FIRST AMENDMENT DATED AS OF NOVEMBER 1, 1996
to the LEASE AGREEMENT ("LEASE")
BETWEEN DP PARTNERSHIP ("LANDLORD")
and
CABRILLO LANES, INC., a NEW YORK CORPORATION,
dba THE GROVE BOWLING CENTER ("TENANT")
RECITALS
A. Landlord and Tenant have previously entered into the Lease and Tenant has
entered into possession of the premises.
B. Tenant has requested certain rent relief from the terms of the Lease. NOW,
THEREFORE, Landlord and Tenant agree to amend the Lease as follows pursuant
to this first amendment ("First Amendment").
1. Section 26 of the Lease is amended by adding the following Section
26.2.
"26.2 Notwithstanding anything set forth in Section 26.1, Landlord
hereby forgives and waives the obligation of the Tenant to
have paid, or to pay, any Promotion Fund charges for the
period July 1, 1993 through December 31, 1997; provided,
however, that Promotion Fund charges shall be reinstated as
of January 1, 1998 at the annual charge of Seven Thousand
Five Hundred and No/100 Dollars ($7,500.00) with the annual
adjustment increase set forth in Section 26.1 operating from
July 1, 1993 through December 31, 1997. The initial
quarterly payment will be due within ten days of billing on
or after January 1, 1998."
2. Section 19 of the Lease is amended by adding the following Section
19.9.
"19.9 The Tenant shall not be responsible for any CAM charge for
use of the Readerboard through December 31, 1997, but shall
be permitted use of the Readerboard through December 31,
1997 consistent with the usage of other tenants, and
provided that use of the Readerboard is not generally
discontinued for tenants."
3.
A. Section 5.2 of the Lease is amended by adding the following
Section 5.2(b).
"5.2(b) Commencing on November 1, 1996 and continuing through
October 31, 1998, Tenant shall have the right to defer up
to Six Thousand and No/100 Dollars ($6,000.00) per month of
Minimum Rent payable pursuant to Section 5.1. Such deferred
rent (sometimes called "Deferred Rent") shall be payable in
three equal installments of one-third (1/3) each of the
total amount deferred pursuant to this subsection, on
November 28, 1998, December 31, 1998 and January 31, 1999.
The failure to fully pay any such installment on the date
due shall (i) automatically cause the entire unpaid balance
of the Deferred Rent to become immediately due and payable
without any further notice or demand, and (ii) cause the
entire unpaid
remaining balance of the additional rent payment described in Section
5.2(a) (sometimes referred to as "Additional Rent") to become
immediately due and payable as a single installment payment at the
election of Landlord which may be exercised by written notice to
Tenant."
B. Section 5.2 of the Lease is amended by adding the following Section
5.2(c).
5.2(c) special Termination Rights. If Tenant fails to pay any installment of
the Deferred Rent (a "Deferred Rent Installment") when due (the date
of which is referred to herein as the "Nonpayment Date"), one of the
two following alternatives shall occur.
l. Tenant may cure its failure to timely pay such Deferred Rent
installment by: (a) Tenant making a written "Payoff Offer" (as
hereinafter defined) at any time prior to 10 days preceding a "Noticed
Termination Date" (as hereinafter defined); (b) Landlord at its sole
option accepting such Payoff Offer by written notice to Tenant prior
to the first anniversary of the date of the Payoff Offer (the "Payoff
Offer Anniversary"); and (c) Tenant paying to Landlord the "Payoff
Amount" (as hereinafter defined) within 10 days after the effective
date of Landlord's notice of acceptance. Thereafter, Landlord shall
have no further right of remedy resulting from Tenant's failure to
timely pay such Deferred Rent Installment and the Lease shall remain
in full force and effect.
or
2. Landlord may cause a "Special Termination" (as hereinafter defined) of
this Lease and may seek and recover the "Special Remedy" (as
hereinafter defined) as its sole and exclusive remedy, but only if
either: (a) Tenant has not made a Payoff Offer by the 10th day prior
to the Noticed Termination Date; or (b) if Tenant has made a Payoff
Offer, Landlord has notified Tenant in writing prior to the Noticed
Termination Date that Landlord has rejected the Payoff Offer. The
election to cause a Special Termination shall be made at any time
prior to the Payoff Offer Anniversary except as set forth in Section
5.2(c)(4). If Landlord for any reason fails to cause a Special
Termination by the Payoff Offer Anniversary: (a) Landlord shall be
deemed to have accepted the Payoff Offer; (b) Tenant shall tender the
Payoff Amount to Landlord within 10 days after the Payoff Offer
Anniversary; and (c) thereafter, Landlord shall have no further right
or remedy resulting from Tenant's failure to timely pay such Deferred
Rent Installment and the Lease shall remain in full force and effect.
5.2 (c)(1) Special Termination of Lease. Providing Landlord is entitled
to cause a Special Termination of this Lease, Landlord may terminate
this Lease (which termination is referred to herein as a "Special
Termination") by notice to Tenant specifying a termination date which
is at least 30 days but not more than 45 days after the effective
date of such notice (a "Noticed Termination Date"). Except as
otherwise provided herein, this Lease shall terminate on such Noticed
Termination Date, all of the rights of the Tenant in and to the
Premises shall terminate on such Noticed Termination Date and such
Special Termination shall operate as a compromise and buyout of both
parties' rights and liabilities under the Lease. Pursuant to such
Special Termination, Landlord may seek and recover the Special Remedy
and Landlord and Tenant shall have all rights and remedies which
exist under
-2-
the Lease upon a termination of the Lease, except that Tenant shall
have no liability for future rental obligations under the Lease, and
no liability for breaches or defaults which existed prior to the date
of this First Amendment, except for breaches or defaults for physical
injury to the Premises, including environmental contamination.
5.2(c)(2) Payoff Offer. At any time between a Nonpayment Date and the date this
Lease is terminated, Tenant may notify Landlord in writing of
Tenant's readiness to pay (a "Payoff Offer") within ten days of such
notice the entire balance of the Deferred Rent, together with ten
percent (10%) interest per annum thereon from the Nonpayment Date
until the date of such Payoff Offer (the "Payoff Amount").
5.2(c)(3) Special Remedy. If Landlord is entitled to seek and recover the
Special Remedy, Landlord as such "Special Remedy" may: (a) collect
and receive the then existing balance remaining under the letter of
credit established pursuant to Section 5.2 of the Lease (which
original balance of $250,000 shall be deemed reduced for purposes of
this section by $1,365.83 for each payment of $3,032.50 of Additional
Rent which has been made by Tenant commencing on the 25th month of
the Lease); (b) recover all sums due to Landlord for rent or other
charges or sums required to be paid by Tenant under the terms of the
Lease through the Noticed Termination Date except for the unpaid
Deferred Rent; and (c) recover the interest portion of any unpaid
regularly scheduled payment of Additional Rent accrued through the
Noticed Termination Date (but not including any acceleration of any
rents, including the Additional Rent, beyond the amount of the unpaid
scheduled Additional Rent payments accrued through the Noticed
Termination Date).
5.2(c)(4) Failure to Timely Pay Payoff Amount. If Landlord accepts Tenant's
Payoff Offer and Tenant fails to timely pay the Payoff Amount within
10 days, interest shall be deemed to have run without interruption
from the Nonpayment Date and Tenant shall have no further right to
make a Payoff Offer and Landlord in its sole and absolute discretion
may cause a Special Termination to occur at any time prior to the
expiration of the Lease. Notwithstanding the foregoing, if Landlord
thereafter accepts subsequent payment of the Deferred Rent and
interest due thereon in full, Tenant's failure to pay the Deferred
Rent Installment shall be deemed cured, Landlord shall have no
further right or remedy resulting from Tenant's failure to timely pay
such Deferred Rent Installment and the Lease shall remain in full
force and effect.
C. Except as otherwise specifically provided in paragraphs 3.A and 3.B, above,
this Amendment shall in no way operate to reduce or subtract from the rights
of the Landlord (and obligations of Tenant) with respect to the Additional
Rent obligation of the Tenant pursuant to Section 5.2(a) of the Lease and
the rights of Landlord with respect to the letter of credit benefiting
Landlord as described in Section 5.2(a) of the Lease.
D. If Tenant is in material default of this Lease pursuant to Section 20.1 of
the Lease (including any default in the payment of rent, including the
Additional Rent) other than as a result of a failure to timely pay the
Deferred Rent, Landlord shall have all of its rights or remedies pursuant to
Section 20.2 of this Lease for the default under Section 20.1. As part of
the remedies under Section 20.2, Landlord shall also be entitled to recover
all then unpaid Deferred Rent, whether or not Tenant has timely paid
previously due Deferred Rent Installments.
4. Tenant agrees to refrain from discussing with, or releasing to, any third
party any information respecting the terms and conditions of this First
Amendment, with the exception of its employees, consultants or lenders who
reasonably require such information by reason of their business relationship
with the Tenant, or as required by judicial proceedings or state or federal
law. In particular, Tenant agrees not to discuss or reveal the terms and
conditions of this First Amendment with or to any other tenants at the
Marketplace at the Grove. Any violation of this provision shall constitute a
noncurable material default under the Lease and shall entitle Landlord to
exercise any and all remedies available to it, including its remedies set
forth in Section 20.2 of the Lease.
5. In the event that Tenant hereafter requests an assignment or subletting of
the Lease, which Landlord approves pursuant to Section 15.3(a), the rent
reductions and deferrals set forth in paragraphs 1 through 3 of this First
Amendment shall not be affected, but any rent previously deferred pursuant
to this First Amendment shall nonetheless be due and payable at the time of
the consent of the assignment or subletting to the extent (but only to the
extent) Tenant receives net cash proceeds from the transaction pursuant to
which the assignment or subletting is being made. In connection with any
request for consent to such assignment or subletting, and further provided
that any of the Deferred Rent is still outstanding, Tenant shall provide
Landlord with a copy of the transaction documentation and shall set forth
the amount, if any, of any net cash proceeds anticipated by Tenant in
connection with such transaction. In the event that Landlord is otherwise
prepared to consent to such Sublease Agreement, the granting of such consent
shall be conditioned upon Tenant assigning to Landlord all net cash proceeds
of the transaction (if any) up to the amount of the outstanding Deferred
Rent. Nothing set forth herein shall release the Tenant from any obligations
with respect to the letter of credit described in Section 5.2 of the Lease.
Further, nothing set forth herein shall be construed to reduce the amount of
information which Landlord is entitled to receive from Tenant in connection
with a proposed assignment or sublease irrespective of the existence of
outstanding Deferred Rent.
6. In connection with the request for rent relief referred to in Recital B of
this First Amendment, Tenant has expressed or implied to Landlord that
claims or offsets may exist in favor of Tenant against Landlord for various
reasons, including the alleged failure of Landlord to revitalize the
shopping center and the alleged failure to add various additional tenants to
the shopping center. As a material part of the consideration to be received
by Landlord under this First Amendment, Tenant, by execution of this First
Amendment, hereby generally releases and discharges Landlord and its
constituent partners and their respective officers, directors, shareholders,
agents, representatives, attorneys, employees, both past, present and future
("Landlord's Representatives"), of and from any and all claims, debts,
liabilities, obligations and causes of action of any kind or nature, whether
known or unknown, based on, arising out of or connected with, either
directly or indirectly, any term, provision, matter, fact, event or
occurrence arising out of, related to or contained in the Lease (except for
the obligations of Landlord expressly set forth in
this First Amendment and Landlord's obligations expressly set forth in the
Lease accruing subsequent to the execution of this Amendment) or to any
landlord/tenant relationship between Tenant and Landlord based on any
fact, matter or thing arising prior to the date of execution of this First
Amendment.
Without in any way limiting the generality of the foregoing, Tenant
specifically agrees to release and discharge Landlord and Landlord's
Representatives of and from any and all claims, debts, liabilities,
obligations and causes of action of any kind or nature, whether known or
unknown, for negligent or intentional misrepresentation, concealment,
failure to disclose, fraud or any representations or other wrongdoing by
Landlord or Landlord's Representatives regarding (a) the status of lease
negotiations or execution of lease agreements, or likelihood of additional
tenants at the shopping center, including, but not limited to, Wal-Mart or
other anchor tenants; (b) the percentage or portion of space leased at the
shopping center; (c) Tenant's ability or inability to change and/or modify
the terms of the Lease through negotiation; (d) promotion and advertising
of the shopping center, (e) representations regarding the adequacy of
security at the shopping center and/or to the extent of criminal activity
or other dangerous activities, including, but not limited to, the
existence of gang activity; and (f) revitalizing of the shopping center.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY THEIR LEGAL COUNSEL AND
ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE 1542, WHICH PROVIDE AS
FOLLOWS:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at a time of executing the release, which, if
known by him, must have materially affected his settlement with the debtor.
THE TENANT, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT
IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR Effect.
Tenant's Initials ___
It is understood and agreed by Tenant that although the facts with respect to
which this general release is given may hereafter turn out to be other than or
different from the facts now known, or believed by Tenant to be true, Tenant
hereby expressly assumes the risk of the facts turning out to be so different
and agrees that the foregoing general release shall be, in all respects,
effective and not subject to termination or rescission by any such difference in
facts. This general release shall bind all persons or business entities claiming
any rights under or through Tenant, whether stockholders or otherwise.
7. Tenant hereby acknowledges the possibility that Landlord may seek a
modification of the shopping center which would possibly bring a Wal-Mart
(leasing in excess of 100,000 square feet) to the shopping center. In
connection with such possible modification, Landlord has advised Tenant of
the following circumstances.
A. Uncertainty of modification. The possible modification will be dependent
on a number of circumstances which presently are uncertain, including, but
not limited to, Wal-Mart's final determination whether or not to locate at
the shopping center, which determination is at the sole election of
Wal-Mart, it being recognized that Wal-Mart may well decide not to locate
at the shopping center; the negotiation and the signing of a final lease
with Wal-Mart; the technical and financial feasibility and success of
accomplishing the modification; consent of various third parties; and
achieving compliance with various governmental rules, regulations and
procedures. Furthermore, Landlord advises Tenant that, even if Wal-Mart is
added to the center, it is uncertain whether any additional tenants will
be added to the center.
B. Securing Wal-Mart as a tenant. As set forth above, the, Landlord hopes to
lease in excess of 100,000 square feet of the shopping center to Wal-Mart.
Based on lease negotiations to date, Wal-Mart may or will require the
following items potentially requiring approval of other tenants.
(i) Wal-Mart is desirous of establishing a "Wal-Mart Maintenance Area"
which shall consist of the Wal-Mart premises and a certain
delineated portion of the present common area of the shopping
center, including a portion of the parking surrounding Wal-Mart.
Wal-Mart is also desirous of individually paying the expenses of
maintaining the Wal-Mart Maintenance Area, but not participating in
other common area expenses of the shopping center. Accordingly, such
an arrangement would mean that paragraph 19.3(b) of the Lease would
need to be modified to exclude the costs of maintaining the Wal-Mart
Maintenance Area from common area expenses and excluding Wal-Mart's
square footage from the denominator of the fraction establishing
Tenant's share of common area expenses, provided, however, there
would be a cap on this as set forth in paragraph 8.C.(i) below.
(ii) In connection with execution of the Wal-Mart lease, Landlord and
Wal-Mart will execute and record a Declaration of Covenants,
Conditions, Restrictions and Reciprocal Easements by and between
Wal-Mart and Landlord (the "Wal-Mart CC&Rs").
(iii) As part of its lease, Wal-Mart may provide for a mutual waiver of
subrogation whereby Wal-Mart on the one hand and Landlord and all
other tenants in the shopping center on the other hand (and the
employees and agents of such tenants) provide for a mutual waiver of
subrogation (i.e., a waiver of claims against the other for any loss
or damage to any property (real or personal) owned by such parties
and covered by insurance so as to preclude a paying insurance
company from pursuing the tenants and Landlord).
C. Dealings with City of San Diego. In connection with the modification, the
following transactions with the City (or similar ones) may take place upon
the occurrence of various conditions.
(i) The City may acquire a right-of-way for the potential expansion of
College Avenue.
(ii) The City may acquire the two-acre sloped triangle of vacant land on
the north side of College Grove Drive.
(iii)The City may lease as a potential park-and-ride facility a portion of
the parking area west of the Xxxx Theaters (it being noted that an
area in that vicinity was previously designated as a park-and-ride
facility in March 1988).
(iv) Landlord will agree that 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, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure or enjoyment of the parking area, nor shall Landlord (or any
person claiming under or through Landlord) establish or permit any
such practice or practices of discrimination or segregation with
respect to the use of the parking area.
D. Even though the possible modification is not in the immediate vicinity
of Tenant's Premises, Tenant acknowledges that the modification of the
shopping center may possibly cause some disturbances and inconveniences
in the shopping center and may necessitate the closure of portions of
the common area and construction of temporary fences and barriers.
E. Signage. In connection with the modification of the shopping center,
Landlord may erect new monument, pylon and other signs at various
locations in the center.
8. In light of the possible modification of the shopping center and the
circumstances described in paragraph 7 above, Tenant agrees and consents as
follows:
A. Tenant acknowledges that the possible modification may or may not
occur and waives and releases any claims it may have against Landlord
by reason of the nonoccurrence of such modification.
B. Tenant consents to the modification of the shopping center so long as
it does not materially adversely affect Tenant's normal business
operations.
C. In connection with the possible Wal-Mart tenancy as described in
paragraph 7.B above, Tenant agrees to the following in the event the
Wal-Mart lease is executed.
(i) In the event the Wal-Mart lease contains a provision
substantially in the form described in Section 7.B(ii) above,
then paragraph 19.3(b) of the Lease shall be deemed amended to
exclude Wal-Mart's floor area square footage from the
calculation of Tenant's CAM, provided that the cost of
maintaining Wal-Mart's Maintenance Area shall also be excluded
from the calculation of Tenant's share of CAM expenses, but
further provided that such lease amendment will further provide
that Tenant shall not pay by reason of such exclusion an amount
greater than 110% of what would have been paid for CAM if
Wal-Mart's floor area square footage were included in the CAM
calculation and the cost to Landlord of maintaining the Wal-Mart
Maintenance Area were also included in the CAM calculation.
(ii) Tenant consents to the recordation of the Wal-Mart CC&Rs and
that the Lease and Tenant's interest in the premises of the
shopping center is and shall be automatically subject and
subordinate to the Wal-Mart CC&Rs, provided that the Wal-Mart
CC&Rs do not materially adversely affect the normal business
operations of Tenant's business. Although the provisions of this
paragraph 8.C(iii) are intended to be self-operative, Tenant
shall, within ten (10) days following Landlord's written request,
execute, have acknowledged and deliver such documents,
instruments, consents and agreements as Landlord may reasonably
require in order to further document the subordination of the
lease to the Wal-Mart CC&Rs, provided that such CC&Rs do not
materially adversely affect the normal business operations of
Tenant.
(iii) In the event that the Wal-Mart lease contains a provision (as
described in paragraph 7.B(iv)) waiving the right of subrogation
against other tenants caused by fire or other insured peril
covered by Wal-Mart's insurance policies (or program of
self-insurance), even if such loss or damage shall have been
caused by the fault or negligence of such party, its employees or
agents, then Tenant agrees that it mutually waives its right of
subrogation as to Wal-Mart, its employees and agents, to the same
extent it is waived by Wal-Mart. The foregoing mutual waiver of
subrogation shall be operative only so long as available in
California, and provided that no policy of insurance is
invalidated thereby.
D. With respect to the possible transactions with the City described in
Section 7.C above, Tenant agrees as follows:
(i) Tenant consents to the transactions described in Section 7.C(i)
above.
(ii) Tenant agrees that it shall not be entitled to any sums or
offsets by reason of such sales or leases.
(iii)Tenant agrees to refrain from any conduct in violation of
paragraph 7.C (iv) above barring discrimination as therein
described.
E. In connection with possible disruption of the shopping center described
in paragraph 7.D above, Tenant consents to such temporary disruption as
is reasonably necessary to accomplish the modification.
F. In connection with the potential new signage described in Section 7.E
above that, in the event the Tenant is afforded the right to install
any additional signage and that Tenant elects to exercise such right,
the condition of such installation shall be Tenant's payment of the pro
rata share of the cost of designing, constructing, installing and
operating such sign(s). For the purpose of this section only, Tenant's
pro rata share shall be a fraction, the numerator of which is the
square footage of Tenant's sign panel, and the denominator of which is
the square footage of all Tenant's sign panels on such sign(s).
9. Waiver of subrogation. Landlord and Tenant agree that the parties will use
their best efforts to have the Waiver of Subrogation set forth in paragraph
10.2 of the Lease apply to the modification of the shopping center so long as
such waiver does not materially increase the cost of its insurance or
invalidate any policy of insurance.
10. Notice and approval,. Delivery and execution of this First Amendment shall
satisfy all notification, consent and approval requirements under the Lease
as may be required as a result of the modification.
11. Continuation of Lease. Except as set forth in this First Amendment, the
Lease remains in full force and effect. Tenant hereby reaffirms all
agreements, covenants and promises set forth in the Lease. All references
in the Lease to "this Lease" shall be deemed references to the Lease as
modified by this First Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first herein above set forth.
LANDLORD: TENANT:
DP PARTNERS, a California general CABRILLO LANES, INC., a New York
partnership corporation
By: /S/ Xxxxx Xxxxxxx _________________ By: /S/ Xxxxxx X. Xxxxx
Name XXXXX SCHULTZ_____________________ Name XXXXXX X. XXXXX
Its General Partner Its President
By its signature below, Sports Arena, Inc. hereby (i) expressly consents to,
acknowledges and joins in the terms of this First Amendment to Lease between DP
Partnership ("Landlord") and Cabrillo Lanes, Inc. (a wholly owned company of
Sports Arena, Inc.); and (ii) makes, adopts and reaffirms for the benefit of
Landlord each of its covenants, obligations and agreements made in that certain
Guaranty of Lease dated January 3, 1994, as if it expressly made each such
covenant, obligation and agreement in this First Amendment.
SPORTS ARENA, INC.
By: /S/ Xxxxxx X. Xxxxx
Name Xxxxxx X. Xxxxx
Its President
