SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (“Amendment”) dated, for reference purposes only, this ____ day of November, 2010, is made by and between HUNTINGTON BEACH NO. 1, a California limited partnership (“Landlord”) and SKY GOLF LLC, a California limited liability company ("Tenant") d/b/a GolfTEC , with reference to the following facts and objectives: RECITALS WHEREAS, Landlord and Tenant’s predecessor-in-interest, OCGT Partners, LLC, a California limited liability company ("OCGT”) entered into a Lease Agreement dated January 24, 2007, as amended by that certain First Amendment to Lease Agreement dated February 23, 2009 (“First Amendment”) for premises located at 7564 Edinger Avenue, Huntington Beach, California 92647 ("Premises"), said Premises being more particularly described in the Lease Agreement. WHEREAS, the Lease Agreement was assigned pursuant to that certain Assignment of Lease/Acceptance of Assignment from OCGT to Tenant, as consented to by Landlord on September 15, 2009, pursuant to that certain Consent to Assignment of Lease dated August 21, 2009 (collectively, “Assignment”). the Lease Agreement as modified by the First Amendment and previously assigned pursuant o the Assignment shall hereinafter be referred to as the “Lease”.
WHEREAS, Landlord and Tenant have agreed to amend said Lease to, inter alia, (i) conditionally abate a portion of the fixed minimum rent due from November 1, 2010 through May 31, 2012, inclusive (the “Abatement Period”); and (ii) waive the monthly installment payments relative to the previous abatement of fixed minimum rent, as hereinafter set forth NOW, THEREFORE, in consideration of the terms, covenants and conditions as set forth in the Lease and in this Amendment, the Lease shall be amended as follows: 1. Basic Lease Provisions. Paragraphs C, H, J and M of the Basic Lease Provisions of the Lease shall be deleted in their entirety and in their place shall be inserted the following: “C.
SKY GOLF LLC, a California limited liability company
Lease Expiration Date: May 31, 2012
Tenant's Address for Notices:
$-07564 Edinger Avenue Huntington Beach, California 92647”
2. Right of Early Termination. Landlord shall have the further right to terminate this Lease provided Landlord gives Tenant at least one hundred eighty (180) days advance written notice of its election to terminate (“Termination Notice”). In the event of such termination, neither Landlord nor Tenant shall have any further obligation to the other under this Lease; provided however, Tenant’s indemnification obligations under Paragraph 13.1 of the Lease shall survive the termination of the Lease. Tenant’s failure to deliver vacant possession of the Premises on or before the early termination date (as set forth in the Termination Notice) shall constitute a default and breach of the Lease, and in such event, Landlord shall have the right to exercise any of its rights and remedies under the Lease and applicable law. Further, notwithstanding anything in the Lease to the contrary, Tenant has no option to extend the Lease beyond the Lease Expiration Date (as identified in Paragraph H of the Basic Lease Provisions. 3. Abatement of Fixed Minimum Rent. Provided Tenant is not then in default under the Lease, Landlord shall accept as fixed minimum rent during the Abatement Period, the amount of Three Thousand Six Hundred Four and 63/100 Dollars ($3,604.63) per month. The portion of fixed minimum rent abated shall collectively be referred to herein as “Abated Rent”. Notwithstanding anything herein to the contrary, the waiver of Abated Rent shall be deemed conditioned upon Tenant’s full and faithful performance of all of the terms, covenants and conditions of the Lease throughout the Abatement Period. Upon a material default or breach of the Lease or this Amendment by the Tenant, any such concession shall automatically be deemed deleted from this Amendment and be of no further force or effect, and all Abated Rent shall become immediately due and payable by Tenant to Landlord, notwithstanding any subsequent cure of said default or breach by Tenant; and further provided, that from and after a material default or breach of the Lease or this Amendment by Tenant, the fixed minimum rent shall revert to, and henceforth be, as set forth in Section 4.1 (b) of the Lease. The acceptance by Landlord of the reduced fixed minimum rent shall not be deemed a waiver by Landlord of the provisions of this Section 3 or a loss of Landlord’s rights to collect the full amount of fixed minimum rent due under the Lease after a default or breach of the Lease or this Amendment by Tenant, as provided above. 4. Waiver of Repayment of Previously Abated Rent. Tenant hereby acknowledges that, as of the date first written above, there exists a balance due to Landlord under the Lease relative to the repayment of previously abated fixed minimum rent (pursuant to Section 16 of First Amendment); Tenant is currently obligated to repay such balance by making monthly payments of Five Hundred Eleven and 36/100 Dollars ($511.36) per month for the next nineteen (19) months (“Repayment Amount”). Upon full execution hereof the
Repayment Amount shall be waived. Notwithstanding anything herein to the contrary, the waiver of the Repayment Amount shall be deemed conditioned upon Tenant’s full and faithful performance of all of the terms, covenants and conditions of the Lease and this Amendment. Upon a breach or default by Tenant under the Lease or this Amendment, any such concession shall automatically be deemed deleted from this Amendment and be of no further force or effect, and the Repayment Amount shall become immediately due and payable, in full, by Tenant to Landlord, notwithstanding any subsequent cure of said default or breach. 5. Confirmation. Tenant confirms, represents and warrants as of the date of this Amendment that: (a) the conditional abatement of a portion of fixed minimum rent and the waiver of the Repayment Amount are not gifts by Landlord nor a surrender of Landlord’s rights to collect any rent due under the Lease but is being agreed to herein by Landlord solely in order to help the Tenant’s business, and that without the abatement and waiver, Tenant’s business would suffer and Tenant would have difficulty paying the rent due under the Lease; (b) the Lease is in full force and effect and is ratified by Tenant; (c) the Lease constitutes the entire agreement between Landlord and Tenant with respect to the Premises, has not been assigned, supplemented or modified in any manner whatsoever, and no arrangements, agreements or understandings exist between Landlord and Tenant with respect to the Lease, the Premises, or either of them, except as specifically set forth in the Lease and this Amendment; (d) all terms, covenants and conditions to be performed, discharged and satisfied by Landlord have been fully performed, discharged and satisfied; (e) to Tenant's actual knowledge, Landlord is not in default in the performance of any term, condition or obligations under the Lease, has not committed any breach thereof and there are no existing defenses or offsets which Tenant has against the enforcement of the Lease by Landlord and there exist no events which would constitute a basis for any such defenses or offsets upon the lapse of time or the giving of notice, or both; (f) it currently possess the Premises and accepts same in its "AS IS" condition, (g) Landlord does not hold a security deposit on behalf of Tenant under the Lease; (h) this Amendment is not (1) an amendment of the terms “fixed minimum rent” or “Rent” as those terms are used in the Lease, or (2) an unconditional forgiveness of any part of the fixed minimum rent or a permanent forgiveness of Minimum Rent; (i) the current monthly charge for Common Area Expenses is in the amount of Eight Hundred Ninety-Seven and 00/100 Dollars ($897.00); (j) Tenant will continue to pay its share of Common Area Expenses and Taxes and all other amounts due under the Lease without regard to this Amendment; and (k) this Amendment shall, in no way, be deemed to permanently establish a new or different amount of fixed minimum rent due under the Lease. 6. Non-Transferable. The abatement of a portion of fixed minimum rent and waiver of the Repayment Amount is granted to the Tenant described in this Amendment only and is not assignable or transferable. In the event of an assignment, transfer or sublease, the abatement of a portion of fixed minimum rent and waiver of the Repayment Amount shall automatically be deemed deleted from this Amendment and be of no further force or effect, and the Abated Rent and Repayment Amount shall become immediately due and payable, in full, to Landlord and the fixed minimum rent shall revert to, and henceforth be, as set forth in Section 4.1 (b) of the Lease. 7. Application of Overpayment. If a reconciliation of Tenant’s monthly estimate for its share of Common Area Expenses as described in Section 5.6 of the Lease, reflects a credit due Tenant, it is hereby understood and agreed that said credit shall be applied to Abated Rent and the Repayment Amount and Tenant shall relinquish all claims to said overpayment of charges until the full amount of Abated Rent and the Repayment Amount have been recouped by Landlord. 8. Profit and Loss Statements. At any time during the Lease term, Tenant shall, upon thirty (30) days’ prior written notice from Landlord, provide Landlord or any institutional lender which is negotiating with Landlord for interim, construction or permanent financing, with a confidential current financial statement (dated within ninety  days of the date Tenant receives Landlord’s notice) and financial statements for each of the two (2) years prior to the then current fiscal statement year. Such current statement shall be prepared in accordance with generally accepted accounting principals and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. 9. Late Charges (Lease – Paragraph 4.1 (d)). The following shall be added to the end of Paragraph 4.1 (d): “Tenant hereby acknowledges that late payment of Tenant to Landlord of rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is 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. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of the late payment by Tenant. Acceptance of such late charge 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. Further, in the event that any check, draft, or other instruments of payment given by Tenant to Landlord is dishonored for any reason, Tenant agrees to pay to Landlord the sum of One Hundred Twenty Five and 00/100 Dollars ($125.00) in addition to any late charge and Landlord, at its option, may require all future rent be paid by cashier’s check.”
10. Damages and Remedies. The following shall be added to the Lease, following Paragraph 25.1 b., as Paragraph 25.1A: “25.1A Damages and Remedies. (a) Should Landlord have re-entered the Premises under the provisions of Paragraph 25.1 b. above, Landlord shall not be deemed to have terminated this Lease or the liability of Tenant to pay any rental or other charges thereafter accruing, or to have terminated Tenant’s liability for damages under any of the provisions hereof by any action in unlawful detainer or otherwise to obtain possession of the Premises, unless Landlord shall have notified Tenant in writing that it has so elected to terminate this Lease, and Tenant further covenants that the service by Landlord of any notice pursuant to the unlawful detainer statutes of the state in which the Shopping Center is located and the surrender of possession pursuant to such notice shall not (unless Landlord elects to the contrary at the time of or at any time subsequent to the serving of such notice and such election is evidenced by a written notice to Tenant) be deemed to be a termination of this Lease. In the event of any entry or taking possession of the Premises as aforesaid, Landlord shall have the right, but not the obligation, to remove therefrom all or any part of the personal property located therein and may place the same in storage at a public warehouse at the expense and risk of Tenant. (b) Should Landlord elect to terminate this Lease pursuant to the provisions of Paragraph 25.1 a. above, Landlord may recover from Tenant the following damages: (1) The worth at the time of the award of any unpaid rent and other charges which had been earned at the time of termination; plus (2) The worth at the time of the award by which the unpaid rent and other charges which would have been earned after termination until the time of the award exceeds the amount of the loss of such rental and other charges that Tenant proves could have been reasonably avoided; plus (3) The worth at the time of the award of the amount by which the unpaid rent and other charges for the balance of the term of the Lease after the time of the award exceeds the amount of the loss of such rental and other charges that Tenant proves could have been reasonably avoided; plus (4) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom including, buy not limited to, any costs or expense incurred by Landlord in (a) retaking possession of the Premises, including reasonable attorneys’ fees thereof; (b) maintaining or preserving the Premises after such default; (c) preparing the Premises for reletting to a new tenant, including repairs or alterations to the Premises for such reletting; (d) leasing commissions; or (e) any other costs necessary or appropriate to relet the Premises; plus (5) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable state law. (c) For the purposes of the preceding paragraph (b), all rental and charges other than fixed minimum rent including, but not limited to, common area charges, and percentage rent, if any, shall be computed on the basis of the average monthly amount thereof accruing during the twelve (12) month period immediately preceding notice to Tenant of Tenant’s default unless a twelve (12) month period of this Lease has not elapsed, in which case the average monthly amount shall be based upon the entire period of Tenant’s occupancy of the Premises. In the event of default, all of Tenant’s fixtures, furniture, equipment, improvements, additions, alterations and other personal property shall remain on the Premises, and during the period of such default, Landlord shall have the right to require Tenant to remove the same forthwith. (d) As used in subparagraphs (b) (1) and (2) above, the “worth at the time of the award” shall be computed by allowing interest at the maximum rate permitted by law per annum. As used in subparagraph (b) (3) above, the “worth at the time of the award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%).” 11. Attorney’s Fees (Lease – Article 28). The phrase “costs and expenses” as used in Article 28 of the Lease shall include expert witness fees and the costs of a collection agency. 12. Confidentiality. Tenant agrees to keep this Amendment and the terms, obligations, and conditions contained in this Amendment strictly confidential. Tenant shall not disclose any part of this Amendment to anyone other than Tenant’s attorneys, accountants or employees and such disclosure to be on a “need to know” basis only. Failure to abide by the terms of this Section 12 shall be considered a default under the Lease. Further, in the event that Tenant breaches this Section 12, Landlord will be entitled to recover from the breaching Party the liquidated amount of Five Thousand Dollars ($5,000.00) for each breach with reasonable
attorneys' fees. Tenant agrees that this amount represents the mutually agreed amount of probable damages for the disclosure of the contents of this Amendment. The Landlord has expended efforts to determine a reasonable amount of damages anticipated to result from breach of this Section 12. The parties hereto agree that actual damages in such circumstances are very difficult to ascertain in advance. Such liquidated damages shall be in addition to any relief, whether legal or equitable, as may be available 13. Conflicting Terms. Except as expressly modified herein, all provisions of the Lease shall remain unchanged and in full force and effect. In the event of any inconsistencies between the terms of the Lease and the terms of this Amendment, the terms of this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date referenced below. LANDLORD:
HUNTINGTON BEACH NO. 1, a California limited Partnership
SKY GOLF LLC, a California limited liability company
WATT PROPERTIES, INC., a California corporation, its general partner By: Its: By: Its:
____________________________ Allison M. Lynch Vice President
_____________________________ ________________________ __________________ ________________