner
By:
h ' topher R. Phillips
9resident
By: .IYB ENTERPRISES, INC., a
California corporation, its General
Partner
By: THREEMMMS, INC., a California
corporation, its General Partner
By:�'�--
Michael . Humbach, President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
001219.0001\1695809.2 18
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 istopher R. 4Phillips
President
001 219.0001U 6958092 19
EXHIBIT A
LEASEHOLD INTEREST ASSIGNMENUTRANSFER
001219.0001 \1695809.2 20
This Document was electronically recorded by
Stewart Title
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Richard P. Waxman, Esq.
Wendel, Rosen, Black & Dean LLP
111 I Broadway, 24`h Floor
Oakland, CA 94607-4036
Recorded in Official Records, Orange County
Torn Daly, Clerk -Recorder
1111111111111111111111111111111111111111111111111111111111111111111 42.00
2010000692869 04:30pm 12/22/10
93 401 A34 13
D.00 0.00 0.00 0.00 36.00 0.00 0.00 0.00
CC- 92-2-2-10Uk (THIS SPACE FOR RECORDER'S USE ONLY)
AMENDED AND RESTATED ASSIGNMENT, TRANSFER AND
CONVEYANCE OF LEASEHOLD INTEREST
THIS PAGE ADDED TO PROVIDE ADEQUATE SPACE FOR RECORDING INFORMATION (GOVT. CODE 27361.6)
(additional recording fee applies)
001219.0001 \ 1709651.1
AMENDED AND RESTATED ASSIGNMENT, TRANSFER AND
CONVEYANCE OF LEASEHOLD INTEREST
THIS AMENDED AND RESTATED ASSIGNMENT, TRANSFER AND
CONVEYANCE OF LEASEHOLD INTEREST ("Amended/Restated Assignment/Transfer")
is made and entered into effective as of December ZZ, 2010 ("Effective Date"), by and between
C.S.B. PARTNERSHIP, a California general partnership ("Assignor/Transferor"), and the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public
body, corporate and politic ("Assignee/Transferee"), who agree as follows:
1. RECITALS. This Amended/Restated Assignment/Transfer is made with
reference to the following facts and objectives:
1.1 Assignee/Transferee is the owner in fee that certain improved real
property commonly known as 7872 Edinger Avenue, Huntington Beach, California 92647 (the
"Property"), as such Property is more particularly described on Exhibit A, attached hereto.
Under threat of condemnation, Assignee/Transferee and HB Auto I, LLC, a California limited
liability company (collectively, the "Predecessor Landlord") completed the negotiation 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 (collectively, the "New Landlord/Predecessor Landlord
Property Acquisition Agreement"), setting forth the terms and conditions by which
Assignee/Transferee would 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. The acquisition transaction pursuant to the New
Landlord/Predecessor Landlord Property Acquisition Agreement was closed and consummated
on January 28, 2009, upon which date Assignee/Transferee acquired all of Predecessor
Landlord's rights, title and interest as the owner in fee in and to the Property (the "Property
Acquisition Date"). Effective as of the Property Acquisition Date, Assignee/Transferee
succeeded to all of the rights and assumed all of the obligations of Predecessor Landlord under
that certain Standard Lease Agreement for the Property dated for reference purposes April 19,
2004, and Option Addendum to Standard Lease Agreement (collectively, the "Original Lease")
as amended by that certain First Amendment to Standard Lease entered into and executed as of
January 23, 2009 by and between Assignee/Transferee as successor -in -interest landlord and
Assignor/Transferor as Tenant ("First Lease Amendment"), which First Lease Amendment
became effective as of the Property Acquisition Date. The Original Lease as amended by the
First Lease Amendment shall hereinafter be collectively referred to as the "Lease." The
obligations of Assignor/Transferor under the Lease are guaranteed by Christopher R. Phillips, an
individual ("Guarantor") pursuant to the terms of that certain Guaranty of Lease dated April 19,
2004 ("Lease Guaranty"). The Lease and the Lease Guaranty are currently in full force and
effect.
1.2 In conjunction with Assignee/Transferee's acquisition from Predecessor
Landlord of all of Predecessor Landlord's rights, title and interest as the owner in fee in and to
the Property pursuant to the New Landlord/Predecessor Landlord Property Acquisition
Agreement on Property Acquisition Date, and Assignee/Transferee's proposed redevelopment of
the Property, Assignee/Transferee determined that it would be necessary for Assignor/Transferor
001219.0001 \ 1709651.1
to permanently cease to occupy the Property prior to the expiration of the Lease; and, as such,
Assignee/Transferee and Assignor/Transferor entered into that certain Reinstated Acquisition of
Leasehold Interest Agreement dated as of December 29, 2008 (the "Leasehold Interest
Acquisition Agreement"), setting forth the terms and conditions by which Assignee/Transferee
shall acquire Assignor/Transferor's entire leasehold interest in the Property (the "Leasehold
Interest") pursuant to the Original 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 Assignor/Transferor's occupancy of the Property prior to the expiration of the Lease. As
required by the terms and conditions of the Landlord/Tenant Leasehold Interest Acquisition
Agreement, the Original Lease was amended by the terms of the First Lease Amendment.
1.3 In conjunction with certain transactions between Big O Tires, LLC, a
Nevada limited liability company (formerly known as Big O Tires, Inc., a Nevada corporation)
("Big O") and Assignor/Transferor pursuant to which Big O purchased and acquired from
Assignor/Transferor the assets subject to certain liabilities which comprised the retail Big O Tire
store owned and operated by Tenant on the Property effective as of December 1, 2009 (the
"Edinger Avenue Big O Store Transaction"), Assignor/Transferor as "Sublandlord" and Big O as
"Subtenant" entered into that certain Sublease Agreement and Master Landlord's Consent
Thereto dated as of December 1, 2009 (the "Sublease"); and, Assignee/Transferee, as the
"Master Landlord," consented to Big O subleasing the Property pursuant to the terms of the
Sublease.
1.4 Assignor/Transferor and Assignee/Transferee have entered into that
certain First Amendment to Leasehold Interest Acquisition Agreement dated as of December 23,
2010 (the "First Leasehold Interest Acquisition Agreement Amendment") pursuant to which
Assignor/Transferor and Assignee/Transferee have agreed to amend the Leasehold Interest
Acquisition Agreement to provide that, notwithstanding Assignee/Transferee's right under the
terms of the Leasehold Interest Acquisition Agreement to acquire the Leasehold Interest no later
than January 28, 2014 (defined as the "Lease TerminationNacation Date" in the Leasehold
Interest Acquisition Agreement), subject to the satisfaction in full or affirmative waiver (as
applicable) of all Conditions Precedent set forth in the First Leasehold Interest Acquisition
Agreement Amendment (i) Assignee/Transferee shall acquire the Leasehold Interest from
Assignor/Transferor no later than December 31, 2010; and (ii) immediately following such
acquisition, Assignor/Transferor, Assignee/Transferee and Big O shall be fully bound by that
certain Termination of Sublease and Assignment, Assumption and Amendment of Lease (the
"Sublease Termination and Lease Assignment/Assumption/Amendment") pursuant to which
(a) the Sublease shall be terminated; (b) Assignee/Transferee shall assign and transfer to Big O
all of its rights, title and interest as the successor -in -interest tenant under the Lease as amended
by the Sublease Termination and Lease Assignment/Assumption/Amendment and Big O shall
accept such assignment, transfer and conveyance and assume Assignee/Transferee's obligations
as the successor -in -interest tenant under the Lease as amended by the Sublease Termination and
Assignment/Assumption/Amendment accruing and arising from and after the Effective Date;
(c) Assignee/Transferee and Big O shall agree to certain amendments to the Lease; and
(d) Assignor/Transferor, Assignee/Transferee and Big O shall agree on such other terms and
conditions, all as set forth in the Sublease Termination and Lease
Assignment/Assumption/Amendment. The Leasehold Interest Acquisition Agreement; as
amended by the First Leasehold Interest Acquisition Agreement Amendment, shall hereinafter be
collectively referred to as the "Amended Leasehold Interest Acquisition Agreement".
001219.0001 \ 1709651.1 2
1.5 In conjunction with Section 1.4, Assignor/Transferor and
Assignee/Transferee hereby acknowledge and agree that all Conditions Precedent under the First
Leasehold Interest Acquisition Agreement Amendment have been fully satisfied or affirmatively
waived (as applicable); and, in connection therewith and, as required by the terms of the
Amended Leasehold Interest Acquisition Agreement, mutually desire to enter into this Amended
Restated/Assignment/Transfer pursuant to which (i) Assignor/Transferor shall assign, transfer
and convey to Assignee/Transferee the Leasehold Interest in the Property pursuant to the Lease
and Assignee/Transferee shall accept such assignment, transfer and conveyance and assume,
keep and perform all of the Assignor/Transferor's obligations as the tenant under the Lease
accruing and arising from and after the Effective Date; and (ii) immediately following such
assignment, transfer and conveyance, Assignor/Transferor and Assignee/Transferee shall be fully
bound by the Sublease Termination and Lease
Assignment/Assumption/Assignment/Amendment, all on and subject to the terms and conditions
as shall hereinafter be set forth.
1.6 Capitalized terms in this Amended/Restated Assignment/Transfer and not
otherwise defined herein will have the definitions given such terms in the Amended Leasehold
Interest Acquisition Agreement, and such definitions are hereby incorporated by reference herein
and made a part hereof.
2. ASSIGNMENT AND ASSUMPTION. Effective as of the Effective Date, and
on and subject to the terms, conditions, representations, warranties, covenants and agreements set
forth in the Amended Leasehold Interest Acquisition Agreement, Assignor/Transferor hereby
assigns, transfers and conveys to Assignee/Transferee all of its rights, title and interest in, to and
under the Leasehold Interest pursuant to the Lease as amended by the Sublease Termination and
Lease Assignment/Assumption/Amendment and Assignee/Transferee hereby accepts such
assignment, transfer and conveyance of the Leasehold Interest pursuant to the Lease as amended
by the Sublease Termination and Lease Assignment/Assumption/Amendment and agrees to
assume, keep, perform and fulfill all of Assignor/Transferor's obligations as the Tenant under the
Lease accruing and arising from and after the Effective Date. In conjunction with the foregoing,
Assignor/Transferor and Assignee/Transferee agree to be fully bound by the Sublease
Termination and Lease Assignment/Assumption/Amendment effective as of the Effective Date.
3. NO MERGER. Pursuant to Section 5(a) of the First Leasehold Interest
Acquisition Agreement Amendment, Assignor/Transferor and Assignee/Transferee acknowledge
and agree that it is the intent of Assignor/Transferor and Assignee/Transferee that in conjunction
with the transactions contemplated by the Amended Leasehold Interest Acquisition Agreement
and the terms of the Sublease Termination and Lease Assignment/Assumption/Amendment, that
notwithstanding the fact that until Assignee/Transferee assigns and transfers the Leasehold
Interest in the Property acquired fiom Assignor/Transferor under the terms of the Amended
Leasehold Interest Acquisition Agreement to Big O pursuant to the Sublease Termination and
Lease Assignment/Assumption/A+nendment, Assignee/Transferee's (x) leasehold interest in the
Property and (y) fee interest in the Property will remain separate and distinct from and will not
merge with the other interests or any other interest, elements or estates in the Property that
Assignee/Transferee now holds or may hereinafter acquire.
4. SUBJECT TO AMENDED LEASEHOLD INTEREST ACQUISITION
AGREEMENT. Nothing contained in this Assignment/Transfer will operate or have the effect
of expanding, constricting or of-erwise modifying the terms and provisions of the Amended
001219.0001 \ 1709651.1
Leasehold Interest Acquisition Agreement, all of the terms and provisions of which are hereby
reaffirmed by Assignor/Transferor and Assignee/Transferee.
5. MISCELLANEOUS.
5.1 If either party commences an action against the other party arising out of
or in connection with this Amended/Restated Assignment/Transfer, the prevailing party will be
entitled to recover from the losing party reasonable attorneys' fees and costs of suit.
5.2 This Amended/Restated Assignment/Transfer will be binding on and inure
to the benefit of the parties hereto and their respective successors, assigns, administrators,
personal representatives, executors, and heirs.
5.3 The Recitals set forth above in this Amended/Restated
Assignment/Transfer are incorporated herein by this reference and made a part hereof.
5.4 All Exhibits attached to this Amended/Restated Assignment/Transfer are
incorporated herein by this reference and made a part hereof.
5.5 The parties agree that this Amended/Restated Assignment/Transfer may
be signed in two (2) or more counterparts, each of which will be deemed an original, but all of
which together will be deemed one and the same agreement.
5.6 This Amended/Restated Assignment/Transfer will be recorded in the
official real estate records of Orange County, California as soon as reasonably practical
following the execution of this Amended/Restated Assignment/Transfer by Assignor/Transferor
and Assignee/Transferee.
5.7 Assignor/Transferor and Assignee/Transferee agree to execute all
documents and instruments and take such further action as may be reasonably required in order
to effectuate and consummate the transactions contemplated by this Amended/Restated
Assignment/Transfer.
5.8 Each person signing this Amended/Restated Assignment/Transfer on
behalf of a party to this Amended/Restated Assignment/Transfer warrants and represents that
such person is fully authorized to enter into and execute this Amended/Restated
Assignment/Transfer for and on behalf of such party and that this Amended/Restated
Assignment/Transfer is a binding obligation on such party.
[SIGNATURES ON NEXT PAGE]
001219,000111709651.1 4
IN WITNESS WHEREOF, the parties hereto have executed this Amended/Restated
Assignment/Transfer as of the dates set forth below.
ATTEST:
By:
Print
Title
REVXam:
D APPROVED:
By:
Printred Wilson
Title: Executive Director
ASSIGNEE/TRANSFEREE :
REDEVELOPMENT AGENCY OF THE
CITY OF HUNQ NGTON D , a public
body, co rat d pol'
ame:
Ti
APP OVED AS TO FORM:
By.
PH t ame: Jennife cGrath
Title: Agency Counsel
APPROVED AS TO FORM:
LEIDOLD MCCLENDON & ANN, P.C.
Agency pecial Couns .
By:
Print ame: 1' f
Title:
INITIATED AND APPROVED:
By. ,
Print Name: Stanley Smal
Title: Deputy Executive Director
[SIGNATURES CONTINUED ON NEXT PAGE/
001219.0001\170965 1.1 5
ASSIGNOR/TRANSFEROR:
C.S.B. PARTNERSHIP, a California general
partnership
By: C.E.P. DEVELOPMENTS, INC., a
California) corporation it General Partner
Y
By:
ristopher. . Phillip , President
By: FOUR KYLES, 4NC., a California
corporation, its",
ts Generall Partner
4irgil Ky e Ky e, III,*resident
By: PHILLIPS & PHILLIPS L.P., a California
limited partnership, its General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, its General
Partner
By:
lstopher R. Phillips,
President
By:.pYYB ENTERPRISES, INC., a California
corporati n, its General Partner
By: _
J s n Y. B0,Preside
By:THREEMMMS, INC., a California
corporation, its General Partner
By:
Michaelf. lAumbach, President
[SIGNATURES CONTINUED ON NEXT PAGE/
001219.0001\1709651.1 6
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:
astopher R. Philli
President
001219,0001\1709651.1
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
On December 21, 2010 before me, P. L. Esparza, Notary Public, personally
appeared Joan L. Flynn and Joe Carchio who proved to me on the basis of
satisfactory evidence to be the persons whose names are subscribed to the within
instrument and acknowledged to me that they executed the same in their authorized
capacities, and that by their signatures on the instrument the persons, or the entity
upon behalf of which the persons acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
P. L. ESPARZA
WITNESS my hand and official seal. IQ Commission # 1857021iNotary Public - California i Orange County
My Comm. Expires Au 4, 2013
(Seal)
(Notary Signatu�
State of California
County of C)ncwj. e
On 1 q1 7 , 2010 , before me, N &G,_S , Notary
Public, personally appeared�Lhn;fiL:phe (? . �1�; jj,�5 , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary Puke
State of California
County of
(Seal)
MARY M. SATE"
0 COAIIM. #1722693 W
LJ "--,` �i; NOTARY PUBLIC-,CALIFORNIA M
U) Senemardino Cola
a '> Dmy
Commission Expire Fe)ruary 11, 2011
On 1 11 , 20 1 (),before me, VL't �� � ' _, Notary
Public, personally appeared Vj nq t ! i<g I e V_y le '13l , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary Pub is
001219.0001 \ 1709651.1
(Seal)
pfi::
N
MARY M. SATES
r
y
CC?MM.#1722693
LiJ =
NOTARY PUBLIC-CALIFORNIA
0
W
San Bernardino County
r� Commission
Expires February 11, 2011
State of California
County of tW L
On i Z % I 1 , 2010 , before me, k tuk4 Notary
Public, personally appeared } Ce bu 1/ f3eort ( , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
J✓ v� at
Notary Pu lic
State of California
County of OY`CLoc, t_
(Seal)
r COMM- # 176 2693 C!1
W, ` � - io t�t�i�, 'PUBLIC-CAUFORNIA M
5� 3,1n Bernardino County �
Commission Expires February 11, 2011 �
On , 2010 , before me, P IL N fL,( • P-)Xt e-S , Notary
Public, personally appeared fY) l c.(,e 1 'T k umb6LC-#' , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal. (Seal)
MARY M. BATES
Notary Publi,CIi.#�722693 M
NOTARY PUBLIC-CALIFORNIA �
San Bernardino county C�
n ate'' Commission Expires February 111 2011 r
001219.0001 \1709651.1 9
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
00 1219.000 1 \ 1709651.1
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Huntington Beach, County of Orange, State of California, described
as follows:
LOTS 21, 22 AND 23 OF TRACT NO. 417, IN THE CITY OF HUNTINGTON BEACH,
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
16 PAGE 47 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPT ALL OIL, MINERALS AND OTHER HYDROCARBON SUBSTANCES
WITHOUT RIGHT OF SURFACE ENTRY THERETO ABOVE A DEPTH OF ABOVE 500
FEET FROM THE SURFACE THEREOF, AS RESERVED IN THE DEED FROM BEULAH
H. FINLEY, RECORDED DECEMBER 14, 1960 IN BOOK 5548 PAGE 385, OFFICIAL
RECORDS.
APN: 142-081-028
EXHIBIT B
SUBLEASE TERMINATION AND LEASE
ASSIGNMENT/TRANSFER/AMENDMENT
001219MOl U 695809.2 21
TERMINATION OF SUBLEASE AND
ASSIGNMENT, ASSUMPTION AND AMENDMENT OF LEASE
THIS TERMINATION OF SUBLEASE AND ASSIGNMENT, ASSUMPTION
AND AMENDMENT OF LEASE ("Sublease Termination and Lease
Assignment/Assumption/Amendment") is entered into as of the 23rd day of December, 2010, by
and among the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, a public body, corporate and politic ("Landlord" or "Assignor"), C.S.B.
PARTNERSHIP, a California general partnership ("C.S.B.") and BIG O TIRES LLC, a
Nevada limited liability company (formerly known as Big O Tires, Inc., a Nevada corporation)
("Assignee" or "Big O").
RECITALS
A. Landlord, as the successor -in -interest landlord and C.S.B. as tenant are parties to
that certain Standard Lease Agreement dated for reference purposes April 19, 2004 and Option
Addendum to Standard Lease Agreement ("Option Addendum") (collectively, the "Original
Lease") as amended by that First Amendment to Standard Lease Agreement entered into and
executed as of January 23, 2009 (the "First Lease Amendment" and, together with the Original
Lease, the "Lease") for the leasing of that certain real property commonly known as 7872
Edinger Avenue, Huntington Beach, California 92647 (the "Property"). The obligations of
C.S.B. as the tenant under the Lease are guaranteed by Christopher R. Phillips ("Phillips
Guarantor") pursuant to the terms of that certain Guaranty of Lease dated April 19, 2004 (the
"Phillips Lease Guaranty"). The Lease and the Phillips Lease Guaranty are currently in full
force and effect. A copy of the Lease is attached hereto as Exhibit A and a copy of the Phillips
Lease Guaranty is attached hereto as Exhibit B.
B. Under threat of condemnation, Landlord and HB Auto, LLC, a California limited
liability company, the predecessor -in -interest landlord under the Original Lease (the
"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"), which sets forth
the terms and conditions by which Landlord acquired from Predecessor Landlord, Predecessor
Landlord's rights, title and interest as the owner in fee of the Property, on and subject to the
terms of the New Landlord/Predecessor Landlord Property Acquisition Agreement. The
transaction pursuant to the New Land] ord/Predecessor Landlord Property Acquisition Agreement
was closed and consummated on January 28, 2009. In conjunction with such closing and
consummation, the First Amendment became effective and binding on Landlord and C.S.B.
C. In conjunction with Landlord's acquisition from Predecessor Landlord of all of
Predecessor Landlord's right, title and interest as the owner in fee of the Property pursuant to the
New Landlord/ Predecessor Landlord Property Acquisition Agreement, Landlord determined that
it was necessary for C.S.B. as the tenant under the Lease to permanently cease to occupy the
Property prior to expiration of the Lease; and, as such, Landlord and C.S.B. had entered into that
certain Reinstated Acquisition of Leasehold Interest Agreement dated as of December 29, 2008
001219.0001\1696178.4
(the "Leasehold Interest Acquisition Agreement") setting forth the terms and conditions by
which Landlord would acquire C.S.B. 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 C.S.B. occupancy of the Property prior to the expiration of the Lease (the "Leasehold
Interest Acquisition Transaction"). The Leasehold Interest Acquisition Transaction pursuant to
the Leasehold Interest Acquisition Agreement was closed and consummated immediately
following the closing and consummation of the New Landlord/Predecessor Landlord Property
Acquisition Agreement on January 28, 2009 (the "Leasehold Interest Acquisition Agreement
Closing Date").
D. Under the terms of the Leasehold Interest Acquisition Agreement, Landlord is
obligated to complete the acquisition of the Leasehold interest from C.S.B. on or before the date
which is five (5) years from the Leasehold Interest Acquisition Agreement Closing Date, such
date being January 28, 2014. In connection therewith, under the terms of the Leasehold Interest
Acquisition Agreement, Landlord is required to give C.S.B. at least ninety (90) days prior written
notice of the date upon which it will acquire the Leasehold Interest and on the date Landlord
acquires the Leasehold interest the Lease will terminate.
E. In conjunction with the foregoing Recitals and a certain purchase and sale
transaction between C.S.B. and Assignee, pursuant to which C.S.B. sold, transferred, assigned,
conveyed and delivered to Assignee and Assignee purchased and acquired from C.S.B., among
other assets and properties, the assets and properties which comprised the franchised retail Big O
Tire Store known as "Big O Tires Store No. 5754" owned and operated by C.S.B. on the
Property effective as of December 1, 2009 (the "Edinger Avenue Big O Store. Acquisition"). As
part of the Edinger Avenue Big O Store Acquisition, C.S.B. and Assignee entered into that
certain Sublease Agreement and Master Landlord's Consent Thereto dated and effective as of
December 1, 2009 (the "Sublease"). The obligations of Assignee under the Sublease are
guaranteed by TBC Corporation, a Delaware corporation (the "TBC Guarantor") pursuant to that
certain Guaranty of Sublease executed as of December 1, 2009 (the "TBC Sublease Guaranty").
The Sublease was, as required by the terms of the Lease, consented to by Landlord, by
Landlord's execution of the "Consent of Master Landlord" attached to the Sublease as Exhibit B.
Assignee currently owns and operates the franchise retail Big O Tire Store known as "Big O Tire
Store No. 5809" at the Property ("Assignee's Edinger Avenue Big O Store").
F. Landlord and C.S.B. have entered into that certain First Amendment to Reinstated
Acquisition of Leasehold Interest Agreement (the "Leasehold Interest Acquisition Agreement
Amendment") which amends the Leasehold Acquisition Agreement and provides that upon the
satisfaction or affirmative waiver of certain conditions precedent, including without limitation,
the execution of this Sublease Termination and Lease Assignment/Assumption/Amendment by
Landlord, C.S.B. and Assignee, Landlord shall acquire C.S.B.'s entire Leasehold Interest in the
Property as of the Effective Date (as such term is defined in Section 8 hereof). The Leasehold
Interest Acquisition Agreement and the Leasehold Interest Acquisition Agreement Amendment
shall sometimes hereinafter be collectively referred to as the "Amended Leasehold Interest
Acquisition Agreement."
001219.0001\1696178 4 2
G. In conjunction with the foregoing Recitals, Landlord, C.S.B. and Assignee
mutually desire to enter into this Sublease Termination and Lease Assignment/Assumption/
Amendment setting forth the terms and conditions by which as of Effective Date, and provided
that all Conditions Precedent set forth in Section 4 hereof are satisfied, immediately following
the closing and consummation of the transactions pursuant to the Amended Leasehold Interest
Acquisition Agreement (i) the Sublease shall be terminated; (ii) concurrently with the
termination of the Sublease, Landlord, as the successor -in -interest tenant under the Lease
pursuant to the Amended Leasehold Interest Acquisition Agreement shall assign and transfer to
Assignee all of its rights, title and interest as the successor -in -interest tenant under the Lease and
Assignee shall accept such assignment from Landlord and assume Landlord's obligations as the
tenant under the Lease accruing and arising from and after the Effective Date; and (iii) Landlord
and Assignee shall agree to certain amendments to the Lease, all 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.
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, C.S.B. and Assignee hereby agree as follows:
AGREEMENT
1. Termination of Sublease and Assignment and Assumption of Lease. Subject
to the satisfaction of all of the Conditions Precedent set forth in Section 4 hereof, effective as of
the Effective Date (i) Landlord, C.S.B. and Assignee agree that the Sublease and the TBC
Sublease Guaranty shall be terminated; and (ii) concurrently with such termination of the
Sublease and the TBC Sublease Guaranty, Landlord hereby assigns and transfers to Assignee all
of Landlord's rights, title and interest as the successor -in -interest tenant in and to the Lease as
amended by this Sublease Termination and Lease Assignment/Assumption/Amendment
(Landlord shall retain all rights, title and interest as the fee interest owner of the Property and
remain as the successor -in -interest landlord under the Lease as amended by this Sublease
Termination and Lease Assignment/Assumption/Amendment) and Assignee accepts the
assignment and transfer of Landlord's rights, title and interest as the successor -in -interest tenant
under the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment and assumes and agrees to keep, perform and fulfill all of
the obligations of the tenant under the Lease as amended by this Sublease Termination and Lease
Assignment/AssumptionlAmendment arising or accruing from and after the Effective Date.
From and after the Effective Date, the "Tenant" for purposes of the Lease as amended by this
Sublease Termination and Lease Assignment/Assumption/Amendment refers to and shall mean
Assignee.
2. Further Assignment. Assignee acknowledges and agrees that the acceptance by
Assignee of the assignment and transfer and assumption of the Lease as amended by this
Sublease Termination and Lease Assignment/Assumption/Amendment as provided in Section 1
hereof is subject to the restrictions concerning any further assignment and transfer as set forth in
the Lease as amended by this Sublease Termination and Lease
001219.0001\1696178.4
Assignment/Assumption/Amendment; and, Assignee acknowledges and agrees that it may not
further assign or transfer its interest as the successor -in -interest tenant under the Lease as
amended by this Sublease Termination and Lease Assignment/Assumption/Amendment and/or
in the Property or any part thereof, without first obtaining Landlord's prior written consent in
accordance with the applicable terms of the Lease as amended by this Sublease Termination and
Lease Assignment/Assumption/Amendment.
3. TBC Corporation Guaranty of Lease. Assignee agrees to cause the TBC
Guarantor to guaranty all of the obligations of Assignee under the Lease as amended by this
Sublease Termination and Lease Assignment/Assumption/Amendment by executing the
Guaranty Agreement in the form attached hereto as Exhibit C (the "TBC Lease Guaranty").
Assignee agrees to cause an executed copy of the TBC Lease Guaranty to be delivered to
Landlord and C.S.B. at the same time it delivers an executed copy of the Sublease Termination
and Lease Assignment/Assumption/Amendment to Landlord and C.S.B.
4. Conditions Precedent to Effectiveness. Notwithstanding anything in this
Sublease Termination and Lease Assignment/Assumption/Amendment to the contrary, the
effectiveness of this Sublease Termination and Lease Assignment/Assumption/Amendment is
conditioned upon the satisfaction of all of the following conditions precedent (each a "Condition
Precedent" and collectively, the "Conditions Precedent"): (i) the transactions pursuant to the
Amended Leasehold Interest Acquisition Agreement being fully closed and consummated on or
before December 31, 2010; and (ii) TBC Guarantor having executed the TBC Lease Guaranty in
the form attached hereto as Exhibit C. In the event the foregoing Conditions Precedent are not
fully satisfied, this Sublease Termination and Lease Assignment/Assumption/Amendment and
the terms hereof shall be null and void and of no further force and effect and (a) the Lease and
the Phillips Lease Guaranty; (b) the Sublease and the TBC Sublease Guaranty; and (c) the
Leasehold Interest Acquisition Agreement (but not the Leasehold Interest Acquisition
Agreement Amendment, which shall be null and void and of no further force and effect) shall
remain in full force and effect and the applicable parties thereto shall remain fully obligated and
bound by the terms thereof.
5. Amendments to Lease. Landlord and Assignee agree to the following
amendments to the Lease which amendment shall become effective as of the Effective Date:
(a) Lease Term. Subject to Landlord's termination rights as provided in
Section 5(b) hereof, (i) .Landlord and Assignee acknowledge and agree that the initial ten (10)
year term of the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment shall, as provided in Paragraph G and Section 3 of the
Original Lease, expire on June 30, 2014 (the "Initial Term"); and (ii) notwithstanding anything
contained in the Option Addendum to the contrary, Landlord hereby grants to Assignee one (1)
option to extend the term of the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment for a five (5) year period (the "Option Term") which
Option Term shall be subject to the provisions of Section 5(b) hereof and shall, subject to the
provisions of Section 5(b) hereof, commence immediately following the expiration of the Initial
Term. Such Option Term shall be exercised, if at all, by Assignee giving written notice to
Landlord of the exercise of such Option Term at least one hundred eighty (180) days but not
more than three hundred sixty-five (365) days before the expiration of the Initial Term. Landlord
001219.0001\1696178.4 4
and Assignee acknowledge that except with respect to the Option Term, Assignee shall have no
further rights to extend the term of the Lease as amended by this Sublease Termination and
Lease Assignment/Assumption/Amendment.
(b) Landlord Lease Termination Restrictions and Rights. Notwithstanding
anything contained in Section 5(a) to the contrary, so long as the Lease as amended by this
Sublease Termination and Lease Assignment/Assumption/Amendment has not otherwise been
terminated pursuant to the applicable terms thereof, Landlord shall have no right to terminate the
Lease as amended by this Sublease Termination and Lease Assignment/Assumption/Amendment
during the nine (9) month period commencing as of the Effective Date. From and after the
expiration of such nine (9) month period, Landlord shall have the right upon giving at least one
hundred twenty (120) days prior written notice to Assignee (the "Lease Termination Notice"), to
notify Assignee of its election to terminate the Lease, in which event, Assignee shall vacate the
Property on or before the applicable date set forth in the Lease Termination Notice (the "Lease
Termination/Vacation Date"). Provided that, nothing contained in this Section 5(b) shall in any
manner whatsoever operate to modify the rights of either Landlord or Assignee to terminate the
Lease as amended by this Sublease Amendment and Lease Assignment/Assumption/Amendment
pursuant to the applicable terms thereof and hereof.
(c) Minimum Rent. Notwithstanding anything contained in Section 4 of the
Original Lease to the contrary (including Section 4(b) thereof which is hereby deleted and
replaced with this Section 5(c)), Landlord and Assignee agree that the Minimum Rent will, from
and after the Effective Date be as follows:
(i) , Effective Date through June 30, 2014. For the period
commencing as of the Effective Date up and through June 30, 2014, the Minimum Monthly Rent
payable by Assignee to Landlord is calculated based upon the amount of Thirty -Three and
01/100 Dollars ($33.01) per square foot per year (or Two and 75/100) Dollars ($2.75) per square
foot per month), which equates to Twenty -Two Thousand Four Hundred Forty -Five and 08/100
Dollars ($22,445.08) per month and Two Hundred Sixty -Nine Thousand Three Hundred Forty -
One Dollars ($269,341) per year.
(ii) July 1, 2014 through June 30, 2016. For the period commencing
on July 1, 2014 up and through June 30, 2016, the Minimum Monthly Rent payable by Assignee
to Landlord is calculated based upon the amount of Thirty -Six and 31/100 Dollars ($36.31) per
square foot per year (or Three and 02/100 Dollars [$3.021 per square foot per month), which
equates to Twenty -Four Thousand Seven Hundred and 58/100 Dollars ($24,700.58) per month
and Two Hundred Ninety -Six Thousand Four Hundred Seven Dollars ($296,407) per year.
(iii) From and After July 1, 2016. For the period commencing on
July 1, 2016 up and through the end of the Option Period, the Minimum Monthly Rent payable
by Assignee to Landlord is calculated based upon the amount of Thirty -Nine and 94/100 Dollars
($39.94) per square foot per year (or Three and 33/100 Dollars ($3.33) per square foot per
month), which equates to Twenty -Seven Thousand One Hundred Eighty -Eight and 42/100
Dollars ($27,188.42) per month and Three Hundred Twenty -Six Thousand Two Hundred Sixty-
-One Dollars ($326,261) per year.
001219.0001 \1696178.4 5
(d) Real Property Taxes. Notwithstanding anything contained in the Lease
to the contrary, including without limitation, Section 5 of the Original Lease, Landlord shall be
responsible for all real property taxes, general and special assessments or other similar charges
assessed against the Property or the buildings or other improvements located on the Property
accruing and arising from and after the Effective Date (the "Real Property Taxes").
(e) Personal Property Taxes. Notwithstanding anything contained in the
Lease to the contrary, including, without limitation, Section 5 of the Original Lease, Assignee
shall be responsible for all taxes, assessments, license fees and other charges that are levied and
assessed against C.S.B.'s personal property, including its fixtures, furnishings and equipment
installed or located on the Property (the "Personal Property Taxes").
(f) Additional Rent. Except with respect to the Real Property Taxes, which
Landlord shall be responsible for as provided in Section 5(d) hereof, Assignee shall be
responsible for all Personal Property Taxes as provided in Section 5(e) hereof and all other
Additional Rent as set forth in Section 5 of the Original Lease.
(g) Retention and Removal of Assignee Assets. In conjunction with the
terms of the Amended Leasehold Interest Acquisition Agreement and the Edinger Avenue Big O
Store Acquisition, the Parties acknowledge and agree that Assignee owns all rights, title and
interest in and to all of the assets and property (both tangible and intangible) located on or
otherwise used in connection with the operation and condition of Assignee's Edinger Avenue
Big O Store, including, without limitation, (i) all inventory; (ii) all supplies; (iii) all displays,
telephone/facsimile systems, computer equipment, furniture, fixtures, trade fixtures, equipment,
machinery, hoists, lifts, alignment racks, balancers, compressors, signage and other personal
property not permanently fixed to the buildings located on the Property; (iv) all tenant
improvements; and (v) all intangible assets and properties, including, without limitation, the
telephone and facsimile numbers, the trademarks, trade names, service marks, service names,
copyrights, patents, processes, formulas, scientific and/or technical information, trade secrets,
licenses, franchises, plans, reports, supplies, customer and vendor lists and similar items
(collectively, the "Retained Tenant Assets"). Assignee shall have all rights to and will remove
all of the Retained Tenant Assets and all other personal property (both tangible and intangible)
owned by Assignee from the Property on or before the Lease TerminationNacation Date.
Assignee shall have no obligation to repair any damage to the Property resulting from or
occasioned by such removal of the Retained Tenant Assets; except that, Assignee agrees to take
all commercially reasonable steps and exercise reasonable care to minimize any such damage.
6. Termination of Sublease and TBC Sublease Guaranty; Phillips Guaranty;
Return of C.S.B.'s Security Deposit; Transfer of Assignee's Sublease Security Deposit. In
conjunction with the terms of the Amended Leasehold Interest Acquisition Agreement, in the
event all of the Conditions Precedent set forth in Section 4 hereof, are satisfied and the
transactions pursuant to the Amended Leasehold Interest Acquisition Agreement are closed and
consummated, on the Effective Date, (i) the Sublease and the TBC Sublease Guaranty will,
except for any obligations under the Sublease and the TBC Sublease Guaranty which, pursuant
to the terms of the Sublease and the TBC Sublease Guaranty, survive such termination and
remain in full force and effect (C.S.B. and Assignee and TBC Guarantor shall remain liable for
their respective obligations which survive such termination), terminate and be of no further force
001219.0001\1696178A 6
and effect; (ii) the Phillips Guaranty will terminate and be of no further force and effect;
(iii) Agency shall return to C.S.B. the Security Deposit under the Lease as amended by this
Sublease Termination and Lease Assignment/Assumption/Amendment in the amount of Fifteen
Thousand Dollars ($15,000); and C.S.B. shall deliver to Agency the Fifteen Thousand Dollars
($15,000) security deposit (the "Sublease Security Deposit") provided by Assignee to C.S.B. and
currently held by C.S.B. pursuant to the terms of the Sublease which Sublease Security Deposit
shall be held by Landlord as the "Security Deposit" (as such term is defined in the Original
Lease) to secure Assignee's obligations as the successor -in -interest tenant under the Lease as
amended by this Sublease Termination and Lease Assignment/Assumption/Amendment. With
regard to the Security Deposit under the Lease as amended by this Sublease Termination and
Lease Assignment/Assumption/Amendment and the Sublease Security Deposit, Landlord shall
retain the Security Deposit under the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment and C.S.B. shall retain the Sublease Security Deposit; and,
Landlord shall hold the Security Deposit under the Lease as amended by this Sublease
Termination and Lease Assignment/Assumption/Amendment to secure Assignee's obligations as
the successor -in -interest tenant under the under the Lease as amended by this Sublease
Termination and Lease Assignment/Assumption/Amendment.
7. Assignee Waiver and Release of Relocation Benefits and Assistance. In
consideration of the covenants, agreements and promises contained herein, Assignee, for itself
and its partners, members, shareholders, managers, directors, officers, employees, contractors,
guarantors (including, without limitation, TBC Guarantor), agents, franchisors, franchisees,
representatives, assigns, administrators, attorneys, heirs, beneficiaries, and successors -in -interest
(including, without limitation, its assignees and transferees) and anyone claiming by, through or
under Assignee (collectively, the "Assignee Related Parties") hereby fully and forever waives
and releases (i) Landlord and the members of Landlord's Board of Directors, the City of
Huntington Beach ("City") the members of the Huntington Beach City Council and the
governing Board of the Landlord, and of City's and Landlord's officers, agents, representatives,
assigns, employees, consultants, insurer's, attorneys and successors -in -interest (collectively, the
"Landlord Related Parties") and (ii) C.S.B. and C.S.B.'s partners, members, shareholders,
managers, officers, directors, employees, contractors, guarantors (including, without limitation
the Phillips Guarantor), agents, representatives, assigns, administrators, attorneys, heirs,
beneficiaries, and successors -in -interest (collectively, the "C.S.B. Related Parties") from all
rights, claims, debts, liabilities, demands, obligations, costs, expenses, actions and causes of
action of every nature, character and description, known or unknown, including those for
damages, compensation, relocation assistance, relocation benefits, consequential damages,
punitive damages, interest, costs, attorneys' and appraisal fees, injunctive or declaratory relief, or
for relief by way of writ of mandate, or for demands, damages, refunds, debts, liabilities,
reckonings, accounts, obligations, costs, expenses, liens, actions, causes, and causes of action of
whatever, kind, at law or in equity, which Assignee or any of the Assignee Related Parties now
has or may have in the future against Landlord and all of the Landlord Related Parties and C.S.B.
and the C.S.B. Related Parties out of or pertaining to any occurrence, event, circumstance or
matter of any kind or nature arising out of (a) Landlord's acquisition from Predecessor Landlord
of all of Predecessor Landlord's right, title and interest as the owner in fee of the Property
pursuant to the New Landlord/ Predecessor Landlord Property Acquisition Agreement; (b) the
acquisition by Landlord of the Leasehold interest in the Property from C.S.B. pursuant to the
Amended Leasehold Interest Acquisition Agreement; (c) the termination of the Sublease and the
001219.0001\1696178.4 7
assignment and transfer by Landlord to Assignee of its rights;, title and interest as the successor -
in -interest tenant under the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment and Assignee's acceptance of such assignment and transfer
and assumption of the obligations of the tenant under the Lease as amended by this Sublease
Termination and Lease Assignment/Assumption/Amendment arising or accruing from and after
the Effective Date; and (d) Assignee's obligation to vacate and/or its vacation of the Property on
the Lease Termination/Vacation Date in accordance with the terms set forth herein or Assignee's
vacation of the Property at any time for any other reason except for vacation of the Property due
to a breach by Landlord of the terms of the Lease as amended by this Sublease Termination and
Lease Assignment/Assumption/Amendment, including, but not limited to, claims for further
compensation, claims for any acquisition or relocation related benefits, including, but not limited
to, compensation for personal property, any leasehold interest in the real property, payment for
personal property, fixtures and equipment (if applicable), relocation benefits or assistance or any
compensation based upon loss of goodwill, interest, costs, attorneys' and appraisal fees or any
other damages of any nature. Assignee, for itself and all of the Assignee Related Parties hereby
specifically waives and releases any relocation benefits, assistance and/or payments under the
Relocation Assistance Act (Government Code Section 7260 et seq.), the Uniform Relocation and
Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. Section 460,1, et seq.)
and any other applicable federal, state or local enactment, regulation or practice providing for
relocation assistance, moving expenses or compensation for property (including, without
limitation, loss of goodwill and/or furnishings, fixtures, and equipment) (collectively, the
"Relocation Claims"). It is intended that the releases and waivers set forth in this Section 7. shall
be effective as a bar to each and every action, cause of action, claim, loss and damage whether
now known or unknown, foreseen or unforeseen; suspected or unsuspected that Assignee and
Assignee Related Parties may have against Landlord and Landlord Related Parties and C.S.B.
and C.S.B. Related Parties arising out of or in any way connected with the Relocation Claims,
and Assignee hereby expressly waives any and all rights and claims under Section 1542 of the
California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTENT) TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BV HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.
Initials of Assignee: CJC7—
8. Effective Date of Sublease Termination and Lease Assignment/
Assumption/Amendment. Subject to the satisfaction of the Conditions Precedent set forth in.
Section 4 hereof, Landlord, C.S.B. and Assignee agree that the effective date of this Sublease
Termination and Lease Assignment/Assumption/Amendment shall be as of the date the
transactions pursuant to the Amended Leasehold Interest Acquisition Agreement are closed and
consummated (the "Effective Date"), which Effective Date must be on or before December 31,
2010. In the event the transactions pursuant to the Amended Leasehold Interest Acquisition
001219.0001\1696178A
Agreement are closed and consummated, Landlord shall notify Assignee of the date which is the
Effective Date.
9. Indemnity.
(a) By C.S.B. C.S.B. agrees to protect, defend, indemnify and hold (i)
Assignee and Assignee Related Parties harmless from and against all claims, losses, lawsuits,
fines, penalties, actions, costs, liabilities, expenses (including attorneys' fees and costs) and
damages of and in connection with C.S.B.'s obligations under the Lease arising or accruing
under the Lease prior to December 1, 2009, which was the commencement date of the Sublease
(the "Sublease Effective Date"); and (ii) Landlord and the Landlord Related Parties harmless
from and against all claims, losses, lawsuits, fines, penalties, actions, costs, liabilities, expenses
(including attorneys' fees and costs) and damages of and in connection with C.S.B.'s obligations
under the Lease arising or accruing under the Lease prior to the Effective Date.
(b) By Assignee. Assignee agrees to protect, defend, indemnify and hold
C.S.B. and C.S.B. Related Parties and Landlord and the Landlord Related Parties harmless from
and against all claims, losses, lawsuits, fines, penalties, actions, costs, liabilities, expenses
(including attorneys' fees and costs) and damages of and in connection with Assignee's
obligations under the Lease arising or accruing under the Lease as amended by this Sublease
Termination and Lease Assignment/Assumption/Amendment from and after the .Effective Date.
10. Notices. Section 3 of the First Lease Amendment shall be deleted in its entirety
and replaced with the following:
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 10.
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.
To C.S.B.: C.S.B. PARTNERSHIP
33791 Glocamora Lane
San Juan Capistrano, CA 92675
Attention: Christopher R. Phillips
Copy to: Richard P. Waxman, Esq.
Wendel, Rosen, Black & Dean LLP
1111 Broadway, 24`h Floor
Oakland, CA 94607
001219.0001 \1696178.4 9
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
To Assignee: BIG O TIRES, LLC
823 Donald Ross Road
Juno Beach, FL 33408
Attn: Legal Department
11. Ratification and Reaffirmation of Lease. Except as hereby expressly amended
by this Sublease Termination and Lease Assignment/Assumption/Amendment, the Lease shall
remain in full force and effect up and until the Lease as amended by this Sublease Termination
and Lease Assignment/Assumption/Amendment is terminated on the date which is the Lease
Termination/Vacation Date, and the Lease as amended by this Sublease Termination and Lease
Assignment/Assumption/Amendment, 'is hereby ratified and reaffirmed.
12. Interpretation. In the event of any conflict between the provisions of the Lease
as originally in effect, and the provisions of this Sublease Termination and Lease
Assignment/Assumption/Amendment, the provisions of this Sublease Termination and Lease
Assignment/Assumption/Amendment shall control.
13. Execution in Counterparts; Facsimile Electronic Transmission. This
Sublease .Termination and Lease Assignment/Assumption/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, C.S.B. and Assignee agree that a facsimile or electronic
transmission (email) copy of an authorized signature of a party to this Sublease Termination and
Lease Assignment/Assumption/Amendment will have the same force and effect as the original
signature.
14. Delivery of Sublease Termination and Lease
Assignment/Assumption/Amendment to Escrow Agent. In conjunction with the Amended
Leasehold Interest Acquisition Agreement, each party agrees to deliver to Stewart Title of
001219.0001\1696178.4 10
California, Inc., 2010.Main Street, Suite 250, Irvine, California 92614, Grace Kim, Escrow
Officer, Telephone: (949) 476-0777; Facsimile: (714) 242-9886, Escrow No. 16581 ("Escrow
Agent") its executed copy of this Sublease Termination and Lease
Assignment/Assumption/Amendment, specifically instructing the Escrow Agent in writing not to
release copies of this Sublease Termination and Lease Assignment/Assumption/Amendment to
any party unless and until the transactions between Agency and C.S.B. pursuant to the Amended
Leasehold Interest Acquisition Agreement are closed and consummated.
15. Incorporation of Exhibits. All Exhibits and other instruments attached to this
First Amendment are incorporated herein by this reference and made a part hereof.
16. Authority. Each person signing this Sublease Termination and Lease
Assignment/Assumption/Amendment on behalf of a party to this Sublease Termination and
Lease Assignment/Assumption/Amendment, warrants and represents that such person is fully
authorized to enter into and execute this Sublease Termination and Lease
Assignment/Assumption/Amendment for and on behalf of such party and that this Sublease
Termination and Lease Assignment/Assumption/Amendment is a binding obligation on such
party.
17. Attorneys' Fees. If any party commences an action against any of the other
parties arising out of or in connection with this Sublease Termination and Lease
Assignment/Assumption/Amendment or to enforce any provision hereof, the prevailing party or
Parties shall be entitled to recover from the losing party or parties reasonable attorneys' fees,
costs of suit and collection costs.
18. Successors. This Sublease Termination and Lease
Assignment/Assumption/Amendment is binding on and inures to the benefit of the parties hereto
and their successors and assigns.
19. Governing Law. This Sublease Termination and Lease
Assignment/Assumption/Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of California.
20. Severability. If any of the terms and provisions of this Sublease Termination and
Lease Assignment/Assumption/Amendment are held by a court of competent jurisdiction to be
invalid, void or unenforceable, in whole or in part, the remaining terms and provisions shall
nevertheless continue and be in full force and effect.
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001219.0001 \1 696178.4 11
IN WITNESS WHEREOF, the parties hereto have executed this Sublease Termination
and Lease Assignment/Assumption/Amendment as of the dates set forth below.
ATTEST:
By:
Nam
Title
REVIEWMAND APPROVED:
By: &a_
Name- r d Wilson
Title: Executive Director
k !1 11 RI.
REDEVELOP AG
CITE' OF NT,IN TO2
By:
Nameko( rchi o
Titlef Chairo son
APPROVED AS TO FORM:
By.
Na e: Jennifer McGrat
Title: Agency Counsel
APPROVED AS TO FORM:
THE
LEIBOLD MCCLENDON & MANN, P.C.
Agency Special Counsel
INITIATED AND
Name: Stan:
Title: Deputy
utive Director
[SIGNATURES CONTINUED ON NEXT PAGE]
001219.0001\1696178.4 12
C.S.B. PARTNERSHIP, a California general
partnership
By: C.E.P. DEVELOPMENTS, INC., a
California corporation, its General
Partner
0- 4 —t 4 P'JR1
By:
>stopher R. Phillips, Iresident
By: FOUR KYLES, INC., a California
corporation, ' Gen al Partner
By:
Virgil yle K4e, id, President
By: PHILLIPS & PHILLIPS L.P., a
California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, its General
Partner
By: 1�aAL
C(/esident
opher R. Phillips,
By: JYB ENTERPRISES, INC., a
California corporation, its General
Partner
By: J i�
J so Y. Bet , Presi,
r
By: THREE1VIlY MS, INC., a California
corporation, its General Partner
Michael J. Humbach, President
[SIGNATURES CONTINUED ON NEXT PAGE/
001 219.0001\1 696178.4 13
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:
esit(dent
opher R. Phillip ,r
"ASSIGNEE"
BIG O TIRES, LLC, a Nevada limited liability company
(formerly known as Big O Tires, Inc., a Nevada corporation)
Charlie Zacharias, Senior Vice -President,
Real Estate/Distribution
001219.0001 \1696178.4 14
P
By: CHRIS & TAIL 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:
Christopher R. Phillips,
President
"ASSIGNEE"
BIG O TIRES, LLC, a Nevada limited liability company
(formerly known as Big O Tires, Inc., a Nevada: corporation)
By:
�e Za arias, Senior Vice -President,
Real Estate/Distribution
001219.0001\1696178.4 14
EXHIBIT A
LEASE
001219,0001\1696178.4
STANDARD LEASE AGREEMENT
between
RB AUTO I, LLC,
a California limited liability company
and
.IUZTWIN, INC.,
a California corporation
"LANDLORD"
and
C.S.B. PARTNERSHIP,
a California general partnership
"TENANT"
061219.000116984572
ORIGINAL
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 terms 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 1, 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).
FL Monthly Minimum Rent (Section 4):
(i) $16,000.0.0 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.
D01219.DCWk9&457.2
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):
HD Auto 1, LLC
3424 Via Oporto, Suite 204
Newport Beach, California 92663
Attention: Todd Carson
Telephone: (949) 574-7112
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
Q. 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.
M1219.0001\S9457.2 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 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").
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 \b9&957.2
4. IVEUgMUM 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
Laz?dlord 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
L c adiord 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
p,�-,riod(s), if any, pursuant to the Addendum, "Minimum Rent" per month for the Premises shall
be increased by ten percent (101/o) 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.
5. 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
001219.000I\69M572 4
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; (H) 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
001219.000M984571
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
rLs 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 ONHTTED.
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. A.LTERATIONS, 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
001219.00071698457.2
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
fzxtures 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
IIenant 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
'drat 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
i7n 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
irt,asrest 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
00I219.OWI1 698457.2 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
I . provements, 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
001219.000IN699457.2
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.
(c) 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
001219.0W11698457.2 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.
9012I9.00MM57.2 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 "CPI
Adjustment." The term "CPI Adjustment" means adjustments at five (5) year intervals,
commencing on the first (1st) 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.
001229.OMI%698457.2 11
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 ONVIITTED.
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.
(e) 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,
001219.0001'698437.2 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 18(a) or such additional
insurance as was then actually in effect, Landlord shall have the right to either repair, replace or
-store 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,
W(219. W 01/6964571 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
a--maining 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.
001219.0001 W984S7.2 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. Consent by
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
of 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
ovidencing 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
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 (50%), or the
dissolution (voluntarily or by court order) of the partnership or limited liability company (as
applicable), will be deemed a voluntary assignment.
D01219.MV,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 (50%) 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
ernove 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 in order to cause the Premises to be restored to its original
condition at the time the Tenant's Improvements were completed.
25. HOLDING 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
ynd 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
001219,000M98957.2 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 law 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 Ipayment 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.
001219.00011699457.2 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 law 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 waiver 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.OW I\6984571 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
terra, covenant or condition of this Lease, other than the failure of Tenant to pay the particular
Pent 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 document; provided, however, that as a condition to such
subordination of Tenant's interest hereunder, 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:
001219.000 1W984572 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.
(b) Tenant shall not cause or allow to be filed or recorded any Uniform,
Commercial Code ("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 the Premises are located.
29. TRANSFER BY LANDLORD; LANDLORD'S LIMITED LIABILTI'Y.
001219.0001\699457-2 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 liability 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 STATEWI NTS.
(a) Tenant shall upon fifteen (15) 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 to provide 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)6984571 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 LandIord'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
a�-mual 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 Landlord'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 party is/are 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 agreement or other controlling documents, and (b) that this
0072MOOOMM57.2 22
Lease is binding upon Landlord and Tenant in accordance with its terms. Each parry 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 asan 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
co, nsel 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
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
001219.0W1\648457.2 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 ONMED.
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
1950, 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.
0012MW01169&457.2 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
WANE 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,
of 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 party 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\699457.2 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 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(b).
001219.000,MM57.2 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 92-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.
001279.000116994575 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:
C.S.B. PARTNERSHIP,
a California general partnership
HB AUTO I, LLC,
:aCaliformia li ed liability company By:
Name: L) c�oitJ
Title:
C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General Partner
By: 011VAJ,&,
C ' topper R. Phillip ,—President
By: FOUR KYLES, INC.,
a California/
alifornia rporation, its General Partner
By:
Virgil Kyle Kyle, 91, President
By: PHILLIPS & PHILLIPS, L.P.,
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By:
0-4 e� Y24L -
opher R. Phillips, resident
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By:
J Y. Berry, Presi nt
001219.0001\698457.2 28
LEGAL DESCRIPTION OF PREMISES
To be supplied by Landlord at a future time.
001319.000116984571
EXHIBIT "B"
TENANT WORK LETTER AGREEMENT
This TENANT WORK LETTER AGREEMENT ("Work Letter Agreement") is entered
into as of April _, 2004 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").
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 sale 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 "B- I".
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
001219.0001\699457.2
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'THE 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.
enant'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.
to 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.
001219.0=699457.2 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:
HB AUTO I, LLC,
C.S.B. PARTNERSHIP,
a California general partnership
a California limn d liability company By:
By: ��,�--
Nam :
Title: o —
001219.0001\699457.2
C.E.P. DEVELOPMENTS, INC.,
a California corporation, its General Partner
By:
C s pher R_ Philli , President
By: FOUR KYL7—
, INC.,
a California rporation, its General Partner
By:
V gil Kyle Kyle, III, President
By: PHILLIPS & PHILLIPS, L.P.,
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By:
C pher R. Phillip President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By:
Ll—
JasoY. Berry, Pres' en
SCB EDULE OF TENANT LVIPROVEMENT WORK
[to be inserted]
DO 1219.00011699457.2
EXHIBIT "C"
TENANT'S ESTOPPEL CERTIFICATE
TO: , or its assigns ("Landlord");
RE: That certain Lease dated
or its assigns (`Buyer"); and
or its assigns ("Lender");
by and between
as "Landlord" and
as "Tenant" for a year term
which commenced on and will terminate on
"Lease") of the premises commonly referred to as
containing square feet of the project commonly referred to as
(the "Project").
(the "Premises")
(the
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.
001219.0001\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.
S. 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
Pam•
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 portion of 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.
16. 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 setforth
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]
O01259A00]169&4571 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
thi�Y®to) attached to this Estoppel Certificate as Attachment A is a true and correct copy of the
ease, constitutes the only agreement between Landlord and Tenant with respect to the Premises,
is iu 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
i 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
001219.00W698457.2
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 thelease.
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.
001214.000MM572 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:
001219.000 M9&757.2
M
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)
;Dears 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
tan 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 I 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.
001219.0001169P57.2
(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:
HB AUTO I, LLC,
C.S.B. PARTNERSHIP,
a California general partnership
a Cali�1*iab' ity company By: C.E.P. DEVELOPMENTS, INC.,
B a California corporation, its General Partner
Name:/By:
Tatle: ✓407C pher R. Phillips resident
,I
California • po•n
By: FOUR KYLES, INC.,
a California orporation, its General Partner
By:
Virgil K le Ky , III, President
By: PHILLLIPS & PHILLIPS, L.P.,
a California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC.,
a California corporation, General Partner
By:
C opher R. Philli , President
By: JYB ENTERPRISES, INC.,
a California corporation, its General Partner
By:
J n Y. Berry, Presi en
001219.W01\698457.2 2
LEASE RIDER AND MODIFICATION
THiS AGREEMENT is made effective this 1st day of August, 2004 by and between HB Auto 1, LLC
("Landlord"), C.S.B. PARTNERSHIP ("Tenant"), and Big O Tires, Inc., its affiliates, successors and
assigns ("Big O").
WHEREAS, Landlord leases or will lease certain premises to Tenant at 7872 Edinger Avenue,
Huntington Beach, CA 92647 ("Premises") under that certain lease agreement dated April 19, 2004
between Landlord and Tenant ("Lease"); and
WHEREAS, Tenant will operate a Big O Tire Store at such Premises under a Franchise Agreement
("Franchise Agreements between Tenant and Big O; and
WHEREAS, the parties hereto desire to provide Big O with certain rights in the event of default
under the Lease, Franchise Agreement, or other franchise agreements between Tenant and Big O, if any;
NOW, THEREFORE, in consideration of the sum of one dollar ($1.00), in hand paid by Big O to
Landlord and to Tenant, and other good and sufficient consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. No act, failure to act, event, condition, non-payment or other occurrence ("Event") shall
constitute a breach or default under the Lease so as to allow to Landlord any right of acceleration of
obligations thereunder, termination, cancellation or rescission:
(a) if the Event is the non-payment of rent, unless such Event is not cured within ten (10) days
after Notice of Default (as hereinafter defined) has been received by Big O;
(b) if the Event is anything other than the non-payment of rent, unless such Event is not cured
within twenty-five (25) days after Notice of Default (as hereinafter defined) has been received by
Big O, provided, however, if the Event is of such nature that it cannot reasonably be cured within
such twenty-five (25) day period, then, in that case such twenty-five (25) day period shall be
extended to a period of such length as Is reasonably necessary to cure such Event, provided,
however, such period shall be extended only so long as Tenant and/or Big O diligently pursues the
cure of such Event.
2. Landlord agrees to accept from Big O any payment or p9ffonnance required under the Lease.
Nothing herein shall be construed as requiring Big O to make any payments or perform any obligation
under the Lease.
3. As used herein, Notice of Default means written notice mailed by registered or certified mail or
overnight courier specifying the Event claimed and specifically describing, in each instance of a claimed
Event, the particular Event and the cure Landlord requires, such Notice of Default to be mailed to Big O at:
Big O Tires, Inc.
12650 East Briarwood Avenue, Suite 2-D
Centennial, Colorado 80112
Attention: Vice President of Real Estate Development
4. In the event Landlord claims that an Event has occurred, or in the event Big O notifies Landlord
in writing that Big O is exercising a right to take over possession of the Premises, then, at Big O's option,
Landlord shall accept Big O as substitute tenant under the Lease and will cooperate with Big O in turning
actual, immediate possession of the Premises over to Big O. in such case, the Lease shall remain in full
force and effect, but with Big 0 as the tenant thereunder. Big O's option, hereinabove granted, may be
xercised only if Big O agrees to assume the obligations of the Tenant to Landlord under the Lease as of
the date Big O or its affiliate or successor is given actual possession of the Premises.
5. Landlord agrees that Big O, or its affiliate or successor may sublet or assign the Premises to a
new Big O Franchisee on the same terms and conditions as are contained in the Lease.
6. Tenant agrees that if Landlord claims that an Event has occurred, or if any material breach
occurs under any Franchise Agreement between Tenant and Big O (whether for the Premises or not),
then, Big O shall have the right to:
(a) immediate and actual possession of the Premises, and all equipment and inventory therein,
which such possession Tenant agrees to give peaceably, and which may be otherwise obtained by
Big O by warrant, injunction, temporary restraining order, summary process or such other
immediate legal, summary or equitable proceeding or action as Big O may choose. Tenant hereby
waives any right to a jury in any such proceeding or action.
(b) become the Tenant under the Lease to the exclusion of the Tenant.
7. Tenant agrees that any default under the Lease shall constitute a material breach under all
Franchise Agreements between Tenant and Big O, or its affiliates or successors.
8. Tenant and Landlord understand that Big O is entering into or has entered into a Franchise
Agreement with Tenant for a Big O Tire Store at the Premises in reliance on the agreements of Tenant
and Landlord as herein contained and that Big O, in this instance, would not have otherwise entered into
such Franchise Agreement.
IN WITNESS WHEREOF, the parties hereto have duly execute and delivered this agreement as of
the date first above -listed.
LANDLORD
HBt O1,-LLG -- .
Name: i-�d SaiC.l
Title:
(CORPORATE SEAL)
TENANT
C.S.B. PARTNERSHIP
By. e-;" A&Z
Name:
Title:
(CORPORATE SEAL)
BIG O TIRES, INC.
Name: Joh . Nvduke
Title: Senior Vice President —
Franchise Development
(CORPORATE SEAL)
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (this "Assig ment"), is made as of June 25, 2004, by
and between JUZTWIN, INC., a California corporation ("Assignor"), and MICHAEL TODD
CARSON and ROSEMARY KATHLEEN CARSON, husband and wife as community property
with right of survivorship ("Assignee"), with reference to the following:
RECITALS
A. Together with HB Auto I, LLC, a California limited liability company ("HB Auto
Assignor, as "Landlord", and C.S.B. Partnership, a California general partnership, as
"Tenant", are parties to that certain Standard Lease Agreement dated April 19, 2004 (the
"Lease") pursuant to which Landlord leased to Tenant that certain real property located at 7872
Edinger Avenue, Huntington Beach, California, as described more fully in the Lease
("Premises").
B. Concurrently herewith, Assignor has agreed to sell and convey its undivided fifty
percent (50%) fee simple ownership interest in the Premises ("Property Interest") to Assignee.
C. In connection with the sale of the Property Interest by Assignor to Assignee,
Assignor desires to Assign to Assignee, and Assignee desires to accept and assume from
Assignor, all of Assignor's right, title, interest and obligations as "Landlord" under the Lease.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Incorporation of Recitals. All of the recitals set forth above are hereby made an
integral part of this Assignment.
2. Definitions. All capitalized terms not otherwise defined in this Assignment shall
have the meaning ascribed to them in the Lease.
3. Assignment. Effective as of the date upon which Assignor acquires fee simple
title Assignor's Property Interest ("Effective Date"), Assignor hereby assigns, sets over and
transfers to Assignee all of Assignor's right, title, interest and obligations in, to and under the
Lease.
4. Acceptance and Assumption. Assignee hereby accepts the. foregoing
assignment of the Lease and hereby assumes and agrees to perform all of Assignor's obligations
under or with respect to the Lease arising from and after the Effective Date. Assignor hereby
agrees to indemnify, defend and hold Assignee harmless from and against any and all loss,
liability, damage or claim related to Assignor's failure to comply with its obligations under the
Lease arising prior to the Effective Date. Assignee hereby agrees to indemnify, defend and hold
Assignor harmless from and against any and all loss, liability, damage or claim related to
Assignee's failure to comply with its obligations under the Lease arising after the Effective Date.
5. Severability. If any term or provision of this. Assignment or the application
thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Assignment or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each term and provision of this Assignment shall be valid and enforced to
the fullest extent permitted by law.
6. Counterparts; Facsimile. This Assignment may be executed in counterparts,
each of which shall be an original and all of which counterparts taken together shall constitute
one and the same agreement. This Assignment may be executed via facsimile which facsimile
signature shall be as binding as an original.
IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date
first set forth hereinabove.
ASSIGNOR:
JUZTWIN, INC.,
a California corporation
y:
Name:
Title: Authorized Signatory
ASSIGNEE:
CHAEL TODD ARSO'
ROSEMARY KATHLEEN CARSON
-2-
410
S. Severability. If any term or provision of this Assignment or the application
thereof to any persons or circumstances shall, to tiny extent, be invalid or unenforceable, the
remainder of this Assignment or the application of such terns or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable shall act be
affected thereby, and each term and provision of this Assignment shall be valid and enforced to
the fullest extent permitted by law.
6. Counterparts; FacsirnVe. This Assignment may be executed in counterparts,
each of which shall be an original and all of which counterparts taken together shall constitute
one and the same agreement, This Assignment may be executed via facsimilc which facsimile
signature shall be as binding as an original_
IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date
first set forth hereinabove.
ASSIGN011:
I-UZTW1N, INC.,
a Callf'os-nia corporation
By.
N arnD. v'rJ
Title: Authorized Signatory
M
ASSSIGNEE-.
MICHAEL TODD CARSON
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (this "Assignment"), is made as of November 11,
2004, by and between MICHAEL TODD CARSON and ROSEMARY KATHLEEN CARSON,
husband and wife as community property with right of survivorship ("Assignor"), and HB
AUTO I, LLC, a California limited liability company ("Assignee"), with reference to the
following:
RECITALS
A. Assignee and Jurtwin, Inc., a California corporation ("Jurtwin"), collectively as
"Landlord", and C.S.B. Partnership, a California general partnership, as "Tenant", entered into
that certain Standard Lease Agreement dated April 19, 2004 (the "Lease") pursuant to which
Landlord leased to Tenant that certain real property located at 7872 Edinger Avenue, Huntington
Beach, California, as described more fully in the Lease ("Premises").
B. By Grant Deed dated June 25, 2004, and recorded June 29, 2004, in the Official
Records of Orange County California as Instrument No. 2004000591428, Jurtwin sold and
conveyed an undivided fifty percent (50%) fee simple ownership interest in the Premises
("Property Interest") to Assignor.
C. Pursuant to the terms of that certain Assignment of Lease dated June 25, 2004,
entered into between Jurtwin and Assignor, Jurtwin assigned all of its right, title, interest and
obligations as "Landlord" under the Lease to Assignor.
D. Concurrently herewith, Assignor has agreed to contribute its Property Interest to
Assignee in consideration for membership interests in Assignee.
E. In connection with the contribution of the Property Interest by Assignor to
Assignee, Assignor desires to Assign to Assignee, and Assignee desires to accept and assume
from Assignor, all of Assignor's right, title, interest and obligations as "Landlord" under the
Lease.
AGREEMENTS
NOW, THEREFORE, in consideration
other good and valuable consideration, the
acknowledged, the parties agree as follows:
of the mutual covenants contained herein and
receipt and sufficiency of which is hereby
1. Incorporation of Recitals. All of the recitals set forth above are hereby made an
integral part of this Assignment.
2. Definitions. All capitalized terms not otherwise defiled in this Assignment shall
have the meaning ascribed to them in the Lease.
3. Assignment. Effective as of the date upon which Assignor acquires fee simple
title Assignor's Property Interest ("Effective Date"), Assignor hereby assigns, sets over and
transfers to Assignee all of Assignor's right, title, interest and obligations in, to and under the
Lease.
4. Acceptance and Assumption. Assignee hereby accepts the foregoing
assignment of the Lease and hereby assumes and agrees to perform all of Assignor's obligations
under or with respect to the Lease arising from and after the Effective Date. Assignor hereby
agrees to indemnify, defend and hold Assignee harmless from and against any and all Ioss,
liability, damage or claim related to Assignor's failure to comply with its obligations under the
Lease arising prior to the Effective Date. Assignee hereby agrees to indemnify, defend and hold
Assignor harmless from and against any and all Ioss, liability, damage or claim related to
Assignee's failure to comply with its obligations under the Lease arising after the Effective Date,
5. Severability. If any term or provision of this Assignment or the application
thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Assignment or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each term and provision of this Assignment shall be valid and enforced to
the fullest extent permitted by law.
6. Counterparts; Facsimile. This Assignment may be executed in counterparts,
each of which shall be an original and all of which counterparts taken together shall constitute
one and the same agreement. This Assignment may be executed via facsimile which facsimile
signature shall be as binding as an original.
IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date
first set forth hereinabove.
ASSIGNEE:
HB AUTO I, LLC,
a California limited liability company
By:
Name:1--
Title: Authorized Signatory
ASSIGNOR:
MICHAEL TOI)b eARsON'(
ROSEMARY KATHLEEN CARSON
��K r
fir;
-2-
transfers to Assignee all of .Assignor's right, title, interest and obligations in, to and under the
Lease.
4. Acceptance and Assmnption. Assignee hereby accepts the foregoing
assignment of the Lease and hereby assumes and agrees to perform all of Assignor's obligations
under or with respect to the Lease arising from and after the Effective Date. Assignor hereby
agrees to indemnify, defend and hold Assignee harmless from and against any and all loss,
liability, damage or claim related to Assignor's failure to comply with its obligations under the
Lcasc arising prior to the Effective Date. Assignee hereby agrees to indemnify, defend and hold
Assignor harmless from and against any and all loss, liability, damage or claim related to
Assignee's failure to comply with its obligations under the Lease arising after the Effective Date.
5_ Severability. If any term or provision of this Assignment or the application
thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Assignment or the application of such term or provision to persons or
circwnstances other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each term and provision of this Assignment shall be valid and enfurucd to
the; fullest extent permitted bylaw.
6. C:ounterparfs; Facsimile. 11iis Assignment may be executed in counterparts,
each of which shall be an original and all of which counterparts taken together shall constitute
one and the same aigeement. This Assignment may be executed via fiicsimile which facs-innile
signature shall be as binding as an original.
- IN WITNESS WHEREOF, the undersigned have execrated this Assignment as of the date
-first set forth hereinabove.
ASSIGNF-E: ASSIGNOR:
HB AUTO I, LLC,
a California limited liability company
By: MICHAEL TODD CARSON
Title: Authorized Signatory
ROSEMAR THLEEN CA.RSON
-2-
EXHIBIT A-2
LANDLORD/TENANT RELEASE AGREEMENT
001219.0001\849486.6
AGREEMENT OF RELEASE OF ALL CLAIMS
' This AGREEMENT OF RELEASE OF ALL CLAIMS ("Agreement") dated as of
January 23, 2009, is made by and between HB AUTO I, LLC, a California limited liability
company ("Landlord"), and C.S.B. PARTNERSHIP, a California general partnership
("Tenant"). Landlord and Tenant are hereinafter sometimes referred to individually as a "Party"
and collectively as the "Parties."
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 dated
April , 2004 (collectively, the "Lease") between Tenant as tenant and Landlord and TURN-
KEY WASHES, INC., a California corporation (formerly known as JUZTWIN, INC., a
California corporation) ("Turn -Key") together as landlord, Tenant is leasing that certain
improved 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 therein (collectively, "Tenant's Business"). The Lease is currently in full force
and effect.
B. The obligations of Tenant under the Lease are guaranteed by Christopher R.
Phillips, an individual ("Phillips"), pursuant to the terms of that certain Guaranty of Lease dated
April 19, 2004 (the "Lease Guaranty").
C. 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 Turn -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 Carsons all of its right, title and interest as a
landlord in, to and under the Lease, and the Carsons accepted such assignment and assumed and
agreed to perform Turn-Key's obligations under or with respect to the Lease.
D. 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 "Carsons Grant Deed"), the Carsons granted to Landlord 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 Landlord as assignee (the "Carsons/Landlord Assignment"), effective as
of the date of the recording of the Carsons Grant Deed, the Carsons assigned, set over and
transferred to Landlord all of their right, title and interest as the landlord in, to and under the
Lease and Landlord 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
001219.0001 \845367.11
Grant Deed and the Carsons/Landlord Assignment, Landlord is the sole owner in fee of the
. , operty and is the "Landlord" under the Lease.
E. The Redevelopment Agency of the City of Huntington Beach, California, a public
body, corporate and politic ("Agency"), under the threat of condemnation, has completed
negotiations with Landlord, and Agency and Landlord have 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 Agency/Landlord Property Acquisition Agreement"), setting forth the terms and
conditions by which Agency shall acquire from Landlord as the sole owner in fee of the
Property, all of Landlord's rights, title and interest in and to the Property on and subject to the
terms of the New Agency/Landlord Property Acquisition Agreement, in consideration of the
payment by Agency to Landlord of certain purchase consideration for such acquisition of the
Property. A copy of the New Agency/Landlord Acquisition Agreement is attached hereto as
Exhibit A.
F. In connection with the Agency's threat of condemnation and acquisition from
Landlord of all of the Landlord's rights, title and interest as the sole owner in fee in and to the
'roperty pursuant to the New Agency/Landlord Property Acquisition Agreement, Agency will
succeed to all of the rights and assume all of the obligations of the "Landlord" under the Lease
and the Lease Guaranty. As part of the threat of condemnation and as a result of the subsequent
proposed redevelopment of the Property, Agency has determined that it will be necessary for
A enant to permanently cease to occupy the Property on or before the Lease
Term inationNacation Date (as such term is defined below) and is prepared to pay Tenant certain
compensation as consideration for Tenant's agreement to terminate the Lease and the Lease
Guaranty and Tenant's occupancy of the Property prior to the expiration of the Lease. In
conjunction therewith, Agency and Tenant have entered into that certain Reinstated Acquisition
of Leasehold Interest Agreement dated as of December 29, 2008 (the "Reinstated Agency/Tenant
Leasehold Interest Acquisition Agreement") setting forth the terms and conditions by which
Agency 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. The terms of the Reinstated
Agency/Tenant Leasehold Interest Acquisition Agreement provide that the acquisition of the
Leasehold Interest pursuant to the Lease and the corresponding termination of the Lease and the
Lease Guaranty and Tenant's occupancy of the Property shall occur on or before the date which
is five (5) years from the date Agency acquires the Property from Landlord pursuant to the terms
of the New Agency/Landlord Property Acquisition Agreement (defined as the "Lease
TerminationNacation Date" in the Reinstated Agency/Tenant Leasehold Interest Acquisition
Agreement). A copy of the Reinstated Agency/Tenant Leasehold Interest Acquisition
Agreement is attached hereto as Exhibit B.
G. In conjunction with the foregoing Recitals, the Parties mutually desire to establish
their respective rights and obligations and undertakings with regard to (i) Agency's acquisition
of all of Landlord's rights, title and interest as the owner in fee in and to the Property pursuant to
the New Agency/Landlord Property Acquisition Agreement; and (ii) Agency's acquisition of
Tenant's Leasehold Interest in the Property pursuant to the Reinstated Agency/Tenant Leasehold
001219.0001 \845367.1 1 2
Interest Acquisition Agreement; and, the payment of certain compensation as consideration
to Landlord for the acquisition of all of Landlord's rights, title and interest as the owner in fee
e arid to the Property and (b) to Tenant for the eventual acquisition of Tenant's Leasehold
Interest pursuant to the Lease and the termination of the Lease and the Lease Guaranty and
Tenant's occupancy of the Property prior to the expiration of the Lease pursuant to the
Reinstated Agency/Tenant Acquisition Agreement, all on and subject to the terms and conditions
as shall hereinafter be set forth.
H. The Parties hereto acknowledge that it is not the intent of the Parties hereto that
Agency, as a result of becoming the successor -in -interest landlord pursuant to the New Agency/
Landlord Property Acquisition Agreement, succeed to any of the rights or obligations of
Landlord under this Agreement, nor that Agency be bound in any manner whatsoever by the
terms of this Agreement. The rights and obligations of Agency as successor -in -interest Landlord
shall be on and subject to the terms of the Lease as amended by the "Lease Amendment" (as
such term is defined in the Reinstated Agency/Tenant Leasehold Interest Acquisition
Agreement) and the Reinstated Agency/Tenant Leasehold Interest Acquisition Agreement.
I. Capitalized terms not otherwise defined herein shall have the meanings given
them in the Lease.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and
terms, conditions and covenants hereinafter set forth and such other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged by the
Parties, the Parties, intending to be legally bound, hereby agree as follows:
AGREEMENT
1. Incorporation of Recitals. The Recitals set forth in the introductory paragraphs
of this Agreement are incorporated into this Agreement and made a part hereof as if stated in full
herein.
2. Waiver of Tenant's Award by Landlord.
Landlord hereby acknowledges and agrees that Tenant shall be entitled to the entirety of
the compensation payable by Agency to Tenant as set forth in the Reinstated Agency/Tenant
Leasehold Interest Acquisition Agreement as consideration for Tenant's agreement to assign,
transfer and convey to Agency, Tenant's Leasehold Interest in the Property pursuant to the Lease
and terminate the Lease and the Lease Guaranty and its occupancy of the Property on or before
the Lease TerminationNacation Date (collectively, "Tenant's Consideration") as negotiated and
mutually agreed to by and between Tenant and Agency on and subject to the terms of the
Reinstated Agency/Tenant Leasehold Acquisition Agreement; and, Landlord fully and forever
and completely, absolutely and unconditionally waives any and all claims and rights to Tenant's
Consideration, including, but not limited to, all claims and rights to Tenant's Consideration
specifically set forth in Section 22 of the Lease or as may otherwise be set forth in the Lease.
001219.0001 \845367.11
3. Waiver of Landlord's Award by Tenant. r
Tenant hereby acknowledges and agrees that Landlord shall be entitled to the purchase
price payable by Agency to Landlord as set forth in the New Agency/Landlord Property
Acquisition Agreement as consideration for Landlord's agreement, as the sole owner in fee of
the Property, to assign, transfer and convey to Agency, all of Landlord's rights, title and interest
in and to the Property ("Landlord's Consideration") as negotiated and mutually agreed to by and
between Landlord and Agency pursuant to the terms of the New Landlord/Agency Property
Acquisition Agreement; and, Tenant fully and forever and completely, absolutely and
unconditionally waives all claims and rights to Landlord's Consideration, including, without
limitation, all claims and rights to Landlord's Consideration that may be set forth in the Lease.
4. Further Covenants and Agreements. In consideration of the mutual promises,
agreements, obligations, undertakings and representations set forth in this Agreement, the Parties
hereby agree to the following covenants and agreements:
(a) Tenant's Continuing Obligations Regarding Hazardous Materials.
Tenant hereby acknowledges and affirms its indemnification and other obligations with regard to
"Hazardous Materials" (as such term is defined below) as set forth in Section 43 of the Lease.
(b) Landlord's Obligations Regarding Hazardous Materials. Landlord
hereby agrees to indemnify, protect, defend and hold harmless Tenant from and against any and
all debts, liabilities, obligations, losses, damages, judgments, fines, demands, claims, actions or
causes of action of whatever kind at law or equity, recoveries, deficiencies, costs and expenses
(including, but not limited to, reasonable attorneys' fees and court costs) arising out of or related
{ to: (i) the presence, use, generation, storage, treatment, disposal, transportation, or migration or
emanation of Hazardous Materials in, onto, beneath or about the Premises; or (ii) the presence of
any underground storage tanks under or about the Premises or other real property adjacent
thereto, except to the extent such Hazardous Materials are brought onto the Premises by Tenant
or Tenant's Parties, arising or accruing during any period prior to the date Agency acquires
Landlord's rights, title and interest as the sole owner in fee, in and to the Property, on and subject
to the terms of the New Agency/Landlord Property Acquisition Agreement.
(c) Definition of Hazardous Materials. For purposes of this Section 4, the
term "Hazardous Materials" means any hazardous or toxic substance, material or waste which is
or becomes regulated by any local governmental authority, the state in which the Premises are
located or the United States. Hazardous Materials include, without limitation, the following:
(i) any pollutant, oil or hazardous substance, identified or listed pursuant to Sections 307, 311 or
502 of the Federal Water Pollution Control Act (33 U.S.C. § 1317, § 1321 and § 1362); (ii) any
element, compound, mixture, solution or substance designated pursuant to Section 102 of the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") (42
U.S.C. §9602); (iii) any substance or material having the characteristics identified under or listed
pursuant to Section 3001 of the Resource Conservation and Recovery Act ("RCRA") (42 U.S.C.
§6921) or equivalent law or regulation in the state in which the Premises are located; (iv) any
petroleum, crude oil, or any fraction of either which is not otherwise specifically listed or
designated under items (i)-(iii); (v) any hazardous waste, extremely hazardous waste, hazardous
substance or hazardous material, as defined or listed under Applicable Laws; and (vi) any waste,
001 219.0001\845367.1 1 4
material or building contaminant, including asbestos, lead, and mold, which is.listed or meets
an identification or toxicity criterion under Applicable Laws.
(d) Tenant Share of Environmental Insurance. Tenant acknowledges that
it has been informed by Landlord and Agency that Agency will, upon its acquisition of the
Property pursuant to the New Agency/Landlord Property Acquisition, obtain the environmental
protection insurance policy identified and described on Exhibit C, attached hereto ("Landlord's
Environmental Protection Insurance") and that the cost of such insurance is the amount of Sixty -
Eight Thousand Five Hundred Dollars ($68,500) ("Insurance Premium Charge"). In conjunction
with Agency's requirement that Landlord pay the entire Insurance Premium Charge, Tenant
agrees, in consideration of Landlord's agreement to indemnify Tenant as provided in Section
4(b), to pay to Landlord that portion only of the Insurance Premium Charge which equals the
amount of Thirty -Two Thousand Dollars ($32,000) ("Tenant's Portion of the Insurance Premium
Charge"). Landlord and Tenant agree that Tenant shall pay Tenant's Portion of the Insurance
Premium Charge out of the proceeds from Tenant's Consideration when Tenant receives such
proceeds from Agency on the Lease Termination/Vacation Date.
5. Mutual Waiver and Release of Claims.
As provided in the following sentence, Landlord and Tenant, in consideration of the
mutual promises, agreements, obligations, undertakings and representations set forth in this
Agreement, mutually agree to fully and forever and completely, absolutely and unconditionally
waive and release any and all actions, causes of actions, claims, demands, rights, obligations, and
liabilities of any kind whatsoever of every nature and character, whether known or unknown,
arising from any matter, cause or thing, whatsoever occurred, done or omitted, and the matters
arising out of (i) the acquisition by Agency from Landlord, as the sole owner in fee of the
Property, of all of Landlord's rights, title and interest in and to the Property pursuant to the terms
and conditions of the New Landlord/Agency Property Acquisition Agreement; and, (ii) the
acquisition by Agency of Tenant's Leasehold Interest in the Property pursuant to the Lease,
pursuant to the terms and conditions of the Reinstated Agency/Tenant Leasehold Interest
Acquisition Agreement (collectively, the "Released Claims"). In conjunction with the foregoing
and except with respect to their respective representations, warranties, covenants, agreements,
obligations (including, without limitation, indemnification obligations) and undertakings under
this Agreement, which Landlord and Tenant shall each remain fully liable and responsible
therefor and shall survive the execution and delivery of this Agreement, Landlord and Tenant, on
behalf of themselves and their respective affiliated corporations, partnerships, limited liability
companies or other entities, partners, members, managers, shareholders, officers, directors,
employees, guarantors, (including, without limitation, Phillips, pursuant to the Lease Guaranty),
contractors, agents, franchisors, franchisees, representatives, trustees, administrators, attorneys,
accountants, heirs, beneficiaries, and successors in interest and assigns and any and all persons or
entities who may claim through or on behalf of any of them, hereby release and forever
discharge each other and their respective affiliated corporations, partnerships, limited liability
companies or other entities, partners, members, managers, shareholders, officers, directors,
employees, guarantors, (including, without limitation Phillips, pursuant to the Lease Guaranty),
contractors, agents, franchisors, franchisees, representatives, trustees, administrators, attorneys,
heirs, beneficiaries, and successors in interest and assigns and any and all other persons or
001 219.0001\845367.11 5
entities who may claim through or on behalf of any of them from each and all of the Released
Cialms.
6. Waiver of Unknown Claims.
Landlord and Tenant covenant and agree that they will forever refrain from instituting,
prosecuting or maintaining any lawsuit, action and/or administrative or governmental proceeding
against each other arising out of or relating to the Released Claims. It is intended that this
Agreement shall be effective as a bar to each and every action, cause of action, claim, loss and
damage whether now known or unknown, foreseen or unforeseen, suspected or unsuspected that
either Party may have against the other Party arising out of (i) the acquisition by Agency of all of
Landlord's rights, title and interest in and to the Property pursuant to and the New
Agency/Landlord Property Acquisition Agreement; and (ii) the acquisition by Agency of
Tenant's entire Leasehold Interest -in the Property pursuant to the Lease pursuant to the
Reinstated Agency/Tenant Leasehold Interest Acquisition Agreement, and each of the Parties
expressly waives any and all rights and claims under Section 1542 of the California Civil Code,
which provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her, must have
materially affected his or her settlement with the debtor.
Provided, however, nothing contained in this Section 6 shall release or relieve the Parties
from their respective representations, warranties, covenants, agreements, obligations (including,
without limitation, indemnification obligations), or undertakings under this Agreement which the
Parties shall each remain fully liable and responsible therefor and shall survive the execution and
delivery of this Agreement.
7. Effectiveness of Agreement.
Landlord and Tenant agree that the effectiveness of this Agreement and the releases and
waivers by and the representations, warranties, covenants, agreements, obligations and
undertakings of the Parties under this Agreement are expressly conditioned upon (i) the closing
and consummation of the acquisition by Agency of all of Landlord's rights, title and interest as
the owner in fee, in and to Property, pursuant to the New Agency/Landlord Property Acquisition
Agreement; and (ii) the "Closing" (as such term is defined in the Reinstated Agency/Tenant
Leasehold Interest Acquisition Agreement) of the transactions pursuant to the Reinstated
Agency/Tenant Leasehold Interest Acquisition Agreement (collectively, the "Conditions
Precedent"). In the event both of the Conditions Precedent are not satisfied, this Agreement shall
be of no further force and effect. In the event both of the Conditions Precedent are satisfied, the
effective date of this Agreement shall be the date both Conditions Precedent have been satisfied.
8. Entire Agreement; Amendments.
This Agreement (including all Exhibits attached hereto) is the final expression of and
contains the entire agreement between the Parties with respect to the matters which are the
subject of this Agreement, including, without limitation, the apportionment of the consideration
001219.0001\845367.11 6
pursuant to Sections 2 and 3 of this Agreement and rights of each Party with respect to such
apportionment of the consideration and supersedes all prior understandings with respect thereto.
is Agreement may not be modified, changed, supplemented or terminated, nor may any rights
or obligations hereunder be waived, except by written instrument signed by the Parties. The
Parties do not intend this Agreement to confer any benefit hereunder on any person, firm or
corporation, partnership, limited liability company or other entity other than the Parties hereto.
9. Professional Fees.
Each Party shall be responsible for paying its own costs and expenses incurred in the
preparation of this Agreement. However, in the event of the bringing of any action or suit by a
Party hereto against the other Party hereunder by reason of any breach of any of the
representations, warranties, covenants, agreements, obligations, undertakings, or provisions on
the part of the other Party arising out of this Agreement, then, in that event the prevailing Party
shall be entitled to have and recover of and from the other Party all costs and expenses of the
action or suit, including reasonable attorneys' accounting, engineering and other professional
fees and costs rendered to such Party.
10. Governing Law; Consent to Jurisdiction.
The Parties hereto acknowledge that this Agreement has been negotiated and entered into
in the State of California. The Parties hereto expressly agree that this Agreement shall be
governed by, interpreted under, and construed and enforced in accordance with the laws of the
State of California. The Parties hereto consent to and agree that any legal action or proceeding
brought by either Party hereto and arising from or in connection with this Agreement or any
breach hereunder shall be brought (i) with respect to the federal district court, in the Southern
District of California in the County of Orange, State of California; and (ii) with respect to any
state court, in the Superior Court of the State of California for the County of Orange, California.
11. Counterparts; Facsimile.
This Agreement may be executed in counterparts, all of which when taken together shall
constitute one (1) complete instrument. The Parties agree that a facsimile copy of an authorized
signature of a Party to this Agreement will have the same force and effect as the original
signature.
12. Mutual Contribution.
Both Parties to this Agreement have been represented by separate and independent legal
counsel in the negotiation and preparation of this Agreement. This Agreement has been drafted
or the basis of the Parties' mutual contributions of language and this Agreement shall not to be
construed against any Party as being the drafter of this Agreement.
13. Notices.
Notices and other deliveries pursuant to this Agreement may be delivered by private
messenger service, mail, overnight courier or delivery service, or facsimile. Any notice or
document required or permitted to be delivered by either Party shall be in writing and shall be
001219.0001 \845367.1 1
deemed to be given on the date received by (or on the date receipt was refused by) the Party;
provided, however, that all notices and documents (i) mailed to a Party in the United States Mail,
postage prepaid, certified mail, return receipt requested, shall be deemed to have been received
three (3) days after mailing; or (ii) delivered by overnight courier or delivery service shall be
deemed received the next business day after deposit with a reputable overnight courier or
delivery service for overnight delivery. The address of the Parties shall for all purposes be the
following, unless otherwise changed by the Party by notice to the other as provided in this
Section 13:
If to Landlord: c/o HB Auto I, LLC
3111 Newport Boulevard, 2nd Floor
Newport Beach, CA 92663
Attention: Todd Carson
Telephone: (949) 675-0101
Facsimile: (949) 675-0107
If to Tenant: C.S.B. Partnership
7872 Edinger Avenue
Huntington Beach, CA 92675
Attention: Christopher R. Phillips
Telephone: (714) 500-4575
Facsimile: (714) 500-4578
14. Authority. Each person executing this Agreement on behalf of a Party hereby
represents and warrants that such person is duly authorized and empowered to execute this
Agreement on behalf of a Party and that this Agreement is a binding obligation of such Party.
15. Severability. If for any reason, any provision of this Agreement is determined to
be invalid, unenforceable or contrary to any existing or future law to any extent, such provisions
shall be enforced to the extent permissible under the law and such invalidity, unenforceability or
illegality shall not impair the operation of or otherwise effect those provisions of this Agreement
which are valid, enforceable and legal.
16. Binding Effect. This Agreement is and shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, affiliates, predecessors, successors and
assigns. The foregoing notwithstanding, and in conjunction with Recital H above, Landlord and
Tenant acknowledge and agree that this Agreement and the terms, rights, obligations,
agreements, waivers, releases and undertakings of Landlord and Tenant under this Agreement
shall not be binding on Agency as the successor -in -interest landlord under the Lease or for any
other reason; and, that the terms, rights, obligations, waivers, releases and undertakings of
Tenant and Agency shall be on and subject to the terms and conditions set forth in the Lease and
Lease Amendment and the Agency/Tenant Leasehold Interest Acquisition Agreement.
17. Waiver. No waiver in any instance by any Party of any provision of this
Agreement shall be deemed a waiver by such Party of such provision in any other instance or a
waiver of any other provisions hereunder in any instance.
001219-0001 \845367.11
18. Headings for Reference Only. The headings of Sections and subsections herein
are included solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
19. Incorporation of Exhibits. Any Exhibits attached to this Agreement are
incorporated herein by this reference and made a part hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
written in the introductory paragraph of this Agreement.
LANDLORD:
HB AUTO I, LLC, a California limited
liability company
By:
Todd arson (als known as Michael
Todd Carson), aging Member
[SIGNATURES CONTINUED ON NEXT PAGE]
001215.0001 \845367.11 9
TENANT:
C.S.B. PARTNERSHIP, a California general
partnership
By: C.E.P. DEVELOPMENTS, INC., a
California corporation, its General
Partner
By:
_a
hr' topher R. Phillips, president"
By: PHILLIPS & PHILLIPS L.P., a
California limited partnership, its
General Partner
By: C. & E. PHILLIPS, INC., a
California corporation, its
General Partner
n
By: >
C16,bpher R. Phillips, PivTsident
By: FOUR KYL , INC., a California corporation,
its General P er
By:
argil yle Ky e, , resident
By: JYB ENTERPRISES, INC., a California corporation,
its General Partner
By: � , L/� 1
J1 n Y. Berryj'resident
By: THREEMMMS, INC., a California corporation, its
General Partner
By:
Michael J. Hi mbach, President
[SIGNATURES CONTINUED ON NEXT PAGE]
001219.0001 \845367.11 10
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:�Dj
C16Vopher R. Phillips, P esident
001219.0001 \845367.11 11
EXHIBIT B
PHILLIPS LEASE GUARANTY
061219-000 it 1696178.4
- GUARANTY OF LEASE --ORIGINAL-
TIES
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.
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) Guarantor waives (i) all presentments, demands for performance, notices
of non-performance, protests, notices of protests and notices of dishonor; (ii) all other notices
and demands to which Guarantor might be entitled, including, without limitation, 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
foregoing 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
law 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
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Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
6.EML/1 multipart_xFBFF 2_Guaranty.doc/C5BEA28C-18CO-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, instrument or agreement to which
Guarantor is a party or by which it and/or its assets are affected or bound.
11. Construction; Severability; Inte argr tion. 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 Orange, 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.
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Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
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13. Parap-r ph 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 parry 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: / .v
CHI&f OPHER R PHIL IPS
4
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Proposed lease of 7872 Edinger Avenue, Huntington Beach, CA-
6.EML/1 multipart_xFBFF_2_Guaranty.doc/C5BEA28C-18CO-4a97-9AF2-036E93DDAFB3/Guaranty.doc?attach=l
EXHIBIT C
TBC LEASE GUARANTY
GUARANTY OF LEASE
THIS GUARANTY OF LEASE ("Guaranty") is being executed as of the;?:-1day of
December, 2010, by TBC CORPORATION, a Delaware corporation ("Guarantor"), under the
following circumstances:
A. BIG O TIRES, LLC, a Nevada limited liability company (formerly known as Big
O Tires, Inc., a Nevada corporation) ("Tenant"), is a wholly -owned subsidiary of Guarantor.
B. Tenant as successor -in -interest tenant, and the REDEVELOPMENT AGENCY
OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic, as successor -
in -interest landlord ("Landlord"), are parties to that certain Standard Lease Agreement dated for
reference purposes April 19, 2004 and Option Addendum to Standard Lease Agreement (the
"Original Lease"), as amended by that certain First Amendment to Standard Lease Agreement
dated and executed as of January 23, 2009, (the "First Lease Amendment") and that certain
Sublease Termination and Lease Assignment, Assumption and Amendment dated as of
December.23,2010 (the "Sublease Termination and Lease
Assignment/Assumption/Amendment"), which is being executed contemporaneously with this
Guaranty (the Original Lease, the First Amendment and the Sublease Termination and Lease
Assignment/Assumption/Amendment shall sometimes hereinafter be collectively referred to as
the "Lease"), setting forth the terms by which Landlord is leasing to Tenant and Tenant is
Leasing from Landlord the real property commonly known as 7872 Edinger Avenue, Huntington
Beach, California 92680 (the "Property").
C. Guarantor's execution of this Guaranty is a condition precedent to Landlord's
obligation to execute the Sublease Termination and Lease Assignment/Assumption/Amendment.
AGREEMENT
NOW THEREFORE, in consideration of, and as an inducement for, Landlord's
agreement to be bound by and execute the Sublease Termination and Lease
Assig;i.ment/Assumption/Amendment, Guarantor hereby irrevocably and unconditionally
guarantees to Landlord the full and timely payment of all rent and other sums and charges
payable by Tenant under the Lease, and the full and timely performance and observance of all
covenants, terms, conditions, and agreements to be performed or observed by Tenant under the
Lease.
Guarantor hereby covenants to Landlord and agrees that, if Tenant shall at any time
default in the payment of any rent or other sums and charges payable by Tenant under the Lease
or in the full and timely performance and observance of any covenants, terms, conditions, and
agreements to be performed or observed by 'Tenant under the Lease, Guarantor will forthwith
pay such rent or other sums and charges to Landlord, and will forthwith faithfully perform and
Fulfill all of such covenants, terms, conditions, and agreements.
'l"his Guaranty is an absolute and unconditional guaranty orpayment and of performance,
and it shall be enforceable against Guarantor without the necessity for any suit or proceedings of
any kind or nature whatsoever against Tenant or against any security for Tenant's obligations,
0012 t 9.000 C� 109033, 3
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 Landlord's assertion or failure to assert any rights or remedies against Tenant under the
Lease. No act or omission on the part of Landlord 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 Lease; any extension of time or waiver that may be
granted by Landlord to Tenant; 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 Landlord and its successors and assigns.
Landlord's rights hereunder shall not be impaired as a result of any dissolution of Tenant
or any bankruptcy or insolvency proceedings involving Tenant (including without limitation, any
discharge of Tenant 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 is 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 is 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 Landlord 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 such prevailing party's reasonable attorney fees. The
attorney's fees 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
Landlord and Guarantor. No delay on Landlord's part in exercising any right, privilege, or
power under the Lease or this Guaranty shall operate as a waiver of any such right, privilege, or
power, or any other right, privilege, or power.
[SIGNATURES ON FOLLOWING PAGEJ
001219.0001\1699033.3 2
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date set
forth above.
Signed in the presence of. TBC CORPORATION, a Delaware
corporat;n„
By:
Print
Title
001219,0001\16990333
December 23, 2010
Ms. Grace Kim
Escrow Officer
Stewart Title of California, Inc.
2010 Main Street, Suite 250
Irvine, CA 92614
Telephone: (949) 476-0777
Facsimile: (949) 224-8684
RE: Leasehold Interest in 7872 Edinger Avenue, Huntington Beach,
California Property
APN 142-081-28 — Amended/Restated Joint Escrow Instructions
Dear Ms. Kim:
These Amended and Restated Joint Escrow Instructions ("Amended/Restated Joint
Escrow Instructions") amend land restate and replace and supersede in their entirety those certain
Joint Escrow Instructions dated January 23, 2009 (the "Original Joint Escrow Instructions")
previously delivered to you.
Pursuant to the terms of that certain Reinstated Acquisition of Leasehold Interest
Agreement dated as of December 29, 2008 ("Original Agreement"), which Original Agreement
has been amended by that certain First Amendment to Reinstated Acquisition of Leasehold
Interest Agreement dated as of December 23, 2010 ("First Amendment' and together with the
Original Agreement, the "Amended Agreement') by and between the REDEVELOPMENT
AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic
("Agency") and C.S.B. PARTNERSHIP, a California general partnership ("Tenant"), copies of
which are attached to these Amended/Restated Joint Escrow Instructions as Attachment I and
Attachment II respectively, and incorporated herein by this reference and made a part hereof,
the undersigned hereby jointly provide to you as escrow agent ("Escrow Agent') these
Amended/Restated Joint Escrow Instructions with respect to the leasehold interest of Tenant (the
"Leasehold Interest") in the improved real property commonly known as 7872 Edinger Avenue,
Huntington Beach, California 92647 (the "Property"). Except as expressly defined in these
Amended/Restated Joint Escrow Instructions, all capitalized terms defined in the Amended
Agreement shall have the same meaning when set forth in these Amended/Restated Joint Escrow
Instructions.
In conjunction with the Amended Agreement, we have attached to the First Amendment
the following Exhibits:
(i) Exhibit A — Amended and Restated Assignment, Transfer and Conveyance of
Leasehold Interest (the "Amended/Restated Leasehold Interest Assignment/Transfer") which
001219.0001 \ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 2
amends and restates and replaces and supersedes in its entirety the Assignment, Transfer and
Conveyance of Leasehold Interest attached to the Original Agreement as Exhibit D and needs to
be recorded in the Official Real Estate Records of the Orange County, California Recorder;
(ii) ]Exhibit B — Termination of Sublease and Assignment, Assumption and
Amendment of Lease dated as of December 23, 2010 ("Sublease Termination and Lease
Assignment/Assumption/Am:endment"), which is a new document entered into by and among
Agency, Tenant and Big O Tires, LLC, a Nevada limited liability company (formerly known as
Big O Tires, Inc., a Nevada corporation) ("Big O");
(iii) Exhibit C — Guaranty of Lease by TBC Corporation (the "TBC Lease Guaranty")
which was executed by TBC Corporation, a Delaware corporation ("TBC"), which is a new
document which was created in conjunction with and as required by the terms of the First
Amendment and the Sublease Termination and Lease Assignment/Assumption/Amendment; and
(iv) Exhibit D — These Amended/Restated Joint Escrow Instructions.
These Amended/Restated Joint Escrow Instructions reconfirm that an escrow was
established on behalf of Agency and Tenant pursuant to the Original Agreement and the Original
Joint Escrow Instructions (the "Escrow") and that the Original Joint Escrow Instructions are
hereby amended and restated and replaced and superseded in their entirety by these
Amended/Restated Joint Escrow Instructions. As soon as reasonably possible after receipt by
you of these Amended/Restated Joint Escrow Instructions and the attached documents referred to
above, please confirm to the undersigned your receipt of these Amended/Restated Joint Escrow
Instructions and email updated wire transfer instructions to the escrow account opened by you in
connection with the Escrow and these Amended/Restated Joint Escrow Instructions to Doris
Powell of Agency at dpowell@surfcity-hb.org. No later than December 31, 2010, Agency will
wire transfer to you the amount of One Million One Hundred Thousand Dollars ($1,100,000),
which shall constitute the "Adjusted Payment Consideration Balance" as required pursuant to
Section 3 of the First Amendment. The Adjusted Payment Consideration Balance shall be
deposited into an interest bearing cash account approved by Agency and Tenant, with the interest
earned less the Escrow Fees/Other Costs (as such term is defined below in these
Amended/Restated Joint Escrow Instructions) to be paid to Agency upon the disbursement of the
Adjusted Payment Consideration Balance to Tenant in accordance with these Amended/Restated
Joint Escrow Instructions on the Closing pursuant to Section 9 of the First Amendment. With
regard to the Amended/Restated Leasehold Interest Assignment/Transfer, you are hereby
instructed that the Amended/Restated Leasehold Interest Assignment/Transfer amends and
restates and supersedes and replaces in its entirety the executed original of the Assignment,
Transfer and conveyance of Leasehold Interest attached to the Original Agreement as Exhibit D
(the "Original Leasehold Interest Assignment/Transfer"), which was delivered to you with the
Original Joint Escrow Instructions, and to record the Amended/Restated Leasehold Interest
Assignment Transfer on the Closing Date (as hereinafter defined) of the Escrow in the Official
Real Estate Records of the Orange County, California Recorder.
001219.0001 \ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 3
Pursuant to Section 9(b) of the First Amendment, Agency is responsible for (i) any and
all escrow fee charges by Escrow Agent; (ii) any and all costs for all title work with respect to
the Property; (iii) any and all sales and use taxes payable with respect to the transfer of the
Leasehold Interest in the Property; and (iv) any and all recording fees for the recordation of the
new Amended/Restated Leasehold Interest Assignment/Transfer attached to the First
Amendment as Exhibit A and any transfer taxes payable with respect to the assignment, transfer
and conveyance of Tenant's Leasehold Interest in the Property to Agency pursuant to the terms
and conditions the Amended Agreement (collectively, the "Escrow Fees/Other Costs").
The obligations of the Agency and Tenant to close and consummate the transactions
pursuant to the Amended Agreement are subject to the satisfaction of the "Conditions Precedent"
set forth in Section 8 of the First Amendment. In conjunction therewith, and pursuant to Section
3 and 8(a) of the First Amendment, the obligations of Agency to acquire the Leasehold Interest
in the Property from Tenant and deliver the payment of the Adjusted Payment Consideration
Balance pursuant to Section 3 of the First Amendment are subject to the satisfaction or
affirmative waiver (as applicable) by Agency of the Conditions Precedent to the Closing set forth
in Section 8(a) of the First Amendment; and, the obligations of Tenant to assign, transfer and
convey the Leasehold Interest in the Property to Agency are subject to the satisfaction or
affirmative waiver (as applicable) by Tenant of the Conditions Precedent set forth in Section 8(b)
of the First Amendment. Although the Amended Agreement has been executed by Agency and
Tenant, the Conditions Precedent in favor of Agency as set forth in Section 8(a) of the First
Amendment and the Conditions Precedent in favor of Tenant as set forth in Section 8(b) of the
First Amendment have not yet been satisfied or affirmatively waived by the party in whose favor
the applicable Condition(s) Precedent is given.
Pursuant to Sections 8(a) and 8(b) of the First Amendment, prior to the Closing Date:
(i) Agency and Tenant shall have executed before a notary public and delivered to
you the Amended/Restated Leasehold Interest Assignment/Transfer attached to
the First Amendment as Exhibit A. The Amended/Restated Leasehold Interest
Assignment/Transfer will need to be recorded by you in the Official Real Estate
Records of the Orange County, California Recorder on the Closing Date.
(ii) Agency and Tenant shall have delivered to you (a) the Sublease Termination and
Lease Assignment/Assumption/Amendment attached to the First Amendment as
Exhibit B executed by Agency and Tenant and Big O; and (b) TBC Lease
Guaranty executed by TBC.
(iii) Agency shall have wire transferred to the escrow account opened by you in
connection with the Escrow and these Amended/Restated Joint Escrow
Instructions, the Adjusted Payment Consideration Balance.
(iv) Agency shall have delivered to you a written instrument stating that provided
that the documents set forth in clauses (i) and (ii) above have been delivered, all
001219.0001 \ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 4
of the Conditions Precedent set forth in Section 8(a) of the First Amendment are
satisfied or affirmatively waived (as applicable).
(v) Tenant shall have delivered to you a written instrument stating that provided that
the documents set forth in clauses (i) and (ii) above have been delivered, all of
the Conditions Precedent set forth in Section 8(b) of the First Amendment are
satisfied or affirmatively waived (as applicable).
The documents set forth in clauses (i) and (ii) above shall, upon receipt, be held in trust
by Escrow Agent until the Closing Date.
Upon the date following the Closing Date that you as Escrow Agent have been advised
by Agency and Tenant in writing that all of the Conditions Precedent set forth in Sections 8(a)
and 8(b) of the First Amendment have been satisfied or affirmatively waived (as applicable),
Agency and Tenant, hereby jointly instruct you as Escrow Agent to:
(A) Release the Adjusted Payment Consideration Balance to Tenant.
(B) Release any interest earned on the Adjusted Payment Consideration Balance,
less any Escrow Fees/Other Costs due by Agency to Escrow Agent, to Agency.
(C) Release to Escrow Agent any Escrow Fees/Other Costs due by Agency to
Escrow Agent.
(D) Release fully executed copies of the First Amendment to Agency and Tenant.
(lE) Release fully executed copies of the Amended/Restated Leasehold Interest
Assignment/Transfer to Agency and Tenant.
(F) Release fully executed copies of the Sublease Termination and Lease
Assignment/Assumption/Amendment and the TBC Lease Guaranty to Agency
and Tenant.
Unless instructed to the contrary in a writing signed by Agency and Tenant, if the Closing
Date does not occur by December 31, 2010, the First Amendment and the Sublease Termination
and Lease Assignment/Assumption/Amendment and the TBC Lease Guaranty shall terminate
and be of no further force and effect; and these Amended/Restated Joint Escrow Instructions
shall terminate and be of no further force and effect, and the Original Joint Escrow Instructions
shall be reinstated; and:
(1) The Adjusted Payment Consideration Balance, plus any interest earned thereon,
less any Escrow Fees/Other Costs, shall promptly be returned to the Agency.
(2) The signature pages of the documents delivered to you by Agency shall be
returned to the Agency.
001219.0001 \ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 5
(3) The signature pages of the documents delivered to you by Tenant shall be
returned to Tenant.
Sincerely,
Stanley Smalewitz
Director of Economic Development
cc: Kellee Fritzal, Deputy Director
Jennifer McGrath, City Attorney
[SIGNATURE PAGES F®LL0WJ
001219.0001 \ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 6
THE UNDERSIGNED HEREBY AGREES TO AND
ACKNOWLEDGES THE FOREGOING AMENDED/RESTATED
JOINT ESCROW INSTRUCTIONS:
TENANT:
By: C.S.B. PARTNERSHIP, a California general partnership
By: C.E.P. DEVELOPMENTS, INC., a California
corporation, its General Partner
By: _ & /
h ' topher R. Phillips, Wresident
By: FOUR KYLES, INC., a California corporation, its
General Partner
By: / �.-
V"irgil lkyle Kyle, II , President
By: PHILLIPS & PHILLIPS L.P., a California limited
partnership, its General Partner
By: C. & E. PHILLIPS, INC., a California
corporation, its General Partner
0,/,/
By: � �D
C topher R. Phillip , resident
By: JYB ENTERPRISES, INC., a California corporation,
its General Pa nor
By:
�''
Jas n Y. BerrOesident
[SIGNATURES CONTINUED ON NEXT PAGE]
00 1219.0001\ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 7
By: THREEMMMS, INC., a California corporation, its
General Partner
By:
Michael J. Hu ach, President
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: 7
C i pher R. Phillips, ident
00 1219.0001\ 1709646.1
Ms. Grace Kim
December 23, 2010
Page 8
Acceptance of Amended/Restated )Escrow Instructions
Your acceptance of this Escrow shall create a contractual obligation between you, Agency and
Tenant for complete compliance with these Amended/Restated Joint Escrow Instructions which
amend and restate and superseded and replace in their entirety the Original Joint Escrow
Instructions. Agency and Tenant reserve the right to jointly revoke in writing this Escrow at any
time upon Agency's payment to you of the Escrow Fees/Other Costs in accordance with the
terms of these Amended/Restated Joint Escrow Instructions. Your obligations as Escrow Agent
under these Amended/Restated Joint Escrow Instructions shall be subject to the following
provisions:
You are not responsible as to the sufficiency or correctness as to form, manner of execution, or
validity of any instrument deposited in this Escrow or as to the authority or rights of any person
executing such instrument. Except as otherwise provided in these Amended/Restated Joint
Escrow Instructions, your duties as Escrow Agent are limited to the proper handling of monies
and the proper safekeeping of instruments and other items received by you as Escrow Agent, and
for the performance of your obligations as specifically provided under these Amended/Restated
Joint Escrow Instructions. You are responsible for the sufficiency of any instruments or
documents prepared by you for this Escrow.
Agency and Tenant jointly and severally agree to indemnify and hold you harmless from
damages incurred as a result of your good faith and diligent performance of your duties under
these Amended/Restated Joint Escrow Instructions.
Upon your acceptance of these Amended/Restated Joint Escrow Instructions, return the executed
counterparts of these joint escrow instructions to Agency and Tenant.
ACKNOWLEDGED AND AGREED:
STEWART TITLE OF CALIFORLNIA, INC.
By: t -
race Kim, Escrow Officer
00 1219.000 1 \ 1709646.1