<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1999
----------------------------------------------
[_] Transition report under to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________________ to ____________________
Commission file number 000-26175
---------------------------
DISCOVERY INVESTMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 88-049151
- ------------------------------- ------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
23805 Stuart Ranch Road, Suite 220, Malibu, CA 90265
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(310) 456-8494
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
----------------------------- ----------------------------
----------------------------- ----------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
---------------------------------------------------------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]
State issuer's revenues for its most recent fiscal year: $3,680,003
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of a specified date within the past 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.) $10,500,000 as of April 7, 2000.
Note. If determining whether a person is an affiliate will involve
an unreasonable effort and expense, the issuer may calculate the aggregate
market value of the common equity held by non-affiliates on the basis of
reasonable assumptions, if the assumptions are stated.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Indicate by check mark whether the issuer has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 14,000,000 as of April 7,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 31, 1999).
No documents are incorporated by reference into this Annual Report on Form
10-KSB.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
2.1 Plan and Agreement of Reorganization dated December 10, 1999 by and
between the Company, LLO-Gas, and John Castellucci (1)
3.1 Articles of Incorporation (2)
3.2 Bylaws (2)
4.1 Form of Common Stock certificate (4)
10.1 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000 (1)
10.2 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000 (1)
10.3 3-Year 10 Percent Convertible Note, Number 3 payable to CRS Financial
Corp., Ltd, dated as of November 1, 1999 in the sum of $250,000 (1)
10.4 3-Year 10 Percent Convertible Note, Number 4 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.5 3-Year 10 Percent Convertible Note, Number 5 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.6 3-Year 10 Percent Convertible Note, Number 6 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
*10.7 Loan and Security Agreement, dated August 2, 1999, between West Star
Energy Group, LLO-Gas, a California corporation and LLO-Gas, and Capstone
Capital, LLC
*10.8 Promissory Note, dated August 2, 1999, between West Star Energy Group,
LLO-Gas, a California corporation and LLO-Gas, and Capstone Capital, LLC
10.9 Guarantee, dated August 2, 1999, from John D. Castellucci to Capstone
Capital, LLC (4)
*10.10 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
01860, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
Companion Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999,
between LLO-Gas and ARCO, and Right of First Refusal Agreement, dated
September 2, 1999, between LLO-Gas and ARCO
*10.11 Agreement For Sale of Business to Contract Dealer for ARCO facility 01860,
dated September 2, 1999, between LLO-Gas and ARCO
*10.12 am/pm Mini Market Agreement Part I for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company, together
with related am/pm Mini Market Agreement Part II for ARCO facility 82060
and Statement Regarding Finances & Investors, dated September 2, 1999
*10.13 Contract Dealer Gasoline Agreement for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.14 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82060,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.15 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82060,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.16 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82060, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.17 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
05212, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the Companion
Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999, between
LLO-Gas and ARCO, and Right of First Refusal Agreement, dated September 2,
1999, between LLO-Gas and ARCO
*10.18 Agreement For Sale of Business to Contract Dealer for ARCO facility 05212,
dated September 2, 1999, between LLO-Gas and ARCO
*10.19 Contract Dealer Gasoline Agreement for ARCO facility 82061, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.20 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82061,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
*10.21 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82061, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.22 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
05502, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the Companion
Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999, between
LLO-Gas and ARCO, and Right of First Refusal Agreement, dated September 2,
1999, between LLO-Gas and ARCO
*10.23 Agreement For Sale of Business to Contract Dealer for ARCO facility 05502,
dated September 2, 1999, between LLO-Gas and ARCO
*10.24 am/pm Mini Market Agreement Part I for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company, together
with related am/pm Mini Market Agreement Part II for ARCO facility 82062
and Statement Regarding Finances & Investors, dated September 2, 1999
*10.25 Contract Dealer Gasoline Agreement for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.26 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82062,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.27 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82062,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.28 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82062, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.29 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
05513, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the Companion
Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999, between
LLO-Gas and ARCO, and Right of First Refusal Agreement, dated September 2,
1999, between LLO-Gas and ARCO
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
*10.30 Agreement For Sale of Business to Contract Dealer for ARCO facility 05513,
dated September 2, 1999, between LLO-Gas and ARCO
*10.31 am/pm Mini Market Agreement Part I for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company, together
with related am/pm Mini Market Agreement Part II for ARCO facility 82063
and Statement Regarding Finances & Investors, dated September 2, 1999
*10.32 Contract Dealer Gasoline Agreement for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.33 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82063,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.34 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82063,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.35 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82063, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.36 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
05972, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the Companion
Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999, between
LLO-Gas and ARCO, and Right of First Refusal Agreement, dated September 2,
1999, between LLO-Gas and ARCO
*10.37 Agreement For Sale of Business to Contract Dealer for ARCO facility 05972,
dated September 2, 1999, between LLO-Gas and ARCO
*10.38 am/pm Mini Market Agreement Part I for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company, together
with related am/pm Mini Market Agreement Part II for ARCO facility 82060
and Statement Regarding Finances & Investors, dated September 2, 1999
*10.39 Contract Dealer Gasoline Agreement for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.40 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
82064, dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.41 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82064,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.42 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82064, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.43 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility
06202, dated September 2, 1999, between LLO-Gas and ARCO, together with
related Legal Description of the Real Estate, Location of the Companion
Real Estate, Declaration of Environmental Restriction and Other
Environmental Covenants and Conditions, dated September 2, 1999, between
LLO-Gas and ARCO, and Right of First Refusal Agreement, dated September 2,
1999, between LLO-Gas and ARCO
*10.44 Agreement For Sale of Business to Contract Dealer for ARCO facility 06202,
dated September 2, 1999, between LLO-Gas and ARCO
*10.45 am/pm Mini Market Agreement Part I for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company, together
with related am/pm Mini Market Agreement Part II for ARCO facility 82065
and Statement Regarding Finances & Investors, dated September 2, 1999
*10.46 Contract Dealer Gasoline Agreement for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.47 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82065,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.48 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82065,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.49 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82065, dated September 2, 1999,
between LLO-Gas and ARCO Products Company
*10.50 Intercreditor Agreement, dated October 25, 1999, between Capstone Capital,
LLC and Convenience Store Finance Company, LLC
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
*10.51 Loan and Security Agreement, dated October 26, 1999, made by LLO-Gas in
favor of Convenience Store Finance Company, LLC, together with related
Definitions Schedule, Information Schedule, Specified Market Schedule,
Schedule 2.3 Affiliates, Schedule 2.14 Filing Offices (U.C.C.-1
Recordings), Schedule 2.23 Subsidiaries, Schedule 2.26 Credit Card
Agreements, Schedule 2.31 Sale of Assets, Schedule 2.38 Listing of Local
Banks, Exhibit A Secured Promissory Note (Preliminary Statement), Exhibit
B Schedule of Notes and Properties (Preliminary Statement), Exhibit C
Current Filings, Exhibit D Principal Agreements, Exhibit E Compliance
Certificate, Exhibit F Local Bank Direction Letters and Exhibit H
Financing Statements (on Form UCC-1)
10.52 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $300,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.53 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $585,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.54 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $1,230,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.55 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $975,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.56 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $2,500,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.57 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $750,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.58 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $760,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
10.59 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $700,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
*10.60 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Phoenix, AZ location, dated October 26, 1999, with LLO-Gas as
Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
*10.61 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Mammoth Lakes, CA location, dated October 26, 1999, with
LLO-Gas as Trustor, Old Republic Title Company as Trustee and Convenience
Store Finance Company, LLC as Beneficiary
*10.62 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Bakersfield, CA location, dated October 26, 1999, with LLO-Gas
as Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
*10.63 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Bakersfield, CA location, dated October 26, 1999, with LLO-Gas
as Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
*10.64 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Los Angeles, CA location, dated October 26, 1999, with LLO-Gas
as Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
*10.65 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Fontana, CA (deed of trust) location, dated October 26, 1999,
with LLO-Gas as Trustor, Old Republic Title Company as Trustee and
Convenience Store Finance Company, LLC as Beneficiary
*10.66 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for No. Palm Springs, CA location, dated October 26, 1999, with
LLO-Gas as Trustor, Old Republic Title Company as Trustee and Convenience
Store Finance Company, LLC as Beneficiary
*10.67 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture
Filing, for Rosemead, CA location, dated October 26, 1999, with LLO-Gas as
Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
*10.68 Indemnity and Guaranty Agreement, dated as of October 26, 1999, between
John D. Castellucci and Convenience Store Finance Company, LLC
10.69 Note, for $300,000, dated October 28, 1999, between John Castellucci,
LLO-Gas and Time Out, LLC (4)
10.70 Note, for $300,000, dated October 28, 1999, between LLO-Gas and Time Out,
LLC (4)
10.71 Straight Note, for $200,000, dated November 23, 1999, between LLO-Gas and
Time Out, LLC (4)
10.72 Promissory Note, for $150,000, dated December 16, 1999, between LLO-Gas
and John D. Castellucci, on the one hand, and Mehdi Mostaedi, on the other
hand (4)
*10.73 Option Agreement, for 979 East Paige Avenue, Tulare, California 93274,
dated March 1, 2000, between Carl E. Lindros and John Castellucci, Manager
of LLO-Gas Truck Stop No. 1, LLC
10.74 Memorandum of Understanding, for the $398,310.86 LLO-Gas obligation to
ARCO, dated March 23, 2000, between LLO-Gas and ARCO (4)
10.75 Promissory Note, for $398,310.86, dated March 23, 2000, between LLO-Gas
and ARCO (4)
10.76 Loan Agreement and Promissory Note For Line of Credit, for $300,000, dated
March 23, 2000, between LLO-Gas and ARCO (4)
*10.77 Office Lease, Miramar Professional Park, for 23805 Stuart Ranch Road,
Suite 224, Malibu, California, commencing on October 1, 1999, between
Miramar Investment Co. and West Star Energy Group LLO-Gas, Inc., a
Delaware corporation
10.78 Employment Contract For Senior Executive, for James Mandich, dated
September 15, 1999, between LLO-Gas and James Mandich (4)
*10.79 Deed of Trust, dated November 22, 1999, made between LLO-Gas and Capstone
Capital, LLC
*10.80 Agreement for Corporate am/pm Non-Lessee Dealer, dated January 12, 2000
and January 19, 2000, between LLO-Gas and ARCO, together with related
Assignment and Assumption of Non-Lessee am/pm Agreement, (undated),
between Time Out, LLC and LLO-Gas
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
*10.81 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out, LLC
*10.82 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out, LLC
*10.83 Modification To Deed of Trust, recorded November 23, 1999, between LLO-Gas
and Time Out, LLC
*10.84 Deed of Trust, dated November 23, 1999, between LLO-Gas and Time Out, LLC
*10.85 Subordination Agreement (undated), between LLO-Gas and Time Out, LLC
10.86 Note, dated July 19, 1999, between LLO-Gas and John Castellucci and
Interlochen Enterprises, Inc., for $150,000 (4)
*10.87 Modification To Deed of Trust, October 29, 1999, between LLO-Gas and Time
Out, LLC
16.1 Letter dated April 10, 2000 from Barry F. Friedman addressed to the SEC
regarding a change in accountant and confirming the disclosure contained
in the Company's current Report on Form 8-K (3)
21.1 List of subsidiaries (4)
27. Financial Data Schedule (4)
99.1 Lock-up Agreement dated May 3, 1999 by Kimberly Lynn Jack (2)
99.2 Lock-up Agreement dated May 3, 1999 by Scott A. Jack (2)
99.3 Lock-up Agreement dated May 3, 1999 by Debra S. Hackney (2)
</TABLE>
___________________________
*Filed herewith
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on December 10, 1999.
(2) Filed as an exhibit to the Company's General Form for Registration of
Securities of Small Business Issuers on Form 10-SB, filed with the SEC on
May 24, 1999.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on April 11, 2000.
9
<PAGE>
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, filed
with the SEC on April 14, 2000.
10
<PAGE>
(b) Reports on Form 8-K
On December 13, 1999, the Company filed a Current Report on Form 8-K
with SEC, with respect to the issuance by the Company of the Convertible
Debentures and the execution of the Plan of Reorganization.
On January 4, 2000, the Company filed a Current Report on Form 8-K with
the SEC, with respect to the change in control of the Company as a result of the
Reorganization, the closing of the transactions contemplated by the Plan of
Reorganization and the issuance of the Convertible Debentures. At the time of
filing said Current Report, the Company disclosed that it was impractical to
provide the required financial statements for the acquisition of the acquired
assets. ARCO has informed the Company that audited financial information is not
available for the assets acquired from ARCO and it is contrary to ARCO corporate
policy to allow the Company to audit ARCO's books in connection with the assets
acquired from ARCO. Accordingly, the Company was not able to comply with the
financial statement disclosure requirements of Form 8-K and Regulation S-X.
On April 11, 2000, the Company filed a Current Report on Form 8-K with
the SEC, with respect to the retention of new independent auditors.
11
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DISCOVERY INVESTMENTS, INC.
Date: May 16, 2000 By: /s/ John D. Castellucci
-----------------------------------
John D. Castellucci, President
In accordance with the Exchange Act, this Report has been signed below by
the following persons on behalf of the Company and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ John D. Castellucci President (Principal Executive Officer), May 16, 2000
- ---------------------------- Chief Financial Officer, Secretary and
Director
</TABLE>
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<C> <S>
2.1 Plan and Agreement of Reorganization dated December 10, 1999 by and between
the Company, LLO-Gas, and John Castellucci (1)
3.1 Articles of Incorporation (2)
3.2 Bylaws (2)
4.1 Form of Common Stock certificate (4)
10.1 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000 (1)
10.2 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian Enterprises,
Inc. dated as of November 1, 1999 in the sum of $250,000 (1)
10.3 3-Year 10 Percent Convertible Note, Number 3 payable to CRS Financial Corp.,
Ltd, dated as of November 1, 1999 in the sum of $250,000 (1)
10.4 3-Year 10 Percent Convertible Note, Number 4 payable to CRS Financial Corp.,
Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.5 3-Year 10 Percent Convertible Note, Number 5 payable to CRS Financial Corp.,
Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.6 3-Year 10 Percent Convertible Note, Number 6 payable to CRS Financial Corp.,
Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
*10.7 Loan and Security Agreement, dated August 2, 1999, between West Star Energy
Group, LLO-Gas, a California corporation and LLO-Gas, and Capstone Capital, LLC
*10.8 Promissory Note, dated August 2, 1999, between West Star Energy Group,
LLO-Gas, a California corporation and LLO-Gas, and Capstone Capital, LLC
10.9 Guarantee, dated August 2, 1999, from John D. Castellucci to Capstone Capital,
LLC (4)
*10.10 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 01860,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
</TABLE>
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
*10.11 Agreement For Sale of Business to Contract Dealer for ARCO facility 01860,
dated September 2, 1999, between LLO-Gas and ARCO
*10.12 am/pm Mini Market Agreement Part I for ARCO facility 82060, dated September 2,
1999, between LLO-Gas and ARCO Products Company, together with related am/pm
Mini Market Agreement Part II for ARCO facility 82060 and Statement Regarding
Finances & Investors, dated September 2, 1999
*10.13 Contract Dealer Gasoline Agreement for ARCO facility 82060, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.14 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.15 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82060,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.16 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82060, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
*10.17 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 05212,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
*10.18 Agreement For Sale of Business to Contract Dealer for ARCO facility 05212,
dated September 2, 1999, between LLO-Gas and ARCO
*10.19 Contract Dealer Gasoline Agreement for ARCO facility 82061, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.20 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82061,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.21 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82061, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
</TABLE>
ii
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
*10.22 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 05502,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
*10.23 Agreement For Sale of Business to Contract Dealer for ARCO facility 05502,
dated September 2, 1999, between LLO-Gas and ARCO
*10.24 am/pm Mini Market Agreement Part I for ARCO facility 82062, dated September 2,
1999, between LLO-Gas and ARCO Products Company, together with related am/pm
Mini Market Agreement Part II for ARCO facility 82062 and Statement Regarding
Finances & Investors, dated September 2, 1999
*10.25 Contract Dealer Gasoline Agreement for ARCO facility 82062, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.26 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.27 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82062,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.28 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82062, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
*10.29 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 05513,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
*10.30 Agreement For Sale of Business to Contract Dealer for ARCO facility 05513,
dated September 2, 1999, between LLO-Gas and ARCO
*10.31 am/pm Mini Market Agreement Part I for ARCO facility 82063, dated September 2,
1999, between LLO-Gas and ARCO Products Company, together with related am/pm
Mini Market Agreement Part II for ARCO facility 82063 and Statement Regarding
Finances & Investors, dated September 2, 1999
</TABLE>
iii
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
*10.32 Contract Dealer Gasoline Agreement for ARCO facility 82063, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.33 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.34 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82063,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.35 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82063, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
*10.36 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 05972,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
*10.37 Agreement For Sale of Business to Contract Dealer for ARCO facility 05972,
dated September 2, 1999, between LLO-Gas and ARCO
*10.38 am/pm Mini Market Agreement Part I for ARCO facility 82064, dated September 2,
1999, between LLO-Gas and ARCO Products Company, together with related am/pm
Mini Market Agreement Part II for ARCO facility 82060 and Statement Regarding
Finances & Investors, dated September 2, 1999
*10.39 Contract Dealer Gasoline Agreement for ARCO facility 82064, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.40 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.41 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82064,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.42 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82064, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
</TABLE>
iv
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
*10.43 Agreement For Sale of Real Estate to Contract Dealer for ARCO facility 06202,
dated September 2, 1999, between LLO-Gas and ARCO, together with related Legal
Description of the Real Estate, Location of the Companion Real Estate,
Declaration of Environmental Restriction and Other Environmental Covenants and
Conditions, dated September 2, 1999, between LLO-Gas and ARCO, and Right of
First Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
*10.44 Agreement For Sale of Business to Contract Dealer for ARCO facility 06202,
dated September 2, 1999, between LLO-Gas and ARCO
*10.45 am/pm Mini Market Agreement Part I for ARCO facility 82065, dated September 2,
1999, between LLO-Gas and ARCO Products Company, together with related am/pm
Mini Market Agreement Part II for ARCO facility 82065 and Statement Regarding
Finances & Investors, dated September 2, 1999
*10.46 Contract Dealer Gasoline Agreement for ARCO facility 82065, dated September 2,
1999, between LLO-Gas and ARCO Products Company
*10.47 Amendment to Contract Dealer Gasoline Agreement for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
*10.48 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility 82065,
dated September 2, 1999, between LLO-Gas and ARCO Products Company
*10.49 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
Retailer) for ARCO facility 82065, dated September 2, 1999, between LLO-Gas
and ARCO Products Company
*10.50 Intercreditor Agreement, dated October 25, 1999, between Capstone Capital, LLC
and Convenience Store Finance Company, LLC
*10.51 Loan and Security Agreement, dated October 26, 1999, made by LLO-Gas in favor
of Convenience Store Finance Company, LLC, together with related Definitions
Schedule, Information Schedule, Specified Market Schedule, Schedule 2.3
Affiliates, Schedule 2.14 Filing Offices (U.C.C.-1 Recordings), Schedule 2.23
Subsidiaries, Schedule 2.26 Credit Card Agreements, Schedule 2.31 Sale of
Assets, Schedule 2.38 Listing of Local Banks, Exhibit A Secured Promissory
Note (Preliminary Statement), Exhibit B Schedule of Notes and Properties
(Preliminary Statement), Exhibit C Current Filings, Exhibit D Principal
Agreements, Exhibit E Compliance Certificate, Exhibit F Local Bank Direction
Letters and Exhibit H Financing Statements (on Form UCC-1)
</TABLE>
v
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
10.52 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $300,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
10.53 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $585,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
10.54 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $1,230,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.55 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $975,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
10.56 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $2,500,000, dated October 26, 1999,
between LLO-Gas and Convenience Store Finance Company, LLC (4)
10.57 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $750,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
10.58 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $760,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
10.59 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program, Secured
Promissory Note, CSFC Loan #250, for $700,000, dated October 26, 1999, between
LLO-Gas and Convenience Store Finance Company, LLC (4)
*10.60 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Phoenix, AZ location, dated October 26, 1999, with LLO-Gas as Trustor, Old
Republic Title Company as Trustee and Convenience Store Finance Company, LLC
as Beneficiary
*10.61 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Mammoth Lakes, CA location, dated October 26, 1999, with LLO-Gas as
Trustor, Old Republic Title Company as Trustee and Convenience Store Finance
Company, LLC as Beneficiary
*10.62 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Bakersfield, CA location, dated October 26, 1999, with LLO-Gas as Trustor,
Old Republic Title Company as Trustee and Convenience Store Finance Company,
LLC as Beneficiary
</TABLE>
vi
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
*10.63 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Bakersfield, CA location, dated October 26, 1999, with LLO-Gas as Trustor,
Old Republic Title Company as Trustee and Convenience Store Finance Company,
LLC as Beneficiary
*10.64 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Los Angeles, CA location, dated October 26, 1999, with LLO-Gas as Trustor,
Old Republic Title Company as Trustee and Convenience Store Finance Company,
LLC as Beneficiary
*10.65 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Fontana, CA (deed of trust) location, dated October 26, 1999, with LLO-Gas
as Trustor, Old Republic Title Company as Trustee and Convenience Store
Finance Company, LLC as Beneficiary
*10.66 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for No. Palm Springs, CA location, dated October 26, 1999, with LLO-Gas as
Trustor, Old Republic Title Company as Trustee and Convenience Store Finance
Company, LLC as Beneficiary
*10.67 Deed of Trust and Absolute Assignment of Rents and Leases and Fixture Filing,
for Rosemead, CA location, dated October 26, 1999, with LLO-Gas as Trustor,
Old Republic Title Company as Trustee and Convenience Store Finance Company,
LLC as Beneficiary
*10.68 Indemnity and Guaranty Agreement, dated as of October 26, 1999, between John
D. Castellucci and Convenience Store Finance Company, LLC
10.69 Note, for $300,000, dated October 28, 1999, between John Castellucci, LLO-Gas
and Time Out, LLC (4)
10.70 Note, for $300,000, dated October 28, 1999, between LLO-Gas and Time Out, LLC
(4)
10.71 Straight Note, for $200,000, dated November 23, 1999, between LLO-Gas and Time
Out, LLC (4)
10.72 Promissory Note, for $150,000, dated December 16, 1999, between LLO-Gas and
John D. Castellucci, on the one hand, and Mehdi Mostaedi, on the other hand (4)
*10.73 Option Agreement, for 979 East Paige Avenue, Tulare, California 93274, dated
March 1, 2000, between Carl E. Lindros and John Castellucci, Manager of
LLO-Gas Truck Stop No. 1, LLC
</TABLE>
vii
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
10.74 Memorandum of Understanding, for the $398,310.86 LLO-Gas obligation to ARCO,
dated March 23, 2000, between LLO-Gas and ARCO (4)
10.75 Promissory Note, for $398,310.86, dated March 23, 2000, between LLO-Gas and
ARCO (4)
10.76 Loan Agreement and Promissory Note For Line of Credit, for $300,000, dated
March 23, 2000, between LLO-Gas and ARCO (4)
*10.77 Office Lease, Miramar Professional Park, for 23805 Stuart Ranch Road, Suite
224, Malibu, California, commencing on October 1, 1999, between Miramar
Investment Co. and West Star Energy Group LLO-Gas, Inc., a Delaware corporation
10.78 Employment Contract For Senior Executive, for James Mandich, dated September
15, 1999, between LLO-Gas and James Mandich (4)
*10.79 Deed of Trust, dated November 22, 1999, made between LLO-Gas and Capstone
Capital, LLC
*10.80 Agreement for Corporate am/pm Non-Lessee Dealer, dated January 12, 2000 and
January 19, 2000, between LLO-Gas and ARCO, together with related Assignment
and Assumption of Non-Lessee am/pm Agreement, (undated), between Time Out, LLC
and LLO-Gas
*10.81 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out, LLC
*10.82 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out, LLC
*10.83 Modification To Deed of Trust, recorded November 23, 1999, between LLO-Gas and
Time Out, LLC
*10.84 Deed of Trust, dated November 23, 1999, between LLO-Gas and Time Out, LLC
*10.85 Subordination Agreement (undated), between LLO-Gas and Time Out, LLC
10.86 Note, dated July 19, 1999, between LLO-Gas and John Castellucci and
Interlochen Enterprises, Inc., for $150,000 (4)
*10.87 Modification To Deed of Trust, October 29, 1999, between LLO-Gas and Time Out,
LLC
16.1 Letter dated April 10, 2000 from Barry F. Friedman addressed to the SEC
regarding a change in accountant and confirming the disclosure contained in
the Company's current Report on Form 8-K (3)
</TABLE>
viii
<PAGE>
<TABLE>
Exhibit No. Description
- ---------- -----------
<S> <C>
21.1 List of subsidiaries (4)
27. Financial Data Schedule (4)
99.1 Lock-up Agreement dated May 3, 1999 by Kimberly Lynn Jack (2)
99.2 Lock-up Agreement dated May 3, 1999 by Scott A. Jack (2)
99.3 Lock-up Agreement dated May 3, 1999 by Debra S. Hackney (2)
</TABLE>
___________________________
*Filed herewith
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on December 10, 1999.
(2) Filed as an exhibit to the Company's General Form for Registration of
Securities of Small Business Issuers on Form 10-SB, filed with the SEC on
May 24, 1999.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on April 11, 2000.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, filed
with the SEC on April 14, 2000.
ix
<PAGE>
EXHIBIT 10.7
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of August 2,1999, West Star Energy Group
formerly known as Mid-States Fuels, Inc., a California corporation having an
office at Atwater, 695 Atwater Blvd., Atwater, CA 95301 and LLO-Gas, Inc. a
California corporation, having an office at Laws Bulk Plant, 108 Dehy - Law,
Bishop, CA 93514 and 23805 Stuart Ranch Road, Suite 265, Malibu, CA 90265 and
LLO-Gas, Inc., a Delaware Corporation having an office at 1013 Centre Road,
Wilmington, DE 19805, (the "Borrower"), for the benefit of Capstone Capital,
-----------
LLC, a Delaware limited liability company (the "Lender"), having an office at
---------
515 Madison Avenue New York New York 10022.
WITNESSETH:
-----------
WHEREAS, on the date hereof, the Lender is establishing a revolving
credit facility in favor of the Borrower in the principal amount of up to
$900,000 (the "Loan"), pursuant to a Promissory Note, dated of even date
-------
herewith, made by the Borrower in favor of the Lender in the original principal
amount of $900,000 (as the same may be supplemented, amended, modified or
restated from time to time in accordance with the terms thereof, the "Note"),
--------
and
WHEREAS, on the date hereof, the Lender and the Borrower have entered
into a Supply Agreement (the "Supply Agreement") pursuant to which, among other
-------------------
things, Lender shall provide a letter of credit facility to Borrower of up to
$900,000; and
WHEREAS, in order to provide additional security for the payment and
performance of all of its obligations to the Lender under the Note and the
Supply Agreement, the Borrower has agreed to grant to the Lender a continuing
lien and security interest in and to certain of the Borrower's accounts and
contract rights and to execute this and such other security agreements and
instruments as are necessary to grant such lien and security, interest;
NOW, THEREFORE, in consideration of the premises contained herein and
in the Note, and as further inducement to the Lender to make the Loan, and for
other good and valuable consideration the sufficiency of which is hereby
acknowledged, the Borrower agrees with the Lender as follows:
Section 1. GRANT OF SECURITY INTEREST.
(a) The Borrower hereby pledges, assigns and grants to the Lender a
continuing security interest in and lien on the properties, assets and rights
described on Exhibit 'A' hereto, whether now or hereafter owned by the Borrower
-----------
(collectively, the "Collateral"), which security
-------------
1 of 16
<PAGE>
interest shall, be primary and subordinate only to Pre-Bank Business Credit,
Inc. pursuant to a certain intercreditor agreement executed between the parties
(the "Intercreditor Agreement").
-----------------------
(b) The Borrower hereby pledges assigns and grants to the Lender a
continuing priority security interest in and a lien on any asset, property or
right of Borrower, which Lender has an interest in by virtue of the Supply
Agreement, including, but not limited to, all Supplier Orders and Client Orders
(as those terms are defined in the Supply Agreement) and all accounts, inventory
and proceeds related to the Supplier Orders and the Client Orders.
Section 2. OBLIGATIONS SECURED.
The Collateral hereunder constitutes and will constitute continuing
security for the strict performance and observance by the Borrower of the
following obligations (the "Obligations"):
-------------
(a) The prompt payment, when due, of all present and future
obligations and indebtedness of the Borrower to the Lender under the Supply
Agreement.
(b) The strict performance and observance by the Borrower of
all warranties covenants and agreements contained in the Supply Agreement.
(c) The prompt payment, when due, of all present and future
obligations and indebtedness of the Borrower to the Lender under the Note and
this Agreement; and
(d) The strict performance and observance by the Borrower of all
warranties covenants and agreements contained in the Note and this Agreement.
As among the foregoing, the obligations with respect to the Supply
Agreement, set forth in clauses (a) and (b) above, are and will be senior to and
be secured on a senior basis in relation to the obligations with respect to the
Note.
Section 3. BORROWER REMAINS LIABLE.
Anything herein to the contrary notwithstanding, in the absence of the
Lender's express prior written consent thereto, (a) the Borrower shall remain
liable under any and all contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by the Lender of any of the rights hereunder shall not release the
Borrower from any of its duties or obligations under any contracts and
agreements included in the Collateral, and (c) the Lender shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Lender be obligated to
perform any of the obligations or duties of the Borrower under any such contract
or agreement or to take any action to collect or enforce any claim for payment
assigned hereunder.
2 of 16
<PAGE>
Section 4. GUARANTEES AND WARRANTIES.
The Borrower represents and warrants to the Lender that:
4.1. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, is
duly qualified and in good standing under the laws of each jurisdiction where
the character of its properties or the transaction of its business makes such
qualification necessary, and has full power to own or hold under lease its
properties and assets and to conduct its business as now being conducted.
4.2.(a) The Borrower has full power and authority to execute,
deliver and perform, this Agreement and the Note, which has been duly authorized
by all necessary and proper corporate action. No consent of stockholders or
members or of any public authority is required as a condition to the validity of
this Agreement, the Note, or the Supply Agreement. The making and performance by
the Borrower of this Agreement and the Note will not violate any provision of
law and will not conflict with or result in the breach of any order, writ,
injunction or decree of any court or government instrumentality, or its
certificate of formation or operating agreement or create a default under any
agreement, note or indenture to which it is a party or by which it is bound or
to which any of its property is subject, or result in the imposition of any
lien, charge, security interest or encumbrance of any nature whatsoever upon any
of its properties or assets, except for the liens created under this Agreement.
(b) Each of this Agreement, the Note and the Supply Agreement has
been duly executed and delivered, and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.
4.3. The Borrower has good title to and is the lawful owner of the
Collateral free from all claims, liens, encumbrances, charges or security
interests whatsoever. The Collateral will at all times be kept at the location
set forth on Exhibit "A" hereto.
4.4. The provisions of this Agreement create a valid and perfected
first priority security interest in the Collateral, enforceable in accordance
with their respective terms.
4.5. There are no judgments outstanding against the Borrower and
there are no actions or proceedings before any court or administrative agency
pending or, to the knowledge of the Borrower, threatened against the Borrower
which, if determined adversely to the Borrower, would affect the Collateral
other than those disclosed in the Supply Agreement.
4.6. The Borrower's principal office and place of business where
it maintains its records concerning the Collateral is at its address stated
above. The Borrower has no other office or place of business except as indicated
on Exhibit "A" hereto.
3 of 16
<PAGE>
4.7. All the Collateram (I) is owned solely by Borrower free and
clear of all claims, liens, security interests and encumbrances (including
without limitation any vlaims of infringement) except those in Lender's favor
and (ii) is not subject to any agreement prohibiting the granting of a security
interest or requiring notice of or consent to the granting of a security
interest; Any limitations or incurrence of additional indebtedness, payment of
dividends, etc.
Section 5. COVENANTS.
The Borrower covenants and agrees that from the date of this Agreement
until Satisfaction in full of all of the Obligations the irrevocable termination
of this Agreement.
5.1. Upon the Lender's request, the Borrower shall keep and
maintain the Collateral insured against loss or damage by such risks as are
customarily insured against by similar businesses for the full insurable value
thereof with such companies and by policies in such forms and terms as shall be
satisfactory to the Lender. Such standard policies shall by their terms be
payable to the Lender as its interests may appear, shall name the Lender as an
"additional insured" and "Lender", and shall provide that the Lender shall be
given at least thirty (30) days prior written notice of any amendment,
modification or cancellation thereof and that the Lender shall have the option,
but not the obligation, to pay the premiums to continue such insurance in effect
or obtain like coverage. The originals or certificates of all such policies
shall be delivered to the Lender. The Borrower agrees that any payment made by
the Lender pursuant to the foregoing authorization, shall bear interest thereon
at the Default Rate (as defined in the Note) from the date of such payment and
shall become part of the Obligations and be shall secured by the Collateral
pursuant to the terms of this Agreement. The Borrower hereby appoints the Lender
as its attorney-in-fact to make, adjust or settle any claim under any insurance
policy insuring the Collateral.
5.2. The Borrower shall give the Lender full and free access to
the Collateral and to all books, correspondence and records of the Borrower with
respect thereto, permit the Lender and its representatives to examine the same
and to make extracts therefrom all at the Borrower's expense.
5.3. The Borrower shall promptly pay and discharge or cause to be
paid and discharged all its obligations and liabilities including (without
limitation) all taxes, assessments and governmental charges upon it or its
income or properties, when due unless and to the extent that only that the same
shall be contested in good faith and by appropriate proceedings and then only to
the extent that a bond is filed in cases where the filing of a bond is necessary
to avoid the creation of a lien against any of its property .
5.4. The Borrower shall do, or cause to be done, all things
necessary to preserve and keep in full force and effect its limited liability
company existence and all franchises, rights and privileges necessary for the
proper conduct of its business, and continue to engage in the business of the
same type as now conducted by it.
4 of 16
<PAGE>
5.5. The Borrower shall not grant, permit or suffer to exist any
lien, claim, security interest or encumbrance on the Collateral, except those in
favor of the Lender.
5.6. The Borrower shall notify the Lender in writing within three
(3) business day after the occurrence thereof, of the occurrence of any event
which constitutes, or which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined).
5.7. The Borrower shall deliver to the Lender promptly upon
request therefore such financial data, reports or information with respect to
Borrower or the Collateral as the Lender may reasonable request from time to
time.
5.8. The Borrower shall execute and deliver such further or
additional instruments and assurances, and take all such additional action as
the Lender may require for the purpose of carrying out the provisions of this
Agreement, the Note and the Supply Agreement, including for the purpose of the
Lender maintain its first priority perfected lien in the collateral.
5.9. The Borrower shall not sell, assign or otherwise dispose of
the Collateral except the Borrower may sell, assign or otherwise dispose of the
------
Collateral only if the gross proceeds of such sale, assignment or other
disposition are immediately paid to the Lender to be applied to the outstanding
obligations under the Note pursuant to Section A.5 thereof.
5.10. The Borrower shall not change its principal office or the
place where it maintains its records pertaining to the Collateral as specified
in Section 4.6 hereof without giving the Lender at least thirty (30) days nor
written notice thereof.
5.11. The Borrower shall defend the Collateral against claims and
demands of all parties.
5.12. Subject to Section 5.10 hereof the Borrower shall not remove
or permit the removal of the Collateral from its present location as set forth
on Exhibit 'A" hereto without the prior written consent of the Lender.
5.13. The Borrower hereby irrevocably and unconditionally sells,
transfers and assigns all of the Borrower's right, title and interest in and to
the Accounts to the Lender.
5.14. The Borrower shall place notations upon its books of account
and any financial statement prepared by Borrower to disclose Lender's security
interest in the collateral.
Section 6. OPTION TO PERFORM OBLIGATION OF THE BORROWER IN RESPECT COLLATERAL.
If the Borrower fails or refuses to make any payment, performance any
covenant or obligation, or take any other action which the Borrower is obligated
hereunder to perform,
5 of 16
<PAGE>
observe, take or do, then the Lender may, at its option, without notice or
demand upon the Borrower and without releasing the Borrower from any obligation
or covenant hereof, perform, observe, take or do the same in such manner and to
such extent as the Lender may deem necessary to protect any of the Collateral
and its rights hereunder including without limitation, obtaining insurance and
the payment of any taxes and the payment of any sums necessary to discharge
liens or security interests at any time levied or placed on the Collateral. The
Borrower agrees that any payment or expense incurred by the Lender pursuant to
the foregoing authorization, shall bear interest at the Default Rate from the
date of the incurrence of such expense and shall become part of the Obligations
and shall be secured by the Collateral pursuant to the terms of this Agreement.
Section 7. EVENTS OF DEFAULT.
If one or more of the events listed below (any such event, an 'Event
------
of Default" shall occur, the entire unpaid balance of all Obligations owing to
- -----------
the Lender by the Borrower shall immediately become due and payable at the
election of the Lender without notice or demand and without presentment, protest
or notice of protest, or notice of non-payment, all of which are hereby waived:
7.1. The Borrower shall fail to make any payment of principal or
interest on the Note (including, without limitation, any mandatory prepayment of
principal) or any other amount when due (or, if applicable, when demanded by the
Lender) thereunder or under this Agreement;
7.2. The Borrower shall default in the performance or observance
of any covenant agreement contained in the Note or in this Agreement, excluding
the Event of Default as described in Paragraph 7.1, above and any breach of
Sections 5.1, 5.2, 5.3, 5.5, 5.9, 5.10, and 5.11, and not cure said default
within 30 days from occurrence;
7.3. An uncured event of default or uncured default shall occur
and be continuing under any other agreement, document or instrument executed and
delivered to the Lender by the Borrower or any guarantor or hypothecator
relating to any Liabilities (as defined in the Note), including, without
limitation) this Agreement or Supply Agreement;
7.4. Any material representation or warranty made by or on behalf
of the Borrower in the Note or in this Agreement or in any other certificate,
agreement, instrument or statement delivered to the Lender by or on behalf of
the Borrower shall at any time prove to have been incorrect when made in any
material respect;
7.5. The Borrower or any Affiliate (as defined in the Supply
Agreement) shall materially default in the payment of principal of or interest
on any indebtedness for borrowed money (including any such indebtedness in the
nature of a lease) or shall default in the performance or observance of the
terms of any instrument pursuant to which such indebtedness is
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<PAGE>
outstanding, the result of which is to cause the same to become due prior to its
stated maturity (and whether or not such default is waived by the holder
thereof);
7.6. Any material change in the condition or affairs (financial or
otherwise) of the Borrower, any Affiliate or any guarantor of any of the
obligations shall occur which, in the opinion of the Lender, increases its risk
with respect to the loan evidenced by the Note or impair any security therefor;
7.7. There shall be a defect in the Borrower's title to any of the
Collateral and such defect in title shall not have been cured or removed within
ten (10) days after the Borrower's receipt of notice thereof;
7.8. The Borrower, any Affiliate or any guarantor of any of the
Obligations, shall become insolvent, make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated insolvent or bankrupt,
admit in writing its inability to pay its debts when they mature, petition or
apply for, consent to, or acquiesce in the appointment of, a trustee or receiver
for the Borrower or for a substantial part of its property; or any other
bankruptcy, reorganization, debt arrangement or other proceeding under any
bankruptcy, insolvency law, or any dissolution or liquidation proceeding shall
be instituted by or against the Borrower, and if instituted against it, shall be
consented to or acquiesced in by the Borrower or shall not be dismissed or, if
contested, stayed within a period of thirty (30) days; or any judgment, writ of
attachment or execution or any similar process shall be issued or levied against
a substantial part of the property of the Borrower and shall not be released,
stayed, bonded or vacated within a period of thirty (30) days after its issue or
levy;
7.9. The Borrower shall, at any time without the prior written
consent of the Lender, enter into an agreement to change the location of the
Collateral or permit any change in such location of the Collateral from that
specified in Section 5.1 hereof except as permitted by Section 5.11; and/or
7.10. The lien created hereunder shall, for any reason other than
by or through the conduct of the Lender, cease to be a valid first priority
perfected security interest.
7.11 A default or an event of default shall occur and be
continuing under any agreement, document or instrument executed and delivered to
the Lender by the Borrower, any, guarantor, or any Affiliate relating to any
Liabilities (as defined in the Note).
7.12. A Change in Control (as hereinafter defined) of the Borrower
or any affiliate (including, without limitation, West, shall occur, or a change
in any executive officer of the Borrower not approved in advance by Capstone.
For the purposes of this Agreement, "Change in Control" shall mean (i) a "change
------------------
in control' as such term is used in Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended at the date
hereof ("Act"), (ii) a change in control as the term "control" is defined in
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Rule 12b-2 promulgated under the Act, (iii) when any "person' (as such term is
defined in Sections 3 (a)(9) and 13(d)(3) of the Act) becomes a beneficial
owner, directly or indirectly, of securities of the Borrower representing (30%)
percent or more of the Borrower's or any Affiliate's then outstanding securities
having the right to vote on the election of directors, (iv) when individuals who
are members of the Borrower's or any Affiliate's Board of Directors at any one
time shall immediately thereafter cease to constitute a majority of the Board of
Directors or (v) when a majority of the directors elected at any annual or
special meeting of stockholders are not individuals nominated by the Borrower's
or any Affiliate's incumbent Board of Directors;
Section 8. REMEDIES.
In case any Event of Default shall have occurred and be continuing,
the Lender shall, have, in addition to all other rights and remedies given it by
this Agreement or the Note, those allowed by law and the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any jurisdiction
in which any of the Collateral may be located and without limiting the
generality of the foregoing, the Lender may immediately, without demand of
performance and without notice of intention to sell or of time or place of sale
or redemption or other notice or demand whatsoever to the Borrower, all of which
are hereby expressly waived, and without advertisement, enter onto the premises
where the Collateral is located and take possession thereof without liability
for any lawsuit or action, and sell, lease or otherwise dispose of all or any
part of the Collateral or any interest which the Borrower may have therein,
either at pubic or private sale or otherwise, and after deducting from the
proceeds of sale or other disposition of the Collateral all expenses (including
all reasonable fees and expenses of counsel) as provided in Section 14 hereof,
shall apply the residue of such proceeds toward the payment of the Obligations.
If notice of any sale or other disposition is required by law to be given the
Borrower hereby agrees that a notice sent at least ten (10) days before the time
of any intended public sale or before the time after which any private sale or
other disposition of the Collateral is to be made shall be reasonable notice of
such sale or other disposition. The Borrower agrees to assemble the Collateral,
or cause it to be assembled, at such place or places as the Lender may designate
by written notice. At any such sale or other disposition, the Lender may
purchase the whole or any part of the Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby waived and
released. Without limiting the generality of the rights and remedies conferred
upon the Lender under this Section 8, the Lender may: (a) enter upon the
premises of the Borrower and take immediate possession of the Collateral, either
personally or by means of a receiver appointed by a court therefor, using all
necessary force to do so; (b) at the Lender's option, use, operate, manage and
control the Collateral in any lawful manner; (c) collect and receive all rents,
income, revenue, earnings, issue and profits therefrom; and (d) maintain,
repair, renovate, alter or remove the Collateral as the Lender may determine in
its discretion and any monies so collected or received by the Lender shall be
applied to, or may be accumulated for application upon the Obligations and the
Borrower shall be liable for any deficiency.
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<PAGE>
Section 9. POWER OF ATTORNEY.
The Borrower authorizes the Lender and does hereby make, constitute
and appoint the Lender and any officer, employee or agent of the Lender with
full power of substitution as the Borrower's true and lawful attorney-in-fact
with power, in its own name or in the name of the Borrower, to endorse any
notes, checks, drafts. money orders, or other instruments of payment (including
payments under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Lender; to sign and endorse any
documents relating to the Collateral and to verify Borrower's accounts
receivable and upon the occurrence of an Event of Default; to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or
placed on or threatened against the Collateral; to grant, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; and,
generally, to do at the Lender's option and at the Borrower's expense, at any
time, or from time to time, all acts and things which the Lender deems necessary
to protect, preserve and realize upon the Collateral and the Lender's security
interests therein in order to effect the intent of this Agreement, as fully and
effectual as the Borrower might or could do; and the Borrower hereby ratifies
all that said attorney shall do or cause to be done by virtue hereof. THIS
POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE FOR AS
LONG AS ANY OF THE OBLIGATIONS SHALL BE OUTSTANDING. The Borrower agrees that
any fees, costs and expense incurred by the Lender pursuant to the foregoing
authorization, and interest thereon at the rate prescribed in the Note from the
date of incurring any such fees, costs and expense, shall become part of the
Obligations and be secured by the Collateral.
Section 10. JURISDICTION; WAIVER OF JURY TRIAL AND SETOFF, ETC.
The Borrower hereby irrevocably consents to the jurisdiction and venue
of any, New York State or Federal court located in New York County, New York
over any action or proceeding arising out of any dispute between the Borrower
and the Lender under the Note or this Agreement or otherwise and the Borrower
further irrevocably consents to the service of process in any such action or
proceeding by the mailing of a copy of such process to the Borrower at the
address set forth in the first paragraph of this Agreement. "EACH OF THE
BORROWER AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED BY THE NOTE AND THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER"
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<PAGE>
Section 11. NOTICES.
All notices, requests, demands and other communications to or upon the
respective parties hereto shall be deemed to have been given or made when
deposited in the mails and sent by registered or certified mail, postage
prepaid, return receipt requested, or when delivered personally, to the parties
at their addresses hereinafter provided, or to such other addresses as may
hereafter be designated in writing by the respective parties hereto.
Section 12. NO WAIVER.
No failure on the part of the Lender to exercise, and no delay in
exercising any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lender of any right,
remedy or power hereunder preclude any other or future exercise of any other
right, remedy or power. Each and every right, remedy or power hereby granted to
the Lender or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by the Lender from time to time.
Section 13. FINANCING STATEMENTS; FURTHER ASSURANCES; FILING
At the Closing, the Borrower shall deliver UCC-1 financing statements
in form and substance satisfactory to the Lender and with the Lender's security
interest duly noted thereon with respect to the Collateral for filing at the
appropriate offices. Thereafter, within three (3) business days after the
Lender's written request therefor, the Borrower shall cause such additional
Uniform Commercial Code financing statements with respect to the Collateral or
any modifications, assignments, or amendments to any such financing statements
(all in form and substance satisfactory to the Lender) to be delivered to the
Lender for filing at the appropriate offices. The Borrower from time to time,
at its sole expense, will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or the Lender may request, and hereby authorizes the Lender to take all action
(including the filing of any financing statements, continuation statements,
assignments or amendments thereto with respect to the Collateral without the
signature of the Borrower where permitted by law) as the Lender may deem
necessary, proper or desirable in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Lender to
exercise and enforce its rights and remedy hereunder with respect to any
Collateral. A carbon, photographic or other reproduction of the Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
Section 14. INDEMNITY AND EXPENSES.
14.1. The Borrower here by indemnifies the Lender from and against
any and all actions, claims, losses, fees, expenses and liabilities growing out
of or resulting from this Agreement and/or the Note (including, without
limitation, enforcement of this Agreement and/or the Note, except claims, losses
or liabilities resulting from the Lender's willful misconduct.
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<PAGE>
14.2. The Borrower will upon demand pay to the Lender the amount
of any and all expenses, including the fees and disbursements of its counsel and
of any experts and agents, which the Lender may incur in connection with (a) the
administration of this Agreement, (b) the custody, preservation, verification,
use or operation of, or the sale of, collection from, or other realization upon-
any of the Collateral, (c) the exercise, enforcement or protection of any of the
rights of the Lender hereunder, (d) preparation, execution, and delivery of any
waiver, any amendment thereto or consent proposed or executed in connection with
the transactions contemplated by this Agreement, the Note and the Supply
Agreement (e) the failure by the Borrower to perform or observe any of the
provisions hereof. The foregoing expenses shall become part of the Obligations
(and the definition of the term Obligations shall include such fees,
disbursements and other expenses) and shall be secured by the Collateral as set
forth in this Agreement and the Lender may at any time apply to the payment of
all such costs and expenses all proceeds arising from the possession or
disposition of all or an portion of the Collateral.
Section 15. MODIFICATIONS, ETC.
Neither this Agreement nor any provision hereof may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of such change, waiver, discharge
or termination is sought.
Section 16. TERMINATION
Upon the payment in full of all Obligations and the irrevocable
termination of this Agreement, the Note and the Supply Agreement, the Lender
shall execute and deliver to the Borrower all such documents and instruments as
shall be necessary to evidence termination of this Agreement and the security
interests created hereunder; provided, however, the obligations of the Borrower
-----------------
under Section 14 hereof shall survive any termination under this Section 16.
Section 17. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR
CHOICE OF LAW.
Section 18. ASSIGNMENT, ETC.
The Borrower shall not assign, pledge, or otherwise transfer or
encumber any of its rights or obligations under this Agreement or in the
------
Collateral or any part thereof except as expressly permitted by Section 5.9
hereof. Any such purported assignment, pledge, transfer or other action without
the Lender's written consent shall be void. The Lender may, without notice,
transfer or assign this Agreement or any interest herein and may encumber or
transfer any of its rights or interest in and to the Collateral or any part
thereof and any such assignee or transferee of any of the Lender's rights under
this Agreement or with respect to the Collateral shall have the
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<PAGE>
right to transfer or assign its interest as aforesaid. Each such assignee or
transferee shall have all of the rights but none of the obligations of the
Lender under this Agreement and the Borrower shall not assert against any of
them any defense, counterclaim or setoff that the Borrower may have against the
Lender. This Agreement shall be binding upon each of the Borrower and its
successors and shall inure to the benefit of the Lender and its successors and
assigns.
Section 19. PARTIAL INVALIDITY.
If any provision of this Agreement is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the
particular provision or provisions held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced to such
extent as shall be entitled by law.
Section 20. SETOFF.
The Borrower hereby waives the right to interpose any and all defenses, setoffs,
counterclaims, crossclaims or abatements with respect to, in connection with, or
arising out of this Agreement or the Note; provided, however, that nothing in
-----------------
this Section 20 shall prevent Borrower from asserting, in a separate and
independent proceeding, any claim it may have against the Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives on the date first above
written.
/s/ [illegible] /s/ John Castellucci
- ----------------------------------- ---------------------------------------
Witness John D. Castellucci, President
West Star Energy Group
/s/ [illegible] /s/ John Castellucci
- ----------------------------------- ---------------------------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a Delaware corporation
/s/ [illegible] /s/ John Castellucci
- ----------------------------------- ---------------------------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a California corporation
/s/ [illegible] /s/ John Castellucci
- ----------------------------------- ---------------------------------------
Witness John D. Castellucci, Individually
as Guarantor
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<PAGE>
ACCEPTED AND AGREED
Capstone Capital, LLC
By: /s/ Joseph F. Ingrassia
------------------------------------------
Joseph F. Ingrassia
Member
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<PAGE>
Address For Notices:
West Star Energy
Atwater
695 Atwater Blvd.
Atwater, CA 95301
LLO-Gas, Inc.
Laws Bulk Plant
108 Dehy -Laws
Bishop, CA 93514
LLO-Gas, Inc.
23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
LLO-Gas, Inc.
1013 Centre Road
Wilmington, DE 19805
John D. Castellucci
5740 Kanan Dume
Malibu, CA 90265
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<PAGE>
Exhibit-A
to
Security Agreement
1. Description of Collateral:
(a) All inventory and goods, including without limitation, all inventory and
goods held for sale or lease or to be furnished under contracts of service, raw
materials, work in process, finished goods, goods in transit, advertising,
packaging and shipping materials, and all designs, creations, patterns, styles,
samples and all other material and supplies (collectively, the "Inventory');
(b) All documents, including without limitation, documents of transport,
payment and title relating to any of the foregoing and all such other documents
as are made available to Borrower for the purpose of ultimate sale or exchange
of goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange;
(c) All rights, claims, rights of offset, rights of return, actions and causes
of action against any person, including without limitation, those arising out of
the purchase by Borrower of any of its Inventory including, without limitation,
the Supplier Orders, and all rights of stoppage in transit, replevin,
reclamation and rights of any unpaid vendor or as a lienor;
(d) All equipment, machinery, fixtures, trade fixtures, vehicles, furnishings,
furniture supplies, materials, tools, machine tools, office equipment,
appliances, apparatus, dies, jigs, and chattels; trucks, trailers, loaders and
other vehicles and all replacements and substitutions therefore and all
accessories thereto;
(e) All of Borrower's now owned or hereafter acquired general intangibles
including, without limitation, trademarks, tradenames, tradestyles, trade
secrets, equipment formulation, manufacturing procedures, quality control
procedures, product specifications, patents, patent applications, copyrights,
registrations, contract rights, choses in action, causes of action, corporate or
other business records, inventions, designs, goodwill, claims under guarantees,
licenses, franchises, tax refunds, tax refund claims, computer programs,
computer data bases, computer program flow diagrams, source codes, object codes
and all other intangible property of every kind and nature;
(f) All of Borrower's now owned or hereafter acquired accounts and contract
rights, instruments, insurance proceeds, documents, chattel paper, letters of
credit and Borrower's rights to receive payment thereunder, any and all rights
to the payment or receipt of money or other forms of consideration of any kind
at any time now or hereafter owing or to be owing to Borrower (Receivables"),
all proceeds thereof and all files in which Borrower has any interest whatsoever
containing information identifying or pertaining to any of Borrower's
Receivables,
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together with all of Borrower's rights to any merchandise which is represented
thereby, and all Borrower's right, title, security and guarantees with respect
to each Receivable, including, without limitation, all rights of stoppage in
transit, replevin and reclamation and all rights as an unpaid vendor;
(g) All of Borrower's now owned and hereafter acquired investment property,
including without limitation, sercurities (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
accounts, and commodities contracts;
(h) All guarantees, liens on real or personal property, leases, and other
agreements and property which in any way secure or relate to the foregoing, or
are acquired for the purpose of securing and enforcing any item thereof;
(i) (1) all cash held as collateral to the extent not otherwise constituting
collateral, all other cash or property at any time on deposit with or held by
Lender for the account of Borrower (whether for safekeeping, custody, pledge,
transmission or otherwise), (2) all present or future deposit accounts (whether
time or demand or interest or non-interest bearing of Borrower with Lender any
other person including those to which any such cash may at any time and from
time to time be credited, (3) all investments and reinvestments (however
evidenced) of amounts from time to time credited to such accounts, and (4) all
interest, dividends, distributions and other proceeds payable on or with respect
to (x) such investments and reinvestments and (y)such accounts;
(j) All instruments, chattel paper, documents, and contract rights and other
rights, irrespective of when acquired, including without limitation the Client
Orders and Supplier Orders;
(k) All proceeds, insurance proceeds, products and accessions of or to any and
all of the foregoing, and all collateral and security for, and guarantees of,
any and all of the foregoing, and all books and records relating to any and all
of the foregoing (including without limitation, any and all microfilm,
microfiche, computer programs and records, source materials, tapes and discs)
and all equipment containing said books and records;
The Collateral is presently located at: West Star Energy Group formerly known as
Mid-State Fuels, Inc. Atwater, 695 Atwater Blvd., Atwater, CA 95301; LLO-Gas,
Inc., Laws Bulk Plant 108 Dehy-Laws, Bishop, CA 93514; Bishop Texas Retail
Station & Pacific Pride Cardlock, 1223 N. Main Street, Bishop, CA 93514; Mammoth
Pacific Pride Cardlock, 240 Commerce Rd., Mammoth Lakes, CA 93546; Mammoth Bulk
Plant, Location #3, Old Mammoth Rd & 395, Mammoth Lakes, CA 95301; Lone Pine
Station, 840 So. Main Street, Lone Pine, CA 93545; Lock Box, P.O. Box 45715,
San Francisco, CA 94145-0715;1013 Centre Road, Wilmington, DE 19805; and 23805
Stuart Ranch Road, Suite 265, Malibu, CA 90265.
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<PAGE>
EXHIBIT 10.8
PROMISSORY NOTE
$900,000 New York, New York
August 2, 1999
A. GENERAL TERMS OF PAYMENT
1. FOR VALUE RECEIVED, the undersigned, West Star Energy Group
formerly known as Mid-States Fuels, Inc., a California corporation having an
office at Atwater, 695 Atwater Blvd., Atwater, CA 95301 and LLO-Gas, Inc. a
California corporation, having an office at Laws Bulk Plant, 108 Dehy - Law,
Bishop, CA 93514 and 23805 Stuart Ranch Road, Suite 265, Malibu, CA 90265 and
LLO-Gas, Inc., a Delaware Corporation having an office at 1013 Centre Road,
Wilmington, DE 19805, (the "Borrower"), hereby promises to pay to the order of
Capstone Capital, LLC, a Delaware limited liability company ("Capstone") having
an office at 515 Madison Avenue, New York, New York 10022, its successors,
assigns and subsequent holders of this Note (collectively, the "Lender"), the
principal sum of Nine Hundred Thousand Dollars and no cents ($900,000), or so
much thereof as may be advanced and outstanding, payable with interest 3 days
from the date of each cash advance or drawing under any letter of credit issued
by Capstone on behalf of the Borrower (the "Maturity Date")
2. Interest. Subject to Section A.3 hereof, from and after the
--------
date of this Note and through and including the Maturity Date, interest shall
accrue on the unpaid principal amount outstanding under this Note, and shall be
payable by the Borrower on the Maturity Date, at a rate equal to 4% per annum
above the rate of interest designated by Chase Bank and in effect from time to
time as its "Prime Rate", adjusted when such Prime Rate changes.
3. Default Interest. At all times after the Maturity Date and/or
----------------
during the continuance of an Event of Default (as hereinafter defined), interest
shall accrue on any unpaid principal amount outstanding under this Note, and
shall be payable by the Borrower upon demand of the Lender, at a rate equal to
24% per annum (the "Default Rate").
4. Mandatory Prepayment. The Borrower shall, in accordance with
--------------------
Section 9 hereof, immediately prepay this Note in whole at any time or in part
from time to time in the amount set forth in Section 8 of the Supply Agreement,
dated as of even date herewith (as same may be amended, modified, restated or
supplemented from time to time the "Supply Agreement"), between Borrower and
Capstone.
5. Optional Prepayment. The Borrower shall have the right to
-------------------
prepay this Note in whole at any time or in part from time to time without
penalty or premium.
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<PAGE>
6. Guarantees; Other Agreements. This Promissory Note shall be
secured by and have the benefit of (i) the personal guarantee (the "Guarantee")
of even date herewith executed by John D. Castellucci, individually (the
"Guarantor"), and (ii) the Security Agreement of even date herewith (the
"Security Agreement") between the Borrower and Capstone. For the purposes of
- --------------------
this Promissory Note the term "Loan Instruments" shall mean the Personal
------------------
Guarantees, the Security Agreement, and this Note, together with the various
other mortgages, assignments, instruments and other documents creating or
evidencing the Lender's interest in any collateral securing or intended to
secure anyone's obligations under any of the foregoing.
7. Subordination. The obligations of the Borrower under this Note
-------------
shall be fully subordinated, in payment and otherwise, to all obligations of the
Borrower under the Supply Agreement of even date herewith, between the Borrower
and Capstone (the "Supply Agreement").
------------------
8. Manner of Payment. All payments by the Borrower on account of
-----------------
principal interest or fees hereunder shall be made in lawful money of the United
States of America in immediately available funds.
9. Payment. (a) All payments of principal, interest, fees and
other amount due the Lender pursuant to this Note and the other Loan Instruments
shall be made in immediately available funds by 12:30 P.M. (New York City time)
on the date payment is due to the Lender at its offices at the address set forth
in the Introduction, and, or as otherwise instructed by the Lender. All
advances and payments made pursuant to this Note and the other Loan Instruments
may be recorded by the Lender on its books and records, and such records shall
be conclusive as to the existence and amounts thereof absent manifest error;
failure to so record shall not relieve Borrower of any of its obligations
hereunder; (b) Should any payment become due and payable on other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and in the case of any payment of principal, interest shall be
payable thereon at the rate per annum specified in this Note during such
extension; (c) Any payment received by the Lender hereunder shall be applied in
the following order of priority: (a) first, to the payment or reimbursement of
any fees, costs or expenses incurred by the Lender in connection with the
enforcement of Lender's rights hereunder, (b) second, to the payment of
interest, if any, accrued on the then outstanding unpaid principal amount
hereunder, and (c) third, to the reduction of any portion of the principal
amount then outstanding hereunder.
10. No Usury. This Note is subject to the express condition that at
--------
no time shall the Borrower be obligated or required to pay interest on the
principal balance due hereunder at a rate which could subject the Lender to
either civil or criminal liability as a result of being in excess of the maxim
interest rate which the Borrower is permitted by applicable law to contract or
agree to pay. If by the terms of this Note, the Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of such maximum rate, the interest rate that would be
applicable hereunder but for the provisions of this Section A.9 shall be deemed
to be immediately reduced to such maximum rate and any payments in excess of the
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<PAGE>
maximum rate shall be deemed to have been payments in reduction of principal and
not on account of the interest due hereunder. Notwithstanding the foregoing,
the Borrower will not be obligated to pay interest in excess of twenty-five
percent (25%) per annum.
11. Lost or Damaged Note. In the event of the loss, theft or
--------------------
destruction of this Note, the Borrower shall execute and deliver an identical
new Note to the Lender in substitution therefor upon the Borrower's receipt of
(i) notice from the Lender confirming such event and (ii) an indemnity agreement
from (and in such form and substance as may be acceptable to) the Lender if
requested by the Borrower. In the event of mutilation of or other damage to
this Note, the Borrower shall execute and deliver an identical new Note to the
Lender in substitution therefore, following which the Lender will return the
mutilated or damaged Note to the Borrower.
B. EVENTS OF DEFAULT: REMEDIES
If any of the following events (each such event, an "Event of Default")
------------------
shall occur and be continuing:
1. The Borrower shall fail to make any payment of principal of or
interest on this Note (including, without limitation, any mandatory prepayment
of principal) or any other amount when due (or, if applicable, when demanded by
the Lender) hereunder;
2. The Borrower shall default in the performance or observance of
any covenant or agreement contained in this Note, excluding Section B. Paragraph
1, above, and not cure said default within 30 days of notice;
3. An event of uncured default or default shall occur and be
continuing under any other agreement, document or instrument executed and
delivered to the Lender by the Borrower including without limitation, the Supply
Agreement or any guarantor or hypothecator relating to any Liabilities (as
hereinafter defined), including, but not limited to, the Loan Instruments.
4. Any material representation or warranty made by or on behalf of
the Borrower in this Note or in any other certificate, agreement, instrument or
document delivered to the Lender by or on behalf of the Borrower shall at any
time prove to have been incorrect when made in any material respect;
5. The Borrower or any of the Guarantors shall default in the
payment of principal or interest on any indebtedness for borrowed money
(including any such indebtedness in the nature of a lease) or shall default in
the performance or observance of the material terms of any instrument pursuant
to which such indebtedness is outstanding, the result of which is to cause the
same to become due prior to its stated maturity and whether or not such default
is waived by the holder thereof);
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<PAGE>
6. Any material change in the condition or affairs (financial or
otherwise) of the Borrower or any of the Guarantors shall occur which, in the
sole opinion of the Lender, increases its risk with respect to the loan
evidenced by this Note;
7. The Borrower, or any Guarantors of this Note, shall become
insolvent, make an assignment for the benefit of creditors, file a petition in
bankruptcy, be adjudicated insolvent or bankrupt, admit in writing its
respective inability to pay its debts as they mature, petition or apply for,
consent to, or acquiesce in the appointment of, a trustee or receiver its or for
a substantial part of its respective property; or any other bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding shall be instituted
by or against the Borrower or any Guarantors, and if instituted, shall be
consented to or acquiesced in or shall not be dismissed or, if contested, stayed
within a period of thirty (30) days; or any judgment, writ of attachment or
execution or any similar process shall be issued or levied against a substantial
part of the property of the Borrower, or of any Guarantors, and shall not be
released, stayed, bonded or vacated within a period of thirty (30) days after
its issue or levy; and
8. A Change in Control (as hereinafter defined) of the Borrower or
any Affiliate (including, without limitation, West Star Energy Group formerly
known as Mid-State Fuels, Inc., and LLO-Gas, Inc., a California corporation, and
LLO-Gas, Inc., a Delaware corporation) shall occur, or a change in any executive
officer of the Borrower not approved in advance by Capstone. For the purposes
of this Agreement, "Change in Control' shall mean (i) a "change in control" as
-------------------
such term is used in Item 5(f) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended at the date hereof
("Act"), (ii) a change in control as the term "control" is defined in Rule 12b-2
promulgated under the Act, (iii) when any "person" (as such term is defined in
Sections 3(a)(9) and 13(d)(3) of the Act) becomes a beneficial owner, directly
or indirectly, of securities of the Borrower representing thirty (30%) percent
or more of the Borrower's or any Affiliate's then outstanding securities having
the right to vote on the election of directors, (iv) when individuals who are
members of the Borrower's or any Affiliate's Board of Directors at any one time
shall immediately thereafter cease to constitute a majority of the Board of
Directors or (v) when a majority of the directors elected at any annual or
special meeting of stockholders are not individuals nominated by the Borrower's
or Affiliate's incumbent Board of Directors; then, and in any such event, the
Lender may declare the entire unpaid principal amount of this Note and all
interest, fees and expenses accrued and unpaid hereunder to be forthwith due and
payable, whereupon the same shall become and be forthwith due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrower. The balance of every account of the
Borrower with, and each claim of the Borrower against, the Lender existing from
time to time shall be subject to a lien and subject to be set off against any
and all Liabilities, including (without limitation) those hereunder.
For the purposes of this Note, the term "Liabilities" shall mean the
------------
indebtedness evidenced by this Note and the Supply Agreement and all other
indebtedness, liabilities and
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obligations of any kind of the Borrower (or any partnership or other group of
which the Borrower is a member) to (a) the Lender, (b) any group of which the
Lender is a member, or (c) any other person if the Lender has participation or
other interest in such indebtedness, liabilities or obligations, whether (i) for
the Lender's own account or as agent for others, (ii) acquired directly or
indirectly by the Lender from the Borrower or others, (iii) absolute or
contingent, joint or several, secured or unsecured, liquidated or unliquidated,
due or not due, contractual or tortious, now existing or hereafter arising, or
(iv) incurred by the Borrower as principal, surety, endorser, guarantor or
otherwise, and including without limitation all expenses, including attorneys'
fees, incurred by the Lender in connection with any such indebtedness,
liabilities or obligations.
C. MISCELLANEOUS
1. Covenants. So long as any obligation under this Note shall
----------
remain unpaid, the Borrower agrees to (a) notify the Lender in writing within
three (3) business day after the occurrence thereof of any Event of Default (or
any event or circumstance that, with the giving of notice or the passage of time
or both, would constitute an Event of Default (a "Default"), describing in
--------
sufficient detail the nature thereof and what steps the Borrower is taking or
will take to cure such Event of Default or Default, (b) at any reasonable time
and from time to time, permit the Lender or any of its agents or representatives
to examine and make copies of and abstracts from their records and book of
account, visit their properties and discuss their affairs, finances and accounts
with any of their officers, directors or independent accountants and (c)
Borrower shall have ten (10) days to cure said default from the first date of
default as determined by the Lender.
2. No Waiver: Remedies Cumulative. No failure on the part of the
-------------------------------
Lender to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by the Lender of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other rights. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
3. Costs and Expenses. The Borrower shall reimburse the Lender
------------------
for all reasonable fees, costs and expenses incurred by the Lender, including
(without limitation) the fees and disbursements of counsel to the Lender, in
connection with enforcement of the Lender's rights hereunder. The Borrower
shall also pay any and all taxes (other than taxes on or measured by net income
of the holder of this Note) incurred or payable in connection with the execution
and delivery of this Note.
4. Amendments. No amendment, modification or waiver of any
----------
provision of this Note nor consent to any departure by the Borrower therefrom
shall be effective unless the same shall be in writing and signed by the Lender
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
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<PAGE>
5. Construction. This Note shall be deemed to be a contract made
------------
under the laws of the State of New York and shall be construed in accordance
with the laws of said State without regard to principles of conflict of laws or
choice of law.
6. Successors and Assigns; Assignment; Participations. Whenever
--------------------------------------------------
in this Note or any other Loan Instrument reference is made to any party, such
reference shall be deemed to include the successors, assigns, participants,
heirs and legal representatives of such party, and, without limiting the
generality of the foregoing, all Guarantees, warranties, covenants and other
agreements made by or on behalf of the Borrower in this Note and the other Loan
Instruments shall inure to the benefit of the successors and assigns of the
Lender; provided, however, that nothing herein shall be deemed to authorize or
permit the Borrower to assign any of its rights or obligations under this Note
or any other Loan Instrument to any other person (whether or not an affiliate of
the Borrower), and the Borrower covenants and agrees that it shall not make any
such assignment. The Lender from time to time may assign and/or grant
participation interests to one or more other persons all or any portion(s) of
its rights and interests and/or obligations under this Note and the other Loan
Instruments, including (without limitation) to any person of all or any
portion(s) of its rights to payments of principal and /or interest under the
Note(s) and other Loan Instruments, and may take any and all reasonable actions
necessary or appropriate in connection with any such assignment, all without
notice to or consent of the Borrower or an other person.
7. Severability. The provisions of this Note are severable, and
------------
if any provision shall be held invalid or unenforceable in whole or in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
8. Jurisdiction: Waiver of Jury Trial. The Borrower hereby
----------------------------------
irrevocably consents to the jurisdiction and venue of any New York State or
Federal court located in New York County, New York, over any action or
proceeding arising out of any dispute between the Borrower and the Lender under
this Note or otherwise, and the Borrower further irrevocably consents to the
service of process in any such action or proceeding by the mailing of a copy of
such process to the Borrower at the address set forth in the first paragraph of
this Note. THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THE TRANSACTIONS CONTEMPLATED BY THIS NOTE, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER.
9. Set-off. The Borrower hereby waives the right to interpose any
-------
and all defenses, set-offs, counterclaims, cross-claims or abatements with
respect to, in connection with, or arising out of this Note; provided, however,
that nothing in this Section C.9 shall prevent the Borrower from asserting, in a
separate and independent proceeding, any claim it may have against the Lender.
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<PAGE>
10. Borrower expressly waives any presentment, protest, notice of
protest or notice of any kind except as expressly set forth in the Security
Agreement.
This Note shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives on the date first above
written.
/s/ [illegible] /s/ John Castellucci
- ----------------------------- ---------------------------------
Witness John D. Castellucci, President
West Star Energy Group
/s/ [illegible] /s/ John Castellucci
- ----------------------------- ---------------------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a Delaware corporation
/s/ [illegible] /s/ John Castellucci
- ---------------------------- ---------------------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a California corporation
/s/ [illegible] /s/ John Castellucci
- ---------------------------- ---------------------------------
Witness John D. Castellucci, Individually
as Guarantor
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<PAGE>
ACCEPTED AND AGREED
Capstone Capital, LLC
By: /s/ Joseph F. Ingrassia
------------------------------------------
Joseph F. Ingrassia
Member
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<PAGE>
Address For Notices:
West Star Energy
Atwater
695 Atwater Blvd.
Atwater, CA 95301
LLO-Gas, Inc.
Laws Bulk Plant
108 Dehy -Laws
Bishop, CA 93514
LLO-Gas, Inc.
23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
LLO-Gas, Inc.
1013 Centre Road
Wilmington, DE 19805
John D. Castellucci
5740 Kanan Dume
Malibu, CA 90265
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<PAGE>
EXHIBIT 10.10
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 01860
Dated (for identification): September 2 ,1999
-------------
This Agreement for Sale of Real Estate to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer I.D. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached
Exhibit "A". Seller's interest in the Real Estate is a fee interest in the
entirety of the Real Estate, except as otherwise stated in Exhibit "A".
Seller's interest includes the ownership of the improvements that .are
located on or under the land that Seller owns in fee, including without
limitation underground storage tanks and gasoline pipelines. The principal
parcel of land included in the Real Estate is commonly known as:
Street Address: 3817 W. Third Street
City, State, ZIP Code: Los Angeles, California 90020
County: Los Angeles
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the
attached Exhibit "B".
Deposit: $23,750.00 by Buyer's check payable to Escrow Holder
Purchase Price: $950,000.00
2
<PAGE>
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Slinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10732 PC
--------------
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction")
will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed: Mineral Reservation. Seller shall convey the Real Estate to
-----------------------------
Buyer by a Corporation Grant Deed (the "Deed"). In the Deed, Seller will
reserve the rights, below the depth of 500 feet, to minerals and oil, gas, and
other hydrocarbon substances in and under the land being sold, but without the
right of surface entry.
5. Purchase Price.
--------------
3
<PAGE>
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
transactions under the Business Agreement, the Companion
Real Estate Agreements, and the Companion Business
Agreements, Seller has confirmed that (i) Seller is ready
and committed to close those transactions or (ii) if the
transaction is being handled through an escrow, Seller has
received notice from the escrow holder that the escrow
holder is ready and committed to close the escrow.
(b) Other Closing Conditions. All closing conditions for that
party's benefit contained in provisions of this Agreement
other than this Section 6.3 have been satisfied, or will be
satisfied as a part of the closing.
(c) Other Party's Obligations. The other party has performed
all its obligations under this Agreement to be performed
before the closing, or will perform those obligations as a
part of the closing.
7. Delivery of Documents and Funds.
-------------------------------
4
<PAGE>
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The
------------------------------------------------
Memorandum of Contract Dealer Gasoline Agreement (the
"Memorandum") referred to in Section 6.3(c) of the Business
Agreement, signed and acknowledged by Seller, through its
division ARCO Products Company;
(c) Withholding Certifications. (i) A Certification of Non-
--------------------------
Foreign Person Status with respect to Seller's exemption
from federal income tax withholding in connection with the
Transaction and (ii) a comparable certification with respect
to Seller's exemption from state income tax withholding in
connection with the Transaction, if the state in which the
Real Estate is located imposes a withholding requirement on
Buyer for income tax that Seller might owe to the state in
connection with the Transaction, each of which
certifications must meet the requirements of applicable laws
and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents
---------------
reasonably required to complete the Transaction.
7.2 Deliveries by Busier. At or before the closing, Buyer shall
--------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum, signed and acknowledged by
----------
Buyer;
(b) Right of First Refusal Agreement. The Right of First
--------------------------------
Refusal Agreement (as defined in Section 14), signed and
acknowledged by Buyer;
(c) Environmental Declaration. The Environmental Declaration
-------------------------
(as defined in Section 12), signed and acknowledged by
Buyer;
(d) Cash. Cash or immediately available funds to pay the
----
balance of the Purchase Price and Buyer's share of closing
costs and prorations; and
5
<PAGE>
(e) Other Documents and Funds. All other instruments,
-------------------------
documents, and funds reasonably required to complete the
Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the following documents in the Official Records of the County, in the
following order: The Deed, the Memorandum, the Right of Refusal Agreement, the
Option Agreement, and the Environmental Declaration. These documents must be
recorded before any documents benefiting any lender or other third party are
recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is committed to issue
an ALTA Standard Coverage Owner's Policy of Title Insurance (the "Title Policy")
insuring Buyer in the amount of the Purchase Price upon the close of Escrow.
The Title Policy must insure Buyer's title to the Real Estate subject to only
(i) the standard exclusions and exceptions of the policy form, (ii)
nondelinquent taxes and assessments, and (iii) the Permitted Exceptions (as
defined in Section 9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for title
insurance, if the Real Estate is located in a state where title insurers do not
issue preliminary title reports) (in either case, the "Report") covering the
condition of title to the Real Estate. Unless Buyer gives Seller written
notice, within ten days after receiving the Report, objecting to matters shown
in the Report, Buyer will be considered to have approved the condition of title
as shown in the Report. If Buyer so objects to any matter (each, a "Disapproved
Matter") shown in the Report, Seller will have 30 days after receiving Buyer's
written objection in which to remove the Disapproved Matter from record title or
to obtain the Title Company's agreement to issue an appropriate endorsement to
the Title Policy. If Seller is unable or unwilling to remove the Disapproved
Matter from record title or to obtain the Title Company's agreement, Seller may
terminate this Agreement by giving a termination notice to Buyer and Escrow
Holder within the 30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow Holder shall return
the Deposit to Buyer; and neither party will have any further obligation to the
other under this Agreement. The term "Permitted Exception" means each matter
shown in the Report that (i) is not a Disapproved Matter or (ii) is a
Disapproved Matter for which Seller has obtained the Title Company's agreement
to issue an appropriate endorsement to the Title Policy.
6
<PAGE>
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real Estate will
vest. If Buyer fails to so notify them, title will vest in Buyer as stated in
the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the Title Policy to
Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of real
property taxes, current installments of special taxes and assessments, and any
rents or other income derived from the Real Estate. Utility charges will not be
prorated. Seller shall cause a final reading of the utility meters to be taken
on the day that Escrow closes; and Buyer shall arrange for all utility services
to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
Baseline Contamination: Any petroleum product released into the soil or
- ----------------------
groundwater during ARCO gasoline station operations conducted on the Real Estate
by Seller and its subsidiaries before Escrow closes. Only contamination
disclosed in the Baseline Data will be considered Baseline Contamination.
Baseline Data: The contaminants, levels, and areas of the contamination
- -------------
disclosed on the attached Schedule 1 environmental documents concerning the
Corrective Action, decreased to any lower contamination levels or smaller
contamination areas disclosed in any Qualified Report obtained by Seller after
Escrow closes. In addition, the Baseline Data levels and areas of contamination
will be increased to any higher contamination levels or larger contamination
areas disclosed in the Phase 11 Report
7
<PAGE>
(as defined in Section 12.7(a)). But if Seller determines in good faith that the
additional contamination came from another source and not from Seller's
operations at the Real Estate, and Seller provides written notice of that
determination to Buyer during the Inspection Period, the Baseline Data levels
and areas of contamination will not be so increased.
Corrective Action: Assessment, monitoring, remediation, removal, or other
- -----------------
corrective action (which may include natural attenuation) on Baseline
Contamination, to the extent required by the Agency for gasoline station use.
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached Exhibit
"C".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
Qualified Report: A subsurface investigation report on the soil or groundwater
- ----------------
at or under the Real Estate that has been prepared and certified by a geologist
or professional engineer who is licensed by the state in which the Real Estate
is located and who is not affiliated with Buyer or Seller.
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Baseline Contamination. Seller shall perform Corrective Action
----------------------
on any Baseline Contamination, subject to Buyer's compliance with the provisions
of the Environmental Declaration. Seller will have sole discretion to determine
the Corrective Action schedule, technique, method, and design, and Seller may
contest and appeal any decision of the Agency.
12.3 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real Estate
are public records, available at the Agency's offices for Buyer's review.
8
<PAGE>
12.4 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.5 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to
provide any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.6 Notice of Buyer's Improvement Plans. Within 15 days after Buyer
-----------------------------------
receives this Agreement signed by Buyer and Seller, Buyer shall deliver to
Seller at Seller's Environmental Notice Address written information regarding
Buyer's plans (if any) for improving the Real Estate after Escrow closes, to
enable Seller to assure that Buyer's planned improvements comply with the
Environmental Declaration.
12.7 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the Inspection
-------------------------------------
Period, Buyer shall obtain a subsurface investigation report on the extent and
concentrations of any petroleum products in the soil and, if encountered,
groundwater at or under the Real Estate (the "Phase II Report"). Buyer shall
engage a geologist or professional engineer who is licensed by the State of
California and who is not an affiliate of Buyer or Seller (the "Environmental
Consultant"), to perform the subsurface investigation and prepare and certify
the Phase II Report. Buyer shall initially pay for the cost of the Phase II
Report. Escrow Holder shall prorate the cost of the Phase II Report at the
closing so that Buyer and Seller share equally up to $15,000 of the total cost
of the Phase II Report. The parties shall request that the Environmental
Consultant complete the Phase II Report at least 10 days prior to the end of the
Inspection Period. Subject to the provisions of Section 12.7 (b) below, Buyer
shall determine the scope of work for the Phase II Report, in its reasonable
discretion. Buyer shall have the right to modify the scope of work, as a result
of on-site conditions discovered in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a
---------------------
modification of the original scope of work, that involves any disturbance
(including any drilling or boring) of the surface of the land or any underground
vault or storage tank, underground pipes, or fuel lines ("Special Buyer
Testing"), Buyer must obtain Seller's prior written approval. Seller may
withhold its approval if it determines in good faith that the Special Buyer
Testing would interfere with Seller's business operations or would
9
<PAGE>
pose a safety or environmental hazard. Buyer shall indemnify and defend Seller
from all liabilities, damages, losses, claims, costs and expenses (including
reasonable attorneys' fees) that Seller incurs arising from performance of the
Special Buyer Testing. Without limiting the immediately preceding provisions of
this Section 12.7(b), Buyer shall promptly repair any damage to the Real Estate
or any personal property located at the Real Estate resulting from any Special
Buyer Testing. But Buyer will have no liability regarding any contaminated soil
or groundwater it may discover on or under the Real Estate during the course of
the Special Buyer Testing, unless Buyer caused the release of that
contamination, for example by puncturing the underground storage tanks on the
Real Estate. Buyer's liability under this Section 12.7(b) is in addition to
Seller's right to retain the Deposit and any accrued interest on the Deposit,
when Seller is permitted to do so under any provision of this Agreement
concerning liquidated damages for Buyer's default under this Agreement. A
termination of this Agreement will not terminate Buyer's obligations under this
Section 12.7(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics'
-----
and similar liens arising from any and all Phase II Report costs (including
without limitation any Special Buyer Testing) payable by Buyer under this
Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at
----------------------
Seller's Environmental Notice Address a copy of the Phase II Report, within two
days after Buyer receives the report. Buyer shall not disclose the results of
any test to any regulatory agency or other third party, unless required to do so
by law and unless Buyer delivers to Seller at Seller's Environmental Notice
Address a copy of the disclosure at least ten days before Buyer mails or
otherwise transmits the disclosure to the agency or other third party.
(e) Buyer's Termination Right. If Buyer is not satisfied with
-------------------------
the environmental condition of the Real Estate, Buyer may terminate this
Agreement by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the Escrow and title cancellation charges; after Buyer has
paid its share of those cancellation charges, the Deposit will be returned to
Buyer; and neither party will have any further obligation to the other under
this Agreement. But the Deposit will not be returned to Buyer until Buyer has
delivered to Seller valid, recordable waivers of mechanics' and other statutory
liens from all contractors who conducted tests at Buyer's request.
12.8 Pending Litigation. Seller shall indemnify and defend Buyer
------------------
from all liabilities, damages, losses, claims, costs, and expenses (including
reasonable attorney's fees) arising from Communities for a Better Environment v.
Tosco, Case No. 300595 (Superior Court for the County of San Francisco), based
on any discharges from the Real Estate into the soil or groundwater before
Escrow closes.
10
<PAGE>
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS
/s/ JC /s/ GS
---------------- -----------------
Buyer's Initials Seller's Initials
(In order to comply with California Civil Code Section 1677, the above provision
must be in at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031, Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation includes the signing, acknowledgment, and delivery of all documents
that Seller reasonably requests, at no risk or expense to Buyer. Seller shall
indemnify and defend Buyer from all liabilities, damages, claims, costs, and
expenses (including reasonable attorneys' fees) that Buyer might incur in
connection with Buyer's participation in the exchange transaction.
11
<PAGE>
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws., Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning laws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate, including material violations of regulations of the Environmental
Protection Agency or any state regulatory body concerning the disposal of
hazardous waste, petroleum, underground storage tanks, or any other hazardous
materials at the Real Estate, except as disclosed in the Environmental Documents
and Schedule 2 attached hereto.
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial
12
<PAGE>
compliance with all applicable laws, statutes, ordinances, codes, covenants,
conditions, and restrictions of any kind or nature affecting the Real Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
(i) fully operational and (ii) in material compliance with the December 23, 1998
underground storage tank system upgrade standards set forth under Section 25291
or Section 25292(d) and (e) of the California Health and Safety Code, and
related regulations adopted pursuant to Section 25299.3 of the California Health
and Safety Code, according to the certificate of upgrade compliance provided
under Section 25284 of the California Health and Safety Code.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any representation or
warranty, as long as Buyer delivers written notice of the breach to Seller and
exercises any remedy, including the filing of any suit or other action, within
one year after the date that the Escrow closes.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next
13
<PAGE>
business day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
14
<PAGE>
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY,
a Delaware corporation
By: /s/ G. Simning
--------------
Gary Simning
Assistant Vice President
Agreed to by Escrow Holder
on Sept. 2 , 1999.
-------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
--------------------
Patricia Cusick
Escrow Officer
15
<PAGE>
SCHEDULE 1
ENVIRONMENTAL DOCUMENTS
1. Report titled Subsurface Environmental Investigation and Soil Borings,
-------------------------------------------------------
dated September 29, 1987, prepared by Applied Geosystems.
2. Report titled Delineation of Hydrocarbon Contamination in the Soil and
--------------------------------------------------------
Ground Water, dated December 15, 1988, prepared by Applied Geosystems.
------------
3. Report titled Subsurface Environmental Investigation, dated October 1,
--------------------------------------
1990, prepared by Applied Geosystems.
4. Report titled Subsurface Environmental Investigation, dated January 21,
--------------------------------------
1992, prepared by Resna.
5. Report titled Subsurface Environmental Investigation, dated March 8, 1993,
--------------------------------------
prepared by Resna.
6. Report titled ARCO Quarterly Report, dated October 29, 1998, prepared by
---------------------
Emcon.
<PAGE>
SCHEDULE 2
PENDING ACTIONS
Communities for a Better Environment v. Tosco, Case No. 300595 (Superior Court
for the County of San Francisco)
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
Lot 43 and the south 25 feet of lot 44 of Tract No. 200, in the city of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in
Book, 13 Page 152 of Maps, in the office of the County Recorder of said County.
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "B"
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
<PAGE>
Order No.:
--------------
Escrow No.:
-------------
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 01860
Location: 3817 W. Third Street
Los Angeles, CA 90020 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
Type 3 Site in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2 , 1999, is
-----------------
made by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of
ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of Los
Angeles, State of California, described in the attached Exhibit "A" (the "Real
Estate"). In connection with the signing and recording of this Declaration,
ARCO conveyed the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions
on the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning
-----------
set forth beside it.
<PAGE>
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
or affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement, cost,
- -----
and expense (including reasonable attorneys' fees) arising after the Effective
Date, whether or not Owner knew or suspected them to exist on the date that
Owner signed this Declaration or on the Effective Date.
Contractual Obligation: Any obligation that ARCO may have, under the Agreement
- ----------------------
for Sale of Real Estate to Contract Dealer between Owner and ARCO dated
September 2, 1999 and any other written agreement entered into between Owner and
- -----------
ARCO before the Effective Date, to conduct any Corrective Action on the Real
Estate.
Corrective Action: Any assessment, monitoring, or corrective action (which may
- -----------------
include natural attenuation) on petroleum products released into the soil or
groundwater at the Real Estate during gasoline station operations conducted on
the Real Estate by ARCO and the ARCO Entities before the Effective Date, to the
extent required by the Agency for gasoline station use.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
No Further Action Letter: A letter issued by the Agency stating that based on
- ------------------------
certain assumptions and conditions, the Agency will not require ARCO to perform
any further Corrective Action with respect to the Real Estate.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater before the Effective Date.
Restricted Area: Each area shown on the Depiction of the Real Estate and
- ---------------
Restricted Area attached as Exhibit "B" and labeled "Restricted Area."
2. ARCO's Access Right.
-------------------
2.1 Grant of Access Right. After the Effective Date, ARCO and ARCO's
---------------------
agents and contractors will have the unrestricted right to enter on the Real
Estate to perform any Corrective Action. ARCO shall give Owner prior oral or
written
<PAGE>
notice of its exercise of this right to enter (the "Access Right"). In
exercising the Access Right, ARCO shall attempt to minimize, to the extent
reasonably possible, any interference with the operation of the business on the
Real Estate, except in the case of an emergency, as determined by ARCO. In
conducting its operations on the Real Estate, Owner shall attempt to minimize,
to the extent reasonably possible, any interference with any Corrective Action
by ARCO or ARCO's agents or contractors. ARCO will have sole discretion to
determine the schedule, technique, method, and design of any Corrective Action
performed by ARCO. But if the cost of two different techniques, methods, or
designs is the same, then ARCO shall select the technique, method, or design
that causes the least physical interference with the operation of the business
on the Real Estate or that takes the least amount of time to complete. Owner
shall cooperate with ARCO in obtaining Agency approval for any Corrective
Action. This Access Right includes, without limitation, (i) the right to perform
soil and groundwater investigations, (ii) the right to install, operate,
monitor, maintain, repair, close, and remove equipment (including piping and
wells) for Corrective Action, and (iii) the right to have service trucks on the
Real Estate. As part of any equipment installation, ARCO may cut and remove
portions of the asphalt and concrete. But ARCO shall patch any asphalt and
concrete that it removes with comparable asphalt and concrete. ARCO will not be
required to pay any rent or other compensation to Owner for the Access Right or
the portion of the Real Estate occupied by the equipment used in performing any
Corrective Action.
2.2 Termination and Resumption of Access Right. The Access Right
------------------------------------------
will terminate 90 days after ARCO receives a No Further Action Letter. But if,
after the Agency issues the No Further Action Letter, the Agency requires ARCO
to perform further Corrective Action, the Access Right will resume until 90 days
after ARCO receives a new No Further Action Letter for the further Corrective
Action. But, in all events, the Access Right will terminate 25 years after the
Effective Date.
3. Owner's Notification Obligations. For 25 years after the Effective
--------------------------------
Date, Owner shall notify ARCO within 14 days after (i) any on-site visit by the
Agency, (ii) Owner's receipt of correspondence from the Agency regarding any
Corrective Action, (iii) any release of a Hazardous Material on or about the
Real Estate requiring regulatory notification, or (iv) any activity on or about
the Real Estate that impacts ARCO's rights under this Declaration or ARCO's
performance of any Contractual Obligation.
4. Owner's Acceptance of the Condition of the Real Estate. Owner
------------------------------------------------------
acknowledges that Pre-Closing Contamination is present on, under, or near the
Real Estate. Owner has accepted the Real Estate, including without limitation
its environmental condition, in "AS IS" condition on the Effective Date, subject
only to any Contractual Obligation. In addition, when the Agency issues the No
Further Action Letter, Owner will be considered to have accepted the Real Estate
in "AS IS" condition as of the date of the No Further Action Letter. Owner
acknowledges that the purchase
<PAGE>
price paid to ARCO for the Real Estate reflects (i) the effect of this
Declaration on the Real Estate and (ii) any presence of Pre-Closing
Contamination, whether or not Owner knew or suspected it to exist on the date
that Owner signed this Declaration or on the Effective Date.
5. Owner's Waiver and Release of Environmental Claims. Owner, for itself
--------------------------------------------------
and its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to the release or presence
of any Hazardous Material on, under, or about the Real Estate at the Effective
Date. These Claims include, without limitation, (i) Claims that might arise
after the Effective Date and (ii) Claims that Owner did not know or suspect to
exist on the date that Owner signed this Declaration and on the Effective Date.
The waived Claims do not include any Claims arising from any material breach by
ARCO of (a) its Contractual Obligation or (b) the conditions to the Access
Right.
6. Real Estate Restrictions. For a period of 25 years after the Effective
------------------------
Date, Owner shall not:
(a) Excavate any soil in any Restricted Area at a depth greater than four
feet below the grade of the Restricted Area at the Effective Date;
(b) Install any underground storage tank for petroleum hydrocarbons on or
under any Restricted Area;
(c) Otherwise store or treat petroleum hydrocarbons on or under any
Restricted Area; or
(d) Construct any improvements in the Restricted Area without ARCO's prior
written confirmation that the proposed improvements will not impair
Owner's ability to perform any Contractual Obligation. ARCO shall not
unreasonably withhold that confirmation.
But, as long as Owner performs the following work in compliance with all
applicable laws and governmental requirements, Owner may:
(i) Install asphalt or landscaping other than trees or landscape in the
Restricted Area;
(ii) Perform any corrective action on soil or groundwater under any
Restricted Area that is contaminated with a Hazardous Material, to the
extent required by the Agency; or
<PAGE>
(iii) Remove or replace any underground gasoline storage tank or any
gasoline lines located under any Restricted Area.
7. Notices. Notices relating to this Declaration must be in writing and
-------
sent to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 7. A written notice will
be considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
8. Entire Agreement: Modification: Waiver. This Declaration (including
--------------------------------------
any attached Exhibits) contains the entire agreement between Owner and ARCO with
respect to any restrictions on Owner's use and operation of the Real Estate and
the other matters that are the subject of this Declaration. Any modification of
this Declaration must be in writing and signed by Owner and ARCO. Any waiver of
a provision of this Declaration by Owner or ARCO must be in writing.
9. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
10. Attorneys' Fees. If a dispute arises with respect to this Declaration
---------------
and if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees.
11. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration
<PAGE>
(collectively, the "Rights and Restrictions") are for the benefit of ARCO and
its successors and assigns. The Rights and Restrictions run with the Real Estate
and bind Owner's successors and assigns, including future owners and tenants of
the Real Estate, for ARCO's benefit. The Rights and Restrictions are intended to
(i) constitute equitable servitudes that burden the Real Estate and (ii) to be
enforceable under Section 1471 of the California Civil Code.
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENTS)
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
<TABLE>
<S> <C>
On September 2, 1999 before me, M. Bird, Notary Public
-------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------
</TABLE>
[X] personally known to me to be the person whose names is subscribed to the
within instrument and acknowledged to me
that he executed the same in his
authorized capacity, and that by his
signature on the instrument the
person, or the entity upon behalf of
which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ M. Bird
------------------------------------------
SIGNATURE OF NOTARY
===============================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenant and Conditions
--------- -------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT ---------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
---------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
<TABLE>
<S> <C>
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
Lot 43 and the south 25 feet of lot 44 of Tract No. 200, in the city of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in
Book, 13 Page 152 of Maps, in the office of the County Recorder of said County.
<PAGE>
DEPICTION OF THE REAL ESTATE AND RESTRICTED AREA
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
[GRAPHIC]
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
<PAGE>
Order No.:
------------
Escrow No.:
-----------
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 01860
Location: 3817 W. Third Street
Los Angeles, CA 90020 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
--------------------------------
This Right of First Refusal Agreement (this "Agreement") dated
September 2 , 1999, is made by LLO-GAS, INC., a Delaware corporation
- --------------
("Owner"), for the benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation
("Holder").
RECITALS
--------
A. Holder is the former owner of the real property in the County of Los
Angeles (the "County"), State of California, described in the attached Exhibit
"A" (the "Real Estate"). In connection with signing and recording this
Agreement, Holder conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
3. Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
1
<PAGE>
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property used
-----------------
in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate
-------------
Offered Parcel: The Real Estate, a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
2
<PAGE>
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
4. Grant of Right of First Refusal. Owner grants to Holder the Right. The
-------------------------------
Right is governed by the terms of this Agreement and will be in effect during
the Right Duration.
5. Included Rights; Exclusion of Security Interest Transfer.
--------------------------------------------------------
5.1 Offer to Lease or Sublease. The Right includes the right to
--------------------------
match the terms of any lease or sublease that Owner enters into during the Right
Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel when
that part includes all or part of the Real Estate. The Right will exist whether
the leasehold or subleasehold is to begin during or after the Right Duration.
5.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right will include the right to acquire the Offered Parcel and the
Related Property, that is to be transferred. If such a separate agreement
exists, it will be considered a Tendered Agreement; and a copy of that signed
separate agreement must be included in the Transfer Notice.
5.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
6. Procedures for Notice and Exercise.
----------------------------------
6.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a Transfer Notice to
Holder. No one
3
<PAGE>
other than Owner can satisfy Owner's obligation to send the Transfer Notice.
Holder may acquire the Offered Parcel that is the subject of the Tendered
Agreement, instead of the third party.
6.2 Exercise Notice; Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
6.3 Holder Indemnifies Owner. Holder shall indemnify and defend
------------------------
Owner from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Owner incurs and that arise from Holder's
exercise of the entry right granted under Section 4.2. But Holder will not be
liable for any decrease in the value of any Offered Parcel resulting from
Holder's discovery of any negative matter regarding the Offered Parcel,
including without limitation any contaminated soil or water existing at the
Offered Parcel before the escrow for Holder's purchase closes (the "Pre-Closing
Contamination"). Holder will not be required to remove or dispose of any Pre-
Closing Contamination. Holder may disclose the existence of any Pre-Closing
Contamination, to the extent that Holder is required to do so under applicable
law.
7. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be: at the price and
on the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 60
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
(c) Price Allocation When Larger Parcel or Adjacent Parcel is
---------------------------------------------------------
Offered. If (i) the Right is for the purchase of a Larger Parcel
-------
and (ii) the purchase price in the Tendered Agreement is
allocated between the Real Estate and the remainder of the Larger
Parcel, Holder
4
<PAGE>
may buy the Real Estate and not the remainder by paying only the
consideration allocated to the Real Estate. Or if (i) the Right
is for the purchase of a Larger Parcel and (ii) the purchase
price is not so allocated, Holder may buy only the Real Estate by
paying consideration that is equitable for only the Real Estate,
considering the total purchase price to be paid by the third
party for the Real Estate and the remainder. If Owner and Holder
fail to agree on an equitable amount, that amount will be
determined in accordance with Section 6. The above principles of
this Section 5(c) will apply in like manner if the Right is for
the purchase of the Real Estate and an Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
--------------------------------------------------
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered Agreement
-------------------------------------
provides for delayed payment terms, Holder may pay the total
purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
8. Valuation Disputes.
------------------
8.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the noncash
consideration under Section 5(f), or (iii) the fair market value under Section
8.2 or 12.9, the amount or value (the "Value") will be determined in accordance
with the appraisal procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal in accordance
with this Section 6, Owner and Holder each shall appoint a Qualified Appraiser
(as defined in Section 6.2). If one of them fails to timely appoint a Qualified
Appraiser, the Qualified Appraiser appointed by the other will determine the
Value.
8.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is unaffiliated
with Owner, Holder, and the third party under the Tendered Agreement, and (iii)
has had full-time experience, during each of the immediately preceding five
years, in appraising commercial real property in the area of the Real Estate.
But if Holder will be purchasing
5
<PAGE>
Business Property, the Qualified Appraiser must also have had substantial
experience, during the immediately preceding five years, in appraising business
assets in the area of the Real Estate. If the Appraisal Institute ceases to
exist, a reasonably comparable, nationally recognized organization of real
estate appraisers will be substituted in the definition of Qualified Appraiser.
8.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to Owner and
Holder within 30 days after his appointment. An Appraisal Report must set forth
the appraiser's determination of the Value and the considerations on which his
opinion is based. If two appraisers are appointed and they agree on the Value,
they must deliver a signed joint Appraisal Report to Owner and Holder within 40
days after the appointment of the second appraiser. If two appraisers are
appointed and they fail to agree on the Value, each appraiser must deliver his
signed Appraisal Report to Owner and Holder within 35 days after his
appointment. If the lower of the two determinations is at least 95% of the
higher, the Value will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers to do so, they
must appoint a third appraiser who is a Qualified Appraiser. Within ten days
after his appointment, the third appraiser must select one of the two
determinations as being the same as or the closer to the amount that he
determines as the Value; and the selected determination will be the Value.
8.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third appraiser.
9. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale
of some or all of the Business Property will occur through a separate Escrow
with an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing
6
<PAGE>
will be considered effected when the County Recorder accepts the
deed for recording.
(b) Extended Coverage Title Policy; Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event,
Holder shall (i) obtain and provide to the title insurer any
survey that the title insurer might require in order to issue the
title policy as an Extended Coverage Title Policy and (ii) pay
the increase in the premium attributable to the extended
coverage. Within three days after Escrow opens, Owner shall send
to Holder a copy of the most recent survey (if any) of the
Offered Parcel that Owner has in its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom
in the County. But if no custom exists for a particular closing
cost, each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect
to (A) the operation of the business conducted at the Offered
Parcel or (B) all or any part of the Offered Parcel, (ii) any
transfer fee that Owner or any of its affiliates is required to
pay to Holder under a Contract Dealer Gasoline Agreement, an
am/pm Mini Market Agreement, or a SmogPros Center Agreement
pertaining to the business conducted at the Offered Parcel, and
(iii) the unpaid balance of principal and accrued interest on any
loan that is payable to Holder or any of its affiliates and that
is secured, wholly or partially, by any properly that Holder is
buying in the Transaction, whether or not the deducted amounts
would otherwise be due when Escrow closes.
10. Entity Changes.
--------------
7
<PAGE>
10.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1(a) or 8.1(b).
10.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
-----------------------------
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
------------------------------
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation and (ii) has control of the management of the parent
corporation and retains control of the management of Owner.
8
<PAGE>
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
-----------------------------------
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
10.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
10.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in accordance with Section 8.3 results from one
or more Values determined in accordance with Section 6 and that part of the
purchase price is greater than 15% of the entire purchase price, Holder may
rescind its Exercise Notice by giving a notice of rescission to Owner. The
notice of rescission must be given within ten days after Holder receives the
last Appraisal Report that may be required under Section 6.3. If Holder
rescinds its Exercise Notice, Holder shall pay the cost of all the appraisers.
11. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims,
liabilities, damages, losses, costs, and expenses (including
reasonable attorneys' fees) that Holder incurs arising from any
environmental contamination occurring or hazardous materials existing
at the real property that Transferor is concurrently conveying to
Holder (the "Real Property"), to the extent that the contamination or
hazardous materials (i) are present at concentrations that any
governmental agency will require to be remediated or otherwise are not
in compliance with all applicable statutory and regulatory
requirements, (ii) are known or discovered before Holder begins its
operations at the Real Property, and (iii) are not those on which
Holder is obligated to
9
<PAGE>
perform any corrective action under a written agreement between
Transferor and Holder. This agreement to indemnify and defend will
survive the closing of Transferor's transfer of the Real Property to
Holder.
12. Owner's Transfer Rights; Notice of Changed Terms. If Holder does not
------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must
include a copy of any signed document changing the price or other terms of the
Tendered Agreement.
13. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the obligation to comply with this Agreement in connection
with any later Tendered Agreement that Owner enters into during the Right
Duration. Holder may void any transfer that Owner makes without complying with
this Agreement. To exercise this right to void a transfer, Holder must give an
Exercise Notice within 25 days after Holder receives actual notice of the
intended or consummated noncomplying transfer and the complete terms of the
transfer.
14. Default on Obligations Secured by Junior Liens.
----------------------------------------------
14.1 Definitions for Section 12. When used in this Section 12 and
--------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
Assignment Endorsement: An ALTA Endorsement No. 10.1 to Lender's
----------------------
Title Policy.
Basic Loan Balance: The unpaid balance of the Secured Obligation
------------------
reduced by the Default Amounts.
10
<PAGE>
Default Amounts: All amounts that were added to the balance of the
---------------
Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal property
----------------
that Holder intends to buy from Owner in accordance with this Section 12 after
giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and Lender
---------------------------
stating that Holder elects to buy (i) the Secured Obligation in accordance with
this Section 12, (ii) the Real Estate in accordance with this Section 12, or
(iii) both the Secured Obligation and the Real Estate in accordance with this
Section 12.
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-enforcement
----------------
sale.
Lender: A person for whose benefit a particular Lien exists.
------
"Lender" includes, without limitation, (i) the beneficiary under a deed of
trust, (ii) a mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance insuring
---------------------
its interest with respect to the Lien.
Lien: A lien that (i) encumbers an interest in the Real Estate, (ii)
----
secures a monetary obligation, and (iii) is junior to Holder's rights under this
Agreement.
Lien Enforcement Notice: A notice from Lender to Holder notifying
-----------------------
Holder of Lender's intent to enforce its Lien. The Lien Enforcement Notice must
include (i) a copy of the recorded lien document, (ii) a copy of the promissory
note or other document evidencing the Secured Obligation, (iii) a current
preliminary title report contemplating the issuance of an Assignment
Endorsement, together with legible copies of all recorded documents referenced
in the report, (iv) a statement of the amount of the unpaid balance of the
Secured Obligation, (v) a description of the Loan
11
<PAGE>
Default, (vi) an itemization of the portion of the unpaid balance of the Secured
Obligation that is in default, (vii) an itemization of the Default Amounts, and
(viii) a statement of any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose its
------------
Lien.
Reinstatement Amount: The unpaid balance of the Secured Obligation
--------------------
reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
------------------
14.2 Coverage of this Section 12. The provisions of this Section 12
---------------------------
will apply with respect to each Lien and to each Lender who holds a Lien.
14.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
14.4 Holder's Right to Buy. Before Lender begins enforcement of its
---------------------
Lien, Holder will have the Foreclosure Purchase Right.
14.5 Holder's Exercise Notice to Owner and Lender. If Holder wishes
--------------------------------------------
to exercise the Foreclosure Purchase Right, Holder must send a Foreclosure
Exercise Notice to Owner and Lender within 25 days after Holder actually
receives the Lien Enforcement Notice.
14.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted on the
real property that Holder intends to buy.
14.7 Holder's Purchase of Secured Obligation. If Holder elects to
---------------------------------------
buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise Notice, Holder shall buy from Lender, and Lender shall sell
to Holder, the Secured Obligation and all of Lender's rights in connection with
the Secured Obligation. The purchase price will be equal to the Basic Loan
Balance as of the date of the closing of the purchase and sale transaction. If
Holder wishes, the purchase and sale transaction will occur through an escrow
with a title insurance company acceptable to Holder. At the closing of the
transaction, (i) Holder shall pay the purchase price to Lender in readily
available funds; (ii) Lender shall deliver to holder (A) any promissory note
12
<PAGE>
evidencing the Secured Obligation, endorsed by Lender to Holder or Holder's
nominee, (B) a recordable assignment of the Lien, signed and acknowledged by
Lender, (C) the original of Lender's Title Policy, and (D) the Assignment
Endorsement issued by the title insurance company that issued Lender's Title
Policy; and (iii) Holder and Lender shall sign, acknowledge, and deliver any
other documents necessary or appropriate to consummate the transaction. The
Assignment Endorsement must insure Holder against loss or damage sustained be
reason of lack of priority of the Lien over defects, liens, or encumbrances
other than those shown in Lender's Title Policy and those that Holder approves
in its sole discretion.
14.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a
period of time to close the purchase of the Elected Property that is equal to
the longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the last Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
14.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice, Holder will receive a credit against the
purchase price for the Basic Loan Balance as of the date that Escrow closes. If
Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation other than the Secured Obligation that was the subject of
the Lien Enforcement Notice, Holder will receive a credit against the purchase
price for the unpaid balance of that monetary obligation as of the date that
Escrow closes.
14.10 Buying Subject to the Lien. If Holder elects to buy the Real
--------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
14.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured
13
<PAGE>
Obligation within 30 days after Holder becomes the owner of the Real Estate by
paying the Reinstatement Amount as of the reinstatement date. Within seven days
after the reinstatement date, Lender shall credit the unpaid balance of the
Secured Obligation by the Default Amounts.
14.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
14.13 Lender's Transfer Rights; New Lien Enforcement Notice. If
-----------------------------------------------------
Holder does not exercise the Foreclosure Purchase Right, Lender may proceed with
the enforcement of the Lien and (i) sell the Encumbered Property to a third
party at a Foreclosure Sale, (ii) buy the Encumbered Property by a credit bid at
the Foreclosure Sale, or (iii) accept a deed conveying the Encumbered Property
in lieu of foreclosure, in each case without the requirement of making a further
offer of the Encumbered Property to Holder. But if, within one year after
Holder actually received the Lien Enforcement Notice, Lender's enforcement of
the Lien has not been completed or Lender has not accepted a deed in lieu of
foreclosure, Lender must give a new Lien Enforcement Notice to Holder before
completing the enforcement of the Lien or accepting a deed in lieu of
foreclosure.
14.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys the
Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth below in this Section G1. But a party may
change its address for notices by giving notice as required by this Section G1.
A written notice will be considered given (i) when personally delivered, (ii)
two business days after deposit in the United States Mail as first class mail,
certified or registered, return receipt requested, with postage prepaid, (iii)
one business day after deposit with a reputable overnight delivery service for
next business day delivery, or (iv) on the business day of successful
transmission by electronic facsimile. The parties' addresses for notices are as
follows:
14
<PAGE>
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons will be considered "Owner" under this
Agreement with respect to the applicable part of the Real Estate while that
person is the owner or tenant.
G4. Time of Essence; Business Day; Dates. Time is of the essence of each
------------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and other similar events) (an "Uncontrollable
Event"). If (i) a party who has the right to exercise a right under this
Agreement has not done so by the last date allowed under this Agreement and (ii)
on that date, the party is prevented from exercising the right due to an
Uncontrollable Event, the date will be extended until the third business day
after the Uncontrollable Event ends.
G6. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement
15
<PAGE>
must be in writing and signed by Owner and Holder. Any waiver of a provision of
this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees.
(See signatures on the next page.)
16
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
17
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
=================================================================================================================
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
<S> <C> <C>
On September 2, 1999 before me, M. Bird, Notary Public
------------------------------------ -------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------------------------
[X] personally known to me to be the person whose names is subscribed to the within instrument and acknowledged to
[SEAL] me that he executed the same in his authorized capacity,
and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed
the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
----------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
--------- --------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT
--------------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
---------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- -------------------------------------- ---------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
Lot 43 and the south 25 feet of lot 44 of Tract No. 200, in the city of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in
Book, 13 Page 152 of Maps, in the office of the County Recorder of said County.
<PAGE>
EXHIBIT 10.11
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 01860
Dated (for identification): September 2 , 1999
-----------------
This Agreement for Sale of Business to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and PRESTIGE STATIONS, INC., a Delaware corporation ("Seller").
RECITALS
--------
A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the business
at the Real Estate ("Seller's Operations") and that are located at the Real
Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Dealer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas; Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 3817 West Third Street
City, State, ZIP Code: Los Angeles, California 90020
County: Los Angeles
Deposit: $23,750.00 by Buyer's check payable to Escrow Holder
Purchase Price: $180,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $60,000.00
Estimated Price of Petroleum Inventory: $15,000.00
Franchise Fee: $95,000.00
Closing Date: See Section 6.2.
2
<PAGE>
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10738 PC (To be completed by Escrow Holder)
--------------
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to ARCO the items required by Section 3 of the Real Estate
Agreement.
4. Business Property. The following items constitute the Business
-----------------
Property:
(a) Equipment. All equipment, furnishings, and trade fixtures (i)
---------
that Seller uses in connection with Seller's Operations, (ii)
that are located at the Real Estate, whether or not those items
are attached to the land or improvements at the Real Estate, and
(iii) that are shown on the attached Schedule 1 (collectively,
the "Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the Real
-------------------
Estate on the day that Escrow (as defined in Section 6.1) closes
(the "Petroleum Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
---------------
Operations (other than the Petroleum Inventory), in its original
packaging, that is located at the Real Estate on the day that
Escrow closes and (ii) all supplies that Seller uses in
connection with Seller's
3
<PAGE>
Operations and that are located at the Real Estate on the day
that Escrow closes (collectively, the "Store Inventory");
(d) Permits. All transferable licenses and permits that Seller holds
-------
in connection with Seller's Operations (collectively, the
"Permits"), including without limitation (i) the permanent beer
and wine license (the "ABC License"), (ii) the underground
storage tank permit for the underground storage tanks at the Real
Estate, (iii) any conditional use permit for Seller's Operations,
and (iv) any operating permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, walk-in
coolers, affixed sales counters and food preparation counters, food preparation
equipment, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Business Property and the
------
Franchise Fee is the amount set forth in Section 1. Section 15 provides for the
final determination of the amount payable for the Store Inventory and the
Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall deposit the balance of the Purchase Price into Escrow, in cash or
immediately available funds, by the earlier of the following dates: (i) One
business day before the date scheduled for the close of Escrow or (ii) the date
designated by Escrow Holder so that Escrow Holder can timely file Form 226,
Statement Re Consideration Deposited in Escrow, with the California Department
of Alcoholic Beverage Control (the "ABC") to allow the closing to occur on the
scheduled date.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
4
<PAGE>
6.2 Closing Date. If the ABC License is ready to be issued to Buyer,
------------
the Escrow will close simultaneously with the closings under the Real Estate
Agreement, the Companion Business Agreements, and the Companion Real Estate
Agreements. If the ABC License is not ready to be issued to Buyer, but a
temporary beer and wine license is ready to be issued to Buyer, the escrows
under the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements may close before the Escrow closes. In that
case, the Escrow will close when the ABC License is issued to Buyer.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) ABC License. Buyer, Seller, and Escrow Holder have received
-----------
notice that the ABC has transferred the ABC License to Buyer.
(b) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Real Estate Agreement, the Companion
Business Agreements, and the Companion Real Estate Agreements,
Seller has confirmed that (i) Seller is ready and committed to
close those transactions or (ii) if the transaction is being
handled through an escrow, Seller has received notice from the
escrow holder that the escrow holder is ready and committed to
close the escrow.
(c) Franchise Documents. ARCO, through its division ARCO Products
-------------------
Company ("APC"), and Buyer (i) have signed a Contract Dealer
Gasoline Agreement (the "Gas Agreement") and a non-lessee am/pm
Mini Market Agreement (the "Mini Market Agreement") for Buyer's
operations at the Real Estate after the closing and (ii) have
signed and have had notarized a Memorandum of Contract Dealer
Gasoline Agreement in recordable form. The am/pm Mini Market
Agreement will provide for the Franchise Fee as set forth in
Section 1, which is included in the Purchase Price. The Gas
Agreement and the Mini Market Agreement each must have a term of
15 years and be in ARCO's standard form.
(d) Other Closing Conditions. All closing conditions for that
------------------------
party's benefit contained in provisions of this Agreement other
than this Section 6.3 have been satisfied, or will be satisfied
as a part of the closing.
(e) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
closing, or will perform those obligations as a part of the
closing.
5
<PAGE>
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Buyer or Escrow Holder the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale") transferring
------------
title to the Business Property to Buyer, signed by Seller;
(b) Business Property. Physical possession of the tangible assets of
-----------------
the Business Property and all tangible evidence of the intangible
assets of the Business Property, to the extent that those items
are in Seller's possession or control;
(c) Permits. All the Permits;
-------
(d) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations; and
(e) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs; and
(b) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
8. Transfer of ABC License. Buyer shall do all that is reasonably
-----------------------
necessary to obtain the ABC's approval of the transfer of the ABC License to
Buyer. Seller shall cooperate with Buyer's efforts to obtain the ABC's approval
of the transfer.
9. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
10. Bulk Sale Notices. Buyer and Seller shall give notice, in compliance
-----------------
with California Business and Professions Code Section 24073, of the intended
transfer of the ABC License. Buyer and Seller instruct Escrow Holder (i) to
cause the notice to state that "the sale of seller's assets to buyer is not
subject to Division 6 of the California Uniform Commercial Code, including
Section 6106.2 of the California Uniform Commercial Code," (ii) to record and
publish the notice, and (iii) in accordance with California Business and
Professions Code Section 24074, to distribute the Purchase
6
<PAGE>
Price to Seller's bona fide creditors who file claims with Escrow Holder before
Escrow Holder receives notice from the ABC of its approval of the transfer of
the ABC License. Upon Escrow Holder's request, Buyer and Seller shall provide
Escrow Holder with the information necessary to prepare the notice. Seller
represents and warrants to Buyer that the sale under this Agreement is not a
bulk sale as contemplated by Division 6 of the California Uniform Commercial
Code. Based on that representation and warranty, Buyer instructs Escrow Holder
not to give notice under Division 6.
11. Tax Clearance Certificates. Seller will not be required to provide to
--------------------------
Buyer tax clearance certificates from applicable governmental agencies. Buyer
and Seller instruct Escrow Holder to not obtain tax clearance certificates.
Seller shall indemnify and defend Buyer from all liabilities, damages, claims,
costs, and expenses (including reasonable attorneys' fees) that Buyer might
incur in connection with any tax liability of Seller related to Seller's
Operations before closing. If required by the ABC, Seller shall provide the ABC
with evidence that Seller is not delinquent in the payment of any taxes that are
the subject of California Business and Professions Code Section 24049.
12. Sales and Use Tax. Buyer represents that it holds a valid
-----------------
Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store Inventory
or the Petroleum Inventory to Buyer.
13. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Personal property taxes.
14. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the filing, recording, publication, and other costs
and expenses that Escrow Holder incurs on its behalf, unless the cost or expense
is otherwise allocated under this Agreement. Buyer shall pay all application
and other fees charged by the ABC in connection with the transfer of the ABC
License.
15. Inventory.
---------
15.1 Store Inventory. On the day that Escrow closes, an outside
---------------
inventory service (the "Service") selected by Seller will conduct an in-store
inventory of the Store Inventory. The Service will calculate the retail price
of the Store Inventory. At the completion of the in-store inventory, Buyer and
Seller each shall pay to the Service one half of the fee for the in-store
inventory. After the in-store inventory has been completed and the Service has
calculated the retail price of the Store Inventory, Seller shall calculate the
amount payable for the Store Inventory in accordance with its then-current
pricing policies for the sale of store inventory located at an operating
business of Seller to a person who intends to re-sell the store inventory at the
same location. Seller shall then notify Buyer and Escrow Holder of the amount
payable for the Store Inventory. Seller's Operations will be closed to the
public during the instore inventory.
7
<PAGE>
15.2 Petroleum Inventory. On the day that Escrow closes, Buyer and
-------------------
ARCO's representative conducting the changeover of Seller's Operations ("ARCO's
Changeover Representative") shall jointly inventory the Petroleum Inventory; and
after the joint inventory has been completed, ARCO's Changeover Representative
shall calculate the amount payable for the Petroleum Inventory. The amount
payable for the Petroleum Inventory will equal Seller's rack price based on
Seller's latest invoices for gasoline delivered to the Real Estate. Seller
shall then notify Buyer and Escrow Holder of the amount payable for the
Petroleum Inventory.
15.3 Adjustment for Estimated Price of Inventory. After the
-------------------------------------------
petroleum inventory and in-store inventory are completed, the sum of the amount
payable for the Petroleum Inventory and the amount payable for the Store
Inventory will be subtracted from the sum of the Estimated Price of Store
Inventory and the Estimated Price of Petroleum Inventory set forth in Section 1.
The resulting overage or shortage will be credited or charged, as applicable, to
the Purchase Price.
16. Equipment Listing. Seller shall attach to the Bill of Sale, or
-----------------
otherwise deliver to Buyer before or at the closing, a list of Equipment. Buyer
may inspect the Equipment before Escrow closes.
17. Seller's Representations and Warranties. Seller's representations and
---------------------------------------
warranties in this Agreement will survive the closing. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the close of
Escrow, as follows:
17.1 Ownership of Assets. Seller has, and at the close of Escrow
-------------------
will transfer to Buyer, title to the Business Property, free and clear of all
liabilities, liens, encumbrances, security interests, leases, contracts, and
claims.
17.2 Leases, Contracts, and Agreements. No leases, contracts,
---------------------------------
commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
17.3 Pending Litigation. Seller shall indemnify and defend Buyer
------------------
from all liabilities, damages, losses, claims, costs, and expenses (including
reasonable attorney's fees) arising from Communities for a Better Environment v.
Tosco, Case No. 300595 (Superior Court for the County of San Francisco), based
on any discharges from the Real Estate into soil or groundwater before Escrow
closes.
17.4 Absence of Litigation. No suit, arbitration, or other
---------------------
proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future. Nevertheless, Seller discloses to Buyer the existence of the
litigation described on the attached Schedule "2".
8
<PAGE>
17.5 Taxes. Seller has filed all tax returns required in connection
-----
with Seller's Operations. Seller has paid, or will pay before the close of
Escrow, all taxes (including interest and penalties on the taxes) due from
Seller in connection with Seller's Operations.
17.6 Equipment. All Equipment is in good working condition. The
---------
underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement, according to the certificate of upgrade
compliance provided under Section 25284 of the California Health and Safety
Code. The PayQuick Island Cashier has been installed at the Real Estate and
compiles with the terms of Section 10.13 of the Gas Agreement. The video
surveillance equipment approved by ARCO has been installed at the Real Estate
and is in good working condition. Any secondary containment equipment for the
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
17.7 Permits and Laws. Seller's Operations are in compliance with
----------------
(i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits for
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Environmental Health
and Safety Manager, Ted Harriss is the Property Management Representative
assigned to the Real Estate, and Lynn Beteag is Seller's Property Management
Manager assigned to the Real Estate.
17.8 Trademark and Trade Dress. Seller's Operations comply with the
-------------------------
trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
17.9 Employees. The employment of all employees of Seller for
---------
Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
18. As-Is Sale. Buyer acknowledges that (i) it is buying the Business
----------
Property solely in reliance on its own investigation; (ii) no covenants,
representations, or warranties have been made by Seller or on Seller's behalf,
except those set forth in this Agreement; (iii) Buyer has made itself aware of
all Laws concerning the Business
9
<PAGE>
Property or Buyer's operation of a business using the Business Property; and
(iv) Buyer will be buying the Business Property in its condition existing when
Escrow closes. Nothing in the previous sentence diminishes Seller's obligations
as expressly set forth in this Agreement.
19. Possession of Business Property. Buyer may possess and operate the
-------------------------------
Business Property when Escrow closes. Buyer shall open for business at the Real
Estate within 48 hours after Escrow closes. Any alterations to the building on
the Real Estate will be considered a "conversion" under Section 5.02(b) of the
Mini Market Agreement.
20. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right of
-----------------------------
first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
21. Required Governmental Notices. Promptly following the closing, Buyer
-----------------------------
shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
22. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE: THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 22; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ JLS
--------------------- -------------------
Buyer's Initials Sayer's Initials
23. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example,
10
<PAGE>
corporate resolutions, consent of partners, or consent of members), and any
other document necessary to enable Seller to confirm that the individual signing
this Agreement for Buyer is authorized to bind Buyer.
24. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If ARCO terminates the Real Estate Agreement in accordance with its
terms, Seller may terminate this Agreement without further liability to Buyer.
If Buyer terminates the Real Estate Agreement in accordance with its terms,
Buyer may terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence; Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
11
<PAGE>
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
(See signatures on the next page.)
12
<PAGE>
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------------
John D. Castellucci
President
SELLER:
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
--------------------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2 , 1999
-------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
--------------------------
Patricia Cusick
Escrow Officer
13
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
<PAGE>
EXHIBIT 10.12
Agreement Sequence: 000
-------
Facility Number: 82060
-------
Customer Account Number: 0883314
-------
AR Number: 0883314
-------
Agreement Type: AMPMN
-------
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2 , 1999, between ARCO
------------------------------- ----
Products Company (a division of ATLANTIC RICHFIELD COMPANY - incorporated in
Delaware), with an office at:
4 CENTERPOINTE DRIVE, LA PALMA, CALIFORNIA 90623
- --------------------------------------------------------------------------------
("ARCO") and LLO-Gas, Inc.
-------------------------------------------------------------------
a Corporation
------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"],
if partnership, the names of all partner and State of Organization; if limited
partnership, the names of all general partners
and State of Organization; if corporation, the State of Incorporation; if LLC,
the State of Organization)
with an address at 23805 Stuart Ranch Road, Ste. 265, Malibu, CA 90265
-------------------------------------------------------------
("Operator").
Operator desires to be the franchisee of, and ARCO is willing to grant to
Operator a franchisor for, an am\pm mini market located at the Premises set
forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the
terms and conditions set forth in PARTS I and II of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
in PARTS I and II hereof, each of the parties intending to be legally bound
hereby, agrees as follows:
PART I
PART I contains specific terms which relate to the terms and conditions set
forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10 (4/99),
attached hereto and incorporated herein.
Section
- -------
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
N/A
---------------------------------------------------------------------
---------------------------------------------------------------------
4.03 Store Manager (if Operator has more than one am/pm mini market)
---------------------------------------------------------------------
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______
day of ____________________, ______, ("Commencement Date"), and shall
end at 10 a.m. on the first day after the last day of the [_____]
120th or [_______] 180th full calendar month following the
Commencement Date. If not time is checked, the box for 120th shall be
deemed checked. If no date is set forth in this Part I, the
Commencement Date shall be established by the "Notice of Final
Inspection and Readiness" provided for in Section 5.01 of PART II.
6.01 Premises
3817 W. Third St - MARIPOSA
---------------------------------------------------------------------
(complete address by street number, including, where applicable,
designation of corner)
---------------------------------------------------------------------
City LOS ANGELES LOS ANGELES
---------------------------
(City or town)
State California Zip Code 90020
------------------------- -------------------
7.01(a) Initial franchise fee: Ninety-Five Thousand 00/100
---------------------------------------------
Dollars [$ 95,000.00]
------------ ---------
7.01(c) Renewal franchise fee: n/a
---------------------------------------------
Dollars [$ 0 .00]
------------ ------
7.02(a) Minimum royalty fee: One Thousand 00/100
------------------------------------------------
Dollars [$ 1000 .00]
------------ ----------
7.03 Security Deposit: One Thousand 00/100
--------------------------------------------------
Dollars [$ 1000 .00]
------------ ----------
16.01 Operational Designee, if applicable:
--------------------------------
17.01(j) Transfer fee:
-------------------------------------------------------
Dollars [$ .00]
------------ ------
17.02 Corporate Designee (Corporate operators only): JOHN D. CASTELLUCCI
-------------------
1 of 4
<PAGE>
Limited Liability Company Designee (LLC's Only):
---------------------------
Partnership Designee (Limited Partnership Only):
---------------------------
Facility Number: 82060
-----
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by a
check mark at the left of the required items. ARCO agrees to loan the equipment
initialed by ARCO to the right of such items and to install such equipment prior
to the Commencement Date. Operator agrees to install, at Operator's expense, on
or before the Commencement Date, the equipment initialed by Operator to the
right of such items. All equipment, whether furnished by Operator or by ARCO,
must meet ARCO's specifications including, but not limited to, specifications
with respect to brand, size, color and quality.
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X am/pm Sun & Moon Sign X
- ----- -----
X Building Fascia (illuminated) X
- ----- -----
X Cigarette Merchandiser (Overhead)(Vendor Supplied) X
- ----- -----
X Corner am/pm I.D. Sign
- ----- and where applicable, Sign Pole X
-----
X Interior Signage X
- ----- -----
X Training Materials [Employee Training System ("E.T.S.")] X
- ----- -----
X Bun Toaster X
- ----- -----
X Capuccino Bulk Powder Machine X
- ----- -----
X Cash Register (Primary with PayPoint(R) P.O.S. X
- ----- -----
X Cheese Sauce Dispensers (2) X
- ----- -----
X Coffee Brewer (6 Burner Twin Brewer) X
- ----- -----
X Coffee Brewer Timer X
- ----- -----
X Coffee/ Bakery Menu Board X
- ----- -----
X Coffee Mug Rack X
- ----- -----
X Coffee Lid/Supply Spinner Rack X
- ----- -----
X Computer Software and Hardward X
- ----- -----
X Condiment Pumps (2) X
- ----- -----
X Convection Oven X
- ----- -----
X Convection Oven Racks (4) X
- ----- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
- ----- -----
X Cooler Boxes (Upright) Size______ Number______ X
- ----- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
- ----- -----
X Counter Top Condiment Dispenser Unit X
- ----- -----
X Counter and Shelving (including Condiment Table) X
- ----- -----
X Counter Merchandising System X
- ----- -----
X Cup Dispenser (Hot and Cold) X
- ----- -----
X Fast Food Module (older units only) X
- ----- -----
X Fax Machine X
- ----- -----
X Food Merchandising Warmer X
- ----- -----
X Food Merchandising Rack Identification Channels and Strips X
- ----- -----
X Food Preparation Table X
- ----- -----
X Fountain Drink and Ice Dispenser with Ice Maker and X
- ----- Carbonator (Pepsi-Cola) -----
X Fountain Lid and Straw Rack X
- ----- -----
X Prepackaged Electronic Facility Controller (EFC) X
- ----- (see Electronic Drawings for Details) -----
</TABLE>
2 of 4
<PAGE>
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X Freezer Cabinets (Upright) Size______ Number______ X
- ----- -----
X Freezer (Storage Room) X
- ----- -----
X Frozen Carbonated Beverage Machine X
- ----- -----
X Frozen Dessert Graphics Package X
- ----- -----
X Frozen Dessert Cup, Cone Tower X
- ----- -----
X Gondolas Size______ Number______ X
- ----- -----
X Hood and Exhaust Ventilation System for Convection Oven
- ----- (California only and only where locally required) X
-----
X Ice Maker X
- ----- -----
X Ice Merchandiser Size______ Number______ X
- ----- -----
X In-store Television Monitors for display of multi-media
- ----- advertising** X
-----
X Microwave Over (Commercial) X
- ----- -----
X Nacho CheeseSauce Dispensers X
- ----- -----
X PayQuick Island Cashier (PIC) (only if Operator is
- ----- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000) with PayPoint X
- ----- -----
X Shelving (Storage Room) Size______ Number______ X
- ----- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
- ----- -----
X Shelving (Wall) Size______ Number______ X
- ----- -----
X Sink (3-compartment - food preparation) X
- ----- -----
X Sink (Hand sink in hot food area) X
- ----- -----
X Sink (Service/Mop) X
- ----- -----
X Small Wares (Food Service) X
- ----- -----
X Soft Serve Dispenser X
- ----- -----
X Sports Bottle Rack X
- ----- -----
X Lid/Straw Spinner Rack X
- ----- -----
X (Combination VHS Player/Monitor
- ----- to utilize ETS/VHS tapes) X
-----
X Water Heater X
- ----- -----
X Video Surveillance Equipment (including six Color
- ----- Cameras.two 20" color Monitors, Flashing Red Lights
for Monitors, Multiplexor Unit to support up to 9
Cameras, Time-lapse Video Recorder, Video Tape Library
with 31 tapes (replaced annually with 31 new long
playing Video T-160 tapes) and 24 Hour Surveillance
Decal) X
-----
X VSAT Equipment: (1) Hughes Satellite Dish X
- ----- -----
X (2) Hughes Indoor Unit - Satellite Receiver X
- ----- -----
(3) Deicer (if required for colder climate) X
-----
- ----- Other: 1. _____________________________ -----
2. _____________________________ -----
3. _____________________________ -----
</TABLE>
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
3 of 4
<PAGE>
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Connie Carroll 9/2/99 By /s/ John Castellucci 9-2-99
--------------------------------- ---------------------------------
Manager Date Manager Date
/s/ [illegible] 9-2-99 /s/ Denise Newton 9/2/99
- ----------------------------------- ------------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
4 of 4
<PAGE>
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Mark and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined in Section 5.01 and continuing during the term
of this Agreement, the non-exclusive right and license to use the trade secrets
and know-how regarding operation of am/pm mini markets, the service mark and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm"
service marks for retail grocery store and convenience store services. ARCO
expressly reserves the right to change, alter or modify the am/pm service mark
or service name or substitute any other service mark or service name at any time
by giving Operator not less than thirty (30) days' prior notice thereof. In the
event of any change, alteration or modification of the service mark or service
name, Operator agrees that only the service mark or service name, as changed,
altered or modified, shall be used by Operator to identify the Store. If the
service mark and service name "am/pm" is changed by ARCO, it is agreed that the
new service mark and service name adopted by ARCO shall be substituted for
"am/pm" wherever "am/pm" appears in this Agreement. ARCO also expressly
reserves the right to change, alter or modify colors and designs and other
service marks and service names used in connection with am/pm mini markets from
time to time and place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service mark and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service mark and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service mark or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service mark,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or attempt to register
1 of 33
<PAGE>
ARCO's service names or service marks, trademarks in Operator's name or that of
any other person and not to use such service marks, trademarks or service names,
or any parts thereat as am part of any corporate or partnership name or any
other business name. It is understood that this covenant shall survive the
termination of this Agreement and shall be binding upon the heirs; successors
and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement or
upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service mark,
trademark rights that may have vested in Operator notwithstanding the provisions
of Section 1.04 as a result of any activities of Operator pursuant to this
Agreement. Operator agrees to use said service marks, trademarks and service
names in connection with, and exclusively for, the promotion and operation of an
am/pm store as provided hereunder, and in accordance with the standards, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service mark or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service mark, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this Agreement
or termination of any subsequent Store Agreement to cease and forever abstain
from using the am/pm service mark and service name and other service marks and
service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during the
term of this agreement to use ARCO's franchise accounting system software at the
am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and
after termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for
Operator.
ARTICLE 2
Relationship of Parties
2.01 Neither Operator nor any of its employees shall hold itself or
himself out at any time as an agent, representative, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and
shall not bind nor obligate ARCO in any way, manner or thing whatsoever, nor
shall Operator
2 of 33
<PAGE>
represent that it has any right or power to do so. Operator
shall undertake all obligations herein described as an independent contractor
and shall exercise and be responsible for the exclusive control of the Store and
Premises and all activities conducted therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted
and as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
ARTICLE 4
Hours of Operation and Personal Participation
4.01 Operator shall promote the business of the Store and shall cause the
Store to be operated continuously throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN
THE MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly royalty fee for each day Operator fails to cause the Store to be
open for the prescribed hours.
4.03. Operator shall participate in the operation of the am/pm business
for a period of at least 40 hours per week and if Operator has more than one
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
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program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). For purposes of
personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if Operator is a corporation,
partnership or LLC. The Operational Designee must be a an officer or
shareholder if Operator is a corporation, a member or manager of the LLC if
Operator is an LLC, a general partner if Operator is a limited partnership, a
partner if Operator is a partnership other than a limited partnership. In the
case of Concurrent Operations at the Premises, as more fully described in
Article 4.05 hereof, Operator is obligated to participate in the operation of
all franchise businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm
business as described in Section 4.03 and/or, if applicable, to have the Store
Manager designated in PART I employed at the store on a full time basis and/or,
if applicable, to replace such person with another trained Store Manager within
two months from the date the Store Manager designated in PART I or any successor
to such person is no longer employed at the store shall constitute a material
breach of this Agreement.
4.05 In the event the am/pm mini market, with ARCO's approval, is
operated at the Premises by Operator in conjunction with another or more than
one other ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date first
above written. Except as otherwise provided in this Article, the "Commencement
Date" shall be on the date set forth in PART I. If no date is set forth in PART
1, the Commencement Date shall be the date established by ARCO by notice to
Operator ("Notice of Final Inspection and Readiness") as the date the Premises
are available for occupancy and ready for conduct of the business of the am/pm
mini market. The term hereof shall end as of 10:00 a.m. on the first day after
the last day of the one hundred twentieth (120th) or one hundred eightieth
(180th) full calendar month following the Commencement Date as set forth in Part
I, unless this Agreement is terminated earlier pursuant to the terms hereof.
5.02 (a) In the case of ground-up construction of an am/pm mini market,
as soon as reasonably practicable after execution of the Agreement, but within
six (6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
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(1) Photographs of the entire site, including improvements and corner
signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey should
show all existing elevations and site features and should also include
additional data such as: width of streets; type of curbs and corner
radius; existing sidewalks and/or approaches, including material and
condition; location of existing power poles, light poles, hydrants,
traffic light poles, water, gas and electrical curb boxes, etc.; buildings
and islands on the site, if any, by dimension; paving, landscaping, trees,
fencing, retaining walls, underground motor fuel storage, if any; property
line dimensions, angles and bearings, known setbacks, easements and code
restrictions; North arrow and notes on any special building, zoning and/or
sign code regulations affecting the property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements, and other
changes not resulting from local requirements, but requested by Operator must be
submitted in writing to ARCO with drawings and specifications and approved in
advance by ARCO. All changes, if any, not mandated by governmental authority
but requested by Operator must be submitted simultaneously as one consolidated
request for modification of the preliminary plans. If modifications are
mandated by governmental authority, copy of the specific instructions to change
the plans must be submitted along with the request for change. ARCO is willing,
within the limitations set forth below, to make the approved modifications, or
Operator may, at Operator's expense, have an architectural or engineering firm
of Operator's choosing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
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(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
(1) General arrangement ("As Built") drawings including informational
sketches and data showing: complete set of drawings used for construction
of building (if available); exterior dimensions, length, width, and height
of every vertical and horizontal surface; interior dimensions, length,
width and height of every room, location of all existing electrical
outlets, plumbing lines, fixtures, switches, controls, furniture, etc.;
obstructions in area to be occupied by walk-in coolers; all other major
obstructions such as columns, downspouts, vents, ducts, etc.; existing
ceiling layout and placement of all light fixtures, grilles, etc.,
location of heating, air conditioning and water heating units, type, size,
and condition; electrical panel, size of service, number of circuits,
condition of panel; if reusable as is, or with supplementary panel and if
three-phase service is available; description of existing structural
system, age, type, size, location of beams, columns, bearing walls, shear
walls, etc.; current condition of building, roof, exterior, interior,
restrooms, walkways, existing motor fuel storage and dispensing system, if
any, showing age, size and type of underground tanks (steel or
fiberglass), make and size of suction pumps, leak detectors, make and
model of pumps/dispensers and self-service console/equipment, if any;
describe necessary repairs; photographs of all four sides of building,
interior of office, storage, bays, electrical panel, heating/air
conditioning unit, unusual conditions, existing islands, signs and
canopies; local building restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements and other
changes not resulting from local requirements but requested by Operator, must be
approved in advance by ARCO. All changes, if any, not mandated by governmental
authority but requested by Operator must be submitted simultaneously as one
consolidated guest for modification of the preliminary plans. If modifications
are mandated by governmental authority, copy of the specific instructions to
change the plans must be submitted along with the request for change. ARCO is
willing, within the limitations set forth below, to make the approved
modifications, or Operator may, at Operator's expense have an architectural or
engineering firm
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of Operator's chasing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed 520,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(c) Within 60 days after receipt of the standard Plans, Operator shall
apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if available
in the jurisdiction in which the Store is located. The beer and wine license
must be obtained before ARCO installs or arranges to have installed illuminated
fascia up to ARCO's specifications shown on the Plans, the exterior am/pm sign,
sign pole and interior signage which consists of photo panels, product area
identifiers, striping, fast food menu board and other miscellaneous decals, and
a cigarette overhead merchandiser, if such licenses are available at the time in
the jurisdiction in which Operator's store is located. If a beer and wine
license is not available until construction is completed or the Store is opened
for business, ARCO shall proceed with the necessary work but Operator shall
nevertheless be required to pursue diligently efforts to obtain a beer and wine
license at the earliest possible date in which case the obtaining of a beer and
wine license as a condition to events contemplated in this Article 5, however,
shall be waived and not obtaining a license shall not serve as a ground for
termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on
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the Plans, and the exterior am/pm sign, sign pole and interior signage which
consists of photo panels, product area identifiers, striping, fast food menu
board and other miscellaneous decals, and a cigarette overhead merchandiser. If
Operator is not the sole and exclusive owner of the Premises, as a condition to
ARCO performing its obligations set forth in the preceding sentence, Operator
shall submit, in form satisfactory to ARCO, a consent of all owners of the
Premises to the modification of the Premises, and a waiver in recordable form,
of all claims of the owner, and any party claiming through or under the owner,
including any mortgagees, to any improvements installed by ARCO on the Premises
and consent to removal by ARCO of such improvements upon termination of the
am/pm franchise. After ARCO installs or arranges to have installed exterior
illuminated building fascia, the exterior am/pm sign, sign pole and interior
signage which consists of photo panels, product area identifiers, striping, fast
food menu board and other miscellaneous decals, and a cigarette overhead
merchandiser, and provides the additional items referred to in the second
sentence of this Section 5.03, ARCO shall issue the Notice of Final Inspection
and Readiness. If Operator fails to open the Store for business on the
Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
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ARTICLE 6
Premises and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the
operation of an am/pm mini market on the Premises set forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the equipment
shown on the list entitled "Store Equipment" attached to PART I ("Store
Equipment"). ARCO hereby agrees to loan and install or arrange to have
installed exterior illuminated fascia up to ARCO's specifications shown on the
Plans, the exterior am/pm sign, sign pole and interior signage which consists of
photo panels, product area identifiers, striping, fast food menu board and other
miscellaneous decals ("Loaned Store Equipment"), and a cigarette overhead
merchandiser. Operator agrees to install the Store Equipment on or before the
Commencement Date. All Store Equipment must meet ARCO's specifications,
including but not limited to specifications with respect to size, color and
quality. Operator may not install additional equipment, fixtures or machines
without the prior written consent of ARCO. Operator shall maintain all
equipment, including required and optional equipment, ready for use and in
operable condition and shall use or permit the equipment to be used only for its
intended use and only in a manner consistent with the manufacturer's
instructions, and Operator shall utilize the equipment and exert Operator's best
efforts to promote the retail sale of items or services for which the equipment
is designed. In the event that ARCO agrees to lease to Operator and Operator
agrees to lease from ARCO additional equipment during the term of this
Agreement, the list entitled "Store Equipment" attached to PART I shall be
revised accordingly by means of an amendment to this Agreement executed by both
parties hereto. Operator agrees not to remove any of the Store Equipment from
Store without the prior written consent of ARCO except in the event replacement
of the equipment is necessitated by malfunction, in which case Operator may
replace the equipment with equipment meeting the same specifications with
respect to size, color and quality as the equipment replaced. Operator shall
notify ARCO of any such replacement. Title to the Loaned Store Equipment shall
remain in ARCO at all times during the term hereof and Operator shall not suffer
or permit any levy, attachment or execution by Operator's creditors, including
taxing authorities, or by any person or entity having any interest in the
Premises to remain on such Loaned Store Equipment. ARCO reserves the right to
add or delete Equipment during the term of the Agreement and Operator will
install or remove such Equipment within 90 days after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01 (a) Operator shall pay ARCO an initial franchise fee in the
amount set forth in PART I upon the signing of this Agreement
by Operator.
(b) The initial fee is not refundable in whole or in part except
in the following circumstances:
(1) If this Agreement is for Premises at which construction
of or conversion to an am/pm mini market is contemplated,
after Operator executes the Agreement, ARCO shall have up to
90 days to execute the Agreement ARCO shall not be obligated
under the Agreement until it is executed by ARCO. If ARCO
has made changes to the am/pm franchise between the time the
offering circular was given to
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Operator and the time before the offering circular expires by
its own term and Operator has not yet executed the Agreement,
ARCO shall give Operator a new offering circular and a new
Agreement and related agreements reflecting any such changes
and Operator may elect to execute either the agreements
originally given to Operator or those reflecting the changes.
Operator may notify ARCO that Operator does not want an am/pm
franchise and wishes to revoke the Agreement at any time
before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO
has executed the Agreement, ARCO shall return any initial fee
paid by Operator, less ARCO's costs incurred for site
selection and study and preparation of engineering and other
plans for the Premises and any other costs incurred by ARCO
in contemplation of Operator operating an am/pm mini market.
If ARCO elects not to execute the Agreement, ARCO shall
return, in full, any initial fee paid by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises,
if any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred
for site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the
Agreement because Operator is unable to obtain all necessary
construction permits and, under certain conditions, a beer
and wine license; or (ii) ARCO terminates the Agreement
because of Operator's failure to obtain permits within 12
months from the receipt of final plans and/or complete
construction or conversion of the Premises to suitable am/pm
mini market facilities within 24 months from the receipt of
final plans, for reasons not within Operator's control or
Operator's failure to obtain a beer and wine license, if
available in the jurisdiction in which Operator's am/pm mini
market is located. Except if ARCO's expenses exceed one-half
of the initial fee, in which case ARCO shall deduct its
expenses as set forth in the first sentence of this
subsection (3), one-half of the initial fee shall be returned
to Operator if ARCO terminates the Agreement because of
Operator's failure to obtain permits for and/or complete
construction or conversion within the prescribed time for any
other reason.
(4) The initial fee shall be prorated on a monthly basis
over the term of the Agreement and shall be refundable or
payable on such prorated basis if ARCO terminates the
Agreement for the following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation,
for more than 90 consecutive days, which renders
Operator unable to provide for the continued
proper operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part;
of the Premises pursuant to the power of eminent
domain;
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(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and
in the normal course of business to withdraw
from and to no longer maintain the marketing of
Motor Fuels through retail outlets or the am/pm
mini market franchise in the relevant geographic
market area in which Operator's am/pm mini
market is located.
In the event Operator's initial fee is returned in
whole or in part for any of the foregoing reasons, no
interest shall be paid on the amount returned.
ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02 (a) Unless otherwise agreed to in writing by the parties,
Operator shall pay ARCO, as a monthly royalty fee, six percent (6%) of the
monthly gross sales, as that term is hereinafter defined, but not less than the
minimum royalty fee set forth in PART I; provided, however, that if Operator
operates a Store that is accessible to pedestrian traffic only, unless otherwise
agreed to in writing by the parties, commencing on the Commencement Date,
Operator shall pay ARCO, as a monthly royalty fee, five percent (5%) of the
monthly gross sales, but not less than the minimum royalty fee set forth in PART
I. Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term of this Agreement. For any month this Agreement is in effect
which is less than a full calendar month, the minimum monthly royalty fee shall
be prorated on a daily basis.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated as
described below.
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(1) Gross sales shall be valued in United States currency,
whether received in that form or otherwise, without deduction on account
of any of the following:
(i) the cost of the goods sold, including taxes paid by
Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
(i) all sales of merchandise made from or in the Store
or in the immediate vicinity of the store, such as a cart or
sidewalk sale;
(ii) all compensation received for services performed
from or in the Store including but not limited to, commissions and
referral, commissions on lottery and lotto tickets (including all
payments by state agencies for the sale of tickets and for the
redeeming of winning tickets), handling and placement fees and fees
for placement of coin operated and other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a
physical inventory is taken of merchandise currently held for sale in the
Store: as required in Section 15.03 (b). The inventory variation is
defined as either the inventory gain (physical inventory value is greater
than book inventory) or the inventory loss (book inventory value is
greater than physical inventory). The inventory variation subject to
gross sales calculation for royalty reporting is the inventory variation
in excess of the allowable variation. Detailed calculations for
variations and allowable variations are further described in the Store
Systems Manual.
(4) The following are not included in gross sales:
(i) gasoline and other motor fuel sales, if any,
including all applicable motor fuel and sales taxes;
(ii) any deposits refunded to customers;
(iii) sale price of property returned by customer when the
full sale price is refunded either in cash or credit. Where the
customer is required to exchange returned merchandise for other
new merchandise, the cashier is required to ring the sale of the
new merchandise on the register and the sale of the new
merchandise is included in gross sales subject to royalty. For
the purpose of this paragraph, refund or credit of the entire
amount shall be deemed to be given when the purchase price less
rehandling and restocking costs, is refunded or credited to the
customer;
(iv) the amount of any tax imposed by the United States
or any city, county, state, or other governmental entity or agency
or instrumentality thereof upon or with respect to retail sales of
tangible personal property measured by a stated
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percentage of sales price or gross receipts, whether imposed upon
the Operator, as a seller, or upon the customer, as a purchaser.
(v) for newly constructed or converted am/pm mini
markets only, store sales made during the first 7 days of the term
of the franchise, i.e., during the period comprised of the
Commencement Date as established by the "Notice of Final Inspection
and Readiness" and the next succeeding 6 days of initial operation.
(vi) store sales made during an eligible Grand Opening
Event for a new store, or for an existing store, following
completion of ARCO-approved remodeling or rebuilding. An eligible
Grand Opening Event, which event is not to exceed seven consecutive
days, is more fully described in Article 14.02 hereof.
Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of the calendar month
succeeding the month in which the sales were made for which said fee is due.
Payment of the royalty fee shall be made in accordance herewith and with forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set
forth in PART I on or before the Commencement Date of this Agreement. If
Operator shall be in default at any time in the performance of any of the terms
and conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing on
the Commencement Date, Operator shall pay an advertising and promotion fee for
each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is defined
in Section 7.02 above.) At any time during the term hereof, on thirty (30)
days' prior written notice to Operator, ARCO may increase or decrease the
advertising and promotion fee, but the total advertising and promotion fee may
not be increased to more than five and one-half percent (5.5%) at any time
during the term of this Agreement and ARCO may not increase the fee by more than
one percent (1%) in any calendar year. The advertising and promotion fee is
payable on or before the tenth (10th) day of the calendar month succeeding the
month in which sales were made upon which the fee is calculated. In addition,
Operator may be required to pay shipping costs, plus the cost of replacement
signs, if Operator requests duplicate signage.
7.05 Any fees and other amounts due and owing ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, c/o
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Citibank NA. For Credit to APC National Credit #4051-4874, New York, New York
10043," and to no other bank or account number unless so advised in writing by
the Credit Manager, ARCO Products Company. If such Agreement requires or permits
payment by automated clearing house ("ACH"), all such payments shall be made to
"ARCO Products Company, c/o Citibank Delaware, For Credit to APC National
Credit-ACH #3815-2114, New Castle, Delaware 19720," and to no other bank or
account number unless so advised in writing by the Credit Manager, ARCO Products
Company. If such Agreement requires or permits payment by electronic funds
transfer ("EFT"), all such payments shall be made in strict accord with
procedures established and promulgated by the ARCO Products Company credit
department. Operator agrees to indemnify ARCO for any loss or expense caused by
Operator's failure to comply with this Paragraph. Payment shall be deemed made
when, and only when, its receipt has been verified by ARCO. Receipt by ARCO of
any monies due ARCO after notice of termination or nonrenewal does not
constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in strict
accordance with all applicable federal, state and local laws, ordinances, rules,
regulations and lawful directives or orders of public officials administering
such laws. Operator agrees to immediately notify ARCO, in writing, of any
citations, notices of violation or other communications alleging violations of
federal, state or local laws, ordinances, rules, regulations, directives or
orders, affecting the operation of the Store and Premises.
8.03 Operator represents and warrants that as of the date hereof Operator
is in compliance with all leases, contracts and agreements affecting the
Premises and Operator's use and possession of the Premises.
ARTICLE 9
Utilities
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9.01 Operator shall be solely responsible for all costs of and taxes
and assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
10.02 In addition to the requirements of Section 10.01, Operator shall
perform all maintenance, repairs, and replacement, as necessary, of the
Premises, Store and Store Equipment, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious
physical damage shall exclude damages by the elements and acts of God. ARCO
shall make all necessary repairs and replacements to the Loaned Store Equipment
resulting from each such incidence of accidental or malicious physical damage
and deduct all costs so incurred from Operator's security deposit and shall
pursue collection from the person(s) reported by Operator to ARCO as having
caused such damages. Immediately upon such deduction of costs so incurred,
Operator shall pay to ARCO an amount equal to that portion of the security
deposit so deducted so as to restore said security deposit to the amount set
forth in PART I. Operator agrees to execute and deliver any instruments and
papers and do whatever else is necessary or required in order for ARCO to pursue
such collection efforts on behalf of Operator for the amount deducted from
Operator's security deposit. If ARCO's collection efforts result in repayment
for all costs incurred by ARCO in making all necessary repairs and replacements
for such an incidence and in collecting such repayment, ARCO shall reimburse
Operator for the amount deducted from Operator's security deposit. If ARCO's
collection efforts result in partial repayment for all such costs incurred, ARCO
shall reimburse Operator only to the extent that the amount collected and the
amount deducted from Operator's security deposit taken together exceed the total
amount of cost of collection and of repair and replacement incurred by ARCO.
Operator shall return all Loaned Store Equipment to ARCO at the termination or
expiration of this Agreement in the same condition which existed at the time the
Loaned Store Equipment was delivered to Operator, subject to normal wear and
tear.
Notwithstanding the foregoing, in the event of destruction of the Premises
to the extent that the normal authorized uses are no longer practicable, either
party may terminate this Agreement within 120 days of such destruction by giving
the other party written notice. The effective date of such termination shall
relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to be
reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable
times and the right to remain on the Premises for examination and inspection of
the Premises, Store, Store Equipment, Operator's books, records and reports and
for any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost
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incurred in performing such maintenance and repair and the full replacement
cost, without discount or adjustment for any difference between the remaining
term of the franchise and the useful life of the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video
Surveillance equipment for its intended purpose consistent with the
manufacturer's instructions and ARCO's specifications and maintain at all times
the equipment, including all of its components, in good working order.
ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from
and against all claims, losses and damages for personal injury or death (whether
to third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
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Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in whatever form, shall be deemed to benefit
Operator. ARCO shall make no accounting to Operator of the expenditure of
advertising and promotion fees or promotional and other allowances. ARCO may
condition Operator's eligibility for and receipt of promotional, display and
other allowances on Operator's observance of maximum retail selling prices
determined by ARCO or maximum gross profit margins determined by ARCO or a
reduction in Franchisee's retail selling price commensurate with the amount of
the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
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13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A
suggested electronic file or the product file will also be available for the
operation of the Point of Sale scannable register(s).
14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and
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shall permit ARCO and its representatives to enter the Premises and the Store to
examine Operator's business records at all reasonable times. In addition, in
executing this Agreement, Operator grants ARCO the right to electronically
collect certain sales data via Operator's point-of-sale ("P.O.S.") system,
including scanning devices, for purposes of verifying fees and analyzing sales,
as more fully described in the am/pm Store Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance with the terms and
conditions of the franchise; in the event such mystery shops result in a fee
verification review/audit, regardless of whether such review discloses a
deficiency, Operator shall be required to pay ARCO its reasonable costs in
performing the review, including the then-current cost of the mystery shops
(currently $36 each). If a review or audit discloses a liability for royalty,
advertising and promotion fees due to ARCO, Operator shall pay promptly the
amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any
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authorization for release of statements and cancelled checks to ARCO as may be
requited in order for ARCO to obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall
provide reports, statements and data to ARCO as described below and as described
more fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty fee
calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the service
performing the inventory of the total amount of inventory in the Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all am/pm
franchises, Operator shall provide to ARCO, or to an accounting service
designated by ARCO, such reports and data as are reasonably requested by
ARCO for such purposes and as are more fully described in the Systems
Manual. Such reports and data shall be in a format as designated by ARCO
and transmitted to ARCO, at ARCO's option, either by diskette or
electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise
Accounting System ("F.A.S."), which Operator is required to use, and other
bookkeeping, accounting and physical inventory services. Such services are more
fully described in the Systems Manual. Except for F.A.S., which Operator is
required to use, Operator may elect not to use the other bookkeeping, accounting
and inventory services offered by ARCO and may obtain, at its expense, any other
bookkeeping, accounting and inventory services for Operator's business as
Operator desires. Operator shall nevertheless be required to provide to ARCO,
or to an accounting service designated by ARCO, the information referred to in
Section 15.03.
15.05 The provisions of Article 15 shall survive termination or
expiration of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
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The person(s) required to attend and satisfactorily complete the training
programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
. The sole proprietor, if Operator is a sole proprietor;
. All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
. All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
. All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC).
If no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the
general partner, or if more than one, the general partners),
all shareholders in a corporation or all members in an LLC
must successfully complete the training programs.
2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below:
If Operator has more than one am/pm mini market, Operator must have
one employee who has attended and successfully completed an four
week am/pm Store Manager training program and who is employed on a
full time basis at each store.
16.02 Following is a description of ARCO training programs in
connection with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee, or
any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
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The initial franchisee training program is currently seven weeks, but may
be increased or decreased at ARCO's election, and may include nighttime hours in
connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's assignee(s),
who are required to pay tuition for the initial franchisee training program at
the then-current rate (currently the tuition for the 7-week program is $15,000),
no tuition shall be charged for the initial training program for Operator, or
for one or two employees eligible for training if they attend before or within
thirty-six (36) months after the Commencement Date of the initial Store
Agreement between Operator and ARCO for the Premises. Attendance by additional
persons shall be subject to tuition payable by Operator at the current rate.
The current tuition is $7,500 per additional person, but that is subject to
increase. Tuition must be paid, at ARCO's then-current rate for initial
training, for more than two persons, regardless of whether such persons in
excess of two are partners, shareholders or eligible employees of Operator. If
the franchise is transferred within thirty-six (36) months, a separate training
fee must be paid by the transferee even if only one person has been trained up
to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as
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may be mutually convenient, provided, however, that the cost of such additional
instruction, including transportation, food, lodging and reasonable charges for
time and services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the Employee
Training System, which replacement system will be required when available. It
is estimated that the replacement system will use CD-Rom technology and will be
utilized with personal computers. The current cost for the training materials
is estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of the transfer fee payable to ARCO in
the event of an assignment to a third party. If ARCO does not accept the offer
within 30 days, operator may assign to a third party subject to ARCO's prior
written consort. If Operator offers a lower price or more favorable terms which
have the effect of a lower price to the third party, ARCO's right of first
refusal shall be triggered again and Operator must make the offer to ARCO. If
Operator's proposed assignee has not enrolled in the next available training
school within 90 days after making the original offer to ARCO, the request
assignment will be considered abandoned by the Operator. A further request for
assignment will again trigger the right of first refusal. If the assignment has
not been completed within 210 days after making the original offer to ARCO, the
request for assignment will be considered abandoned by the operator. Any
further request for assignment will again trigger the right of first refusal.
All communications between ARCO and Operator with regard to the assignment,
right of first refusal, offers, withdrawals, changes in terms and acceptances
must be in writing. In any event, Operator may not assign this Agreement and
Operator's interest in the real property and improvements without the prior
written consent of ARCO, which consent shall not be unreasonably withheld. In
order to allow ARCO adequate time to process an assignment request, any such
request for ARCO's consent to an assignment received 45 days or less before the
expiration of the Store Agreement shall be considered for a subsequent Store
Agreement between Operator and ARCO, if such subsequent Agreement has been
offered and accepted by the parties, and shall be in compliance with the
provisions of such subsequent Agreement. Prior to giving its written consent,
ARCO has the right to review or audit Operator's business records, including but
not limited to those relating to the value
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of inventories at cost, and ARCO shall consider, among other things, the
qualifications, character, apparent ability and creditworthiness of the proposed
transferee and such other factors as ARCO deems appropriate, including but not
limited to the following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the time
of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of an
am/pm mini market, the proposed transferee and any employees who must be
trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training tuition
fee is due and payable by means of a cashier's check before the proposed
transferee begins training school. For prospective transferees, the
training tuition fee, which is payable by the prospective transferee to
ARCO regardless of whether or not the transferor is subject to payment of
a transfer fee, shall be refunded in full in the event ARCO refines its
consent to the transfer prior to the proposed transferee attending ARCO's
training program. In the event that ARCO refuses its consent after the
prospective transferee has started attending ARCO's training program or
the prospective transferee withdraws from the training program, ARCO shall
prorate the refund based on any remainder of training to be completed.
The training tuition fee is not refundable in whole or in part upon
completion of the training program. If the proposed transferee is a sole
proprietor or single shareholder corporation, ARCO shall offer to train
and not charge tuition for one employee of the proposed transferee who
attends the initial training within twelve months after the effective date
of the assignment. ARCO shall not reimburse the proposed transferee for
any expenses incurred in connection with attendance at the training
program of the transferee or the transferee's employee. An initial supply
of 20 uniforms must be ordered by the transferee while attending ARCO's
training program at ARCO's training center. In addition, prior to the
effective date of the transfer and as a condition of ARCO granting its
consent to the transfer. ARCO shall require that the transferor has all
then current "Merchandising Accessories Items Required" on hand in the
Store and in good condition and that any such items that are no longer
clean, workable and presentable or outdated be replaced by items meeting
ARCO's then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent, in
the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the
effective date of the assignment, all of the agreements and Operator's
duties and obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's
rights under this Agreement and shall release and discharge ARCO from all
duties and obligations to Operator in connection with this Agreement as of
the effective date of the assignment; whereupon Operator
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shall have no further rights, duties or obligations under this Agreement,
except for those obligations that survive the termination of the Store
Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO
of all required approvals of federal, state and local governmental
entities, agencies or instrumentalities thereof or of any third person,
including but not limited to, approval for the transfer of, or issuance of
a new beer and wine license, if available in the jurisdiction in which
Operator's store is located
(i) The proposed transferee must satisfactorily meet the then-
current criteria established by ARCO for new am/pm Operators including,
but not limited to, passing an English proficiency test, being at least 21
years of age and proof of U.S. citizenship or permanent resident alien
status (green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount of
the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be deposited
in escrow, Operator may, in accordance with ARCO's policies in this
regard, direct payment from such escrow of the remaining portion of the
applicable transfer fee to ARCO which must be paid before ARCO's final
consent to the assignment is given or (b) where the proposed transferee's
transfer price for the businesses shall not be deposited in escrow,
Operator may, in accordance with ARCO's policies in this regard, pay the
remaining portion of the applicable transfer fee by means of a cashier's
check payable to ARCO and given to ARCO before ARCO's final consent to the
assignment is given. In the event that ARCO refuses its consent to the
proposed assignment prior to the proposed transferee attending ARCO's
training program, ARCO shall refund all but $1,000 of any transfer fee
paid. In the event that ARCO refuses its consent to the proposed
assignment because the-proposed transferee does not pass the English
proficiency test and before the proposed transferee attends training
school, ARCO shall refund all but $300 of any transfer fee paid.
Otherwise, the transfer fee is not refundable in whole or in part and
shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event that
Operator requests ARCO to consent to an assignment of Operator's franchise
to: (1) Operator's spouse, adult natural or adopted child, or parent; (2)
a sole proprietorship in which the current shareholder of Operator, which
is a single shareholder corporation, shall be the sole proprietor, (3) a
partnership in which there are only two partners, current Operator as an
individual and one other person, and in which the current Operator has at
least a fifty percent interest; (4) a corporation in which there are only
two shareholders, current Operator as an individual and one other person,
and in which the sole shareholder of the current Operator has at least
fifty percent of the issued and outstanding voting shares of stock; (5) a
corporation in which current Operator, as an individual shareholder, owns
one hundred percent of the issued and outstanding voting shares of stock;
(6) if Operator is a corporation, the transfer of less than fifty percent
of the issued and outstanding voting shares of stock; or (7) the
dissolution of a two-partner partnership or a two-shareholder corporation
resulting in one of the former partners remaining as the sole proprietor,
or one of the former shareholders remaining as the sole shareholder of the
corporation or as a sole proprietor and the remaining partner or
shareholder or sole proprietor had at least a fifty percent interest in
the partnership or corporation prior to the dissolution.
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ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through
merger, consolidation, organization or reorganization without the prior written
consent of ARCO and except upon such terms and conditions as ARCO shall then
require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent
to any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights
or interests under this Agreement and Operator's interest in the real property
and improvements without having received the
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the prior written consent of ARCO shall constitute a material breach of this
Agreement and ARCO shall have the right to terminate this Agreement upon written
notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all
or any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations
hereunder and fails to cure such default within thirty (30) days after receipt
of written notice of default from Operator, Operator shall have the right to
terminate this Agreement by giving ARCO not less than fifteen (15) days' prior
written notice of termination.
18.02 This Agreement may be terminated at any time by mutual agreement
in writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business
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of the am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results
in Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance
with the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner
or the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in-interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or
all or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate
Designee or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or
more in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business
or system.
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n. ARCO makes a reasonable determination that continued
operation of the franchise by the Operator will result in an
imminent danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of
the Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of
such termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service mark or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service mark or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove
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any loaned am/pm Store Equipment and to de-identify any Operator
owned equipment that bears the service mark or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to
enter the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article
1 hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
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Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j)
above, this Agreement shall not terminate upon the death or incapacitation for
more than 90 consecutive days, of Operator if Operator, prior to his or her
death or incapacitation, designates a successor-in-interest to his or her
interest in this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator
is a sole proprietor, the sole proprietor, if Operator is a partnership, a
partner of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days
after the death or incapacitation, for more than 90 consecutive days, of
Operator to give written notice of his or her intention (the "Notice of
Intention") to assume and operate the franchise or, in the case of a successor-
in-interest to the corporate designer, written notice of his or her intention to
personally guarantee performance hereof by the corporate franchisee. The
notification shall contain such information regarding business experience and
creditworthiness as is reasonably required by ARCO. Except as described more
fully below, unless the successor-in-interest has previously been trained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market, the successor-in-interest must attend and successfully
complete such training as is then required by ARCO for new franchisees and
within 21 days after giving the Notice of Intention commence such training. In
addition, ARCO must approve or disapprove the successor-in-interest within 10
days after the successor-interest completes such training. If the successor-in-
interest successfully completes training and is approved by ARCO, ARCO shall
give notice of approval to the successor-in-interest and the successor-in-
interest must commence operation of the franchise (or execute a guarantee of
performance by a corporate franchisee) within 10 days after receipt of such
notice by ARCO. The successor-in-interest shall be required to pay tuition at
the then-current rate for assignees and successors-in-intent. Provided,
however, that if there is an Operational Designee who is different from the
Corporate Designee successor-in-interest, it is the Operational Designee, who
must attend and successfully complete the initial training, unless such
Operational Designee has previously been gained by ARCO pursuant to ARCO's
current 7 week training program for the operation of an am/pm mini market. An
initial supply of 20 uniforms must be ordered by the successor-in-interest while
attending ARCO's training program at ARCO's training center.
20.04 The franchise available to the successor-in-interest pursuant
hereto is intended to be no greater than the franchise as it exists in the name
of the deceased or incapacitated Operator (or, in the case of a corporate
franchisee, with the deceased or incapacitated Operator as Guarantor) at the
time of such Operator's death or incapacitation. The term of the franchise
shall not be extended by reason of the successor-in-interest assuming (or
guaranteeing) the franchise and ARCO may change the terms of the
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franchise upon its renewal, if it is renewed. ARCO may require Operator to
arrange for the discharge or performance of other franchise obligations such as,
but not limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate successor-in-
interest. The alternate, if one is designated, shall have no right to assume and
operate (or guarantee) the franchise or Operator's interest in the franchise, as
applicable, in the event of any exercise of rights by the primary successor-in-
interest. If the alternate desires to assume and operate (or guarantee) the
franchise or Operator's interest in the franchise, as applicable, in the event
the primary successor-in-interest, fails to do so the alternate must give notice
of intention to do so and otherwise comply with Section 20.03. (In the case of
Concurrent Operations, the primary successor-in-interest, if one is designated,
must be one and the same person designated as the primary successor-in-interest
to succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises; the alternate successor, if one is designated, must
be one and the same person designated as the alternate successor-in-interest to
succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no
operation of the franchise following the death or incapacitation of Operator by
anyone until all parts of the franchise have been expressly assumed as herein
provided, including, but not limited to, such items as licensing and tax
permits.
20.07 If the successor-in-interest assumes the franchise (or, in the
cast of a corporate franchisee, guarantees the franchise), the successor-in-
interest shall account to the heirs or estate of the deceased or incapacitated
Operator (or, in the case of a corporate franchisee, to the corporation) for the
value or other disposition of personal property of the Operator located at or
related to the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO
each incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals,
as from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral
representations, stipulations, warranties or understandings, express or implied,
with respect to the subject matter of this Agreement which are not fully set
forth herein and in the Manuals, and all prior or contemporaneous promises,
representations, agreements or understandings, express or implied, in connection
with the Store and the am/pm franchise are expressly merged herein and in the
Manuals incorporated herein by reference.
21.04 Compliance with Applicable Laws. In the event any provisions of
this Agreement provide for periods of notice less than those required by
applicable law, provide for termination other than in accordance with applicable
law or are otherwise inconsistent with applicable law, to the extent such
provisions are inconsistent with applicable law, they shall not be effective and
ARCO and Operator shall comply with applicable law regarding such matters.
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21.05 Excused Performance. In the event that either party hereto shall
be delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If
the excused performance is for a period less than a full month, the minimum
royalty fee shall be prorated for such partial month and Operator shall pay, as
a royalty fee for such month, the greater of the royalty fee based on a
percentage of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices
required or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require
performance of any provision of this Agreement shall not affect either party's
right to require full performance thereof at any time thereafter and the waiver
by either Operator or ARCO of any provision hereof shall not constitute or be
deemed a waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration,
modification or waiver of any provision of this Agreement shall be of any effect
unless in writing and signed by Operator and an authorized representative of
ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior
to such execution hereof by ARCO shall not be construed as a waiver by ARCO of
this requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include
the masculine, feminine and neuter pronouns.
Facility: 82060
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STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
-------------
facility located at 3817 W Third St., Los Angeles, CA 90020 hereby represents
----------------------------------------
and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this facility
other than as income, earnings, inheritances, gifts or other non-
investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above, as
---------
well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including without
limitation any misrepresentations regarding assets, debts, credit status
and history, investments and loans and regarding partners, stockholders,
stakeholders, backers, other investors or lenders and regarding
citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ John Castellucci 9-2-99
- ----------------------------------------- ------------------------------------
LLO-Gas, Inc. Date
<PAGE>
EXHIBIT 10.13
Customer Acct # 0883314
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Facility # 82060
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CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
- --------- ----
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and
LLO-Gas, Inc.
- --------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, corporation or limited
liability company [LLC]; if partnership, the names
a Corporation ("Buyer").
- ---------------------------------------------------------------
of all partners and State of organization; if corporation, the State of
incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
-------------------- --
Palma, in the State of California. Buyer's principal place of business is
- ----- ----------
located at 3817 W. Third St. in the City of Los Angeles, in the State of CA with
----------------- ----------- --
the ZIP code 90020. This Agreement constitutes a "franchise" as defined in the
-----
Petroleum Marketing Practices Act, 15 U.S.C. (S)(S) 2801-2806 ("PMPA").
Recitals
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A. ARCO markets motor fuels comprising gasolines and gasoline containing
materials bearing the ARCO(R) trademark and other identifying symbols (herein
collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and improvements
which Buyer would like to operate as a retail facility selling Gasoline to end
users. The property and improvements are located at 3817 W. Third St., in the
-----------------
city or town of Los Angeles in the State of CA with the ZIP code 90020. ( The
----------- -- -----
"Premises" ).
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective
----
on the date first set forth above. Subject to earlier termination under
Paragraph 17.1 below, the "Commencement Date" of this Agreement shall begin at
10:00 a.m. on the _____ day of _______________, _____ and the term shall end at
10:00 a.m. on the _____ day of _______________, _____. If no Commencement Date
is set forth, at the time this Agreement is executed, the Commencement Date
shall be established by ARCO by notice to Buyer as the date the Premises are
ready to receive Gasoline delivery, which notice shall also set forth the
expiration date which shall be 15 years after the Commencement Date.
----
Page 1 of 21
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2. Orders. Buyer will order and make available for retail sale all
------
grades of Gasoline which ARCO offers to Buyer (hereinafter collectively,
"Product"), in amounts sufficient to satisfy all foreseeable retail customer
demand for Product at the Premises and will at all times have available for sale
some of each grade of Product, subject only to allocation of Product by ARCO in
a manner determined in ARCO's sole discretion in Buyer's geographic area. ARCO
will use its best efforts to fill Buyer's orders; however, ARCO may discontinue
sale of any grade of Product at any time upon fifteen (15) calendar days' prior
written notice to Buyer. ARCO reserves the right to provide automatic Gasoline
ordering and delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
--------------
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
--------
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
------
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
-------
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require
a product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
Page 2 of 21
<PAGE>
financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend
------
credit to Buyer in whatever amounts, and on whatever terms ARCO alone selects.
If ARCO extends Buyer credit, ARCO may withdraw it at any time without notice
and for any reason. In ARCO's sole judgment, ARCO may do any or all of the
following: (i) require that Buyer pay for Product by cashier's check, money
order or bank wire transfer prior to delivery, (ii) require that Buyer post as
irrevocable letter of credit issued by a bank satisfactory to ARCO, (iii)
require Buyer present evidence of financial solvency, and (iv) declare Buyer in
default of this Agreement if Buyer fails to pay any indebtedness when due,
provide evidence of financial solvency upon request or comply with any other
term of this Agreement. Buyer agrees that regardless of whether and for how
long ARCO has extended it credit, ARCO may cease extending credit at any time
and instead require that payment be made in the manner set forth in this
Paragraph or in Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact
----------------
nature of any nonconformity in the type, quantity or price of any Product
delivered to Buyer within thirty (30) calendar days after delivery. Buyer
hereby waives any claim against ARCO based on any nonconformity of which Buyer
does not so notify ARCO.
Page 3 of 21
<PAGE>
9. Record Keeping. For each delivery of Product, Buyer shall at all
--------------
times keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
---------
10.A Storage and Dispensers. Buyer will maintain storage tanks or
----------------------
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
-------------
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection
with the operation of ARCO authorized businesses. Buyer agrees not to tamper
with, alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair of
the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
Page 4 of 21
<PAGE>
manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed and
bonded armored security service to do the following: make cash pick ups at least
3 times per week, maintain possession of all keys to the outer door and the
vault of the PIC Equipment, handle all removal of cash cassettes from the PIC
Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video
Surveillance Equipment Program. In addition, Buyer must install, keep
operational and use one or more video surveillance cameras dedicated to
recording the customer activity at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to
use the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required
to upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that
-----------------------------
with respect to any Product storage facilities located on the Premises,
including without limitation underground storage tanks and related equipment,
Buyer is solely responsible for taking, and will take the following leak and
water contamination prevention and detection measures:
Page 5 of 21
<PAGE>
11.1 Stick Readings. Using a properly calibrated wooden tank
--------------
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
---------------
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
----------------
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
----------
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
---------------------
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
------------
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a
leak is confirmed all Product must be removed from the storage tanks immediately
and the tanks secured. In addition, Buyer will keep fill caps tight, keep fill
boxes free of dirt, ice and snow, and immediately remove any water in excess of
one inch (1") in any Product storage tank.
12. Gasoline Regulations.
--------------------
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
--------
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
Page 6 of 21
<PAGE>
12.2 Disclosures and Warnings. Buyer acknowledges that it has been
------------------------
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
-----
13.1 Payment by Buyer. Buyer will pay promptly when due and hold ARCO
----------------
harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
-------------------------------------
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor fuel
---------------
seller number and use tax registration number. Further, Buyer will provide ARCO
with any information requested by ARCO relating to tax credits claimed by Buyer
for motor fuel, sales, use and other taxes paid by Buyer in connection with the
Product for the purpose of resolving any threatened or pending tax dispute with
any governmental authority or for the purpose of confirming Buyer's compliance
with the terms of this Agreement.
14. Trademarks and Trade Dress.
--------------------------
14.1 Compliance. Within one hundred fifty (150) calendar days after
----------
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
Page 7 of 21
<PAGE>
otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
--------
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or
their manner of display without prior notice to Buyer. Upon receiving notice of
any withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the cost
---------------
of acquiring, transporting and installing certain signs and other trade dress
required hereunder and set forth is Exhibit B, as specified below. The amount
of such reimbursement shall be the lesser of (i) one half of Buyer's actual
verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing
reimbursement shall be in writing and accompanied by all original invoices (of
Page 8 of 21
<PAGE>
which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that
the trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other
remedies available to it, ARCO may offset against any amounts owed to Buyer, the
amount of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph
14.3, Buyer may be obliged to pay ARCO for any reimbursements received and
direct vendor payments made by ARCO hereunder upon the termination or nonrenewal
of this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
------------
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained
by Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
------------------------------
15.1 Compliance With Laws and Regulations. Buyer shall comply with
------------------------------------
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
Page 9 of 21
<PAGE>
any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
---------------
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
------------------------------
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of
---------
this Agreement each of the following forms of insurance from a financially sound
and reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with products-
completed operations coverage in amounts of at least $1,000,000 combined single
limit each occurrence applicable to personal injury, sickness or death and loss
of or damage to property (with liquor law liability coverage if Buyer will sell
or dispense alcoholic beverages), on which ARCO is named as an additional
insured. Buyer will furnish ARCO with certificates of insurance evidencing the
foregoing coverage and providing that no policy of insurance may be canceled or
materially modified without at least thirty (30) calendar days' prior written
notice to ARCO.
Page 10 of 21
<PAGE>
17. Termination and Nonrenewal.
--------------------------
17.1 Triggering Events for Termination or Nonrenewal. In addition to
-----------------------------------------------
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out
the provisions of this Agreement following written notice to Buyer from ARCO of
such failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial
determination of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the prolonged
severe physical or mental disability or disablement of Buyer (if Buyer is an
individual). Buyer's majority shareholder (if Buyer is a corporation) or any of
Buyer's general partners (if Buyer is a partnership) for at least three (3)
months which renders Buyer unable to provide for the continued proper operation
of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of
the Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the
Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO
is legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(1) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
Page 11 of 21
<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a Loan
Agreement and Security Agreement and Related Promissory Note, and Buyer fails to
cure any default under the foregoing Loan Agreement, Loan Agreement and Security
Agreement and Promissory Note as requested, ARCO may terminate this Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
--------------------------------
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe
and healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal
course of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
Page 12 of 21
<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
-----------------------------------
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises, Buyer will repay ARCO all reimbursements
and direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises with a term of more than one year and
Buyer has been a party to an agreement regarding the Premises with ARCO for the
supply of Product for less than thirty-six months, then after the first twelve
months Buyer will pay ARCO, on a pro rata basis as described below, the amount
--- ----
of all reimbursements and direct payments made by ARCO under Paragraph 14.3 upon
the mutual termination of this Agreement or termination or nonrenewal by Buyer
or by ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
--- ----
amount
Page 13 of 21
<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the
total of the reimbursements and direct payments made by ARCO under Paragraph
14.3 times (a) two-thirds during the thirteenth through twenty-fourth month of
this Agreement or (b) one-third during the twenty-fifth through thirty-sixth
month of this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
-------------------------------------------------------------
18.1 Assignment. Buyer will not sell, assign, give or otherwise
----------
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
----------------------
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If
ARCO does not exercise its right of first refusal, Buyer may consummate the
proposed transfer, but not at lower price or on more favorable terms than those
offered to ARCO. If Buyer does not do so within ninety (90) calendar days from
the date ARCO received Buyer's written offer, then Buyer must recommence the
foregoing right of first refusal procedure and satisfy the requirements of this
Paragraph 18.2. ARCO's exercise of its right of first refusal shall not be
dependent on its prior refusal to approve the proposed transferee. Buyer agrees
to execute a memorandum of this
Page 14 of 21
<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
----------------------
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
----------------------
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
-------------
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
--------------
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
-------------
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
Page 15 of 21
<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
-------
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
---------------------------
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
------
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all applicable
----------
government requirements and obtain and maintain all necessary licenses and
permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
---------
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
-----------------------
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver
------------------
such other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO may
---------------
establish additional ARCO or other brand or no brand Gasoline facilities in any
location and proximity to the Premises.
Page 16 of 21
<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise be
--------------
governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this Agreement
-------------------
are intended solely for convenience of reference and shall not in any way or
manner amplify, limit, modify or otherwise affect the interpretation of any
provision of this Agreement, and the neuter gender and the singular or plural
number shall be deemed to include the other genders or numbers whenever the
context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
----------------
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castellucci
- ------------------------------- ---------------------------------
Name Name
Title: Manager Title: Pres.
------------------------- ---------------------------
Witness: /s/ [illegible] Witness: /s/ Denise Newton
----------------------- -------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
Page 17 of 21
<PAGE>
trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
- ---------------------------------- ------------------------------------
Name Name
Title: Title:
---------------------------- ------------------------------
Witness: Witness:
-------------------------- ----------------------------
Page 18 of 21
<PAGE>
Exhibit A
Trade Dress Requirements
------------------------
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
Page 19 of 21
<PAGE>
Exhibit B
Shared Trade Dress Costs
------------------------
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs
- -Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
Page 20 of 21
<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
and (2) Hughes Indoor Unit - Satellite
Receiver (3) Deicer (if required for
colder climate)
</TABLE>
Page 21 of 21
<PAGE>
EXHIBIT 10.14
AMENDMENT TO CONTRACT
DEALER GASOLINE AGREEMENT
(Branded Diesel Fuel)
Facility: 82060
-----
Customer Account: 0883314
-------
THIS AMENDMENT, dated as of Sept. 2, 1999, amends the Contract Dealer Gasoline
-------------
Agreement ("Agreement") dated Sept. 2, 1999, between ARCO Products Company (a
-------------
division of Atlantic Richfield Company, incorporated in Delaware) ("ARCO") and
LLO-Gas, Inc. ("Buyer") with delivery premises at 3817 W Third St., Los Angeles,
- ------------- ------------------------------
CA 90020 ("Premises").
- --------
It is hereby agreed by and between the parties that effective on the date
written above or the Commencement Date of the Agreement, whichever is later, the
Agreement is hereby amended to provide that except as set forthbelow, any
references to "motor fuels comprising gasolines and gasoline-containing
materials bearing the ARCO trademark and other identifying symbols," "gasoline"
and "product" shall be construed to include such motor fuels comprising diesel
fuel and diesel fuel-containing materials bearing the ARCO trademark and other
identifying symbols ("ARCO branded diesel fuels and diesel fuel-containing
materials") as Buyer may purchase and receive from ARCO and ARCO may sell and
deliver to Buyer at the Premises during the term hereof.
It is understood and agreed by and between the parties that Temporary Voluntary
Allowances ("TVA's") are not applicable to diesel fuel or diesel fuel-containing
materials and, therefore, the terms and conditions relating to TVA's set forth
in the Prices provisions, Paragraph 5 of the Agreement, are not amended and
supplemented by this Amendment. It is further understood and agreed by and
between the parties that, except as herein specifically amended and
supplemented, all other terms and conditions of the Agreement, as previously
amended and supplemented, shall be and remain in full force and effect.
This Amendment automatically supercedes and terminates, as of the Effective Date
hereof, any and all other contracts, agreements or understandings between the
parties covering the sale and delivery of ARCO branded fuels and diesel fuel-
containing materials to Buyer at the Premises for resale therefrom.
BUYER ACKNOWLEDGES THAT BUYER HAS READ THIS AMENDMENT AND FULLY UNDERSTANDS ALL
OF THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
This Amendment is not binding until executed by Buyer and by an authorized
officer or manager of ARCO.
IN WITNESS WHEREOF, the parties have executed this Amendment.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9-2-99
- -------------------------------------- ----------------------------------
Date Date
/s/ [illegible] 9/2/99 /s/ Denise Newton
- -------------------------------------- -----------------------------------
Date Date
<PAGE>
EXHIBIT 10.15
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Jean O. Carague - LPR 317
Street: 4 Centerpointe Drive
City &: La Palma
State: California 90623-1066
- --------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
------------------------------------------------
Facility: 82060
-----
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated Sept. 2,
--------
1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located at 3817 W
- ---- ------------- ------
Third St.. Los Angeles, California 90020, and ARCO Products Company, a division
- ------------------------------------------
of Atlantic Richfield Company, a Delaware corporation, with offices at 1055 West
Seventh Street (P.O. Box 2570) in Los Angeles, California 90051-0570 ("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of 3817 W Third St., in
-----------------
the city of Los Angeles, in the state of CA, and more specifically described in
----------- ---
Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in that
certain Contract Dealer Gasoline Agreement between the parties hereto, dated,
Sept. 2, 1999, and this Memorandum of Contract Dealer Gasoline Agreement is
- -------------
subject to all the covenants, conditions and terms set forth in that Agreement,
which is hereby adopted herein and made a part hereof as if all the covenants,
conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
-------------
By: /s/ John Castellucci
--------------------------------
John Castellucci
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
--------------------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- -------------------------------------------------------------------------------
State of California
----------
County of Orange
------
On 9/2/99 before me, Hollie Johnson, Notary Public
----------------- -----------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE,
NOTARY PUBLIC
personally appeared John Castellucci and Connie Carroll
------------------------------------------------------------
[X] proved to me on the basis of satisfactory
evidence to be the person(s) whose
[S E A L] names) are subscribed to the within
instrument and ac-knowledged to me
that they executed the same in their
authorized capacity(ies), and that by
their signatures(s) on the instrument
the person(s), or the entity upon
behalf of which the person(s) acted,
executed the instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- -------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President/Manager Memorandum of CDGA #8200
- ---------------------------------- ------------------------------------
TITLE OR TYPE OF DOCUMENTS
[_] PARTNERS [_] LIMITED
[_] GENERAL 1
------------------------------------
NUMBER OF PAGES
[_] ATTORNEY-IN-FACT
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR
[_] OTHER: 9/2/99
-----------------------------
- -------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- --------------------------------- ------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
ARCO PRODUCTS CO.
- --------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.16
Facility Number: 82060
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
-------------
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc. ("Franchisee"),
the operator of an ARCO location located at 4100 California Ave.,
Bakersfield, California 93309 ("Facility").
1. Agreement
---------
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
-----------
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain products
----
or services may be purchased or performed, e.g. that gasoline may be
----
pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or service
or receiving cash or a refund from Franchisee through use of the PayPoint
Network to which a participating Financial Institution responds with an
approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute agreements
with Franchisor to participate in or provide services through the PayPoint
Network.
3. PayPoint Network Description
----------------------------
The PayPoint Network shall enable Cardholders to receive cash or to pay for
purchases of products and services by means other than cash, money order or
check. Each Cardholder shall use an access card to initiate a Transaction.
Franchisee shall promptly honor all valid access cards when presented by
Cardholders and shall treat Cardholders from all participating Financial
Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use one or more
Island Card Reader devices ("ICR Device") that are in communication with
the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key pad.
The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
----
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via the
PayPoint Account(s). Franchisee shall not permit anyone to complete a
.Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
----
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between Franchisee
and Franchisor or, where applicable, the first day of the thirteenth month
following the Commencement Date, Franchisee shall pay to Franchisor, for
participation in the PayPoint Network, transaction fees in the amount set
forth on Exhibit A, which is incorporated herein, made a part hereof and
attached hereto. Such fees shall be due and payable to Franchisor on or
before the tenth day of the month following the month in which such fees
were incurred during the term of this Addendum. Provided, however, that if
Franchisee installs and ICR device at the Facility prior to the
Commencement Date and operates it thereafter, Franchisee shall pay no fees
for participation in the PayPoint Network for the first twelve months
following the Commencement Date and 50% of the applicable fees for the
balance of the term of this Agreement. The term "Commencement Date" shall
mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a Cardholder
at the Facility, is provided to Franchisee through the PayPoint Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a new
Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
ARCO Retailer) and Franchisee has installed and is operating an ICR Device
and is therefore eligible for the waiver of transaction fees as set forth
above, Franchisee shall pay no transaction fees for participation in the
PayPoint Network for the number of months remaining of the original twelve
month waiver period following the original Commencement Date referred to in
this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to terminate
this Addendum at the end of the thirteenth month following the Commencement
Date, as provided below for Franchisees on their initial PayPoint
agreement, Franchisee shall pay Franchisor as set forth on Exhibit D,
attached hereto, incorporated herein and made a part hereof, for
disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and sales,
use, rental, gross receipts, inventory, excise, income and any other taxes
(including interest, penalties, and additions to tax) imposed by any
federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this Addendum.
Franchisee agrees to pay promptly when due and to hold Franchisor harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges or
the use of any loaned property. Franchisee shall furnish to Franchisor,
promptly upon request, any documentation, which in Franchisor's discretion
is required to evidence the payment of any tax, including, but not limited
to, official receipts of the appropriate taxing authorities, copies of tax
returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving Franchisor
at least 30 days prior written notice, to terminate this Addendum; to
downgrade the number of PayPoint Electronic Cashiers (Island CardReaders),
if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
--------
Franchisee shall require each Cardholder to enter his or her PIN on the POS
Equipment at the Facility in order to initiate a Transaction, except to
complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be transmitted
"in the clear."
6. Transaction Approval or Denial
------------------------------
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint Network
---------------------------------------------------------------------------
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
-----------------------
Franchisor and Franchisee shall cooperate to resolve any system malfunction
or problem that interrupts normal operation of the PayPoint Network.
Franchisor shall provide instructions and procedures for the handling of
Transactions that are initiated when communications between Franchisor, the
participating Financial Institutions and the Franchisee location are
interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
-----------------------------------------------
Cardholder refund transactions shall not be processed electronically, , but
shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
--------
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has not
forwarded such amount to Franchisor within a period of time specified in a
notice to the Franchisee. Such third party beneficiary rights shall be
enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
----------------------
(a) Cardholder Disputes
-------------------
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time limits.
Franchisee agrees to cooperate with Franchisor and participating Financial
Institutions to resolve Cardholder disputes or inquiries about PayPoint
Network Transactions. To facilitate resolution of Cardholder disputes,
Franchisee shall retain, for a period of at least one hundred eighty (180)
days, copies of receipts issued to Cardholders pursuant to Paragraph 10 of
this Addendum, or reports from which Transaction information can be
retrieved. In response to an oral request by Franchisor or a participating
Financial Institution, to be confirmed in writing, Franchisee shall, within
three (3) Working Days of the oral request, send documentation to
Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the requested
information within three (3) Working Days, Franchisor shall, at the request
of the participating Financial Institution, debit Franchisee's Trade
Statement or electronically debit the Retailer's Account, for the amount
disputed by the Cardholder and credit, through the participating Financial
Institution, the Cardholder's deposit account for the amount disputed. The
obligations of this Paragraph 11 shall survive termination of this
Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
-------------------
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by check.
(c) Disputes Over-Merchandise or Service
------------------------------------
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with Cardholders
and shall indemnify and hold Franchisor and participating Financial
Institutions harmless from any claim, action, damage or expense, including
strict liability in tort, arising out of such disputes or the sale of goods
or services by Franchisee; provided, however, to the extent Franchisee's
petroleum or non-petroleum franchise agreements, if any, are contrary to
this provision as to Franchisor, such petroleum or non-petroleum franchise
agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
----------------------------
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right to
debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
--------------------------------
Franchisor shall process all approved Transactions captured each Settlement
Day and any preceding non-Settlement Day and make arrangements for the
funds to which Franchisee is entitled to be deposited into his or her
Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by way
of the POS Terminal, if possible; otherwise, by way of, written reports.
Franchisor shall also mail to Franchisee, on request, summary reports of
PayPoint Network Transactions at the Facility.
14. Term: Termination
-----------------
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer," i.e.,
a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum for
any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating Financial
Institutions' trademarks, trade names and trade indicia and shall remove
all decals and signs indicating Franchisee's participation in the PayPoint
Network and, if Franchisee is terminated for cause or because he/she has
been designated a Special Franchisee, Franchisee shall pay the applicable
amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
---------------
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in the
PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
------------------------------
Franchisee acknowledges that all information that is disclosed to, or comes
to the attention of Franchisee for purposes of the development or operation
of any aspect of the PayPoint Network (herein "Information") is strictly
confidential. Franchisee agrees that Franchisee shall not use for any
purpose other than Franchisee's use of the PayPoint Network or disclose
said Information or knowingly permit Franchisee's employees or contractors
to disclose said Information to any person outside Franchisor and
Franchisee, or to any employee or contractor of Franchisor or Franchisee
who does not have a specific need to know in performance of work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of information
relating to sales by Franchisee (herein "Sales Information") other than to
Financial Institutions and other third parties who require access to Sales
Information for purposes relating to Franchisee's use of or Franchisor's
operation of the PayPoint Network. Franchisor's obligation of non-
disclosure shall not apply to any Sales Information which is or becomes
available to the public other than through breach of this Addendum by
Franchisor. It is presently Franchisor's policy (which may be changed at
any time by Franchisor at its sole option without notice) to destroy all
records of Sales Information after two (2) years. Franchisor's obligation
of non-disclosure with respect to Sales Information shall terminate upon
destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
--------------------
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved by
Franchisor and such equipment is maintained in good operating order and is
operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the PayPoint
Network, and to satisfy itself that services are being provided to the
public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or such
institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any time
by giving Franchisee not less than thirty (30) days prior written notice
thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor, it
is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering or
defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks and
any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
-------------
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
----------
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such prior
written consent shall be void and any assignment or delegation to which
Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
-------------------------
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
----------------------
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfield Company
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9-2-99
- ---------------------------------------- -------------------------------
Date LLO-Gas, Inc. Date
/s/ [illegible] 9-2-99 /s/ Denise Newton 9-2-99
- ---------------------------------------- -------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
_______________________________________________________________________________
PayPoint Network Fees
<TABLE>
<CAPTION>
Transactions per Month Fee per Transaction
<S> <C>
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
</TABLE>
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line -- installation
costs plus monthly phone charge including per item phone calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
------------------------------------------
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be notified
via telephone. The switch contact person will provide the Franchisee
with the data furnished by the financial institution and request a
copy of the cardholder receipt and/or a copy of the Management Report
Printer (MRP) report showing the disputed transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one (1)
working day of the telephone call. A copy of this form is attached.
6) The Franchisee will have only three (3) working days after receipt of
the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of the
customer receipt and/or MRP report (the same information furnished to
the financial institution) to the Franchisor switch within one (1)
working day of sending the information to the financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
----------------------------------------------
RETAILER:______________________________________________________________________
ADDRESS:_______________________________________________________________________
CITY:__________________________________________________________________________
STATE/ZIP CODE:________________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO.____________________________________________________________________
AT_____________________________________________________________________________
BRANCH NO._____________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:______________________________________________
TITLE:___________________________________________
DATE:____________________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
----------------------------------------
CLAIM NO.:_____________________________________________________________________
DATE CLAIM RECEIVED:___________________________________________________________
TODAY'S DATE:__________________________________________________________________
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:___________________________________________________________________
TRANSACTION AMOUNT:______________ TRANSACTION DATE:___________________________
TRANSACTION TIME: _______________ REFERENCE NO._______________________________
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION:_________________________________________________________
ADDRESS:_______________________________________________________________________
_______________________________________________________________________________
CONTACT PERSON:________________________________________________________________
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION IF "REQUESTED
INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
-----------------------------
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME:__________________________________________________________________________
ADDRESS:_______________________________________________________________________
_______________________________________________________________________________
DATE INFORMATION SENT TO FINANCIAL INSTITUTION:________________________________
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
------------
Telephone Line Disconnection $200.00
Each Inside Terminal Disconnection and Removal $200.00
Each Outside Terminal Disconnection and Removal $400.00
<PAGE>
Exhibit 10.17
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 05212
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Real Estate to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
<PAGE>
THEREFORE, Buyer and Seller agree as follows:
1. Basic Provisions.
----------------
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer I.D. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached
Exhibit "A". Seller's interest in the Real Estate is a fee interest in the
entirety of the Real Estate, except as otherwise stated in Exhibit "A".
Seller's interest includes the ownership of the improvements that .are
located on or under the land that Seller owns in fee, including without
limitation underground storage tanks and gasoline pipelines. The principal
parcel of land included in the Real Estate is commonly known as:
Street Address: 3366 N. San Gabriel Boulevard
City, State, ZIP Code: Rosemead, California 91770
County: Los Angeles
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the
attached Exhibit "B".
Deposit: $19,125.00 by Buyer's check payable to Escrow Holder
-2-
<PAGE>
Purchase Price: $765,000.00
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Slinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10696 PC
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction") will
be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed: Mineral Reservation. Seller shall convey the Real Estate to
-----------------------------
Buyer by a Corporation Grant Deed (the "Deed"). In the Deed, Seller will
reserve the rights, below the depth of 500 feet, to minerals and oil, gas, and
other hydrocarbon substances in and under the land being sold, but without the
right of surface entry.
-3-
<PAGE>
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is
reasonably necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
transactions under the Business Agreement, the Companion
Real Estate Agreements, and the Companion Business
Agreements, Seller has confirmed that (i) Seller is ready
and committed to close those transactions or (ii) if the
transaction is being handled through an escrow, Seller has
received notice from the escrow holder that the escrow
holder is ready and committed to close the escrow.
(b) Other Closing Conditions. All closing conditions for that
party's benefit contained in provisions of this Agreement
other than this Section 6.3 have been satisfied, or will be
satisfied as a part of the closing.
(c) Other Party's Obligations. The other party has performed
all its obligations under this Agreement to be performed
before the closing, or will perform those obligations as a
part of the closing.
-4-
<PAGE>
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The
------------------------------------------------
Memorandum of Contract Dealer Gasoline Agreement (the
"Memorandum") referred to in Section 6.3(c) of the Business
Agreement, signed and acknowledged by Seller, through its
division ARCO Products Company;
(c) Withholding Certifications. (i) A Certification of Non-
--------------------------
Foreign Person Status with respect to Seller's exemption
from federal income tax withholding in connection with the
Transaction and (ii) a comparable certification with respect
to Seller's exemption from state income tax withholding in
connection with the Transaction, if the state in which the
Real Estate is located imposes a withholding requirement on
Buyer for income tax that Seller might owe to the state in
connection with the Transaction, each of which
certifications must meet the requirements of applicable laws
and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents
---------------
reasonably required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum, signed and acknowledged by
----------
Buyer;
(b) Right of First Refusal Agreement. The Right of First Refusal
--------------------------------
Agreement (as defined in Section 14), signed and
acknowledged by Buyer;
(c) Environmental Declaration. The Environmental Declaration (as
-------------------------
defined in Section 12), signed and acknowledged by Buyer;
-5-
<PAGE>
(d) Cash. Cash or immediately available funds to pay the balance
----
of the Purchase Price and Buyer's share of closing costs and
prorations; and
(e) Other Documents and Funds. All other instruments, documents,
-------------------------
and funds reasonably required to complete the Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the following documents in the Official Records of the County, in the
following order: The Deed, the Memorandum, the Right of Refusal Agreement, the
Option Agreement, and the Environmental Declaration. These documents must be
recorded before any documents benefitting any lender or other third party are
recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is committed to issue
an ALTA Standard Coverage Owner's Policy of Title Insurance (the "Title Policy")
insuring Buyer in the amount of the Purchase Price upon the close of Escrow. The
Title Policy must insure Buyer's title to the Real Estate subject to only (i)
the standard exclusions and exceptions of the policy form, (ii) nondelinquent
taxes and assessments, and (iii) the Permitted Exceptions (as defined in Section
9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for title
insurance, if the Real Estate is located in a state where title insurers do not
issue preliminary title reports) (in either case, the "Report") covering the
condition of title to the Real Estate. Unless Buyer gives Seller written
notice, within ten days after receiving the Report, objecting to matters shown
in the Report, Buyer will be considered to have approved the condition of title
as shown in the Report. If Buyer so objects to any matter (each, a "Disapproved
Matter") shown in the Report, Seller will have 30 days after receiving Buyer's
written objection in which to remove the Disapproved Matter from record title or
to obtain the Title Company's agreement to issue an appropriate endorsement to
the Title Policy. If Seller is unable or unwilling to remove the Disapproved
Matter from record title or to obtain the Title Company's agreement, Seller may
terminate this Agreement by giving a termination notice to Buyer and Escrow
Holder within the 30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow Holder shall return
the Deposit to Buyer; and neither party will have any further obligation to the
other under this Agreement. The term "Permitted Exception" means
-6-
<PAGE>
each matter shown in the Report that (i) is not a Disapproved Matter or (ii) is
a Disapproved Matter for which Seller has obtained the Title Company's agreement
to issue an appropriate endorsement to the Title Policy.
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real Estate will
vest. If Buyer fails to so notify them, title will vest in Buyer as stated in
the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the Title Policy to
Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of real
property taxes, current installments of special taxes and assessments, and any
rents or other income derived from the Real Estate. Utility charges will not be
prorated. Seller shall cause a final reading of the utility meters to be taken
on the day that Escrow closes; and Buyer shall arrange for all utility services
to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached Exhibit
"C".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
-7-
<PAGE>
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real Estate
are public records, available at the Agency's offices for Buyer's review.
12.3 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.4 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to provide
any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.5 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the
-------------------------------------
Inspection Period, Buyer shall obtain a subsurface investigation report on the
extent and concentrations of any petroleum products in the soil and, if
encountered, groundwater at or under the Real Estate (the "Phase II Report").
Buyer shall engage a geologist or professional engineer who is licensed by the
State of California and who is not an affiliate of Buyer or Seller (the
"Environmental Consultant"), to perform the subsurface investigation and prepare
and certify the Phase II Report. Buyer shall initially pay for the cost of the
Phase II Report. Escrow Holder shall prorate the cost of the Phase II Report at
the closing so that Buyer and Seller share equally up to $15,000 of the total
cost of the Phase II Report. The parties shall request that the Environmental
Consultant complete the Phase II Report at least 10 days prior to the end of the
Inspection Period. Subject to the provisions of Section 12.5 (b) below, Buyer
shall determine the scope of work for the Phase II Report, in its reasonable
discretion.
-8-
<PAGE>
Buyer shall have the right to modify the scope of work, as a result of on-site
conditions discovered in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a modification
---------------------
of the original scope of work, that involves any disturbance (including any
drilling or boring) of the surface of the land or any underground vault or
storage tank, underground pipes, or fuel lines ("Special Buyer Testing"), Buyer
must obtain Seller's prior written approval. Seller may withhold its approval
if it determines in good faith that the Special Buyer Testing would interfere
with Seller's business operations or would pose a safety or environmental
hazard. Buyer shall indemnify and defend Seller from all liabilities, damages,
losses, claims, costs and expenses (including reasonable attorneys' fees) that
Seller incurs arising from performance of the Special Buyer Testing. Without
limiting the immediately preceding provisions of this Section 12.5(b), Buyer
shall promptly repair any damage to the Real Estate or any personal property
located at the Real Estate resulting from any Special Buyer Testing. But Buyer
will have no liability regarding any contaminated soil or groundwater it may
discover on or under the Real Estate during the course of the Special Buyer
Testing, unless Buyer caused the release of that contamination, for example by
puncturing the underground storage tanks on the Real Estate. Buyer's liability
under this Section 12.5(b) is in addition to Seller's right to retain the
Deposit and any accrued interest on the Deposit, when Seller is permitted to do
so under any provision of this Agreement concerning liquidated damages for
Buyer's default under this Agreement. A termination of this Agreement will not
terminate Buyer's obligations under this Section 12.5(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics' and
-----
similar liens arising from any and all Phase II Report costs (including without
limitation any Special Buyer Testing) payable by Buyer under this Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at Seller's
----------------------
Environmental Notice Address a copy of the Phase II Report, within two days
after Buyer receives the report. Buyer shall not disclose the results of any
test to any regulatory agency or other third party, unless required to do so by
law and unless Buyer delivers to Seller at Seller's Environmental Notice Address
a copy of the disclosure at least ten days before Buyer mails or otherwise
transmits the disclosure to the agency or other third party.
(e) Buyer's Termination Right. If Buyer is not satisfied with the
-------------------------
environmental condition of the Real Estate, Buyer may terminate this Agreement
by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the Escrow and title cancellation charges; after Buyer has
paid its share of those cancellation charges, the Deposit will be returned to
Buyer; and neither party will have any further obligation to the other under
this Agreement. But the Deposit will not be returned to Buyer until Buyer has
delivered to Seller valid, recordable waivers of
-9-
<PAGE>
mechanics' and other statutory liens from all contractors who conducted tests at
Buyer's request.
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS
/s/ JC /s/ GS
---------------- -----------------
Buyer's Initials Seller's Initials
(In order to comply with California Civil Code Section 1677, the above provision
must be in at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031, Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation
-10-
<PAGE>
includes the signing, acknowledgment, and delivery of all documents that Seller
reasonably requests, at no risk or expense to Buyer. Seller shall indemnify and
defend Buyer from all liabilities, damages, claims, costs, and expenses
(including reasonable attorneys' fees) that Buyer might incur in connection with
Buyer's participation in the exchange transaction.
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws., Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning laws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate, including material violations of regulations of the Environmental
Protection Agency or any state regulatory body concerning the disposal of
hazardous waste, petroleum,
-11-
<PAGE>
underground storage tanks, or any other hazardous materials at the Real Estate,
except as disclosed in the Environmental Documents and Schedule 2 attached
hereto.
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial compliance with all applicable laws, statutes, ordinances, codes,
covenants, conditions, and restrictions of any kind or nature affecting the Real
Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
(i) fully operational and (ii) in material compliance with the December 23, 1998
underground storage tank system upgrade standards set forth under Section 25291
or Section 25292(d) and (e) of the California Health and Safety Code, and
related regulations adopted pursuant to Section 25299.3 of the California Health
and Safety Code, according to the certificate of upgrade compliance provided
under Section 25284 of the California Health and Safety Code.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any representation or
warranty, as long as Buyer delivers written notice of the breach to Seller and
exercises any remedy, including the filing of any suit or other action, within
one year after the date that the Escrow closes.
-12-
<PAGE>
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its address
for notices by giving notice as required by this Section G1. A written notice
will be considered given (i) when personally delivered, (ii) two business days
after deposit in the U.S. Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement: Modification: Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
-13-
<PAGE>
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
BUYER:
LLO-GAS, INC., a Delaware corporation
By: /s/ John Castellucci
----------------------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY, a
Delaware corporation
By: /s/ G. Simning
----------------------------------
Gary Simning
Assistant Vice President
Agreed to by Escrow Holder
on September 2, 1999.
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
--------------------------------
Patricia Cusick
Escrow Officer
-14-
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
EXHIBIT "A"
PARCEL 1:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead, County of Los Angeles, State of California, as shown on
Map recorded in Book 54 Page(s) 71 and 72 of miscellaneous records, in the
office of the County Recorder of said County, and of San Gabriel Boulevard,
vacated described as follows:
Beginning at the Southeasterly corner of San Gabriel Boulevard and Hellman
Avenue, as shown on Map of Tract No. 11568, recorded in Book 209, pages 24 and
25 of Maps, in the Office of the County Recorder of said County; thence along
the Southerly line of said Hellman Avenue and the Northerly line of said Lot 61,
North 89 degrees 44' 20" East 42.71 feet; thence South 0 degrees 15' 40" East
25.00 feet; thence North 89 degrees 44' 20" East 50.00 feet; thence North 0
degrees 15' 40" West 25.00 feet to said Northerly line; thence along said
Northerly line North 89 degrees 44' 20" East 57.29 feet to the Northerly
prolongation of the Westerly line of Lot 41 of said Tract No. 11568; thence
along said prolongation South 0 degrees 33' 25" East 50.00 feet to a point in a
line parallel with said Northerly line which passes through a point in the
Easterly line of said San Gabriel Boulevard, distant South 0 degrees 33' 25"
East 50.00 feet from the point of beginning; thence along said parallel line
South 89 degrees 44' 20" West 150.00 feet to said Easterly line; thence North 0
degrees 33' 25" West 50.00 feet to the point of beginning.
PARCEL 2:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead County of Los Angeles, State of California, as per Map
Recorded in Book 54, Pages 71 and 72 of Miscellaneous Records, and of San
Gabriel Boulevard, vacated, described as follows:
Beginning at a point in the Easterly line of San Gabriel Boulevard, distant
along said Easterly line South 0 degrees 33' 25" East 50.00 feet from the
Southeasterly corner of San Gabriel Boulevard and Hellman Avenue as shown on Map
of Tract No. 11568, as per Map Recorded in Book 209, Page 24 of Maps; thence
along said Easterly line South 0 degrees 33' 24" East 79.94 feet to the
Northwest Corner of said Tract No. 11568; thence along the Northerly line of
said Tract No. 11568, North 89 degrees 47' 45" East 150 feet to the
Northwest Corner of Lot 41 of said last mentioned tract; thence along the
Northerly prolongation of the Westerly line of said Lot 41, North 0 degrees 33'
25" West 80.10 feet to a line parallel with the Northerly line of said Lot 61
and which passes through the point of beginning; thence South 89 degrees 44' 20"
West 150 feet to the point of beginning.
<PAGE>
PARCEL 3:
Lot 42 of Tract No. 11568, in the City of Rosemead, County of Los Angeles, State
of California, as per Map Recorded in Book 209, Pages 24 and 25 of Maps, in the
Office of the County Recorder of said County.
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
<TABLE>
<CAPTION>
<S> <C>
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City and State 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
</TABLE>
EXHIBIT "B"
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
<PAGE>
Order No.:________
Escrow No.:_______
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 01860
Location: 3817 W. Third Street
Los Angeles, CA 90020 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
Type 3 Site in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2, 1999, is made
by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of Los
Angeles, State of California, described in the attached Exhibit "A" (the "Real
Estate"). In connection with the signing and recording of this Declaration,
ARCO conveyed the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions on
the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning set
-----------
forth beside it.
<PAGE>
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
or affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement, cost,
- -----
and expense (including reasonable attorneys' fees) arising after the Effective
Date, whether or not Owner knew or suspected them to exist on the date that
Owner signed this Declaration or on the Effective Date.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater at or near the Real Estate before the Effective Date, whether or not
Owner knew or suspected it to exist on the date that Owner signed this
Declaration or on the Effective Date.
2. Owner's Acceptance of the Condition of the Real Estate. Owner has
------------------------------------------------------
accepted the Real Estate, including without limitation its environmental
condition, in "AS IS" condition on the Effective Date. Owner acknowledges that
the purchase price paid to ARCO for the Real Estate reflects (i) the effect of
this Declaration on the Real Estate and (ii) any Pre-Closing Contamination.
3. Owner's Waiver and Release of Environmental Claims. Owner, for itself and
--------------------------------------------------
its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to any Pre-Closing
Contamination.
4. Notices. Notices relating to this Declaration must be in writing and sent
-------
to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 4. A written notice will
be considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
2
<PAGE>
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
5. Entire Agreement: Modification: Waiver. This Declaration (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and ARCO with
respect to the matters that are the subject of this Declaration. Any
modification of this Declaration must be in writing and signed by Owner and
ARCO. Any waiver of a provision of this Declaration by Owner or ARCO must be in
writing.
6. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
7. Attorneys' Fees. If a dispute arises with respect to this Declaration and
---------------
if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees.
8. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration (collectively, the "Rights and Restrictions") are for the benefit of
ARCO and its successors and assigns. The Rights and Restrictions run with the
Real Estate and bind Owner's successors and assigns, including future owners and
tenants of the Real Estate, for ARCO's benefit. The Rights and Restrictions are
intended to (i) constitute equitable servitudes that burden the Real Estate and
(ii) to be enforceable under Section 1471 of the California Civil Code.
(See signatures on the next page)
3
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-----------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENTS)
4
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
------------------------------------------------------------------------------------
[X] personally known to me to be the person whose name is subscribed to the within
[SEAL] instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenants and Conditions
--------- --------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
EXHIBIT "A"
PARCEL 1:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead, County of Los Angeles, State of California, as shown on
Map recorded in Book 54 Page(s) 71 and 72 of miscellaneous records, in the
office of the County Recorder of said County, and of San Gabriel Boulevard,
vacated described as follows:
Beginning at the Southeasterly corner of San Gabriel Boulevard and Hellman
Avenue, as shown on Map of Tract No. 11568, recorded in Book 209, pages 24 and
25 of Maps, in the Office of the County Recorder of said County; thence along
the Southerly line of said Hellman Avenue and the Northerly line of said Lot 61,
North 89 degrees 44' 20" East 42.71 feet; thence South 0 degrees 15' 40" East
25.00 feet; thence North 89 degrees 44' 20" East 50.00 feet; thence North 0
degrees 15' 40" West 25.00 feet to said Northerly line; thence along said
Northerly line North 89 degrees 44' 20" East 57.29 feet to the Northerly
prolongation of the Westerly line of Lot 41 of said Tract No. 11568; thence
along said prolongation South 0 degrees 33' 25" East 50.00 feet to a point in a
line parallel with said Northerly line which passes through a point in the
Easterly line of said San Gabriel Boulevard, distant South 0 degrees 33' 25"
East 50.00 feet from the point of beginning; thence along said parallel line
South 89 degrees 44' 20" West 150.00 feet to said Easterly line; thence North 0
degrees 33' 25" West 50.00 feet to the point of beginning.
PARCEL 2:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead County of Los Angeles, State of California, as per Map
Recorded in Book 54, Pages 71 and 72 of Miscellaneous Records, and of San
Gabriel Boulevard, vacated, described as follows:
Beginning at a point in the Easterly line of San Gabriel Boulevard, distant
along said Easterly line South 0 degrees 33' 25" East 50.00 feet from the
Southeasterly corner of San Gabriel Boulevard and Hellman Avenue as shown on Map
of Tract No. 11568, as per Map Recorded in Book 209, Page 24 of Maps; thence
along said Easterly line South 0 degrees 33' 24" East 79.94 feet to the
Northwest Corner of said Tract No. 11568; thence along the Northerly line of
said Tract No. 11568, North 89 degrees 47' 45" East 150 feet to the
Northwest Corner of Lot 41 of said last mentioned tract; thence along the
Northerly prolongation of the Westerly line of said Lot 41, North 0 degrees 33'
25" West 80.10 feet to a line parallel with the Northerly line of said
Lot 61 and which passes through the point of beginning; thence South 89 degrees
44' 20" West 150 feet to the point of beginning.
<PAGE>
PARCEL 3:
Lot 42 of Tract No. 11568, in the City of Rosemead, County of Los Angeles, State
of California, as per Map Recorded in Book 209, Pages 24 and 25 of Maps, in the
Office of the County Recorder of said County.
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
<PAGE>
Order No.:_______
Escrow No.:______
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 05212
Location: 3366 North San Gabriel Blvd.
Rosemead, CA 91770 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") dated
September 2, 1999, is made by LLO-GAS, INC., a Delaware corporation ("Owner"),
- -----------
for the benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation
("Holder").
RECITALS
--------
A. Holder is the former owner of the real property in the County of Los
Angeles (the "County"), State of California, described in the attached Exhibit
"A" (the "Real Estate"). In connection with signing and recording this
Agreement, Holder conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
3. Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
<PAGE>
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property used
-----------------
in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate
-------------
Offered Parcel: The Real Estate, a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
2
<PAGE>
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
4. Grant of Right of First Refusal. Owner grants to Holder the Right.
-------------------------------
The Right is governed by the terms of this Agreement and will be in effect
during the Right Duration.
5. Included Rights; Exclusion of Security Interest Transfer.
--------------------------------------------------------
5.1 Offer to Lease or Sublease. The Right includes the right to
--------------------------
match the terms of any lease or sublease that Owner enters into during the Right
Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel when
that part includes all or part of the Real Estate. The Right will exist whether
the leasehold or subleasehold is to begin during or after the Right Duration.
5.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right will include the right to acquire the Offered Parcel and the
Related Property, that is to be transferred. If such a separate agreement
exists, it will be considered a Tendered Agreement; and a copy of that signed
separate agreement must be included in the Transfer Notice.
5.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
6. Procedures for Notice and Exercise.
----------------------------------
6.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a Transfer Notice to
Holder. No one other than Owner can satisfy Owner's obligation to send the
Transfer Notice. Holder
3
<PAGE>
may acquire the Offered Parcel that is the subject of the Tendered Agreement,
instead of the third party.
6.2 Exercise Notice; Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
6.3 Holder Indemnifies Owner. Holder shall indemnify and defend
------------------------
Owner from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Owner incurs and that arise from Holder's
exercise of the entry right granted under Section 4.2. But Holder will not be
liable for any decrease in the value of any Offered Parcel resulting from
Holder's discovery of any negative matter regarding the Offered Parcel,
including without limitation any contaminated soil or water existing at the
Offered Parcel before the escrow for Holder's purchase closes (the "Pre-Closing
Contamination"). Holder will not be required to remove or dispose of any Pre-
Closing Contamination. Holder may disclose the existence of any Pre-Closing
Contamination, to the extent that Holder is required to do so under applicable
law.
7. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be: at the price and
on the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 60
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
(c) Price Allocation When Larger Parcel or Adjacent Parcel is
---------------------------------------------------------
Offered. If (i) the Right is for the purchase of a Larger Parcel
-------
and (ii) the purchase price in the Tendered Agreement is
allocated between the Real Estate and the remainder of the Larger
Parcel, Holder may buy the Real Estate and not the remainder by
paying only the consideration allocated to the Real Estate. Or
if (i) the Right is for the purchase of a Larger Parcel and (ii)
the purchase price is not
4
<PAGE>
so allocated, Holder may buy only the Real Estate by paying
consideration that is equitable for only the Real Estate,
considering the total purchase price to be paid by the third
party for the Real Estate and the remainder. If Owner and Holder
fail to agree on an equitable amount, that amount will be
determined in accordance with Section 6. The above principles of
this Section 5(c) will apply in like manner if the Right is for
the purchase of the Real Estate and an Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
--------------------------------------------------
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered Agreement
-------------------------------------
provides for delayed payment terms, Holder may pay the total
purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
8. Valuation Disputes.
------------------
8.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the noncash
consideration under Section 5(f), or (iii) the fair market value under Section
8.2 or 12.9, the amount or value (the "Value") will be determined in accordance
with the appraisal procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal in accordance
with this Section 6, Owner and Holder each shall appoint a Qualified Appraiser
(as defined in Section 6.2). If one of them fails to timely appoint a Qualified
Appraiser, the Qualified Appraiser appointed by the other will determine the
Value.
8.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is unaffiliated
with Owner, Holder, and the third party under the Tendered Agreement, and (iii)
has had full-time experience, during each of the immediately preceding five
years, in appraising commercial real property in the area of the Real Estate.
But if Holder will be purchasing Business Property, the Qualified Appraiser must
also have had substantial experience, during the immediately preceding five
years, in appraising business assets in the area of the Real Estate. If the
Appraisal Institute ceases to exist, a reasonably comparable, nationally
recognized organization of real estate appraisers will be substituted in the
definition of Qualified Appraiser.
5
<PAGE>
8.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to Owner and
Holder within 30 days after his appointment. An Appraisal Report must set forth
the appraiser's determination of the Value and the considerations on which his
opinion is based. If two appraisers are appointed and they agree on the Value,
they must deliver a signed joint Appraisal Report to Owner and Holder within 40
days after the appointment of the second appraiser. If two appraisers are
appointed and they fail to agree on the Value, each appraiser must deliver his
signed Appraisal Report to Owner and Holder within 35 days after his
appointment. If the lower of the two determinations is at least 95% of the
higher, the Value will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers to do so, they
must appoint a third appraiser who is a Qualified Appraiser. Within ten days
after his appointment, the third appraiser must select one of the two
determinations as being the same as or the closer to the amount that he
determines as the Value; and the selected determination will be the Value.
8.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third appraiser.
9. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale
of some or all of the Business Property will occur through a separate Escrow
with an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing will be considered effected when the County
Recorder accepts the deed for recording.
(b) Extended Coverage Title Policy; Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event,
Holder shall (i) obtain and provide to the title insurer any
survey that the title insurer might require in order to issue the
title policy as an Extended Coverage Title Policy and (ii) pay
the increase in the premium attributable to the extended
coverage. Within three days after
6
<PAGE>
Escrow opens, Owner shall send to Holder a copy of the most
recent survey (if any) of the Offered Parcel that Owner has in
its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom
in the County. But if no custom exists for a particular closing
cost, each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect
to (A) the operation of the business conducted at the Offered
Parcel or (B) all or any part of the Offered Parcel, (ii) any
transfer fee that Owner or any of its affiliates is required to
pay to Holder under a Contract Dealer Gasoline Agreement, an
am/pm Mini Market Agreement, or a SmogPros Center Agreement
pertaining to the business conducted at the Offered Parcel, and
(iii) the unpaid balance of principal and accrued interest on any
loan that is payable to Holder or any of its affiliates and that
is secured, wholly or partially, by any properly that Holder is
buying in the Transaction, whether or not the deducted amounts
would otherwise be due when Escrow closes.
10. Entity Changes.
--------------
10.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
7
<PAGE>
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1(a) or 8.1(b).
10.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
-----------------------------
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
------------------------------
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation and (ii) has control of the management of the parent
corporation and retains control of the management of Owner.
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
-----------------------------------
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
10.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
10.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in
8
<PAGE>
accordance with Section 8.3 results from one or more Values determined in
accordance with Section 6 and that part of the purchase price is greater than
15% of the entire purchase price, Holder may rescind its Exercise Notice by
giving a notice of rescission to Owner. The notice of rescission must be given
within ten days after Holder receives the last Appraisal Report that may be
required under Section 6.3. If Holder rescinds its Exercise Notice, Holder shall
pay the cost of all the appraisers.
11. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims,
liabilities, damages, losses, costs, and expenses (including
reasonable attorneys' fees) that Holder incurs arising from any
environmental contamination occurring or hazardous materials existing
at the real property that Transferor is concurrently conveying to
Holder (the "Real Property"), to the extent that the contamination or
hazardous materials (i) are present at concentrations that any
governmental agency will require to be remediated or otherwise are not
in compliance with all applicable statutory and regulatory
requirements, (ii) are known or discovered before Holder begins its
operations at the Real Property, and (iii) are not those on which
Holder is obligated to perform any corrective action under a written
agreement between Transferor and Holder. This agreement to indemnify
and defend will survive the closing of Transferor's transfer of the
Real Property to Holder.
12. Owner's Transfer Rights; Notice of Changed Terms. If Holder does not
------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must
include a copy of any signed document changing the price or other terms of the
Tendered Agreement.
13. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the
9
<PAGE>
obligation to comply with this Agreement in connection with any later Tendered
Agreement that Owner enters into during the Right Duration. Holder may void any
transfer that Owner makes without complying with this Agreement. To exercise
this right to void a transfer, Holder must give an Exercise Notice within 25
days after Holder receives actual notice of the intended or consummated
noncomplying transfer and the complete terms of the transfer.
14. Default on Obligations Secured by Junior Liens.
----------------------------------------------
14.1 Definitions for Section 12. When used in this Section 12 and
--------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
Assignment Endorsement: An ALTA Endorsement No. 10.1 to Lender's
----------------------
Title Policy.
Basic Loan Balance: The unpaid balance of the Secured Obligation
------------------
reduced by the Default Amounts.
Default Amounts: All amounts that were added to the balance of the
---------------
Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal property
----------------
that Holder intends to buy from Owner in accordance with this Section 12 after
giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and Lender
---------------------------
stating that Holder elects to buy (i) the Secured Obligation in accordance with
this Section 12, (ii) the Real Estate in accordance with this Section 12, or
(iii) both the Secured Obligation and the Real Estate in accordance with this
Section 12.
10
<PAGE>
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-enforcement
----------------
sale.
Lender: A person for whose benefit a particular Lien exists.
------
"Lender" includes, without limitation, (i) the beneficiary under a deed of
trust, (ii) a mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance insuring
---------------------
its interest with respect to the Lien.
Lien: A lien that (i) encumbers an interest in the Real Estate, (ii)
----
secures a monetary obligation, and (iii) is junior to Holder's rights under this
Agreement.
Lien Enforcement Notice: A notice from Lender to Holder notifying
-----------------------
Holder of Lender's intent to enforce its Lien. The Lien Enforcement Notice must
include (i) a copy of the recorded lien document, (ii) a copy of the promissory
note or other document evidencing the Secured Obligation, (iii) a current
preliminary title report contemplating the issuance of an Assignment
Endorsement, together with legible copies of all recorded documents referenced
in the report, (iv) a statement of the amount of the unpaid balance of the
Secured Obligation, (v) a description of the Loan Default, (vi) an itemization
of the portion of the unpaid balance of the Secured Obligation that is in
default, (vii) an itemization of the Default Amounts, and (viii) a statement of
any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose its
------------
Lien.
Reinstatement Amount: The unpaid balance of the Secured Obligation
--------------------
reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
------------------
14.2 Coverage of this Section 12. The provisions of this Section 12
---------------------------
will apply with respect to each Lien and to each Lender who holds a Lien.
14.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
14.4 Holder's Right to Buy. Before Lender begins enforcement of its
---------------------
Lien, Holder will have the Foreclosure Purchase Right.
11
<PAGE>
14.5 Holder's Exercise Notice to Owner and Lender. If Holder wishes
--------------------------------------------
to exercise the Foreclosure Purchase Right, Holder must send a Foreclosure
Exercise Notice to Owner and Lender within 25 days after Holder actually
receives the Lien Enforcement Notice.
14.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted on the
real property that Holder intends to buy.
14.7 Holder's Purchase of Secured Obligation. If Holder elects to
---------------------------------------
buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise Notice, Holder shall buy from Lender, and Lender shall sell
to Holder, the Secured Obligation and all of Lender's rights in connection with
the Secured Obligation. The purchase price will be equal to the Basic Loan
Balance as of the date of the closing of the purchase and sale transaction. If
Holder wishes, the purchase and sale transaction will occur through an escrow
with a title insurance company acceptable to Holder. At the closing of the
transaction, (i) Holder shall pay the purchase price to Lender in readily
available funds; (ii) Lender shall deliver to holder (A) any promissory note
evidencing the Secured Obligation, endorsed by Lender to Holder or Holder's
nominee, (B) a recordable assignment of the Lien, signed and acknowledged by
Lender, (C) the original of Lender's Title Policy, and (D) the Assignment
Endorsement issued by the title insurance company that issued Lender's Title
Policy; and (iii) Holder and Lender shall sign, acknowledge, and deliver any
other documents necessary or appropriate to consummate the transaction. The
Assignment Endorsement must insure Holder against loss or damage sustained be
[sic] reason of lack of priority of the Lien over defects, liens, or
encumbrances other than those shown in Lender's Title Policy and those that
Holder approves in its sole discretion.
14.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a
period of time to close the purchase of the Elected Property that is equal to
the longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the last Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
12
<PAGE>
14.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice, Holder will receive a credit against the
purchase price for the Basic Loan Balance as of the date that Escrow closes. If
Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation other than the Secured Obligation that was the subject of
the Lien Enforcement Notice, Holder will receive a credit against the purchase
price for the unpaid balance of that monetary obligation as of the date that
Escrow closes.
14.10 Buying Subject to the Lien. If Holder elects to buy the Real
--------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
14.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured Obligation within 30 days after Holder becomes the owner
of the Real Estate by paying the Reinstatement Amount as of the reinstatement
date. Within seven days after the reinstatement date, Lender shall credit the
unpaid balance of the Secured Obligation by the Default Amounts.
14.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
14.13 Lender's Transfer Rights; New Lien Enforcement Notice. If
-----------------------------------------------------
Holder does not exercise the Foreclosure Purchase Right, Lender may proceed with
the enforcement of the Lien and (i) sell the Encumbered Property to a third
party at a Foreclosure Sale, (ii) buy the Encumbered Property by a credit bid at
the Foreclosure Sale, or (iii) accept a deed conveying the Encumbered Property
in lieu of foreclosure, in each case without the requirement of making a further
offer of the Encumbered Property to Holder. But if, within one year after
Holder actually received the Lien Enforcement Notice, Lender's enforcement of
the Lien has not been completed or Lender has not accepted a deed in lieu of
foreclosure, Lender must give a new Lien
13
<PAGE>
Enforcement Notice to Holder before completing the enforcement of the Lien or
accepting a deed in lieu of foreclosure.
14.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys the
Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth below in this Section G1. But a party may
change its address for notices by giving notice as required by this Section G1.
A written notice will be considered given (i) when personally delivered, (ii)
two business days after deposit in the United States Mail as first class mail,
certified or registered, return receipt requested, with postage prepaid, (iii)
one business day after deposit with a reputable overnight delivery service for
next business day delivery, or (iv) on the business day of successful
transmission by electronic facsimile. The parties' addresses for notices are as
follows:
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons
14
<PAGE>
will be considered "Owner" under this Agreement with respect to the applicable
part of the Real Estate while that person is the owner or tenant.
G4. Time of Essence; Business Day; Dates. Time is of the essence of each
------------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and other similar events) (an "Uncontrollable
Event"). If (i) a party who has the right to exercise a right under this
Agreement has not done so by the last date allowed under this Agreement and (ii)
on that date, the party is prevented from exercising the right due to an
Uncontrollable Event, the date will be extended until the third business day
after the Uncontrollable Event ends.
G6. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement must be in writing and signed by Owner and Holder. Any waiver of a
provision of this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees.
15
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
16
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ---------------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------------------------
[X] personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to
[SEAL] me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
--------- --------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- ---------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
EXHIBIT "A"
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead, County of Los Angeles, State of California, as shown on
Map recorded in Book 54 Page(s) 71 and 72 of miscellaneous records, in the
office of the County Recorder of said County, and of San Gabriel Boulevard,
vacated described as follows:
Beginning at the Southeasterly corner of San Gabriel Boulevard and Hellman
Avenue, as shown on Map of Tract No. 11568, recorded in Book 209, pages 24 and
25 of Maps, in the Office of the County Recorder of said County; thence along
the Southerly line of said Hellman Avenue and the Northerly line of said Lot 61,
North 89 degrees 44 minutes 20 seconds East 42.71 feet; thence South 0 degrees
15 minutes 40 seconds East 25.00 feet; thence North 89 degrees 44 minutes 20
seconds East 50.00 feet; thence North 0 degrees 15 minutes 40 seconds West 25.00
feet to said Northerly line; thence along said Northerly line North 89 degrees
44 minutes 20 seconds East 57.29 feet to the Northerly prolongation of the
Westerly line of Lot 41 of said Tract No. 11568; thence along said prolongation
South 0 degrees 33 minutes 25 seconds East 50.00 feet to a point in a line
parallel with said Northerly line which passes through a point in the Easterly
line of said San Gabriel Boulevard, distant South 0 degrees 33 minutes 25
seconds East 50.00 feet from the point of beginning; thence along said parallel
line South 89 degrees 44 minutes 20 seconds West 150.00 feet to said Easterly
line; thence North 0 degrees 33 minutes 25 seconds West 50.00 feet to the point
of beginning.
PARCEL 2:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead County of Los Angeles, State of California, as per Map
Recorded in Book 54, Pages 71 and 72 of Miscellaneous Records, and of San
Gabriel Boulevard, vacated, described as follows:
Beginning at a point in the Easterly line of San Gabriel Boulevard, distant
along said Easterly line South 0 degrees 33 minutes 25 seconds East 50.00 feet
from the Southeasterly corner of San Gabriel Boulevard and Hellman Avenue as
shown on Map of Tract No. 11568, as per Map Recorded in Book 209, Page 24 of
Maps; thence along said Easterly line South 0 degrees 33 minutes 24 seconds East
79.94 feet to the Northwest Corner of said Tract No. 11568; thence along the
Northerly line of said Tract No. 11568, North 89 degrees 47 minutes 45 seconds
East 150 feet to the Northwest Corner of Lot 41 of said last mentioned tract;
thence along the Northerly prolongation of the Westerly line of said Lot 41,
North 0 degrees 33 minutes 25 seconds West 80.10 feet to a line parallel with
the Northerly line of said Lot 61 and which passes through the point of
beginning; thence South 89 degrees 44 minutes 20 seconds West 150 feet to the
point of beginning.
<PAGE>
PARCEL 3:
Lot 42 of Tract No. 11568, in the City of Rosemead, County of Los Angeles, State
of California, as per Map Recorded in Book 209, Pages 24 and 25 of Maps, in the
Office of the County Recorder of said County.
<PAGE>
EXHIBIT 10.18
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 05212
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Business to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and PRESTIGE STATIONS, INC., a Delaware corporation ("Seller").
RECITALS
--------
A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the business
at the Real Estate ("Seller's Operations") and that are located at the Real
Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Dealer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas; Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 3817 West Third Street
City, State, ZIP Code: Los Angeles, California 90020
County: Los Angeles
Deposit: $19,125.00 by Buyer's check payable to Atlantic Richfield Company
Purchase Price: $42,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $7,000.00
Estimated Price of Petroleum Inventory: $25,000.00
Closing Date: See Section 6.1.
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
2
<PAGE>
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within ten business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Atlantic Richfield Company in the amount of the Deposit as set forth in Section
1, and (iii) written proof that Buyer has, or will have, sufficient funds to
complete the Transaction. This proof must consist of evidence showing that (i)
Buyer has sufficient cash or other liquid assets to complete the Transaction or
(ii) Buyer has submitted to an institutional lender a fully completed
application for a loan in an amount sufficient to complete the Transaction.
Buyer must deliver these items to Seller at the same time that Buyer delivers to
ARCO the items required by Section 3 of the Real Estate Agreement.
4. Business Property. The following items constitute the Business
-----------------
Property:
(a) Equipment. All equipment, furnishings, and trade fixtures (i) that
---------
Seller uses in connection with Seller's Operations, (ii) that are
located at the Real Estate, whether or not those items are
attached to the land or improvements at the Real Estate, and (iii)
that are shown on the attached Schedule 1 (collectively, the
"Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the Real
-------------------
Estate on the day that this transaction closes (the "Petroleum
Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
---------------
Operations (other than the Petroleum Inventory), in its original
packaging, that is located at the Real Estate on the day that this
transaction closes and (ii) all supplies that Seller uses in
connection with Seller's Operations and that are located at the
Real Estate on the day that this transaction closes (collectively,
the "Store Inventory");
(d) Permits. All transferable licenses and permits that Seller holds
-------
in connection with Seller's Operations (collectively, the
"Permits"), including without limitation (i) the underground
storage tank permit for the underground storage tanks at the Real
Estate, (ii) any conditional use permit for Seller's Operations,
and (iii) any any operating permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment monitoring and
-----------------
maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, affixed
sales counters, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines.
5. Purchase Price.
--------------
3
<PAGE>
5.1 Amount. The Purchase Price for the Business Property is the
------
amount set forth in Section 1. Section 13 provides for the final determination
of the amount payable for the Store Inventory and the Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Seller shall credit the Deposit to the Purchase Price. Buyer shall
deposit the balance of the Purchase Price with Seller, in cash or immediately
available funds, one business day before the date scheduled for the close of the
Transaction.
6. Closing.
-------
6.1 Closing Date. The Transaction will close simultaneously with the
------------
closings under the Real Estate Agreement, the Companion Business Agreements, and
the Companion Real Estate Agreements. Buyer and Seller shall do all that is
reasonably necessary to close the Transaction.
6.2 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the transactions
-----------------------------------
under the Real Estate Agreement, the Companion Business
Agreements, and the Companion Real Estate Agreements, Seller has
confirmed that (i) Seller is ready and committed to close those
transactions or (ii) if the transaction is being handled through
an escrow, Seller has received notice from the escrow holder that
the escrow holder is ready and committed to close the escrow.
(b) Franchise Documents. ARCO, through its division ARCO Products
-------------------
Company ("APC"), and Buyer (i) have signed a Contract Dealer
Gasoline Agreement (the "Gas Agreement") for Buyer's operations at
the Real Estate after the closing and (ii) have signed and have
had notarized a Memorandum of Contract Dealer Gasoline Agreement
in recordable form. The Gas Agreement must have a term of 15 years
and be in ARCO's standard form.
(c) Other Closing Conditions. All closing conditions for that party's
------------------------
benefit contained in provisions of this Agreement other than this
Section 6.2 have been satisfied, or will be satisfied as a part of
the closing.
(d) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
closing, or will perform those obligations as a part of the
closing.
7. Delivery of Documents and Funds.
-------------------------------
4
<PAGE>
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Buyer the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale|) transferring
------------
title to the Business Property to Buyer, signed by Seller;
(b) Business Property. Physical possession of the tangible assets of
-----------------
the Business Property and all tangible evidence of the intangible
assets of the Business Property, to the extent that those items
are in Seller's possession or control;
(c) Permits. All the Permits;
-------
(d) Equipment Records. All records regarding equipment monitoring and
-----------------
maintenance for Seller's Operations; and
(e) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Seller the following:
(a) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs; and
(b) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
8. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
9. Tax Clearance Certificates. Seller will not be required to provide to
--------------------------
Buyer tax clearance certificates from applicable governmental agencies. Seller
shall indemnify and defend Buyer from all liabilities, damages, claims, costs,
and expenses (including reasonable attorneys' fees) that Buyer might incur in
connection with any tax liability of Seller related to Seller's Operations
before closing.
10. Sales and Use Tax. Buyer represents that it holds a valid
-----------------
Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store Inventory
or the Petroleum Inventory to Buyer.
11. Proration of Personal Property Taxes. Seller shall prorate personal
------------------------------------
property taxes between Seller and Buyer as of the date that the Transaction
closes.
5
<PAGE>
12. Fees and Costs. Buyer and Seller each shall pay one half of the
--------------
filing, recording, publication, and other costs and expenses that are incurred
for the Transaction, unless the cost or expense is otherwise allocated under
this Agreement.
13. Inventory.
---------
13.1 Store Inventory. On the day that the Transaction closes, an
---------------
outside inventory service (the "Service") selected by Seller will conduct an in-
store inventory of the Store Inventory. The Service will calculate the retail
price of the Store Inventory. At the completion of the in-store inventory,
Buyer and Seller each shall pay to the Service one half of the fee for the in-
store inventory. After the in-store inventory has been completed and the
Service has calculated the retail price of the Store Inventory, Seller shall
calculate the amount payable for the Store Inventory in accordance with its
then-current pricing policies for the sale of store inventory located at an
operating business of Seller to a person who intends to re-sell the store
inventory at the same location. Seller shall then notify Buyer of the amount
payable for the Store Inventory. Seller's Operations will be closed to the
public during the in-store inventory.
13.2 Petroleum Inventory. On the day that the transaction closes,
-------------------
Buyer and ARCO's representative conducting the changeover of Seller's Operations
("ARCO's Changeover Representative") shall jointly inventory the Petroleum
Inventory; and after the joint inventory has been completed, ARCO's Changeover
Representative shall calculate the amount payable for the Petroleum Inventory.
The amount payable for the Petroleum Inventory will equal Seller's rack price
based on Seller's latest invoices for gasoline delivered to the Real Estate.
Seller shall then notify Buyer of the amount payable for the Petroleum
Inventory.
13.3 Adjustment for Estimated Price of Inventor. After the petroleum
------------------------------------------
inventory and in-store inventory are completed, the sum of the amount payable
for the Petroleum Inventory and the amount payable for the Store Inventory will
be subtracted from the sum of the Estimated Price of Store Inventory and the
Estimated Price of Petroleum Inventory set forth in Section 1. The resulting
overage or shortage will be credited or charged, as applicable, to the Purchase
Price.
14. Equipment Listing. Seller shall attach to the Bill of Sale, or
-----------------
otherwise deliver to Buyer before or at the closing, a list of the Equipment.
Buyer may inspect the Equipment before the close of the Transaction.
15. Seller's Representations and Warranties. Seller's representations and
---------------------------------------
warranties in this Agreement Will survive the closing. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the close of the
Transaction, as follows:
6
<PAGE>
15.1 Ownership of Assets. Seller has, and at the close of the
-------------------
Transaction will transfer to Buyer, title to the Business Property, free and
clear of all liabilities, liens, encumbrances, security interests, leases,
contracts, and claims.
15.2 Leases, Contracts, and Agreements. No leases, contracts,
---------------------------------
commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
15.3 Absence of Litigation. No suit, arbitration, or other
---------------------
proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future.
15.4 Taxes. Seller has filed all tax returns required in, connection
-----
with Seller's Operations. Seller has paid, or will pay before the close of the
Transaction, all taxes (including interest and penalties on the taxes) due from
Seller in connection with Seller's Operations.
15.5 Equipment. All the Equipment is in good working condition. The
---------
underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement, according to the certificate of upgrade
compliance provided under Section 25284 of the California Health and Safety
Code. The PayQuick Island Cashier has been installed at the Real Estate and
compiles with the terms of Section 10.B of the Gas Agreement. The video
surveillance equipment approved by ARCO has been installed at the Real Estate
and is in good working condition. Any secondary containment equipment for the
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
15.6 Permits and Laws. Seller's Operations are in compliance with
----------------
(i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits for
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Manager of
Environment, Health and Safety, Ted Harriss is the Property Management
Representative assigned to the Real Estate, and Lynn Beteag is Seller's Property
Management Manager assigned to the Real Estate.
7
<PAGE>
15.7 Trademark and Trade Dress. Seller's Operations comply with the
-------------------------
trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
15.8 Employees. The employment of all employees of Seller for
---------
Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
16. As-Is Sale. Buyer acknowledges that (i) it is buying the Business
----------
Property solely in reliance on its own investigation; (ii) no covenants,
representations, or warranties have been made by Seller or on Seller's behalf,
except those set forth in this Agreement; (iii) Buyer has made itself aware of
all Laws concerning the Business Property or Buyer's operation of a business
using the Business Property; and (iv) Buyer will be buying the Business Property
in its condition existing when the Transaction closes. Nothing in the previous
sentence diminishes Seller's obligations as expressly set forth in this
Agreement.
17. Possession of Business Property. Buyer may possess and operate the
-------------------------------
Business Property when the Transaction closes. Buyer shall open for business at
the Real Estate within 48 hours after the Transaction closes. Any alterations
to any structure on the Real Estate will be considered a "conversion" under
Section 5.02(b) of the Mini Market Agreement.
18. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right of
-----------------------------
first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
19. Required Governmental Notices. Promptly following the closing, Buyer
-----------------------------
shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
20. Liquidated Damages. IF THE TRANSACTION FAILS TO CLOSE DUE TO BUYER'S
------------------
DEFAULT, ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 20; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
8
<PAGE>
/s/ JC /s/ JLS
--------------- ------------------
Buyer's Initials Seller's Initials
21. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
22. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If ARCO terminates the Real Estate Agreement in accordance with its
terms, Seller may terminate this Agreement without further liability to Buyer.
If Buyer terminates the Real Estate Agreement in accordance with its terms,
Buyer may terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence; Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
9
<PAGE>
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of the Transaction or the
termination of this Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
10
<PAGE>
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------
John D. Castellucci
President
SELLER:
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
-------------------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2 ,1999
-------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
-----------------------------
Patricia Cusick
Escrow Officer
11
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "A"
<PAGE>
EXHIBIT 10.19
Customer Acct # 0883322
-------
Facility # 82061
-----
CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
- --------- ----
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and
LLO-Gas, Inc.
- --------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, corporation or limited
liability company [LLC]; if partnership, the names
a Delaware Corporation ("Buyer").
- ----------------------------------------------------------------
of all partners and State of organization; if corporation, the State of
incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
-------------------- --
Palma, in the State of California. Buyer's principal place of business is
- ----- ----------
located at 23805 Stuart Ranch Road, Suite 265 in the City of Malibu, in the
---------------------------------- ------
State of California with the ZIP code 90265. This Agreement constitutes a
---------- -----
"franchise" as defined in the Petroleum Marketing Practices Act, 15 U.S.C.
(S)(S) 2801-2806 ("PMPA").
Recitals
--------
A. ARCO markets motor fuels comprising gasolines and gasoline containing
materials bearing the ARCO(R) trademark and other identifying symbols (herein
collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and improvements
which Buyer would like to operate as a retail facility selling Gasoline to end
users. The property and improvements are located at 3366 N. San Gabriel
-------------------
Boulevard, in the city or town of Rosemead in the State of California with the
- --------- -------- ----------
ZIP code 91770. ( The "Premises" ).
-----
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective
----
on the date first set forth above. Subject to earlier termination under
Paragraph 17.1 below, the "Commencement Date" of this Agreement shall begin at
10:00 a.m. on the _____ day of _______________, _____ and the term shall end at
10:00 a.m. on the _____ day of _______________, _____. If no Commencement Date
is set forth, at the time this Agreement is executed, the Commencement Date
shall be established by ARCO by notice to Buyer as the date the Premises are
ready to receive Gasoline delivery, which notice shall also set forth the
expiration date which shall be 15 years after the Commencement Date.
----
Page 1 of 21
<PAGE>
2. Orders. Buyer will order and make available for retail sale all
------
grades of Gasoline which ARCO offers to Buyer (hereinafter collectively,
"Product"), in amounts sufficient to satisfy all foreseeable retail customer
demand for Product at the Premises and will at all times have available for sale
some of each grade of Product, subject only to allocation of Product by ARCO in
a manner determined in ARCO's sole discretion in Buyer's geographic area. ARCO
will use its best efforts to fill Buyer's orders; however, ARCO may discontinue
sale of any grade of Product at any time upon fifteen (15) calendar days' prior
written notice to Buyer. ARCO reserves the right to provide automatic Gasoline
ordering and delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
--------------
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
--------
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
------
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
-------
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require
a product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
Page 2 of 21
<PAGE>
financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend
------
credit to Buyer in whatever amounts, and on whatever terms ARCO alone selects.
If ARCO extends Buyer credit, ARCO may withdraw it at any time without notice
and for any reason. In ARCO's sole judgment, ARCO may do any or all of the
following: (i) require that Buyer pay for Product by cashier's check, money
order or bank wire transfer prior to delivery, (ii) require that Buyer post as
irrevocable letter of credit issued by a bank satisfactory to ARCO, (iii)
require Buyer present evidence of financial solvency, and (iv) declare Buyer in
default of this Agreement if Buyer fails to pay any indebtedness when due,
provide evidence of financial solvency upon request or comply with any other
term of this Agreement. Buyer agrees that regardless of whether and for how
long ARCO has extended it credit, ARCO may cease extending credit at any time
and instead require that payment be made in the manner set forth in this
Paragraph or in Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact
----------------
nature of any nonconformity in the type, quantity or price of any Product
delivered to Buyer within thirty (30) calendar days after delivery. Buyer
hereby waives any claim against ARCO based on any nonconformity of which Buyer
does not so notify ARCO.
Page 3 of 21
<PAGE>
9. Record Keeping. For each delivery of Product, Buyer shall at all
--------------
times keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
---------
10.A Storage and Dispensers. Buyer will maintain storage tanks or
----------------------
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
-------------
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection
with the operation of ARCO authorized businesses. Buyer agrees not to tamper
with, alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair
of the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
Page 4 of 21
<PAGE>
manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed
and bonded armored security service to do the following: make cash pick ups at
least 3 times per week, maintain possession of all keys to the outer door and
the vault of the PIC Equipment, handle all removal of cash cassettes from the
PIC Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video
Surveillance Equipment Program. In addition, Buyer must install, keep
operational and use one or more video surveillance cameras dedicated to
recording the customer activity at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to
use the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required
to upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that
-----------------------------
with respect to any Product storage facilities located on the Premises,
including without limitation underground storage tanks and related equipment,
Buyer is solely responsible for taking, and will take the following leak and
water contamination prevention and detection measures:
Page 5 of 21
<PAGE>
11.1 Stick Readings. Using a properly calibrated wooden tank
--------------
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
---------------
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
----------------
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
----------
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
---------------------
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
------------
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a
leak is confirmed all Product must be removed from the storage tanks immediately
and the tanks secured. In addition, Buyer will keep fill caps tight, keep fill
boxes free of dirt, ice and snow, and immediately remove any water in excess of
one inch (1") in any Product storage tank.
12. Gasoline Regulations.
--------------------
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
--------
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
Page 6 of 21
<PAGE>
12.2 Disclosures and Warnings. Buyer acknowledges that it has been
------------------------
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
-----
13.1 Payment by Buyer. Buyer will pay promptly when due and hold
----------------
ARCO harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
-------------------------------------
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor
---------------
fuel seller number and use tax registration number. Further, Buyer will provide
ARCO with any information requested by ARCO relating to tax credits claimed by
Buyer for motor fuel, sales, use and other taxes paid by Buyer in connection
with the Product for the purpose of resolving any threatened or pending tax
dispute with any governmental authority or for the purpose of confirming Buyer's
compliance with the terms of this Agreement.
14. Trademarks and Trade Dress.
--------------------------
14.1 Compliance. Within one hundred fifty (150) calendar days after
----------
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
Page 7 of 21
<PAGE>
otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
--------
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or
their manner of display without prior notice to Buyer. Upon receiving notice of
any withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the
---------------
cost of acquiring, transporting and installing certain signs and other trade
dress required hereunder and set forth is Exhibit B, as specified below. The
amount of such reimbursement shall be the lesser of (i) one half of Buyer's
actual verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing reimbursement
shall be in writing and accompanied by all original invoices (of
Page 8 of 21
<PAGE>
which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that the
trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other remedies
available to it, ARCO may offset against any amounts owed to Buyer, the amount
of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph 14.3,
Buyer may be obliged to pay ARCO for any reimbursements received and direct
vendor payments made by ARCO hereunder upon the termination or nonrenewal of
this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
------------
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained
by Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
------------------------------
15.1 Compliance With Laws and Regulations. Buyer shall comply with
------------------------------------
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
Page 9 of 21
<PAGE>
any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
---------------
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
------------------------------
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of
---------
this Agreement each of the following forms of insurance from a financially sound
and reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with products-
completed operations coverage in amounts of at least $1,000,000 combined single
limit each occurrence applicable to personal injury, sickness or death and loss
of or damage to property (with liquor law liability coverage if Buyer will sell
or dispense alcoholic beverages), on which ARCO is named as an additional
insured. Buyer will furnish ARCO with certificates of insurance evidencing the
foregoing coverage and providing that no policy of insurance may be canceled or
materially modified without at least thirty (30) calendar days' prior written
notice to ARCO.
Page 10 of 21
<PAGE>
17. Termination and Nonrenewal.
--------------------------
17.1 Triggering Events for Termination or Nonrenewal. In addition to
-----------------------------------------------
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out
the provisions of this Agreement following written notice to Buyer from ARCO of
such failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial
determination of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the prolonged
severe physical or mental disability or disablement of Buyer (if Buyer is an
individual). Buyer's majority shareholder (if Buyer is a corporation) or any of
Buyer's general partners (if Buyer is a partnership) for at least three (3)
months which renders Buyer unable to provide for the continued proper operation
of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of
the Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the
Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO
is legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(1) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
Page 11 of 21
<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a Loan
Agreement and Security Agreement and Related Promissory Note, and Buyer fails to
cure any default under the foregoing Loan Agreement, Loan Agreement and Security
Agreement and Promissory Note as requested, ARCO may terminate this Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
--------------------------------
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe
and healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal
course of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
Page 12 of 21
<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
-----------------------------------
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises, Buyer will repay ARCO all reimbursements
and direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises with a term of more than one year and
Buyer has been a party to an agreement regarding the Premises with ARCO for the
supply of Product for less than thirty-six months, then after the first twelve
months Buyer will pay ARCO, on a pro rata basis as described below, the amount
--- ----
of all reimbursements and direct payments made by ARCO under Paragraph 14.3 upon
the mutual termination of this Agreement or termination or nonrenewal by Buyer
or by ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
--- ----
amount
Page 13 of 21
<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the total
of the reimbursements and direct payments made by ARCO under Paragraph 14.3
times (a) two-thirds during the thirteenth through twenty-fourth month of this
Agreement or (b) one-third during the twenty-fifth through thirty-sixth month of
this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
-------------------------------------------------------------
18.1 Assignment. Buyer will not sell, assign, give or otherwise
----------
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
----------------------
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If
ARCO does not exercise its right of first refusal, Buyer may consummate the
proposed transfer, but not at lower price or on more favorable terms than those
offered to ARCO. If Buyer does not do so within ninety (90) calendar days from
the date ARCO received Buyer's written offer, then Buyer must recommence the
foregoing right of first refusal procedure and satisfy the requirements of this
Paragraph 18.2. ARCO's exercise of its right of first refusal shall not be
dependent on its prior refusal to approve the proposed transferee. Buyer agrees
to execute a memorandum of this
Page 14 of 21
<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
----------------------
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
----------------------
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
-------------
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
--------------
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
-------------
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
Page 15 of 21
<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
-------
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
---------------------------
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
------
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all
----------
applicable government requirements and obtain and maintain all necessary
licenses and permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
---------
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
-----------------------
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver
------------------
such other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO
---------------
may establish additional ARCO or other brand or no brand Gasoline facilities in
any location and proximity to the Premises.
Page 16 of 21
<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise
--------------
be governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this
-------------------
Agreement are intended solely for convenience of reference and shall not in any
way or manner amplify, limit, modify or otherwise affect the interpretation of
any provision of this Agreement, and the neuter gender and the singular or
plural number shall be deemed to include the other genders or numbers whenever
the context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
----------------
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castellucci
- ---------------------------------- ----------------------------------------
Name Name
Title: Manager Title: President
---------------------------- ----------------------------------
Witness: /s/ Hollie Johnson Witness: /s/ Denise Newton
-------------------------- --------------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
Page 17 of 21
<PAGE>
trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
- ---------------------------------- ---------------------------------------
Name Name
Title: Title:
---------------------------- ----------------------------------
Witness: Witness:
-------------------------- --------------------------------
Page 18 of 21
<PAGE>
Exhibit A
Trade Dress Requirements
------------------------
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
Page 19 of 21
<PAGE>
Exhibit B
Shared Trade Dress Costs
------------------------
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs -
Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
Page 20 of 21
<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
and (2) Hughes Indoor Unit - Satellite
Receiver (3) Deicer (if required for
colder climate)
</TABLE>
Page 21 of 21
<PAGE>
EXHIBIT 10.20
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Hollie Johnson
Street: 4 Centerpointe Drive
City &: La Palma
State: California 90623-1066
- -------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
------------------------------------------------
Facility: 82061
-----
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated
Sept. 2, 1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located
- ------------- -------------
at 3366 N.San Gabriel Boulevard, Rosemead, California 91770, and ARCO Products
---------------------------------------------------------
Company, a division of Atlantic Richfield Company, a Delaware corporation, with
offices at 1055 West Seventh Street (P.O. Box 2570) in Los Angeles, California
90051-0570 ("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of 3366 N. San Gabriel
-------------------
Boulevard., in the city of Rosemead, in the state of California, and more
- ----------- -------- -----------
specifically described in Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in that
certain Contract Dealer Gasoline Agreement between the parties hereto, dated,
Sept. 2, 1999, and this Memorandum of Contract Dealer Gasoline Agreement is
- -------------
subject to all the covenants, conditions and terms set forth in that Agreement,
which is hereby adopted herein and made a part hereof as if all the covenants,
conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
-------------
By: /s/ John Castellucci
-------------------------------------
John D. Castellucci
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
-------------------------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
----------
County of Orange
------
On 9/2/99 before me, Hollie Johnson, Notary Public
-------------- ----------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE,
NOTARY PUBLIC
personally appeared John Castellucci and Connie Carroll
-------------------------------------------------------------
[X] proved to me on the basis of satisfactory evidence
to be the person(s) whose names) are
[S E A L] subscribed to the within instrument and
acknowledged to me that they executed the
same in their authorized capacity(ies),
and that by their signatures(s) on the
instrument the person(s), or the entity
upon behalf of which the person(s) acted,
executed the instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-------------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Memorandum of CDGA #820
- ---------------------------------- ----------------------------------------
TITLE OR TYPE OF DOCUMENTS
[_] PARTNERS [_] LIMITED
[_] GENERAL 1
----------------------------------------
NUMBER OF PAGES
[_] ATTORNEY-IN-FACT
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR
[_] OTHER: 9/2/99
-----------------------------
- ---------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- ---------------------------------- ----------------------------------------
ARCO PRODUCTS CO. SIGNER(S) OTHER THAN NAMED ABOVE
- -----------------
- --------------------------------------------------------------------------------
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
----------
County of Orange
------
On 9/2/99 before me, Hollie Johnson, Notary Public
--------------- --------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE,
NOTARY PUBLIC
personally appeared Connie Carroll
-------------------------------------------------------------
[X] proved to me on the basis of satisfactory evidence
to be the person(s) whose names) are
[S E A L] subscribed to the within instrument and
acknowledged to me that they executed the
same in their authorized capacity(ies),
and that by their signatures(s) on the
instrument the person(s), or the entity
upon behalf of which the person(s) acted,
executed the instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-------------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
Manager Memorandum of CDGA #820
- ---------------------------------- ----------------------------------------
TITLE OR TYPE OF DOCUMENTS
[_] PARTNERS [_] LIMITED
[_] GENERAL 1
----------------------------------------
NUMBER OF PAGES
[_] ATTORNEY-IN-FACT
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR
[_] OTHER: 9/2/99
-----------------------------
- ---------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. John Castellucci
- ---------------------------------- ----------------------------------------
ARCO PRODUCTS CO. SIGNER(S) OTHER THAN NAMED ABOVE
- -----------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.21
Facility Number: 82061
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
-------------
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc. ("Franchisee"),
the operator of an ARCO location located at 4100 California Ave.,
Bakersfield, California 93309 ("Facility").
1. Agreement
---------
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
-----------
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain products
----
or services may be purchased or performed, e.g. that gasoline may be
----
pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or service
or receiving cash or a refund from Franchisee through use of the PayPoint
Network to which a participating Financial Institution responds with an
approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute agreements
with Franchisor to participate in or provide services through the PayPoint
Network.
3. PayPoint Network Description
----------------------------
The PayPoint Network shall enable Cardholders to receive cash or to pay for
purchases of products and services by means other than cash, money order or
check. Each Cardholder shall use an access card to initiate a Transaction.
Franchisee shall promptly honor all valid access cards when presented by
Cardholders and shall treat Cardholders from all participating Financial
Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use
one or more Island Card Reader devices ("ICR Device") that are in
communication with the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key pad.
The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
----
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via the
PayPoint Account(s). Franchisee shall not permit anyone to complete a
.Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
----
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between Franchisee
and Franchisor or, where applicable, the first day of the thirteenth month
following the Commencement Date, Franchisee shall pay to Franchisor, for
participation in the PayPoint Network, transaction fees in the amount set
forth on Exhibit A, which is incorporated herein, made a part hereof and
attached hereto. Such fees shall be due and payable to Franchisor on or
before the tenth day of the month following the month in which such fees
were incurred during the term of this Addendum. Provided, however, that if
Franchisee installs and ICR device at the Facility prior to the
Commencement Date and operates it thereafter, Franchisee shall pay no fees
for participation in the PayPoint Network for the first twelve months
following the Commencement Date and 50% of the applicable fees for the
balance of the term of this Agreement. The term "Commencement Date" shall
mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a Cardholder
at the Facility, is provided to Franchisee through the PayPoint Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a new
Addendum to Contract Dealer Gasoline Agreement (PayPoint Network Non-Lessee
ARCO Retailer) and Franchisee has installed and is operating an ICR Device
and is therefore eligible for the waiver of transaction fees as set forth
above, Franchisee shall pay no transaction fees for participation in the
PayPoint Network for the number of months remaining of the original twelve
month waiver period following the original Commencement Date referred to in
this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to terminate
this Addendum at the end of the thirteenth month following the Commencement
Date, as provided below for Franchisees on their initial PayPoint
agreement, Franchisee shall pay Franchisor as set forth on Exhibit D,
attached hereto, incorporated herein and made a part hereof, for
disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and sales,
use, rental, gross receipts, inventory, excise, income and any other taxes
(including interest, penalties, and additions to tax) imposed by any
federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this Addendum.
Franchisee agrees to pay promptly when due and to hold Franchisor harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges or
the use of any loaned property. Franchisee shall furnish to Franchisor,
promptly upon request, any documentation, which in Franchisor's discretion
is required to evidence the payment of any tax, including, but not limited
to, official receipts of the appropriate taxing authorities, copies of tax
returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving Franchisor
at least 30 days prior written notice, to terminate this Addendum; to
downgrade the number of PayPoint Electronic Cashiers (Island CardReaders),
if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
--------
Franchisee shall require each Cardholder to enter his or her PIN on the POS
Equipment at the Facility in order to initiate a Transaction, except to
complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be transmitted
"in the clear."
6. Transaction Approval or Denial
------------------------------
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint Network
---------------------------------------------------------------------------
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
-----------------------
Franchisor and Franchisee shall cooperate to resolve any system malfunction
or problem that interrupts normal operation of the PayPoint Network.
Franchisor shall provide instructions and procedures for the handling of
Transactions that are initiated when communications between Franchisor, the
participating Financial Institutions and the Franchisee location are
interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
-----------------------------------------------
Cardholder refund transactions shall not be processed electronically, but
shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
--------
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has not
forwarded such amount to Franchisor within a period of time specified in a
notice to the Franchisee. Such third party beneficiary rights shall be
enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
----------------------
(a) Cardholder Disputes
-------------------
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time limits.
Franchisee agrees to cooperate with Franchisor and participating Financial
Institutions to resolve Cardholder disputes or inquiries about PayPoint
Network Transactions. To facilitate resolution of Cardholder disputes,
Franchisee shall retain, for a period of at least one hundred eighty (180)
days, copies of receipts issued to Cardholders pursuant to Paragraph 10 of
this Addendum, or reports from which Transaction information can be
retrieved. In response to an oral request by Franchisor or a participating
Financial Institution, to be confirmed in writing, Franchisee shall, within
three (3) Working Days of the oral request, send documentation to
Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the requested
information within three (3) Working Days, Franchisor shall, at the request
of the participating Financial Institution, debit Franchisee's Trade
Statement or electronically debit the Retailer's Account, for the amount
disputed by the Cardholder and credit, through the participating Financial
Institution, the Cardholder's deposit account for the amount disputed. The
obligations of this Paragraph 11 shall survive termination of this
Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
-------------------
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by check.
(c) Disputes Over-Merchandise or Service
------------------------------------
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with Cardholders
and shall indemnify and hold Franchisor and participating Financial
Institutions harmless from any claim, action, damage or expense, including
strict liability in tort, arising out of such disputes or the sale of goods
or services by Franchisee; provided, however, to the extent Franchisee's
petroleum or non-petroleum franchise agreements, if any, are contrary to
this provision as to Franchisor, such petroleum or non-petroleum franchise
agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
----------------------------
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right to
debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
--------------------------------
Franchisor shall process all approved Transactions captured each Settlement
Day and any preceding non-Settlement Day and make arrangements for the
funds to which Franchisee is entitled to be deposited into his or her
Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by way
of the POS Terminal, if possible; otherwise, by way of, written reports.
Franchisor shall also mail to Franchisee, on request, summary reports of
PayPoint Network Transactions at the Facility.
14. Term: Termination
-----------------
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer," i.e.,
a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum for
any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating Financial
Institutions' trademarks, trade names and trade indicia and shall remove
all decals and signs indicating Franchisee's participation in the PayPoint
Network and, if Franchisee is terminated for cause or because he/she has
been designated a Special Franchisee, Franchisee shall pay the applicable
amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
---------------
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in the
PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
------------------------------
Franchisee acknowledges that all information that is disclosed to, or comes
to the attention of Franchisee for purposes of the development or operation
of any aspect of the PayPoint Network (herein "Information") is strictly
confidential. Franchisee agrees that Franchisee shall not use for any
purpose other than Franchisee's use of the PayPoint Network or disclose
said Information or knowingly permit Franchisee's employees or contractors
to disclose said Information to any person outside Franchisor and
Franchisee, or to any employee or contractor of Franchisor or Franchisee
who does not have a specific need to know in performance of work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of information
relating to sales by Franchisee (herein "Sales Information") other than to
Financial Institutions and other third parties who require access to Sales
Information for purposes relating to Franchisee's use of or Franchisor's
operation of the PayPoint Network. Franchisor's obligation of non-
disclosure shall not apply to any Sales Information which is or becomes
available to the public other than through breach of this Addendum by
Franchisor. It is presently Franchisor's policy (which may be changed at
any time by Franchisor at its sole option without notice) to destroy all
records of Sales Information after two (2) years. Franchisor's obligation
of non-disclosure with respect to Sales Information shall terminate upon
destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
--------------------
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved by
Franchisor and such equipment is maintained in good operating order and is
operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the PayPoint
Network, and to satisfy itself that services are being provided to the
public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or such
institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any time
by giving Franchisee not less than thirty (30) days prior written notice
thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor, it
is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering or
defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks and
any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
-------------
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
----------
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such prior
written consent shall be void and any assignment or delegation to which
Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
-------------------------
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
----------------------
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfield Company
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9-29-99
- ------------------------------------- -------------------------------------
Date LLO-Gas, Inc. Date
/s/ Hollie Johnson 9/2/99 /s/ Denise Newton 9-29-99
- ------------------------------------- -------------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
______________________________________________________________________
PayPoint Network Fees
Transactions per Month Fee per Transaction
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line -- installation
costs plus monthly phone charge including per item phone calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
------------------------------------------
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be notified
via telephone. The switch contact person will provide the Franchisee
with the data furnished by the financial institution and request a
copy of the cardholder receipt and/or a copy of the Management Report
Printer (MRP) report showing the disputed transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one (1)
working day of the telephone call. A copy of this form is attached.
6) The Franchisee will have only three (3) working days after receipt of
the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of the
customer receipt and/or MRP report (the same information furnished to
the financial institution) to the Franchisor switch within one (1)
working day of sending the information to the financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
----------------------------------------------
RETAILER:
________________________________________________________________________________
ADDRESS:
________________________________________________________________________________
CITY:
________________________________________________________________________________
STATE/ZIP CODE:
________________________________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO._____________________________________________________________________
AT______________________________________________________________________________
BRANCH NO.______________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:
____________________________________
TITLE:
____________________________________
DATE:
____________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
----------------------------------------
CLAIM NO.:
----------------------------------------------------------------------
DATE CLAIM RECEIVED:
------------------------------------------------------------
TODAY'S DATE:
-------------------------------------------------------------------
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:
--------------------------------------------------------------------
TRANSACTION AMOUNT: TRANSACTION DATE:
---------------- --------------------------
TRANSACTION TIME: REFERENCE NO.
------------------ -----------------------------
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION:
----------------------------------------------------------
ADDRESS:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTACT PERSON:
-----------------------------------------------------------------
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION IF "REQUESTED
INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
-----------------------------
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME:
--------------------------------------------------------------------------
ADDRESS:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DATE INFORMATION SENT TO FINANCIAL INSTITUTION:
---------------------------------
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
------------
Telephone Line Disconnection $200.00
Each Inside Terminal Disconnection and Removal $200.00
Each Outside Terminal Disconnection and Removal $400.00
<PAGE>
EXHIBIT 10.22
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 05502
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Real Estate to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
-1-
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer I. D. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached
Exhibit "A". Seller's interest in the Real Estate is a fee interest in the
entirety of the Real Estate, except as otherwise stated in Exhibit "A".
Seller's interest includes the ownership of the improvements that are
located on or under the land that Seller owns in fee, including without
limitation underground storage tanks and gasoline pipelines. The principal
parcel of land included in the Real Estate is commonly known as:
Street Address: 702 W. Broadway Road
City, State, ZIP Code: Phoenix, AZ 85032
County: Maricopa
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the attached
Exhibit "B".
Deposit: $29,125.00 by Buyer's check payable to Escrow Holder
Purchase Price: $ 1,165,000.00
-2-
<PAGE>
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Slinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 18733 PC
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction")
will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed: Mineral Reservation. Seller shall convey the Real Estate to
--------
Buyer by a Special Warranty Deed (the "Deed"). In the Deed, Seller will reserve
the rights, below the depth of 500 feet, to minerals and oil, gas, and other
hydrocarbon substances in and under the land being sold, but without the right
of surface entry.
5. Purchase Price.
--------------
-3-
<PAGE>
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement. But Buyer or Seller may extend the
Closing Date for 20 days if reasonably required for Buyer to obtain the New Beer
and Wine License (as defined in Section 6.3(a) of the Business Agreement). If
Buyer or Seller wishes to exercise this extension right, it must give an
exercise notice to the other and Escrow Holder at least 10 days before the
initially scheduled Closing Date. If the Closing Date is so extended, the close
of Escrow will occur on or before the extended Closing Date when all closing
conditions contained in this Agreement have been satisfied or waived.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Business Agreement, the Companion Real
Estate Agreements, and the Companion Business Agreements, Seller
has confirmed that (i) Seller is ready and committed to close
those transactions or (ii) if the transaction is being handled
through an escrow, Seller has received notice from the escrow
holder that the escrow holder is ready and committed to close the
escrow.
(b) Other Closing Conditions. All closing conditions for that
------------------------
party's benefit contained in provisions of this Agreement other
than this Section 6.3 have been satisfied, or will be satisfied
as a part of the closing.
-4-
<PAGE>
(c) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
closing, or will perform those obligations as a part of the
closing.
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The Memorandum
------------------------------------------------
of Contract Dealer Gasoline Agreement (the "Memorandum") referred
to in Section 6.3(c) of the Business Agreement, signed and
acknowledged by Seller, through its division ARCO Products
Company;
(c) Withholding Certifications. (i) A Certification of Non-Foreign
--------------------------
Person Status with respect to Seller's exemption from federal
income tax withholding in connection with the Transaction and
(ii) a comparable certification with respect to Seller's
exemption from state income tax withholding in connection with
the Transaction, if the state in which the Real Estate is located
imposes a withholding requirement on Buyer for income tax that
Seller might owe to the state in connection with the Transaction,
each of which certifications must meet the requirements of
applicable laws and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum, signed and acknowledged by Buyer;
----------
(b) Right of First Refusal Agreement. The Right of First Refusal
--------------------------------
Agreement (as defined in Section 14), signed and acknowledged
by Buyer;
(c) Environmental Declaration. The Environmental Declaration (as
-------------------------
defined in Section 12), signed and acknowledged by Buyer;
-5-
<PAGE>
(d) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs and
prorations; and
(e) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the Memorandum, the Right of Refusal Agreement, the Option
Agreement, and the Environmental Declaration. These documents
must be recorded before any documents benefitting any lender or
other third party are recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is
committed to issue an ALTA Standard Coverage Owner's Policy of
Title Insurance (the "Title Policy") insuring Buyer in the amount
of the Purchase Price upon the close of Escrow. The Title Policy
must insure Buyer's title to the Real Estate subject to only (i)
the standard exclusions and exceptions of the policy form, (ii)
nondelinquent taxes and assessments, and (iii) the Permitted
Exceptions (as defined in Section 9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for
title insurance, if the Real Estate is located in a state where
title insurers do not issue preliminary title reports) (in either
case, the "Report") covering the condition of title to the Real
Estate. Unless Buyer gives Seller written notice, within ten
days after receiving the Report, objecting to matters shown in
the Report, Buyer will be considered to have approved the
condition of title as shown in the Report. If Buyer so objects
to any matter (each, a "Disapproved Matter") shown in the Report,
Seller will have 30 days after receiving Buyer's written
objection in which to remove the Disapproved Matter from record
title or to obtain the Title Company's agreement to issue an
appropriate endorsement to the Title Policy. If Seller is unable
or unwilling to remove the Disapproved Matter from record title
or to obtain the Title
-6-
<PAGE>
Company's agreement, Seller may terminate this Agreement by
giving a termination notice to Buyer and Escrow Holder within the
30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow
Holder shall return the Deposit to Buyer; and neither party will
have any further obligation to the other under this Agreement.
The term "Permitted Exception" means each matter shown in the
Report that (i) is not a Disapproved Matter or (ii) is a
Disapproved Matter for which Seller has obtained the Title
Company's agreement to issue an appropriate endorsement to the
Title Policy.
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real
Estate will vest. If Buyer fails to so notify them, title will
vest in Buyer as stated in the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the
Title Policy to Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of real
property taxes, current installments of special taxes and assessments, and any
rents or other income derived from the Real Estate. Utility charges will not be
prorated. Seller shall cause a final reading of the utility meters to be taken
on the day that Escrow closes; and Buyer shall arrange for all utility services
to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
-7-
<PAGE>
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached Exhibit
"B".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real Estate
are public records, available at the Agency's offices for Buyer's review.
12.3 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.4 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to
provide any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.5 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the Inspection
-------------------------------------
Period, Buyer shall obtain a subsurface investigation report on the extent and
concentrations of any petroleum products in the soil and, if encountered,
groundwater at or under the Real Estate (the "Phase II Report"). Buyer shall
engage a geologist or professional engineer who is licensed by the State of
California and who is not an
-8-
<PAGE>
affiliate of Buyer or Seller (the "Environmental Consultant"), to perform the
subsurface investigation and prepare and certify the Phase II Report. Buyer
shall initially pay for the cost of the Phase II Report. Escrow Holder shall
prorate the cost of the Phase II Report at the closing so that Buyer and Seller
share equally up to $15,000 of the total cost of the Phase II Report. The
parties shall request that the Environmental Consultant complete the Phase II
Report at least 10 days prior to the end of the Inspection Period. Subject to
the provisions of Section 12.5 (b) below, Buyer shall determine the scope of
work for the Phase 11 Report, in its reasonable discretion. Buyer shall have the
right to modify the scope of work, as a result of on-site conditions discovered
in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a modification
---------------------
of the original scope of work, that involves any disturbance (including any
drilling or boring) of the surface of the land or any underground vault or
storage tank, underground pipes, or fuel lines ("Special Buyer Testing"), Buyer
must obtain Seller's prior written approval. Seller may withhold its approval
if it determines in good faith that the Special Buyer Testing would interfere
with Seller's business operations or would pose a safety or environmental
hazard. Buyer shall indemnify and defend Seller from all liabilities, damages,
losses, claims, costs and expenses (including reasonable attorneys' fees) that
Seller incurs arising from performance of the Special Buyer Testing. Without
limiting the immediately preceding provisions of this Section 12.5(b), Buyer
shall promptly repair any damage to the Real Estate or any personal property
located at the Real Estate resulting from any Special Buyer Testing. But Buyer
will have no liability regarding any contaminated soil or groundwater it may
discover on or under the Real Estate during the course of the Special Buyer
Testing, unless Buyer caused the release of that contamination, for example by
puncturing the underground storage tanks on the Real Estate. Buyer's liability
under this Section 12.5(b) is in addition to Seller's right to retain the
Deposit and any accrued interest on the Deposit, when Seller is permitted to do
so under any provision of this Agreement concerning liquidated damages for
Buyer's default under this Agreement. A termination of this Agreement will not
terminate Buyer's obligations under this Section 12.5(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics' and
-----
similar liens arising from any and all Phase 11 Report costs (including without
limitation any Special Buyer Testing) payable by Buyer under this Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at Seller's
----------------------
Environmental Notice Address a copy of the Phase II Report, within two days
after Buyer receives the report. Buyer shall not disclose the results of any
test to any regulatory agency or other third party, unless required to do so by
law and unless Buyer delivers to Seller at Seller's Environmental Notice Address
a copy of the disclosure at least ten days before Buyer mails or otherwise
transmits the disclosure to the agency or other third party.
-9-
<PAGE>
(e) Buyer's Termination Right. If Buyer is not satisfied with the
-------------------------
environmental condition of the Real Estate, Buyer may terminate this Agreement
by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the Escrow and title cancellation charges; after Buyer has
paid its share of those cancellation charges, the Deposit will be returned to
Buyer; and neither party will have any further obligation to the other under
this Agreement. But the Deposit will not be returned to Buyer until Buyer has
delivered to Seller valid, recordable waivers of mechanics' and other statutory
liens from all contractors who conducted tests at Buyer's request.
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ GS
---------------- -----------------
Buyer's Initials Seller's Initials
-10-
<PAGE>
(In order to comply with California Civil Code Section 1677, the above provision
must be in at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031, Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation includes the signing, acknowledgment, and delivery of all documents
that Seller reasonably requests, at no risk or expense to Buyer. Seller shall
indemnify and defend Buyer from all liabilities, damages, claims, costs, and
expenses (including reasonable attorneys' fees) that Buyer might incur in
connection with Buyer's participation in the exchange transaction.
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning laws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
-11-
<PAGE>
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate, including material violations of regulations of the Environmental
Protection Agency or any state regulatory body concerning the disposal of
hazardous waste, petroleum, underground storage tanks, or any other hazardous
materials at the Real Estate, except as disclosed in the Environmental
Documents.
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial compliance with all applicable laws, statutes, ordinances, codes,
covenants, conditions, and restrictions of any kind or nature affecting the Real
Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
fully operational.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any representation or
warranty, as long as Buyer delivers written notice of the breach to Seller and
exercises any remedy, including the filing of any suit or other action, within
one year after the date that the Escrow closes.
GENERAL PROVISIONS
------------------
-12-
<PAGE>
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement; Modification Waiver. This Agreement (including any
-------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of
-13-
<PAGE>
this Agreement. In this Agreement, each gender includes the other genders. Words
in the singular include the plural and vice versa, when appropriate. The word
"person" includes natural individuals and all other entities. The word "cost"
includes any cost or expense. The word "term" includes any covenant, condition,
representation, warranty, or other provision that is part of an agreement.
Whenever a provision of this Agreement requires Buyer or Seller to perform an
act, that person must do so at its sole cost (unless otherwise stated in
connection with that provision).
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY,
a Delaware corporation
By: /s/ G. Simning
---------------------------------
Gary Simning
Assistant Vice President
Agreed to by Escrow Holder
on Sept. 2 , 1999.
----------------------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
------------------------------
Patricia Cusick
Escrow Officer
-14-
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
-15-
<PAGE>
LEGAL DESCRIPTION
That part of Lots 8 and 9, BROADWAY GARDENS, according to Book 29 of Maps, Page
43, records of Maricopa County, Arizona, more particularly described as follows:
BEGINNING at the Southeast comer of Section 19, Township 1 North, Range 3 East
of the Gila and Salt River Base and Meridian, Maricopa County, Arizona; thence
West along the South line of the Southeast quarter of said Section 19, a
distance of 233.00 feet to a point on the Southerly prolongation of the West
line of said Lot 8; thence North 00 degrees 19 minutes 30 seconds West along
said West line a distance of 40.00 feet to a point on the North line of the
South 40 feet of said Southeast quarter, said point also lying on the North line
of the South 7 feet of said Lot 8 and also being the true point of beginning;
thence continuing North 00 degrees 19 minutes 30 seconds West along the West
line of said Lot 8 a distance of 234.48 feet to the Northwest corner of said Lot
8; thence North 89 degrees 27 minutes 24 seconds East along the North line of
said Lots 8 and 9 a distance of 193.00 feet to a point on the West line of the
East 7 feet of said Lot 9, said point also lying on the West line of the East 40
feet of said Southeast quarter; thence South 00 degrees 19 minutes 30 seconds
East along the said West line a distance of 216.31 feet to the intersection of
said West line with the North line of the South 27 feet of said Lot 9;
thence South 44 degrees 50 minutes 15 seconds West a distance of 28.20 feet to a
point on the North line of the South 7 feet of said Lot 9, said point also lying
on the West line of the East 27 feet of said Lot 9; thence West along said North
line a distance of 173.00 feet to the TRUE POINT OF BEGINNING;
EXCEPT that portion described as follows:
BEGINNING at the Southeast corner of the Southeast quarter of Section 19,
Township 1 North, Range 3 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; thence North 0 degrees 19 minutes 30 seconds West
along the East line of said Southeast quarter a distance of 60.23 feet; thence
South 89 degrees 40 minutes 30 seconds West a distance 40.00 feet to the TRUE
POINT OF BEGINNING;
thence North 0 degrees 19 minutes 30 seconds West along the West right of way
line of 7th Avenue a distance of 216.31 feet; thence South 89 degrees 27 minutes
24 seconds West a distance of 2.00 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 209.29 feet;
thence South 44 degrees 50 minutes 15 seconds West a distance of 21.15 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 84.53 feet;
thence North 0 degrees 00 minutes 00 seconds West a distance of 6.00 feet;
thence South 90 degrees 00 minutes 00 seconds West 23.00 feet;
-16-
<PAGE>
thence South 76 degrees 31 minutes 29 seconds West a distance of 68.66 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 1.64 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 2.00 feet;
thence North 90 degrees 00 minutes 00 seconds East a distance of 173.00 feet;
thence North 44 degrees 50 minutes 15 seconds East a distance of 28.20 feet to
the TRUE POINT OF BEGINNING.
-17-
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
-18-
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
<TABLE>
<S> <C>
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
</TABLE>
EXHIBIT "B"
-19-
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
-20-
<PAGE>
Order No.: 02-950.079 VR
Escrow No.:__________________________
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN RECORDED,
RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 05502
Location: 702 West Broadway
Phoenix, AZ 85032 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
Type 2, 4, and 5 Site in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2 , 1999, is made
-----------
by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of
Maricopa, State of Arizona, described in the attached Exhibit "A" (the "Real
Estate"). In connection with the signing and recording of this Declaration,
ARCO conveyed the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions on
the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning
-----------
set forth beside it.
-21-
<PAGE>
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
and affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement, cost,
- -----
and expense (including reasonable attorney's fees) arising before or after the
Effective Date, whether or not Owner knew or suspected them to exist on the date
that Owner signed this Declaration or on the Effective Date.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater at or near the Real Estate before the Effective Date, whether or not
Owner knew or suspected it to exist on the date that Owner signed this
Declaration or on the Effective Date.
2. Owner's Acceptance of the Condition of the Real Estate. Owner has
------------------------------------------------------
accepted the Real Estate, including without limitation its environmental
condition, in "AS IS" condition on the Effective Date. Owner acknowledges that
the purchase price paid to ARCO for the Real Estate reflects (i) the effect of
this Declaration on the Real Estate and (ii) any Pre-Closing Contamination.
3. Owner's Waiver and Release of Environmental Claims. Owner, for itself
--------------------------------------------------
and its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to any Pre-Closing
Contamination.
4. Notices. Notices relating to this Declaration must be in writing and
-------
sent to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 4. A written notice will
be considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
To Owner: LLO-Gas, Inc.
-22-
<PAGE>
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
5. Entire Agreement; Modification; Waiver. This Declaration (including
--------------------------------------
any attached Exhibits) contains the entire agreement between Owner and ARCO with
respect to the matters that are the subject of this Declaration. Any
modification of this Declaration must be in writing and signed by Owner and
ARCO. Any waiver of a provision of this Declaration by Owner or ARCO must be in
writing.
6. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
7. Attorneys' Fees. If a dispute arises with respect to this Declaration
---------------
and if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees.
8. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration (collectively, the "Rights and Restrictions") are for the benefit of
ARCO and its successors and assigns. The Rights and Restrictions run with the
Real Estate and bind Owner's successors and assigns, including future owners of
the Real Estate, for ARCO's benefit. The Rights and Restrictions are intended
to constitute equitable servitudes that burden the Real Estate.
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------------
John D. Castellucci
President
-23-
<PAGE>
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
-24-
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
------------------------------------------------------------------------------------
[X] personally known to me to be the person whose names is subscribed to the within
[SEAL] instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenants and Conditions
--------- --------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
-25-
<PAGE>
LEGAL DESCRIPTION
That part of Lots 8 and 9, BROADWAY GARDENS, according to Book 29 of Maps, Page
43, records of Maricopa County, Arizona, more particularly described as follows:
BEGINNING at the Southeast comer of Section 19, Township 1 North, Range 3 East
of the Gila and Salt River Base and Meridian, Maricopa County, Arizona; thence
West along the South line of the Southeast quarter of said Section 19, a
distance of 233.00 feet to a point on the Southerly prolongation of the West
line of said Lot 8; thence North 00 degrees 19 minutes 30 seconds West along
said West line a distance of 40.00 feet to a point on the North line of the
South 40 feet of said Southeast quarter, said point also lying on the North line
of the South 7 feet of said Lot 8 and also being the true point of beginning;
thence continuing North 00 degrees 19 minutes 30 seconds West along the West
line of said Lot 8 a distance of 234.48 feet to the Northwest comer of said Lot
8; thence North 89 degrees 27 minutes 24 seconds East along the North line of
said Lots 8 and 9 a distance of 193.00 feet to a point on the West line of the
East 7 feet of said Lot 9, said point also lying on the West line of the East 40
feet of said Southeast quarter; thence South 00 degrees 19 minutes 30 seconds
East along the said West line a distance of 216.31 feet to the intersection of
said West line with the North line of the South 27 feet of said Lot 9;
thence South 44 degrees 50 minutes 15 seconds West a distance of 28.20 feet to a
point on the North line of the South 7 feet of said Lot 9, said point also lying
on the West line of the East 27 feet of said Lot 9; thence West along said North
line a distance of 173.00 feet to the TRUE POINT OF BEGINNING;
EXCEPT that portion described as follows:
BEGINNING at the Southeast corner of the Southeast quarter of Section 19,
Township 1 North, Range 3 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona;
thence North 0 degrees 19 minutes 30 seconds West along the East line of said
Southeast quarter a distance of 60.23 feet; thence South 89 degrees 40 minutes
30 seconds West a distance 40.00 feet to the TRUE POINT OF BEGINNING;
thence North 0 degrees 19 minutes 30 seconds West along the West right of way
line of 7th Avenue a distance of 216.31 feet;
thence South 89 degrees 27 minutes 24 seconds West a distance of 2.00 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 209.29 feet;
thence South 44 degrees 50 minutes 15 seconds West a distance of 21.15 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 84.53 feet;
thence North 0 degrees 00 minutes 00 seconds West a distance of 6.00 feet;
thence South 90 degrees 00 minutes 00 seconds West 23.00 feet;
-26-
<PAGE>
thence South 76 degrees 31 minutes 29 seconds West a distance of 68.66 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 1.64 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 2.00 feet;
thence North 90 degrees 00 minutes 00 seconds East a distance of 173.00 feet;
thence North 44 degrees 50 minutes 15 seconds East a distance of 28.20 feet to
the TRUE POINT OF BEGINNING.
-27-
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
-28-
<PAGE>
Order No.: 02-950.079 VR
Escrow No.:_______
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND
WHEN RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar D. Castellon
Facility No.: 05502
Location: 702 West Broadway
Phoenix, AZ 85032 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") dated
September 2, 1999, is made by LLO-GAS, INC., a Delaware corporation ("Owner"),
for the benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation
("Holder").
RECITALS
--------
A.. Holder is the former owner of the real property in the County of
Maricopa (the "County"), State of Arizona, described in the attached Exhibit "A"
(the "Real Estate"). In connection with signing and recording this Agreement,
Holder conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
10 Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
-29-
<PAGE>
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property used
-----------------
in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate
-------------
Offered Parcel: The Real Estate; a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
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Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
2. Grant of Right of First Refusal. Owner grants to Holder the Right.
-------------------------------
The Right is governed by the terms of this Agreement and will be in effect
during the Right Duration.
3. Included Rights; Exclusion of Security Interest Transfer.
--------------------------------------------------------
3.1 Offer to Lease or Sublease. The Right includes the right to
--------------------------
match the terms of any lease or sublease that Owner enters into during the Right
Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel when
that part includes all or part of the Real Estate. The Right will exist whether
the leasehold or subleasehold is to begin during or after the Right Duration.
3.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right will include the right to acquire the Offered Parcel and the
Related Property that is to be transferred. If such a separate agreement
exists, it will be considered a Tendered Agreement; and a copy of that signed
separate agreement must be included in the Transfer Notice.
3.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
4. Procedures for Notice and Exercise.
----------------------------------
4.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a Transfer Notice to
Holder. No one other than Owner can satisfy Owner's obligation to send the
Transfer Notice. Holder may acquire the Offered Parcel that is the subject of
the Tendered Agreement, instead of the third party.
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4.2 Exercise Notice: Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
4.3 Holder Indemnifies Owner. Holder shall indemnify and defend
------------------------
Owner from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Owner incurs and that arise from Holder's
exercise of the entry right granted under Section 4.2. But Holder will not be
liable for any decrease in the value of any Offered Parcel resulting from
Holder's discovery of any negative matter regarding the Offered Parcel,
including without limitation any contaminated soil or water existing at the
Offered Parcel before the escrow for Holder's purchase closes (the "Pre-Closing
Contamination"). Holder will not be required to remove or dispose of any Pre-
Closing Contamination. Holder may disclose the existence of any Pre-Closing
Contamination, to the extent that Holder is required to do so under applicable
law.
5. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be at the price and on
the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 60
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
(c) Price Allocation When Larger Parcel or Adjacent Parcel is
---------------------------------------------------------
Offered. If (i) the Right is for the purchase of a Larger Parcel
and (ii) the purchase price in the Tendered Agreement is
allocated between the Real Estate and the remainder of the Larger
Parcel, Holder may buy the Real Estate and not the remainder by
paying only the consideration allocated to the Real Estate. Or
if (i) the Right is for the purchase of a Larger Parcel and (ii)
the purchase price is not so allocated, Holder may buy only the
Real Estate by paying
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consideration that is equitable for only the Real Estate,
considering the total purchase price to be paid by the third
party for the Real Estate and the remainder. If Owner and Holder
fail to agree on an equitable amount, that amount will be
determined in accordance with Section 6. The above principles of
this Section 5(c) will apply in like manner if the Right is for
the purchase of the Real Estate and an Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered Agreement
-------------------------------------
provides for delayed payment terms, Holder may pay the total
purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
6. Valuation Disputes.
------------------
6.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the
noncash consideration under Section 5(f), or (iii) the fair
market value under Section 8.2 or 12.9, the amount or value (the
"Value") will be determined in accordance with the appraisal
procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal
in accordance with this Section 6, Owner and Holder each shall
appoint a Qualified Appraiser (as defined in Section 6.2). If
one of them fails to timely appoint a Qualified Appraiser, the
Qualified Appraiser appointed by the other will determine the
Value.
6.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is
unaffiliated with Owner, Holder, and the third party under the
Tendered Agreement, and (iii) has had full-time experience,
during each of the immediately preceding five years, in
appraising commercial real property in the area of the Real
Estate. But if Holder will be purchasing Business Property, the
Qualified
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Appraiser must also have had substantial experience, during the
immediately preceding five years, in appraising business assets
in the area of the Real Estate. If the Appraisal Institute ceases
to exist, a reasonably comparable, nationally recognized
organization of real estate appraisers will be substituted in the
definition of Qualified Appraiser.
6.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to
Owner and Holder within 30 days after his appointment. An
Appraisal Report must set forth the appraiser's determination of
the Value and the considerations on which his opinion is based.
If two appraisers are appointed and they agree on the Value, they
must deliver a signed joint Appraisal Report to Owner and Holder
within 40 days after the appointment of the second appraiser. If
two appraisers are appointed and they fail to agree on the Value,
each appraiser must deliver his signed Appraisal Report to Owner
and Holder within 35 days after his appointment. If the lower of
the two determinations is at least 95% of the higher, the Value
will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers
to do so, they must appoint a third appraiser who is a Qualified
Appraiser. Within ten days after his appointment, the third
appraiser must select one of the two determinations as being the
same as or the closer to the amount that he determines as the
Value; and the selected determination will be the Value.
6.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third
appraiser.
7. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale
of some or all of the Business Property will occur through a separate Escrow
with an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
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<PAGE>
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing will be considered effected when the County
Recorder accepts the deed for recording.
(b) Extended Coverage Title Policy: Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event,
Holder shall (i) obtain and provide to the title insurer any
survey that the title insurer might require in order to issue the
title policy as an Extended Coverage Title Policy and (ii) pay
the increase in the premium attributable to the extended
coverage. Within three days after Escrow opens, Owner shall send
to Holder a copy of the most recent survey (if any) of the
Offered Parcel that Owner has in its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom
in the County. But if no custom exists for a particular closing
cost, each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect
to (A) the operation of the business conducted at the Offered
Parcel or (B) all or any part of the Offered Parcel, (ii) any
transfer fee that Owner or any of its affiliates is required to
pay to Holder under a Contract Dealer Gasoline Agreement, an
am/pm Mini Market Agreement, or a SmogPros Center Agreement
pertaining to the business conducted at the Offered Parcel, and
(iii) the unpaid balance of principal and accrued interest on any
loan that is payable to Holder or any of its affiliates and that
is secured, wholly or partially, by any property that Holder is
buying in the Transaction, whether or not
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<PAGE>
the deducted amounts would otherwise be due when Escrow closes.
8. Entity Changes.
--------------
8.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1 (a) or 8.1(b).
8.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
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<PAGE>
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation and (ii) has control of the management of the parent
corporation and retains control of the management of Owner.
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
8.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
8.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in accordance with Section 8.3 results from one
or more Values determined in accordance with Section 6 and that part of the
purchase price is greater than 15% of the entire purchase price, Holder may
rescind its Exercise Notice by giving a notice of rescission to Owner. The
notice of rescission must be given within ten days after Holder receives the
last Appraisal Report that may be required under Section 6.3. If Holder
rescinds its Exercise Notice, Holder shall pay the cost of all the appraisers.
9. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims,
liabilities, damages, losses, costs, and expenses (including
reasonable attorneys' fees) that Holder incurs arising from any
environmental contamination occurring or hazardous materials existing
at the real property that Transferor is concurrently conveying to
Holder (the "Real Property"), to the extent that the contamination or
hazardous
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<PAGE>
materials (i) are present at concentrations that any governmental
agency will require to be remediated or otherwise are not in
compliance with all applicable statutory and regulatory requirements,
(ii) are known or discovered before Holder begins its operations at
the Real Property, and (iii) are not those on which Holder is
obligated to perform any corrective action under a written agreement
between Transferor and Holder. This agreement to indemnify and defend
will survive the closing of Transferor's transfer of the Real Property
to Holder.
10. Owner's Transfer Rights; Notice of Changed Terms. If Holder does not
------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must
include a copy of any signed document changing the price or other terms of the
Tendered Agreement.
11. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the obligation to comply with this Agreement in connection
with any later Tendered Agreement that Owner enters into during the Right
Duration. Holder may void any transfer that Owner makes without complying with
this Agreement. To exercise this right to void a transfer, Holder must give an
Exercise Notice within 25 days after Holder receives actual notice of the
intended or consummated noncomplying transfer and the complete terms of the
transfer.
12. Default on Obligations Secured by Junior Liens.
----------------------------------------------
12.1 Definitions for Section 12. When used in this Section 12 and
--------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
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<PAGE>
Assignment Endorsement: An ALTA Endorsement No. 10.1 to Lender's
----------------------
Title Policy.
Basic Loan Balance: The unpaid balance of the Secured Obligation
------------------
reduced by the Default Amounts.
Default Amounts: All amounts that were added to the balance of the
---------------
Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal property
----------------
that Holder intends to buy from Owner in accordance with this Section 12 after
giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and Lender
---------------------------
stating that Holder elects to buy (i) the Secured Obligation in accordance with
this Section 12, (ii) the Real Estate in accordance with this Section 12, or
(iii) both the Secured Obligation and the Real Estate in accordance with this
Section 12.
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-enforcement
----------------
sale.
Lender: A person for whose benefit a particular Lien exists.
------
"Lender" includes, without limitation, (i) the beneficiary under a deed of
trust, (ii) a mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance insuring
---------------------
its interest with respect to the Lien.
Lien: A lien that (i) encumbers an interest in the Real Estate, (ii)
----
secures a monetary obligation, and (iii) is junior to Holder's rights under this
Agreement.
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<PAGE>
Lien Enforcement Notice: A notice from Lender to Holder notifying
-----------------------
Holder of Lender's intent to enforce its Lien. The Lien Enforcement Notice must
include (i) a copy of the recorded lien document, (ii) a copy of the promissory
note or other document evidencing the Secured Obligation, (iii) a current
preliminary title report contemplating the issuance of an Assignment
Endorsement, together with legible copies of all recorded documents referenced
in the report, (iv) a statement of the amount of the unpaid balance of the
Secured Obligation, (v) a description of the Loan Default, (vi) an itemization
of the portion of the unpaid balance of the Secured Obligation that is in
default, (vii) an itemization of the Default Amounts, and (viii) a statement of
any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose its
------------
Lien.
Reinstatement Amount: The unpaid balance of the Secured Obligation
--------------------
reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
------------------
12.2 Coverage of this Section 12. The provisions of this Section 12
---------------------------
will apply with respect to each Lien and to each Lender who holds a Lien.
12.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
12.4 Holder's Right to Buy. Before Lender begins enforcement of its
---------------------
Lien, Holder will have the Foreclosure Purchase Right.
12.5 Holder's Exercise Notice to Owner and Lender. If Holder wishes
--------------------------------------------
to exercise the Foreclosure Purchase Right, Holder must send a Foreclosure
Exercise Notice to Owner and Lender within 25 days after Holder actually
receives the Lien Enforcement Notice.
12.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted on the
real property that Holder intends to buy.
12.7 Holder's Purchase of Secured Obligation. If Holder elects to
---------------------------------------
buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise
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<PAGE>
Notice, Holder shall buy from Lender, and Lender shall sell to Holder, the
Secured Obligation and all of Lender's rights in connection with the Secured
Obligation. The purchase price will be equal to the Basic Loan Balance as of the
date of the closing of the purchase and sale transaction. If Holder wishes, the
purchase and sale transaction will occur through an escrow with a title
insurance company acceptable to Holder. At the closing of the transaction, (i)
Holder shall pay the purchase price to Lender in readily available funds; (ii)
Lender shall deliver to holder (A) any promissory note evidencing the Secured
Obligation, endorsed by Lender to Holder or Holder's nominee, (B) a recordable
assignment of the Lien, signed and acknowledged by Lender, (C) the original of
Lender's Title Policy, and (D) the Assignment Endorsement issued by the title
insurance company that issued Lender's Title Policy; and (iii) Holder and Lender
shall sign, acknowledge, and deliver any other documents necessary or
appropriate to consummate the transaction. The Assignment Endorsement must
insure Holder against loss or damage sustained be reason of lack of priority of
the Lien over defects, liens, or encumbrances other than those shown in Lender's
Title Policy and those that Holder approves in its sole discretion.
12.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a
period of time to close the purchase of the Elected Property that is equal to
the longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the last Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
12.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice. Holder will receive a credit against
the purchase price for the Basic Loan Balance as of the date that Escrow closes.
If Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation other than the Secured Obligation that was the subject of
the Lien Enforcement Notice, Holder will receive a credit against the purchase
price for the unpaid balance of that monetary obligation as of the date that
Escrow closes.
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12.10 Buying Subject to the Lien. If Holder elects to buy the Real
--------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
12.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured Obligation within 30 days after Holder becomes the owner
of the Real Estate by paying the Reinstatement Amount as of the reinstatement
date. Within seven days after the reinstatement date, Lender shall credit the
unpaid balance of the Secured Obligation by the Default Amounts.
12.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
12.13 Lender's Transfer Rights; New Lien Enforcement Notice. If
-----------------------------------------------------
Holder does not exercise the Foreclosure Purchase Right, Lender may proceed with
the enforcement of the Lien and (i) sell the Encumbered Property to a third
party at a Foreclosure Sale, (ii) buy the Encumbered Property by a credit bid at
the Foreclosure Sale, or (iii) accept a deed conveying the Encumbered Property
in lieu of foreclosure, in each case without the requirement of making a further
offer of the Encumbered Property to Holder. But if, within one year after
Holder actually received the Lien Enforcement Notice, Lender's enforcement of
the Lien has not been completed or Lender has not accepted a deed in lieu of
foreclosure, Lender must give a new Lien Enforcement Notice to Holder before
completing the enforcement of the Lien or accepting a deed in lieu of
foreclosure.
12.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys the
Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth below in this Section G1. But a party may
change its address for notices by giving notice as required by this Section G1.
A written notice will be considered given (i) when personally delivered, (ii)
two business days after deposit in
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<PAGE>
the United States Mail as first class mail, certified or registered, return
receipt requested, with postage prepaid, (iii) one business day after deposit
with a reputable overnight delivery service for next business day delivery, or
(iv) on the business day of successful transmission by electronic facsimile. The
parties' addresses for notices are as follows:
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons will be considered "Owner" under this
Agreement with respect to the applicable part of the Real Estate while that
person is the owner or tenant.
G4. Time of Essence: Business Day; Dates. Time is of the essence of each
------------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and other similar events) (an "Uncontrollable
Event"). If (i) a party who has the right to exercise a right under this
Agreement has not done so by the last date allowed under this Agreement and (ii)
on that date, the party is prevented from exercising the right due
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<PAGE>
to an Uncontrollable Event, the date will be extended until the third business
day after the Uncontrollable Event ends.
G6. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement must be in writing and signed by Owner and Holder. Any waiver of a
provision of this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees.
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
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<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
-45-
<PAGE>
LEGAL DESCRIPTION
That part of Lots 8 and 9, BROADWAY GARDENS, according to Book 29 of Maps, Page
43, records of Maricopa County, Arizona, more particularly described as follows:
BEGINNING at the Southeast comer of Section 19, Township 1 North, Range 3 East
of the Gila and Salt River Base and Meridian, Maricopa County, Arizona; thence
West along the South line of the Southeast quarter of said Section 19, a
distance of 233.00 feet to a point on the Southerly prolongation of the West
line of said Lot 8; thence North 00 degrees 19 minutes 30 seconds West along
said West line a distance of 40.00 feet to a point on the North line of the
South 40 feet of said Southeast quarter, said point also lying on the North line
of the South 7 feet of said Lot 8 and also being the true point of beginning;
thence continuing North 00 degrees 19 minutes 30 seconds West along the West
line of said Lot 8 a distance of 234.48 feet to the Northwest corner of said Lot
8; thence North 89 degrees 27 minutes 24 seconds East along the North .line of
said Lots 8 and 9 a distance of 193.00 feet to a point on the West line of the
East 7 feet of said Lot 9, said point also lying on the West line of the East 40
feet of said Southeast quarter; thence South 00 degrees 19 minutes 30 seconds
East along the said West line a distance of 216.31 feet to the intersection of
said West line with the North line of the South 27 feet of said Lot 9;
thence South 44 degrees 50 minutes 15 seconds West a distance of 28.20 feet to a
point on the North line of the South 7 feet of said Lot 9, said point also lying
on the West line of the East 27 feet of said Lot 9;
thence West along said North line a distance of 173.00 feet to the TRUE POINT OF
BEGINNING;
EXCEPT that portion described as follows:
BEGINNING at the Southeast corner of the Southeast quarter of Section 19,
Township 1 North, Range 3 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona;
thence North 0 degrees 19 minutes 30 seconds West along the East line of said
Southeast quarter a distance of 60.23 feet;
thence South 89 degrees 40 minutes 30 seconds West a distance 40.00 feet to the
TRUE POINT OF BEGINNING;
thence North 0 degrees 19 minutes 30 seconds West along the West right of way
line of 7th Avenue a distance of 216.31 feet;
thence South 89 degrees 27 minutes 24 seconds West a distance of 2.00 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 209.29 feet;
thence South 44 degrees 50 minutes 15 seconds West a distance of 21.15 feet;
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<PAGE>
thence South 90 degrees 00 minutes 00 seconds West a distance of 84.53 feet;
thence North 0 degrees 00 minutes 00 seconds West a distance of 6.00 feet;
thence South 90 degrees 00 minutes 00 seconds West 23.00 feet;
thence South 76 degrees 31 minutes 29 seconds West a distance of 68.66 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 1.64 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 2.00 feet;
thence North 90 degrees 00 minutes 00 seconds East a distance of 173.00 feet;
thence North 44 degrees 50 minutes 15 seconds East a distance of 28.20 feet to
the TRUE POINT OF BEGINNING.
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<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
<TABLE>
<S> <C>
On September 2, 1999 before me, M. Bird, Notary Public
----------------- -------------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------
</TABLE>
[X] personally known to me to be the person whose names is subscribed to the
within instrument and acknowledged to me that
[SEAL] he executed the same in his authorized
capacity, and that by his signature on the
instrument the person, or the entity upon
behalf of which the person acted, executed
the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
---------------------------------------------
SIGNATURE OF NOTARY
===============================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
--------- ------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT ------------------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
------------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
<TABLE>
<S> <C>
LLO-Gas, Inc., a Delaware corporation None
- -------------------------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
<PAGE>
EXHIBIT 10.23
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 05502
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Business to Contract Dealer (this "Agreement")
is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"), and PRESTIGE
STATIONS, INC., a Delaware corporation ("Seller").
RECITALS
--------
A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the business
at the Real Estate ("Seller's Operations") and that are located at the Real
Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Dealer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
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<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 702 W. Broadway Road
City, State, ZIP Code: Phoenix, AZ 85032
County: Maricopa
Deposit: $29,125.00 by Buyer's check payable to Escrow Holder
Purchase Price: $155,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $60,000.00
Estimated Price of Petroleum Inventory: $15,000.00
Franchise Fee: $70,000.00
Closing Date: See Section 6.2.
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
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<PAGE>
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10739 PC (To be completed by Escrow
Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to ARCO the items required by Section 3 of the Real Estate
Agreement.
4. Business Property. The following items constitute the Business
-----------------
Property:
(a) Equipment. All equipment, furnishings, and trade fixtures (i)
---------
that Seller uses in connection with Seller's Operations, (ii)
that are located at the Real Estate, whether or not those items
are attached to the land or improvements at the Real Estate, and
(iii) that are shown on the attached Schedule 1 (collectively,
the "Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the Real
-------------------
Estate on the day that Escrow (as defined in Section 6.1) closes
(the "Petroleum Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
---------------
Operations (other than the Petroleum Inventory), in its original
packaging, that is located at the Real Estate on the day that
Escrow closes and (ii) all supplies that Seller uses in
connection with Seller's Operations and that are located at the
Real Estate on the day that Escrow closes (collectively, the
"Store Inventory");
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<PAGE>
(d) Permits. All transferable licenses and permits that Seller holds
-------
in connection with Seller's Operations (collectively, the
"Permits"), including without limitation (i) the underground
storage tank permit for the underground storage tanks at the Real
Estate, (ii) any conditional use permit for Seller's Operations,
and (iii) any operating permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, walk-in
coolers, affixed sales counters and food preparation counters, food preparation
equipment, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines. The Permits do not include the Series 10 liquor license for the
sale of beer and wine for off-premises consumption (a "Series 10 License") for
Seller's Operations (the "Existing Beer and Wine License"), since the Existing
Beer and Wine License is not transferable.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Business Property and the
------
Franchise Fee is the amount set forth in Section 1. Section 15 provides for the
final determination of the amount payable for the Store Inventory and the
Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall deposit the balance of the Purchase, Price into Escrow, in cash or
immediately available funds, by the earlier of the following dates: (i) One
business day before the date scheduled for the close of Escrow or (ii) any
earlier date that the Arizona Department of Liquor Licenses and Control (the
"State Liquor Control Department") might require to allow the closing to occur
on the scheduled date.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. If the ABC License is ready to be issued to Buyer,
------------
the Escrow will close simultaneously with the closings under the Real Estate
Agreement, the Companion Business Agreements, and the Companion Real Estate
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<PAGE>
Agreements. If the ABC License is not ready to be issued to Buyer, but a
temporary beer and wine license is ready to be issued to Buyer, the escrows
under the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements may close before the Escrow closes. In that
case, the Escrow will close when the ABC License is issued to Buyer.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) New Beer and Wine License. The State Liquor Control Department
-------------------------
has issued to Buyer a permanent Series 10 License for Buyer's
operations at the Real Estate (the "New Beer and Wine License").
(b) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Real Estate Agreement, the Companion
Business Agreements, and the Companion Real Estate Agreements,
Seller has confirmed that (i) Seller is ready and committed to
close those transactions or (ii) if the transaction is being
handled through an escrow, Seller has received notice from the
escrow holder that the escrow holder is ready and committed to
close the escrow.
(c) Franchise Documents. ARCO, through its division ARCO Products
-------------------
Company ("APC"), and Buyer (i) have signed a Contract Dealer
Gasoline Agreement (the "Gas Agreement") and a non-lessee am/pm
Mini Market Agreement (the "Mini Market Agreement") for Buyer's
operations at the Real Estate after the closing and (ii) have
signed and have had notarized a Memorandum of Contract Dealer
Gasoline Agreement in recordable form. The am/pm Mini Market
Agreement will provide for the Franchise Fee as set forth in
Section 1, which is included in the Purchase Price. The Gas
Agreement and the Mini Market Agreement each must have a term of
15 years and be in ARCO's standard form.
(d) Other Closing Conditions. All closing conditions for that
------------------------
party's benefit contained in provisions of this Agreement other
than this Section 6.3 have been satisfied, or will be satisfied
as a part of the closing.
(e) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
closing, or will perform those obligations as a part of the
closing.
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<PAGE>
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Buyer or Escrow Holder the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale") transferring
------------
title to the Business Property to Buyer, signed by Seller;
(b) Business Property. Physical possession of the tangible assets of
-----------------
the Business Property and all tangible evidence of the intangible
assets of the Business Property, to the extent that those items
are in Seller's possession or control;
(c) Permits. All the Permits;
-------
(d) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations; and
(e) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs; and
(b) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
8. Issuance of New Beer and Wine License. Buyer shall do all that is
-------------------------------------
reasonably necessary to obtain the New Beer and Wine License. Seller shall
cooperate with Buyer's efforts to obtain the New Beer and Wine License.
9. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
10. Bulk Sale Notices. Seller represents and warrants to Buyer that
-----------------
Seller's chief executive office is at Seller's address set forth in Section 1.
Buyer and Seller acknowledge that under Section 47-6103(A) and (B) of the bulk
sales law contained in Chapter 6 of Title 47 of the Arizona Revised Statutes
(the "Bulk Sales Law"), the Bulk Sales Law applies to a bulk sale only if a
seller's chief executive office is located in the
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<PAGE>
State of Arizona. Therefore, Buyer will not give notice of a bulk sale as
contemplated by Sections 47-6104 and 47-6105 of the Bulk Sales Law with respect
to the sale under this Agreement.
11. Tax Clearance Certificates. Seller will not be required to provide to
--------------------------
Buyer tax clearance certificates from applicable governmental agencies. Buyer
and Seller instruct Escrow Holder to not obtain tax clearance certificates.
Seller shall indemnify and defend Buyer from all liabilities, damages, claims,
costs, and expenses (including reasonable attorneys' fees) that Buyer might
incur in connection with any tax liability of Seller related to Seller's
Operations before closing.
12. Sales and Use Tax. Buyer represents that it holds a valid
-----------------
Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store Inventory
or the Petroleum Inventory to Buyer.
13. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Personal property taxes.
14. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the filing, recording, publication, and other costs
and expenses that Escrow Holder incurs on its behalf, unless the cost or expense
is otherwise allocated under this Agreement. Buyer shall pay (i) all application
and other fees charged by the State Liquor Control Department in connection with
obtaining the New Beer and Wine License and (ii) all fees charged by any
consultant that Buyer retains to assist it in obtaining the New Beer and Wine
License.
15. Inventory.
---------
15.1 Store Inventory. On the day that Escrow closes, an outside
---------------
inventory service (the "Service") selected by Seller will conduct an in-store
inventory of the Store Inventory. The Service will calculate the retail price
of the Store Inventory. At the completion of the in-store inventory, Buyer and
Seller each shall pay to the Service one half of the fee for the in-store
inventory. After the in-store inventory has been completed and the Service has
calculated the retail price of the Store Inventory, Seller shall calculate the
amount payable for the Store Inventory in accordance with its then-current
pricing policies for the sale of store inventory located at an operating
business of Seller to a person who intends to re-sell the store inventory at the
same location. Seller shall then notify Buyer and Escrow Holder of the amount
payable for the Store Inventory. Seller's Operations will be closed to the
public during the instore inventory.
15.2 Petroleum Inventory. On the day that Escrow closes, Buyer and
-------------------
ARCO's representative conducting the changeover of Seller's Operations ("ARCO's
Changeover Representative") shall jointly inventory the Petroleum Inventory; and
after
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<PAGE>
the joint inventory has been completed, ARCO's Changeover Representative shall
calculate the amount payable for the Petroleum Inventory. The amount payable for
the Petroleum Inventory will equal Seller's rack price based on Seller's latest
invoices for gasoline delivered to the Real Estate. Seller shall then notify
Buyer and Escrow Holder of the amount payable for the Petroleum Inventory.
15.3 Adjustment for Estimated Price of Inventory. After the
-------------------------------------------
petroleum inventory and in-store inventory are completed, the sum of the amount
payable for the Petroleum Inventory and the amount payable for the Store
Inventory will be subtracted from the sum of the Estimated Price of Store
Inventory and the Estimated Price of Petroleum Inventory set forth in Section 1.
The resulting overage or shortage will be credited or charged, as applicable, to
the Purchase Price.
16. Equipment Listing. Seller shall attach to the Bill of Sale, or
-----------------
otherwise deliver to Buyer before or at the closing, a list of Equipment. Buyer
may inspect the Equipment before Escrow closes.
17. Seller's Representations and Warranties. Seller's representations and
---------------------------------------
warranties in this Agreement will survive the closing. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the close of
Escrow, as follows:
17.1 Ownership of Assets. Seller has, and at the close of Escrow
-------------------
will transfer to Buyer, title to the Business Property, free and clear of all
liabilities, liens, encumbrances, security interests, leases, contracts, and
claims.
17.2 Leases, Contracts, and Agreements. No leases, contracts,
---------------------------------
commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
17.3 Absence of Litigation. No suit, arbitration, or other
---------------------
proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future.
17.4 Taxes. Seller has filed all tax returns required in connection
-----
with Seller's Operations. Seller has paid, or will pay before the close of
Escrow, all taxes (including interest and penalties on the taxes) due from
Seller in connection with Seller's Operations.
17.5 Equipment. All Equipment is in good working condition. The
---------
underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement. The PayQuick Island Cashier has been
installed at the Real Estate and compiles with the terms of Section 10.13 of the
Gas Agreement. The video surveillance equipment approved by ARCO has been
installed at the Real Estate and is in good working condition. Any secondary
containment equipment for the
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<PAGE>
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
17.6 Permits and Laws. Seller's Operations are in compliance with
----------------
(i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits for
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Manager of
Environment, Health and Safety, Ted Harriss is the Property Management
Representative assigned to the Real Estate, and Lynn Beteag is Seller's Property
Management Manager assigned to the Real Estate.
17.7 Trademark and Trade Dress. Seller's Operations comply with the
-------------------------
trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
17.8 Employees. The employment of all employees of Seller for
---------
Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
18. As-Is Sale. Buyer acknowledges that (i) it is buying the Business
----------
Property solely in reliance on its own investigation; (ii) no covenants,
representations, or warranties have been made by Seller or on Seller's behalf,
except those set forth in this Agreement; (iii) Buyer has made itself aware of
all Laws concerning the Business Property or Buyer's operation of a business
using the Business Property; and (iv) Buyer will be buying the Business Property
in its condition existing when Escrow closes. Nothing in the previous sentence
diminishes Seller's obligations as expressly set forth in this Agreement.
19. Possession of Business Property. Buyer may possess and operate the
-------------------------------
Business Property when Escrow closes. Buyer shall open for business at the Real
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<PAGE>
Estate within 48 hours after Escrow closes. Any alterations to the building on
the Real Estate will be considered a "conversion" under Section 5.02(b) of the
Mini Market Agreement.
20. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right of
-----------------------------
first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
21. Required Governmental Notices. Promptly following the closing, Buyer
-----------------------------
shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
22. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 22; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ JLS
-------------- -----------------
Buyer's Initials Seller's Initials
23. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
24. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If
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<PAGE>
ARCO terminates the Real Estate Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Real Estate Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1 Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2 Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3 Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4 Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5 Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6 Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7 Entire Agreement: Modification: Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any
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<PAGE>
modification of this Agreement must be in writing and signed by both parties.
Any waiver of a provision of this Agreement by a party must be in writing.
G8 Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9 Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
(See signatures on the next page.)
-59-
<PAGE>
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------
John D. Castellucci
President
SELLER:
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
-------------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2 , 1999
-------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
-------------------
Patricia Cusick
Escrow Officer
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<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
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<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "A"
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<PAGE>
EXHIBIT 10.24
FACILITY NUMBER: 82062
-----
CUSTOMER ACCOUNT NUMBER: 0883330
-------
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2 , 1999, between ARCO
------------------------------- ----
Products Company (a division of ATLANTIC RICHFIELD COMPANY - incorporated in
Delaware), with an office at:
4 CENTERPOINTE DRIVE, LA PALMA, CALIFORNIA 90623
- ---------------------------------------------------------------------------
("ARCO") and LLO-Gas, Inc.
--------------------------------------------------------------
a Corporation
-------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"],
if partnership, the names of all partner and State of Organization; if limited
partnership, the names of all general partners
and State of Organization; if corporation, the State of Incorporation; if LLC,
the State of Organization)
with an address at 23805 Stuart Ranch Road, Suite 265
------------------------------------------------------------
Malibu, CA 90265 ("Operator").
- ------------------------------------------------------------------
Operator desires to be the franchisee of, and ARCO is willing to grant
to Operator a franchisor for, an am\pm mini market located at the Premises set
forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the
terms and conditions set forth in PARTS I and II of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in PARTS I and II hereof, each of the parties intending to be legally
bound hereby, agrees as follows:
PART I
PART I contains specific terms which relate to the terms and conditions
set forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10
(4/99), attached hereto and incorporated herein.
Section
- -------
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
----------------------------------------------------------------------
----------------------------------------------------------------------
4.03 Store Manager (if Operator has more than one am/pm mini market)
----------------------------------------------------------------------
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______
day of ____________________, ______, ("Commencement Date"), and shall
end at 10 a.m. on the first day after the last day of the [_____] 120th
or [_____] 180th full calendar month following the Commencement Date.
If not time is checked, the box for 120th shall be deemed checked. If
no date is set forth in this Part I, the Commencement Date shall be
established by the "Notice of Final Inspection and Readiness" provided
for in Section 5.01 of PART II.
6.01 Premises
702 W Broadway Rd., Phoenix, Arizona 85032
----------------------------------------------------------------------
(complete address by street number, including, where applicable,
designation of corner)
----------------------------------------------------------------------
City Phoenix State Arizona Zip 85032
------- ------- -----
7.01(a) Initial franchise fee: Seventy Thousand 00/100
---------------------------------------
Dollars [$ 70,000.00]
-------------------- ---------
7.01(c) Renewal franchise fee:
----------------------------------------------------------------------
Dollars [$ .00]
-------------------- ------
7.02(a) Minimum royalty fee: One Thousand 00/100
-------------------------------------------------
Dollars [$ 1000 .00]
-------------------- ----------
7.03 Security Deposit: One Thousand 00/100
---------------------------------------------------
Dollars [$ 1000 .00]
-------------------- ----------
16.01 Operational Designee, if applicable:
---------------------------------
17.02 Corporate Designee (Corporate operators only): John Castellucci
-----------------------
Limited Liability Company Designee (LLC's Only):
----------------------
Partnership Designee (Limited Partnership Only):
----------------------
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<PAGE>
Facility Number: 82062
-----
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by
a check mark at the left of the required items. ARCO agrees to loan the
equipment initialed by ARCO to the right of such items and to install such
equipment prior to the Commencement Date. Operator agrees to install, at
Operator's expense, on or before the Commencement Date, the equipment initialed
by Operator to the right of such items. All equipment, whether furnished by
Operator or by ARCO, must meet ARCO's specifications including, but not limited
to, specifications with respect to brand, size, color and quality.
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
heck Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X am/pm Sun & Moon Sign X
- ----- -----
X Building Fascia (illuminated) X
- ----- -----
X Cigarette Merchandiser (Overhead)(Vendor Supplied) X
- ----- -----
X Corner am/pm I.D. Sign
- ----- and where applicable, Sign Pole X
-----
X Interior Signage X
- ----- -----
X Training Materials [Employee Training System ("E.T.S.")] X
- ----- -----
X Bun Toaster X
- ----- -----
X Capuccino Bulk Powder Machine X
- ----- -----
X Cash Register (Primary with PayPoint(R) P.O.S X
- ----- -----
X Cheese Sauce Dispensers (2) X
- ----- -----
X Coffee Brewer (6 Burner Twin Brewer) X
- ----- -----
X Coffee Brewer Timer X
- ----- -----
X Coffee/ Bakery Menu Board X
- ----- -----
X Coffee Mug Rack X
- ----- -----
X Coffee Lid/Supply Spinner Rack X
- ----- -----
X Computer Software and Hardward X
- ----- -----
X Condiment Pumps (2) X
- ----- -----
X Convection Oven X
- ----- -----
X Convection Oven Racks (4) X
- ----- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
- ----- -----
X Cooler Boxes (Upright) Size______ Number______ X
- ----- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
- ----- -----
X Counter Top Condiment Dispenser Unit X
- ----- -----
X Counter and Shelving (including Condiment Table) X
- ----- -----
X Counter Merchandising System X
- ----- -----
X Cup Dispenser (Hot and Cold) X
- ----- -----
X Fast Food Module (older units only) X
- ----- -----
X Fax Machine X
- ----- -----
X Food Merchandising Warmer X
- ----- -----
X Food Merchandising Rack Identification Channels and Strips X
- ----- -----
X Food Preparation Table X
- ----- -----
X Fountain Drink and Ice Dispenser with Ice Maker and X
- ----- Carbonator (Pepsi-Cola) -----
X Fountain Lid and Straw Rack X
- ----- -----
X Prepackaged Electronic Facility Controller (EFC) X
- ----- (see Electronic Drawings for Details) -----
</TABLE>
2 of 4
<PAGE>
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------- ------------- -------------
<S> <C> <C> <C>
X Freezer Cabinets (Upright) Size______ Number______ X
- --- -----
X Freezer (Storage Room) X
- --- -----
X Frozen Carbonated Beverage Machine X
- --- -----
X Frozen Dessert Graphics Package X
- --- -----
X Frozen Dessert Cup, Cone Tower X
- --- -----
X Gondolas Size______ Number______ X
- --- -----
X Hood and Exhaust Ventilation System for Convection Oven
- --- (California only and only where locally required) X
-----
X Ice Maker X
- --- -----
X Ice Merchandiser Size______ Number______ X
- --- -----
X In-store Television Monitors for display of multi-media
- --- advertising** X
-----
X Microwave Over (Commercial) X
- --- -----
X Nacho CheeseSauce Dispensers X
- --- -----
X PayQuick Island Cashier (PIC) (only if Operator is
- --- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000) with PayPoint X
- --- -----
X Shelving (Storage Room) Size______ Number______ X
- --- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
- --- -----
X Shelving (Wall) Size______ Number______ X
- --- -----
X Sink (3-compartment-food preparation) X
- --- -----
X Sink (Hand sink in hot food area) X
- --- -----
X Sink (Service/Mop) X
- --- -----
X Small Wares (Food Service) X
- --- -----
X Soft Serve Dispenser X
- --- -----
X Sports Bottle Rack X
- --- -----
X Lid/Straw Spinner Rack X
- --- -----
X (Combination VHS Player/Monitor
- --- to utilize ETS/VHS tapes) X
-----
X Water Heater X
- --- -----
X Video Surveillance Equipment (including six Color
- --- Cameras.two 20" color Monitors, Flashing Red Lights
for Monitors, Multiplexor Unit to support up to 9
Cameras, Time-lapse Video Recorder, Video Tape Library
with 31 tapes (replaced annually with 31 new long
playing Video T-160 tapes) and 24 Hour Surveillance
Decal) X
-----
X VSAT Equipment: (1) Hughes Satellite Dish X
- --- -----
X (2) Hughes Indoor Unit - Satellite Receiver X
- --- -----
(3) Deicer (if required for colder climate) X
-----
- --- Other: 1. _____________________________ -----
2. _____________________________ -----
3. _____________________________ -----
</TABLE>
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
3 of 4
<PAGE>
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Connie Carroll 9/2/99 By /s/ John Castellucci 9-2-99
------------------------------------ ------------------------------
Manager Date Manager Date
/s/ [illegible] 9/2/99 /s/ Denise Newton 9-2-99
------------------------------------ ------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
4 of 4
<PAGE>
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Mark and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined in Section 5.01 and continuing during the term
of this Agreement, the non-exclusive right and license to use the trade secrets
and know-how regarding operation of am/pm mini markets, the service mark and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm"
service marks for retail grocery store and convenience store services. ARCO
expressly reserves the right to change, alter or modify the am/pm service mark
or service name or substitute any other service mark or service name at any time
by giving Operator not less than thirty (30) days' prior notice thereof. In the
event of any change, alteration or modification of the service mark or service
name, Operator agrees that only the service mark or service name, as changed,
altered or modified, shall be used by Operator to identify the Store. If the
service mark and service name "am/pm" is changed by ARCO, it is agreed that the
new service mark and service name adopted by ARCO shall be substituted for
"am/pm" wherever "am/pm" appears in this Agreement. ARCO also expressly
reserves the right to change, alter or modify colors and designs and other
service marks and service names used in connection with am/pm mini markets from
time to time and place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service mark and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service mark and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service mark or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service mark,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or
1 of 32
<PAGE>
attempt to register ARCO's service names or service marks, trademarks in
Operator's name or that of any other person and not to use such service marks,
trademarks or service names, or any parts thereat as am part of any corporate or
partnership name or any other business name. It is understood that this covenant
shall survive the termination of this Agreement and shall be binding upon the
heirs; successors and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement or
upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service mark,
trademark rights that may have vested in Operator notwithstanding the provisions
of Section 1.04 as a result of any activities of Operator pursuant to this
Agreement. Operator agrees to use said service marks, trademarks and service
names in connection with, and exclusively for, the promotion and operation of an
am/pm store as provided hereunder, and in accordance with the standards, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service mark or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service mark, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this Agreement
or termination of any subsequent Store Agreement to cease and forever abstain
from using the am/pm service mark and service name and other service marks and
service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during the
term of this agreement to use ARCO's franchise accounting system software at the
am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and
after termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for Operator.
ARTICLE 2
Relationship of Parties
2.01 Neither Operator nor any of its employees shall hold itself or
himself out at any time as an agent, representative, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and
shall not bind nor obligate ARCO in any way, manner or thing whatsoever, nor
shall Operator represent that it has any right or power to do so. Operator
shall undertake all obligations herein
2 of 32
<PAGE>
described as an independent contractor and shall exercise and be responsible for
the exclusive control of the Store and Premises and all activities conducted
therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted
and as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
ARTICLE 4
Hours of Operation and Personal Participation
4.01 Operator shall promote the business of the Store and shall cause the
Store to be operated continuously throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN
THE MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly royalty fee for each day Operator fails to cause the Store to be
open for the prescribed hours.
4.03. Operator shall participate in the operation of the am/pm business
for a period of at least 40 hours per week and if Operator has more than one
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
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<PAGE>
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). For purposes of
personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if Operator is a corporation,
partnership or LLC. The Operational Designee must be a an officer or
shareholder if Operator is a corporation, a member or manager of the LLC if
Operator is an LLC, a general partner if Operator is a limited partnership, a
partner if Operator is a partnership other than a limited partnership. In the
case of Concurrent Operations at the Premises, as more fully described in
Article 4.05 hereof, Operator is obligated to participate in the operation of
all franchise businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm
business as described in Section 4.03 and/or, if applicable, to have the Store
Manager designated in PART I employed at the store on a full time basis and/or,
if applicable, to replace such person with another trained Store Manager within
two months from the date the Store Manager designated in PART I or any successor
to such person is no longer employed at the store shall constitute a material
breach of this Agreement.
4.05 In the event the am/pm mini market, with ARCO's approval, is
operated at the Premises by Operator in conjunction with another or more than
one other ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date first
above written. Except as otherwise provided in this Article, the "Commencement
Date" shall be on the date set forth in PART I. If no date is set forth in PART
1, the Commencement Date shall be the date established by ARCO by notice to
Operator ("Notice of Final Inspection and Readiness") as the date the Premises
are available for occupancy and ready for conduct of the business of the am/pm
mini market. The term hereof shall end as of 10:00 a.m. on the first day after
the last day of the one hundred twentieth (120th) or one hundred eightieth
(180th) full calendar month following the Commencement Date as set forth in Part
I, unless this Agreement is terminated earlier pursuant to the terms hereof.
5.02 (a) In the case of ground-up construction of an am/pm mini market,
as soon as reasonably practicable after execution of the Agreement, but within
six (6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
(1) Photographs of the entire site, including improvements and
corner signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey
should show all existing elevations and site features and should also
include additional data such as: width of streets; type
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of curbs and corner radius; existing sidewalks and/or approaches,
including material and condition; location of existing power poles, light
poles, hydrants, traffic light poles, water, gas and electrical curb
boxes, etc.; buildings and islands on the site, if any, by dimension;
paving, landscaping, trees, fencing, retaining walls, underground motor
fuel storage, if any; property line dimensions, angles and bearings, known
setbacks, easements and code restrictions; North arrow and notes on any
special building, zoning and/or sign code regulations affecting the
property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements, and other
changes not resulting from local requirements, but requested by Operator must be
submitted in writing to ARCO with drawings and specifications and approved in
advance by ARCO. All changes, if any, not mandated by governmental authority
but requested by Operator must be submitted simultaneously as one consolidated
request for modification of the preliminary plans. If modifications are
mandated by governmental authority, copy of the specific instructions to change
the plans must be submitted along with the request for change. ARCO is willing,
within the limitations set forth below, to make the approved modifications, or
Operator may, at Operator's expense, have an architectural or engineering firm
of Operator's choosing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
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(1) General arrangement ("As Built") drawings including
informational sketches and data showing: complete set of drawings used for
construction of building (if available); exterior dimensions, length,
width, and height of every vertical and horizontal surface; interior
dimensions, length, width and height of every room, location of all
existing electrical outlets, plumbing lines, fixtures, switches, controls,
furniture, etc.; obstructions in area to be occupied by walk-in coolers;
all other major obstructions such as columns, downspouts, vents, ducts,
etc.; existing ceiling layout and placement of all light fixtures,
grilles, etc., location of heating, air conditioning and water heating
units, type, size, and condition; electrical panel, size of service,
number of circuits, condition of panel; if reusable as is, or with
supplementary panel and if three-phase service is available; description
of existing structural system, age, type, size, location of beams,
columns, bearing walls, shear walls, etc.; current condition of building,
roof, exterior, interior, restrooms, walkways, existing motor fuel storage
and dispensing system, if any, showing age, size and type of underground
tanks (steel or fiberglass), make and size of suction pumps, leak
detectors, make and model of pumps/dispensers and self-service
console/equipment, if any; describe necessary repairs; photographs of all
four sides of building, interior of office, storage, bays, electrical
panel, heating/air conditioning unit, unusual conditions, existing
islands, signs and canopies; local building restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements and other
changes not resulting from local requirements but requested by Operator, must be
approved in advance by ARCO. All changes, if any, not mandated by governmental
authority but requested by Operator must be submitted simultaneously as one
consolidated guest for modification of the preliminary plans. If modifications
are mandated by governmental authority, copy of the specific instructions to
change the plans must be submitted along with the request for change. ARCO is
willing, within the limitations set forth below, to make the approved
modifications, or Operator may, at Operator's expense have an architectural or
engineering firm of Operator's chasing make the approved modifications. If
Operator elects to have ARCO make the approved modifications, ARCO is willing to
do so provided the total cost of all plans incurred by ARCO in rendering this
service to Operator, including the cost of the 3 sets of blueline and 1 set of
reproducible prints of the preliminary plans and the final plans, does not
exceed 520,000, and provided further that any costs in excess of $20,000 be at
Operator's expense and be paid in advance before such excess costs are incurred.
ARCO will seal final plans developed by ARCO and provide 3 sets of blueline and
1 set of reproducible prints.
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(c) Within 60 days after receipt of the standard Plans, Operator
shall apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if
available in the jurisdiction in which the Store is located. The beer and wine
license must be obtained before ARCO installs or arranges to have installed
illuminated fascia up to ARCO's specifications shown on the Plans, the exterior
am/pm sign, sign pole and interior signage which consists of photo panels,
product area identifiers, striping, fast food menu board and other miscellaneous
decals, and a cigarette overhead merchandiser, if such licenses are available at
the time in the jurisdiction in which Operator's store is located. If a beer and
wine license is not available until construction is completed or the Store is
opened for business, ARCO shall proceed with the necessary work but Operator
shall nevertheless be required to pursue diligently efforts to obtain a beer and
wine license at the earliest possible date in which case the obtaining of a beer
and wine license as a condition to events contemplated in this Article 5,
however, shall be waived and not obtaining a license shall not serve as a ground
for termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on the Plans, and the exterior am/pm sign, sign pole and interior signage
which consists of photo panels, product area identifiers, striping, fast food
menu board and other miscellaneous decals, and a cigarette overhead
merchandiser. If Operator is not the sole and exclusive owner of the Premises,
as a condition to ARCO performing its obligations set forth in the preceding
sentence, Operator shall submit, in form satisfactory to ARCO, a consent of all
owners of the Premises to the modification of the Premises, and a waiver in
recordable form, of all claims of the owner, and any party claiming through or
under the owner, including any mortgagees, to any improvements installed by ARCO
on the Premises and consent to removal by ARCO of such improvements upon
termination of the am/pm franchise. After ARCO installs or arranges
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to have installed exterior illuminated building fascia, the exterior am/pm sign,
sign pole and interior signage which consists of photo panels, product area
identifiers, striping, fast food menu board and other miscellaneous decals, and
a cigarette overhead merchandiser, and provides the additional items referred to
in the second sentence of this Section 5.03, ARCO shall issue the Notice of
Final Inspection and Readiness. If Operator fails to open the Store for business
on the Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
ARTICLE 6
Premises and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the
operation of an am/pm mini market on the Premises set forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the equipment
shown on the list entitled "Store Equipment" attached to PART I ("Store
Equipment"). ARCO hereby agrees to loan and install
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or arrange to have installed exterior illuminated fascia up to ARCO's
specifications shown on the Plans, the exterior am/pm sign, sign pole and
interior signage which consists of photo panels, product area identifiers,
striping, fast food menu board and other miscellaneous decals ("Loaned Store
Equipment"), and a cigarette overhead merchandiser. Operator agrees to install
the Store Equipment on or before the Commencement Date. All Store Equipment must
meet ARCO's specifications, including but not limited to specifications with
respect to size, color and quality. Operator may not install additional
equipment, fixtures or machines without the prior written consent of ARCO.
Operator shall maintain all equipment, including required and optional
equipment, ready for use and in operable condition and shall use or permit the
equipment to be used only for its intended use and only in a manner consistent
with the manufacturer's instructions, and Operator shall utilize the equipment
and exert Operator's best efforts to promote the retail sale of items or
services for which the equipment is designed. In the event that ARCO agrees to
lease to Operator and Operator agrees to lease from ARCO additional equipment
during the term of this Agreement, the list entitled "Store Equipment" attached
to PART I shall be revised accordingly by means of an amendment to this
Agreement executed by both parties hereto. Operator agrees not to remove any of
the Store Equipment from Store without the prior written consent of ARCO except
in the event replacement of the equipment is necessitated by malfunction, in
which case Operator may replace the equipment with equipment meeting the same
specifications with respect to size, color and quality as the equipment
replaced. Operator shall notify ARCO of any such replacement. Title to the
Loaned Store Equipment shall remain in ARCO at all times during the term hereof
and Operator shall not suffer or permit any levy, attachment or execution by
Operator's creditors, including taxing authorities, or by any person or entity
having any interest in the Premises to remain on such Loaned Store Equipment.
ARCO reserves the right to add or delete Equipment during the term of the
Agreement and Operator will install or remove such Equipment within 90 days
after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01 (a) Operator shall pay ARCO an initial franchise fee in the amount
set forth in PART I upon the signing of this Agreement by
Operator.
(b) The initial fee is not refundable in whole or in part except in
the following circumstances:
(1) If this Agreement is for Premises at which construction of
or conversion to an am/pm mini market is contemplated, after
Operator executes the Agreement, ARCO shall have up to 90 days
to execute the Agreement ARCO shall not be obligated under the
Agreement until it is executed by ARCO. If ARCO has made
changes to the am/pm franchise between the time the offering
circular was given to Operator and the time before the offering
circular expires by its own term and Operator has not yet
executed the Agreement, ARCO shall give Operator a new offering
circular and a new Agreement and related agreements reflecting
any such changes and Operator may elect to execute either the
agreements originally given to Operator or those reflecting the
changes. Operator may notify ARCO that Operator does not want
an am/pm franchise and wishes to revoke the Agreement at any
time before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO has
executed the Agreement, ARCO shall return any initial fee paid
by Operator, less ARCO's costs incurred for site selection and
study and preparation of engineering and other plans for the
Premises and any other costs incurred by ARCO in contemplation
of Operator
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operating an am/pm mini market. If ARCO elects not to execute
the Agreement, ARCO shall return, in full, any initial fee paid
by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises, if
any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred for
site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the Agreement
because Operator is unable to obtain all necessary construction
permits and, under certain conditions, a beer and wine license;
or (ii) ARCO terminates the Agreement because of Operator's
failure to obtain permits within 12 months from the receipt of
final plans and/or complete construction or conversion of the
Premises to suitable am/pm mini market facilities within 24
months from the receipt of final plans, for reasons not within
Operator's control or Operator's failure to obtain a beer and
wine license, if available in the jurisdiction in which
Operator's am/pm mini market is located. Except if ARCO's
expenses exceed one-half of the initial fee, in which case ARCO
shall deduct its expenses as set forth in the first sentence of
this subsection (3), one-half of the initial fee shall be
returned to Operator if ARCO terminates the Agreement because
of Operator's failure to obtain permits for and/or complete
construction or conversion within the prescribed time for any
other reason.
(4) The initial fee shall be prorated on a monthly basis over
the term of the Agreement and shall be refundable or payable on
such prorated basis if ARCO terminates the Agreement for the
following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation, for
more than 90 consecutive days, which renders
Operator unable to provide for the continued proper
operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part; of
the Premises pursuant to the power of eminent
domain;
(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and in
the normal course of business to withdraw from and
to no longer maintain the marketing of Motor Fuels
through retail outlets or the am/pm mini market
franchise in the relevant geographic market area in
which Operator's am/pm mini market is located.
In the event Operator's initial fee is returned in whole
or in part for any of the foregoing reasons, no interest shall
be paid on the amount returned.
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ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02 (a) Unless otherwise agreed to in writing by the parties, Operator
shall pay ARCO, as a monthly royalty fee, six percent (6%) of the monthly gross
sales, as that term is hereinafter defined, but not less than the minimum
royalty fee set forth in PART I; provided, however, that if Operator operates a
Store that is accessible to pedestrian traffic only, unless otherwise agreed to
in writing by the parties, commencing on the Commencement Date, Operator shall
pay ARCO, as a monthly royalty fee, five percent (5%) of the monthly gross
sales, but not less than the minimum royalty fee set forth in PART I.
Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term of this Agreement. For any month this Agreement is in effect
which is less than a full calendar month, the minimum monthly royalty fee shall
be prorated on a daily basis.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated as
described below.
(1) Gross sales shall be valued in United States currency,
whether received in that form or otherwise, without deduction on account
of any of the following:
(i) the cost of the goods sold, including taxes paid
by Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
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(i) all sales of merchandise made from or in the Store or
in the immediate vicinity of the store, such as a cart or sidewalk
sale;
(ii) all compensation received for services performed from
or in the Store including but not limited to, commissions and
referral, commissions on lottery and lotto tickets (including all
payments by state agencies for the sale of tickets and for the
redeeming of winning tickets), handling and placement fees and fees
for placement of coin operated and other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a
physical inventory is taken of merchandise currently held for sale in the
Store: as required in Section 15.03 (b). The inventory variation is
defined as either the inventory gain (physical inventory value is greater
than book inventory) or the inventory loss (book inventory value is
greater than physical inventory). The inventory variation subject to
gross sales calculation for royalty reporting is the inventory variation
in excess of the allowable variation. Detailed calculations for
variations and allowable variations are further described in the Store
Systems Manual.
(4) The following are not included in gross sales:
(i) gasoline and other motor fuel sales, if any,
including all applicable motor fuel and sales taxes;
(ii) any deposits refunded to customers;
(iii) sale price of property returned by customer when the
full sale price is refunded either in cash or credit. Where the
customer is required to exchange returned merchandise for other new
merchandise, the cashier is required to ring the sale of the new
merchandise on the register and the sale of the new merchandise is
included in gross sales subject to royalty. For the purpose of this
paragraph, refund or credit of the entire amount shall be deemed to
be given when the purchase price less rehandling and restocking
costs, is refunded or credited to the customer;
(iv) the amount of any tax imposed by the United States or
any city, county, state, or other governmental entity or agency or
instrumentality thereof upon or with respect to retail sales of
tangible personal property measured by a stated percentage of sales
price or gross receipts, whether imposed upon the Operator, as a
seller, or upon the customer, as a purchaser.
(v) for newly constructed or converted am/pm mini markets
only, store sales made during the first 7 days of the term of the
franchise, i.e., during the period comprised of the Commencement
Date as established by the "Notice of Final Inspection and
Readiness" and the next succeeding 6 days of initial operation.
(vi) store sales made during an eligible Grand Opening
Event for a new store, or for an existing store, following
completion of ARCO-approved remodeling or rebuilding. An eligible
Grand Opening Event, which event is not to exceed seven consecutive
days, is more fully described in Article 14.02 hereof.
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Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of the calendar month
succeeding the month in which the sales were made for which said fee is due.
Payment of the royalty fee shall be made in accordance herewith and with forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set
forth in PART I on or before the Commencement Date of this Agreement. If
Operator shall be in default at any time in the performance of any of the terms
and conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing on
the Commencement Date, Operator shall pay an advertising and promotion fee for
each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is defined
in Section 7.02 above.) At any time during the term hereof, on thirty (30)
days' prior written notice to Operator, ARCO may increase or decrease the
advertising and promotion fee, but the total advertising and promotion fee may
not be increased to more than five and one-half percent (5.5%) at any time
during the term of this Agreement and ARCO may not increase the fee by more than
one percent (1%) in any calendar year. The advertising and promotion fee is
payable on or before the tenth (10th) day of the calendar month succeeding the
month in which sales were made upon which the fee is calculated. In addition,
Operator may be required to pay shipping costs, plus the cost of replacement
signs, if Operator requests duplicate signage.
7.05 Any fees and other amounts due and owing ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, c/o Citibank NA. For Credit to APC National Credit #4051-4874, New
York, New York 10043," and to no other bank or account number unless so advised
in writing by the Credit Manager, ARCO Products Company. If such Agreement
requires or permits payment by automated clearing house ("ACH"), all such
payments shall be made to "ARCO Products Company, c/o Citibank Delaware, For
Credit to APC National Credit - ACH #3815-2114, New Castle, Delaware 19720," and
to no other bank or account number unless so advised in writing by the Credit
Manager, ARCO Products Company. If such Agreement requires or permits payment
by electronic funds transfer ("EFT"), all such payments shall be made in strict
accord with procedures established and promulgated by the ARCO Products Company
credit department. Operator agrees to indemnify ARCO for any loss or expense
caused by Operator's failure to comply with this Paragraph. Payment shall be
deemed made when, and only when, its receipt has been verified by ARCO. Receipt
by ARCO of any monies due ARCO after notice of termination or nonrenewal does
not constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
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Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in strict
accordance with all applicable federal, state and local laws, ordinances, rules,
regulations and lawful directives or orders of public officials administering
such laws. Operator agrees to immediately notify ARCO, in writing, of any
citations, notices of violation or other communications alleging violations of
federal, state or local laws, ordinances, rules, regulations, directives or
orders, affecting the operation of the Store and Premises.
8.03 Operator represents and warrants that as of the date hereof Operator
is in compliance with all leases, contracts and agreements affecting the
Premises and Operator's use and possession of the Premises.
ARTICLE 9
Utilities
9.01 Operator shall be solely responsible for all costs of and taxes and
assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
10.02 In addition to the requirements of Section 10.01, Operator shall
perform all maintenance, repairs, and replacement, as necessary, of the
Premises, Store and Store Equipment, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious
physical damage shall exclude damages by the elements and acts of God. ARCO
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shall make all necessary repairs and replacements to the Loaned Store Equipment
resulting from each such incidence of accidental or malicious physical damage
and deduct all costs so incurred from Operator's security deposit and shall
pursue collection from the person(s) reported by Operator to ARCO as having
caused such damages. Immediately upon such deduction of costs so incurred,
Operator shall pay to ARCO an amount equal to that portion of the security
deposit so deducted so as to restore said security deposit to the amount set
forth in PART I. Operator agrees to execute and deliver any instruments and
papers and do whatever else is necessary or required in order for ARCO to pursue
such collection efforts on behalf of Operator for the amount deducted from
Operator's security deposit. If ARCO's collection efforts result in repayment
for all costs incurred by ARCO in making all necessary repairs and replacements
for such an incidence and in collecting such repayment, ARCO shall reimburse
Operator for the amount deducted from Operator's security deposit. If ARCO's
collection efforts result in partial repayment for all such costs incurred, ARCO
shall reimburse Operator only to the extent that the amount collected and the
amount deducted from Operator's security deposit taken together exceed the total
amount of cost of collection and of repair and replacement incurred by ARCO.
Operator shall return all Loaned Store Equipment to ARCO at the termination or
expiration of this Agreement in the same condition which existed at the time the
Loaned Store Equipment was delivered to Operator, subject to normal wear and
tear.
Notwithstanding the foregoing, in the event of destruction of the Premises
to the extent that the normal authorized uses are no longer practicable, either
party may terminate this Agreement within 120 days of such destruction by giving
the other party written notice. The effective date of such termination shall
relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to be
reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable
times and the right to remain on the Premises for examination and inspection of
the Premises, Store, Store Equipment, Operator's books, records and reports and
for any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost incurred in performing such maintenance
and repair and the full replacement cost, without discount or adjustment for any
difference between the remaining term of the franchise and the useful life of
the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video
Surveillance equipment for its intended purpose consistent with the
manufacturer's instructions and ARCO's specifications and maintain at all times
the equipment, including all of its components, in good working order.
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ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from
and against all claims, losses and damages for personal injury or death (whether
to third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in
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whatever form, shall be deemed to benefit Operator. ARCO shall make no
accounting to Operator of the expenditure of advertising and promotion fees or
promotional and other allowances. ARCO may condition Operator's eligibility for
and receipt of promotional, display and other allowances on Operator's
observance of maximum retail selling prices determined by ARCO or maximum gross
profit margins determined by ARCO or a reduction in Franchisee's retail selling
price commensurate with the amount of the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A
suggested electronic file or the product file will also be available for the
operation of the Point of Sale scannable register(s).
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14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and shall permit ARCO and its representatives to
enter the Premises and the Store to examine Operator's business records at all
reasonable times. In addition, in executing this Agreement, Operator grants
ARCO the right to electronically collect certain sales data via Operator's
point-of-sale ("P.O.S.") system, including scanning devices, for purposes of
verifying fees and analyzing sales, as more fully described in the am/pm Store
Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance
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with the terms and conditions of the franchise; in the event such mystery shops
result in a fee verification review/audit, regardless of whether such review
discloses a deficiency, Operator shall be required to pay ARCO its reasonable
costs in performing the review, including the then-current cost of the mystery
shops (currently $36 each). If a review or audit discloses a liability for
royalty, advertising and promotion fees due to ARCO, Operator shall pay promptly
the amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any authorization for release of
statements and cancelled checks to ARCO as may be requited in order for ARCO to
obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall
provide reports, statements and data to ARCO as described below and as described
more fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty fee
calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the service
performing the inventory of the total amount of inventory in the Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all am/pm
franchises, Operator shall provide to ARCO, or to an accounting service
designated by ARCO, such reports and data as are reasonably requested by
ARCO for such purposes and as are more fully described in the Systems
Manual. Such reports and data shall be in a format as designated by ARCO
and transmitted to ARCO, at ARCO's option, either by diskette or
electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise
Accounting System ("F.A.S."), which Operator is required to use, and other
bookkeeping, accounting and physical inventory
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services. Such services are more fully described in the Systems Manual. Except
for F.A.S., which Operator is required to use, Operator may elect not to use the
other bookkeeping, accounting and inventory services offered by ARCO and may
obtain, at its expense, any other bookkeeping, accounting and inventory services
for Operator's business as Operator desires. Operator shall nevertheless be
required to provide to ARCO, or to an accounting service designated by ARCO, the
information referred to in Section 15.03.
15.05 The provisions of Article 15 shall survive termination or
expiration of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
The person(s) required to attend and satisfactorily complete the training
programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
. The sole proprietor, if Operator is a sole proprietor;
. All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
. All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
. All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC).
If no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the
general partner, or if more than one, the general partners),
all shareholders in a corporation or all members in an LLC
must successfully complete the training programs.
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2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below:
If Operator has more than one am/pm mini market, Operator must have
one employee who has attended and successfully completed an four
week am/pm Store Manager training program and who is employed on a
full time basis at each store.
16.02 Following is a description of ARCO training programs in
connection with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee,
or any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
The initial franchisee training program is currently seven weeks, but may
be increased or decreased at ARCO's election, and may include nighttime hours in
connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's
assignee(s), who are required to pay tuition for the initial franchisee training
program at the then-current rate (currently the tuition for the 7-week program
is $15,000), no tuition shall be charged for the initial training program for
Operator, or for one or two employees eligible for training if they attend
before or within thirty-six (36) months after the Commencement Date of the
initial Store Agreement between Operator and ARCO for the Premises. Attendance
by additional persons shall be subject to tuition payable by Operator at the
current rate. The current tuition is $7,500 per additional person, but that is
subject to increase. Tuition must be paid, at ARCO's then-current rate for
initial training, for more than two persons, regardless of whether such persons
in excess of two are partners, shareholders or eligible employees of Operator.
If the franchise is transferred within thirty-six (36) months, a separate
training fee must be paid by the transferee even if only one person has been
trained up to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
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am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as may be mutually
convenient, provided, however, that the cost of such additional instruction,
including transportation, food, lodging and reasonable charges for time and
services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the Employee
Training System, which replacement system will be required when available. It
is estimated that the replacement system will use CD-Rom technology and will be
utilized with personal computers. The current cost for the training materials
is estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of
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the transfer fee payable to ARCO in the event of an assignment to a third party.
If ARCO does not accept the offer within 30 days, operator may assign to a third
party subject to ARCO's prior written consort. If Operator offers a lower price
or more favorable terms which have the effect of a lower price to the third
party, ARCO's right of first refusal shall be triggered again and Operator must
make the offer to ARCO. If Operator's proposed assignee has not enrolled in the
next available training school within 90 days after making the original offer to
ARCO, the request assignment will be considered abandoned by the Operator. A
further request for assignment will again trigger the right of first refusal. If
the assignment has not been completed within 210 days after making the original
offer to ARCO, the request for assignment will be considered abandoned by the
operator. Any further request for assignment will again trigger the right of
first refusal. All communications between ARCO and Operator with regard to the
assignment, right of first refusal, offers, withdrawals, changes in terms and
acceptances must be in writing. In any event, Operator may not assign this
Agreement and Operator's interest in the real property and improvements without
the prior written consent of ARCO, which consent shall not be unreasonably
withheld. In order to allow ARCO adequate time to process an assignment request,
any such request for ARCO's consent to an assignment received 45 days or less
before the expiration of the Store Agreement shall be considered for a
subsequent Store Agreement between Operator and ARCO, if such subsequent
Agreement has been offered and accepted by the parties, and shall be in
compliance with the provisions of such subsequent Agreement. Prior to giving its
written consent, ARCO has the right to review or audit Operator's business
records, including but not limited to those relating to the value of inventories
at cost, and ARCO shall consider, among other things, the qualifications,
character, apparent ability and creditworthiness of the proposed transferee and
such other factors as ARCO deems appropriate, including but not limited to the
following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the time
of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of an
am/pm mini market, the proposed transferee and any employees who must be
trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training tuition
fee is due and payable by means of a cashier's check before the proposed
transferee begins training school. For prospective transferees, the
training tuition fee, which is payable by the prospective transferee to
ARCO regardless of whether or not the transferor is subject to payment of
a transfer fee, shall be refunded in full in the event ARCO refines its
consent to the transfer prior to the proposed transferee attending ARCO's
training program. In the event that ARCO refuses its consent after the
prospective transferee has started attending ARCO's training program or
the prospective transferee withdraws from the training program, ARCO shall
prorate the refund based on any remainder of training to be completed.
The training tuition fee is not refundable in whole or in part upon
completion of the training program. If the proposed transferee is a sole
proprietor or single shareholder corporation, ARCO shall offer to train
and not charge tuition for one employee of the proposed transferee who
attends the initial training within twelve months after the effective date
of the assignment. ARCO shall not reimburse the proposed transferee for
any expenses incurred in connection with attendance at the training
program of the transferee or the transferee's employee. An initial supply
of 20 uniforms must be ordered by the transferee while attending ARCO's
training program at ARCO's training center. In addition, prior to the
effective date of the transfer and as a condition of ARCO granting its
consent to the transfer. ARCO shall require that the transferor has all
then current "Merchandising Accessories Items Required" on hand in the
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Store and in good condition and that any such items that are no longer
clean, workable and presentable or outdated be replaced by items meeting
ARCO's then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent, in
the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the effective
date of the assignment, all of the agreements and Operator's duties and
obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's rights
under this Agreement and shall release and discharge ARCO from all duties
and obligations to Operator in connection with this Agreement as of the
effective date of the assignment; whereupon Operator shall have no further
rights, duties or obligations under this Agreement, except for those
obligations that survive the termination of the Store Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO of
all required approvals of federal, state and local governmental entities,
agencies or instrumentalities thereof or of any third person, including
but not limited to, approval for the transfer of, or issuance of a new
beer and wine license, if available in the jurisdiction in which
Operator's store is located
(i) The proposed transferee must satisfactorily meet the then-current
criteria established by ARCO for new am/pm Operators including, but not
limited to, passing an English proficiency test, being at least 21 years
of age and proof of U.S. citizenship or permanent resident alien status
(green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount of
the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be deposited
in escrow, Operator may, in accordance with ARCO's policies in this
regard, direct payment from such escrow of the remaining portion of the
applicable transfer fee to ARCO which must be paid before ARCO's final
consent to the assignment is given or (b) where the proposed transferee's
transfer price for the businesses shall not be deposited in escrow,
Operator may, in accordance with ARCO's policies in this regard, pay the
remaining portion of the applicable transfer fee by means of a cashier's
check payable to ARCO and given to ARCO before ARCO's final consent to the
assignment is given. In the event that ARCO refuses its consent to the
proposed assignment prior to the proposed transferee attending ARCO's
training program, ARCO shall refund all but $1,000 of any transfer fee
paid. In the event that ARCO refuses its consent to the proposed
assignment because the-proposed transferee does not pass the English
proficiency test and before the proposed transferee attends training
school, ARCO shall refund all but $300 of any transfer fee paid.
Otherwise, the transfer fee is not refundable in whole or in part and
shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event that
Operator requests ARCO to consent to an assignment of Operator's franchise
to: (1) Operator's spouse, adult natural or adopted child, or parent; (2)
a sole proprietorship in which the current
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shareholder of Operator, which is a single shareholder corporation, shall
be the sole proprietor, (3) a partnership in which there are only two
partners, current Operator as an individual and one other person, and in
which the current Operator has at least a fifty percent interest; (4) a
corporation in which there are only two shareholders, current Operator as
an individual and one other person, and in which the sole shareholder of
the current Operator has at least fifty percent of the issued and
outstanding voting shares of stock; (5) a corporation in which current
Operator, as an individual shareholder, owns one hundred percent of the
issued and outstanding voting shares of stock; (6) if Operator is a
corporation, the transfer of less than fifty percent of the issued and
outstanding voting shares of stock; or (7) the dissolution of a two-
partner partnership or a two-shareholder corporation resulting in one of
the former partners remaining as the sole proprietor, or one of the former
shareholders remaining as the sole shareholder of the corporation or as a
sole proprietor and the remaining partner or shareholder or sole
proprietor had at least a fifty percent interest in the partnership or
corporation prior to the dissolution.
ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or
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beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through
merger, consolidation, organization or reorganization without the prior written
consent of ARCO and except upon such terms and conditions as ARCO shall then
require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent
to any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights
or interests under this Agreement and Operator's interest in the real property
and improvements without having received the prior written consent of ARCO shall
constitute a material breach of this Agreement and ARCO shall have the right to
terminate this Agreement upon written notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all
or any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations
hereunder and fails to cure such default within thirty (30) days after receipt
of written notice of default from Operator, Operator shall have the right to
terminate this Agreement by giving ARCO not less than fifteen (15) days' prior
written notice of termination.
18.02 This Agreement may be terminated at any time by mutual agreement
in writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
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a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business of the
am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results
in Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance
with the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner
or the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in-interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or
all or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate
Designee or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
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k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or
more in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business
or system.
n. ARCO makes a reasonable determination that continued
operation of the franchise by the Operator will result in an
imminent danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of
the Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of
such termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
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19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service mark or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service mark or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove any loaned
am/pm Store Equipment and to de-identify any Operator owned
equipment that bears the service mark or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to
enter the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article
1 hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
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(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j)
above, this Agreement shall not terminate upon the death or incapacitation for
more than 90 consecutive days, of Operator if Operator, prior to his or her
death or incapacitation, designates a successor-in-interest to his or her
interest in this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator
is a sole proprietor, the sole proprietor, if Operator is a partnership, a
partner of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days
after the death or incapacitation, for more than 90 consecutive days, of
Operator to give written notice of his or her intention (the "Notice of
Intention") to assume and operate the franchise or, in the case of a successor-
in-interest to the corporate designer, written notice of his or her intention to
personally guarantee performance hereof by the corporate franchisee. The
notification shall contain such information regarding business experience and
creditworthiness as is reasonably required by ARCO. Except as described more
fully below, unless the successor-in-interest has previously been trained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market, the successor-in-interest must attend and successfully
complete such training as is then required by ARCO for new franchisees and
within 21 days after giving the Notice of Intention commence such training. In
addition, ARCO must approve or disapprove the successor-in-interest within 10
days after the successor-interest completes such training. If the successor-in-
interest successfully completes training and is approved by ARCO, ARCO shall
give notice of approval to the successor-in-interest and the successor-in-
interest must commence operation of the franchise (or execute a guarantee of
performance by a corporate franchisee) within 10 days after receipt of such
notice by ARCO. The successor-in-interest shall be required to pay tuition at
the then-current rate for assignees and successors-in-intent. Provided,
however, that if there is an Operational Designee who is different from the
Corporate Designee successor-in-interest, it is the Operational Designee, who
must attend and successfully complete the initial training, unless such
Operational Designee has previously been gained by ARCO pursuant to ARCO's
current 7 week training program for the operation of an am/pm mini
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market. An initial supply of 20 uniforms must be ordered by the successor-in-
interest while attending ARCO's training program at ARCO's training center.
20.04 The franchise available to the successor-in-interest pursuant
hereto is intended to be no greater than the franchise as it exists in the name
of the deceased or incapacitated Operator (or, in the case of a corporate
franchisee, with the deceased or incapacitated Operator as Guarantor) at the
time of such Operator's death or incapacitation. The term of the franchise
shall not be extended by reason of the successor-in-interest assuming (or
guaranteeing) the franchise and ARCO may change the terms of the franchise upon
its renewal, if it is renewed. ARCO may require Operator to arrange for the
discharge or performance of other franchise obligations such as, but not limited
to, insurance, but excluding any obligation to be open to the public, for a
period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate successor-in-
interest. The alternate, if one is designated, shall have no right to assume and
operate (or guarantee) the franchise or Operator's interest in the franchise, as
applicable, in the event of any exercise of rights by the primary successor-in-
interest. If the alternate desires to assume and operate (or guarantee) the
franchise or Operator's interest in the franchise, as applicable, in the event
the primary successor-in-interest, fails to do so the alternate must give notice
of intention to do so and otherwise comply with Section 20.03. (In the case of
Concurrent Operations, the primary successor-in-interest, if one is designated,
must be one and the same person designated as the primary successor-in-interest
to succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises; the alternate successor, if one is designated, must
be one and the same person designated as the alternate successor-in-interest to
succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no
operation of the franchise following the death or incapacitation of Operator by
anyone until all parts of the franchise have been expressly assumed as herein
provided, including, but not limited to, such items as licensing and tax
permits.
20.07 If the successor-in-interest assumes the franchise (or, in the
cast of a corporate franchisee, guarantees the franchise), the successor-in-
interest shall account to the heirs or estate of the deceased or incapacitated
Operator (or, in the case of a corporate franchisee, to the corporation) for the
value or other disposition of personal property of the Operator located at or
related to the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO
each incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals,
as from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral
representations, stipulations, warranties or understandings, express or implied,
with respect to the subject matter of this Agreement which are not fully set
forth herein and in the Manuals, and all prior or contemporaneous promises,
representations, agreements or understandings, express or implied, in connection
with the Store and the am/pm franchise are expressly merged herein and in the
Manuals incorporated herein by reference.
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21.04 Compliance with Applicable Laws. In the event any provisions of
this Agreement provide for periods of notice less than those required by
applicable law, provide for termination other than in accordance with applicable
law or are otherwise inconsistent with applicable law, to the extent such
provisions are inconsistent with applicable law, they shall not be effective and
ARCO and Operator shall comply with applicable law regarding such matters.
21.05 Excused Performance. In the event that either party hereto shall
be delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If
the excused performance is for a period less than a full month, the minimum
royalty fee shall be prorated for such partial month and Operator shall pay, as
a royalty fee for such month, the greater of the royalty fee based on a
percentage of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices
required or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require
performance of any provision of this Agreement shall not affect either party's
right to require full performance thereof at any time thereafter and the waiver
by either Operator or ARCO of any provision hereof shall not constitute or be
deemed a waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration,
modification or waiver of any provision of this Agreement shall be of any effect
unless in writing and signed by Operator and an authorized representative of
ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior
to such execution hereof by ARCO shall not be construed as a waiver by ARCO of
this requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include
the masculine, feminine and neuter pronouns.
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Facility: 82062
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STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
-------------
facility located at 702 W Broadway Rd., Phoenix, Arizona 85032 hereby represents
------------------------------------------
and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this facility
other than as income, earnings, inheritances, gifts or other non-
investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above, as
---------
well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including without
limitation any misrepresentations regarding assets, debts, credit status
and history, investments and loans and regarding partners, stockholders,
stakeholders, backers, other investors or lenders and regarding
citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ John Castellucci 9-2-99
- ------------------------------------- ----------------------------------
LLO-Gas, Inc. Date
<PAGE>
Exhibit 10.25
Customer Acct # 0883330
Facility # 82062
CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and
LLO-Gas, Inc.
- ------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, corporation or limited
liability company [LLC]; if partnership, the names
a Corporation ("Buyer").
- ----------------------------------------------------------------------
of all partners and State of organization; if corporation, the State of
incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
Palma, in the State of California. Buyer's principal place of business is
located at 23805 Stuart Ranch Road, Suite 265 in the City of Malibu, in the
State of California with the ZIP code 90265. This Agreement constitutes a
"franchise" as defined in the Petroleum Marketing Practices Act, 15 U.S.C.
ss.ss. 2801-2806 ("PMPA").
Recitals
A. ARCO markets motor fuels comprising gasolines and gasoline containing
materials bearing the ARCO(R) trademark and other identifying symbols (herein
collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and improvements
which Buyer would like to operate as a retail facility selling Gasoline to end
users. The property and improvements are located at 702 W. Roadway Rd., in the
city or town of Phoenix in the State of Arizona with the ZIP code 85032. ( The
"Premises" ).
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective on
the date first set forth above. Subject to earlier termination under Paragraph
17.1 below, the "Commencement Date" of this Agreement shall begin at 10:00 a.m.
on the _____ day of _______________, _____ and the term shall end at 10:00 a.m.
on the _____ day of _______________, _____. If no Commencement Date is set
forth, at the time this Agreement is executed, the Commencement Date shall be
established by ARCO by notice to Buyer as the date the Premises are ready to
receive Gasoline delivery, which notice shall also set forth the expiration date
which shall be ____ years after the Commencement Date.
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2. Orders. Buyer will order and make available for retail sale all grades
of Gasoline which ARCO offers to Buyer (hereinafter collectively, "Product"), in
amounts sufficient to satisfy all foreseeable retail customer demand for Product
at the Premises and will at all times have available for sale some of each grade
of Product, subject only to allocation of Product by ARCO in a manner determined
in ARCO's sole discretion in Buyer's geographic area. ARCO will use its best
efforts to fill Buyer's orders; however, ARCO may discontinue sale of any grade
of Product at any time upon fifteen (15) calendar days' prior written notice to
Buyer. ARCO reserves the right to provide automatic Gasoline ordering and
delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require a
product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
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<PAGE>
financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend credit
to Buyer in whatever amounts, and on whatever terms ARCO alone selects. If ARCO
extends Buyer credit, ARCO may withdraw it at any time without notice and for
any reason. In ARCO's sole judgment, ARCO may do any or all of the following:
(i) require that Buyer pay for Product by cashier's check, money order or bank
wire transfer prior to delivery, (ii) require that Buyer post as irrevocable
letter of credit issued by a bank satisfactory to ARCO, (iii) require Buyer
present evidence of financial solvency, and (iv) declare Buyer in default of
this Agreement if Buyer fails to pay any indebtedness when due, provide evidence
of financial solvency upon request or comply with any other term of this
Agreement. Buyer agrees that regardless of whether and for how long ARCO has
extended it credit, ARCO may cease extending credit at any time and instead
require that payment be made in the manner set forth in this Paragraph or in
Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact nature
of any nonconformity in the type, quantity or price of any Product delivered to
Buyer within thirty (30) calendar days after delivery. Buyer hereby waives any
claim against ARCO based on any nonconformity of which Buyer does not so notify
ARCO.
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<PAGE>
9. Record Keeping. For each delivery of Product, Buyer shall at all times
keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
10.A Storage and Dispensers. Buyer will maintain storage tanks or
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection
with the operation of ARCO authorized businesses. Buyer agrees not to tamper
with, alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair
of the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
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<PAGE>
manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed
and bonded armored security service to do the following: make cash pick ups at
least 3 times per week, maintain possession of all keys to the outer door and
the vault of the PIC Equipment, handle all removal of cash cassettes from the
PIC Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video
Surveillance Equipment Program. In addition, Buyer must install, keep
operational and use one or more video surveillance cameras dedicated to
recording the customer activity at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to
use the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required
to upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that with
respect to any Product storage facilities located on the Premises, including
without limitation underground storage tanks and related equipment, Buyer is
solely responsible for taking, and will take the following leak and water
contamination prevention and detection measures:
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<PAGE>
11.1 Stick Readings. Using a properly calibrated wooden tank
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a leak
is confirmed all Product must be removed from the storage tanks immediately and
the tanks secured. In addition, Buyer will keep fill caps tight, keep fill boxes
free of dirt, ice and snow, and immediately remove any water in excess of one
inch (1") in any Product storage tank.
12. Gasoline Regulations.
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
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<PAGE>
12.2 Disclosures and Warnings. Buyer acknowledges that it has been
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
13.1 Payment by Buyer. Buyer will pay promptly when due and hold
ARCO harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor
fuel seller number and use tax registration number. Further, Buyer will provide
ARCO with any information requested by ARCO relating to tax credits claimed by
Buyer for motor fuel, sales, use and other taxes paid by Buyer in connection
with the Product for the purpose of resolving any threatened or pending tax
dispute with any governmental authority or for the purpose of confirming Buyer's
compliance with the terms of this Agreement.
14. Trademarks and Trade Dress.
14.1 Compliance. Within one hundred fifty (150) calendar days after
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
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otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or their
manner of display without prior notice to Buyer. Upon receiving notice of any
withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the
cost of acquiring, transporting and installing certain signs and other trade
dress required hereunder and set forth is Exhibit B, as specified below. The
amount of such reimbursement shall be the lesser of (i) one half of Buyer's
actual verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing reimbursement
shall be in writing and accompanied by all original invoices (of
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which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that the
trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other remedies
available to it, ARCO may offset against any amounts owed to Buyer, the amount
of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph 14.3,
Buyer may be obliged to pay ARCO for any reimbursements received and direct
vendor payments made by ARCO hereunder upon the termination or nonrenewal of
this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained by
Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
15.1 Compliance With Laws and Regulations. Buyer shall comply with
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
Page 9 of 21
<PAGE>
any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of this
Agreement each of the following forms of insurance from a financially sound and
reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with
products-completed operations coverage in amounts of at least $1,000,000
combined single limit each occurrence applicable to personal injury, sickness or
death and loss of or damage to property (with liquor law liability coverage if
Buyer will sell or dispense alcoholic beverages), on which ARCO is named as an
additional insured. Buyer will furnish ARCO with certificates of insurance
evidencing the foregoing coverage and providing that no policy of insurance may
be canceled or materially modified without at least thirty (30) calendar days'
prior written notice to ARCO.
Page 10 of 21
<PAGE>
17. Termination and Nonrenewal.
17.1 Triggering Events for Termination or Nonrenewal. In addition to
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out
the provisions of this Agreement following written notice to Buyer from ARCO of
such failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial
determination of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the
prolonged severe physical or mental disability or disablement of Buyer (if Buyer
is an individual). Buyer's majority shareholder (if Buyer is a corporation) or
any of Buyer's general partners (if Buyer is a partnership) for at least three
(3) months which renders Buyer unable to provide for the continued proper
operation of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of
the Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the
Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO
is legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(1) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
Page 11 of 21
<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a
Loan Agreement and Security Agreement and Related Promissory Note, and Buyer
fails to cure any default under the foregoing Loan Agreement, Loan Agreement and
Security Agreement and Promissory Note as requested, ARCO may terminate this
Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe
and healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal
course of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
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<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises, Buyer will repay ARCO all reimbursements
and direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises with a term of more than one year and
Buyer has been a party to an agreement regarding the Premises with ARCO for the
supply of Product for less than thirty-six months, then after the first twelve
months Buyer will pay ARCO, on a pro rata basis as described below, the amount
of all reimbursements and direct payments made by ARCO under Paragraph 14.3 upon
the mutual termination of this Agreement or termination or nonrenewal by Buyer
or by ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
amount
Page 13 of 21
<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the total of
the reimbursements and direct payments made by ARCO under Paragraph 14.3 times
(a) two-thirds during the thirteenth through twenty-fourth month of this
Agreement or (b) one-third during the twenty-fifth through thirty-sixth month of
this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
18.1 Assignment. Buyer will not sell, assign, give or otherwise
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If ARCO
does not exercise its right of first refusal, Buyer may consummate the proposed
transfer, but not at lower price or on more favorable terms than those offered
to ARCO. If Buyer does not do so within ninety (90) calendar days from the date
ARCO received Buyer's written offer, then Buyer must recommence the foregoing
right of first refusal procedure and satisfy the requirements of this Paragraph
18.2. ARCO's exercise of its right of first refusal shall not be dependent on
its prior refusal to approve the proposed transferee. Buyer agrees to execute a
memorandum of this
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<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
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<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all applicable
government requirements and obtain and maintain all necessary licenses and
permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver such
other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO may
establish additional ARCO or other brand or no brand Gasoline facilities in any
location and proximity to the Premises.
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<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise be
governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this Agreement
are intended solely for convenience of reference and shall not in any way or
manner amplify, limit, modify or otherwise affect the interpretation of any
provision of this Agreement, and the neuter gender and the singular or plural
number shall be deemed to include the other genders or numbers whenever the
context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castellucci
- ----------------------------------------- ----------------------------------
Name Name
Title: Manager Title: Pres.
----------------------------------- ----------------------------
Witness: /s/ Karen [illegible] Witness: /s/ Denise Newton
--------------------------------- --------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
Page 17 of 21
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trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
- ---------------------------------- -----------------------------------
Name Name
Title: Title:
---------------------------- ----------------------------
Witness: Witness:
-------------------------- ---------------------------
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<PAGE>
Exhibit A
Trade Dress Requirements
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
Page 19 of 21
<PAGE>
Exhibit B
Shared Trade Dress Costs
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- -------------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs -
Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
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<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- -------------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
100% Dealer and (2) Hughes Indoor Unit-
Satellite Receiver (3) Deicer (if required
for colder climate)
</TABLE>
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<PAGE>
Exhibit 10.26
AMENDMENT TO CONTRACT
DEALER GASOLINE AGREEMENT
(Branded Diesel Fuel)
Facility: 82062
Customer Account: 0883330
THIS AMENDMENT, dated as of Sept. 2, 1999, amends the Contract Dealer Gasoline
Agreement ("Agreement") dated Sept. 2, 1999, between ARCO Products Company (a
division of Atlantic Richfield Company, incorporated in Delaware) ("ARCO") and
LLO-Gas, Inc. ("Buyer") with delivery premises at 702 W Broadway Rd., Phoenix,
Arizona 85032 ("Premises").
It is hereby agreed by and between the parties that effective on the date
written above or the Commencement Date of the Agreement, whichever is later, the
Agreement is hereby amended to provide that except as set forthbelow, any
references to "motor fuels comprising gasolines and gasoline-containing
materials bearing the ARCO trademark and other identifying symbols," "gasoline"
and "product" shall be construed to include such motor fuels comprising diesel
fuel and diesel fuel-containing materials bearing the ARCO trademark and other
identifying symbols ("ARCO branded diesel fuels and diesel fuel-containing
materials") as Buyer may purchase and receive from ARCO and ARCO may sell and
deliver to Buyer at the Premises during the term hereof.
It is understood and agreed by and between the parties that Temporary Voluntary
Allowances ("TVA's") are not applicable to diesel fuel or diesel fuel-containing
materials and, therefore, the terms and conditions relating to TVA's set forth
in the Prices provisions, Paragraph 5 of the Agreement, are not amended and
supplemented by this Amendment. It is further understood and agreed by and
between the parties that, except as herein specifically amended and
supplemented, all other terms and conditions of the Agreement, as previously
amended and supplemented, shall be and remain in full force and effect.
This Amendment automatically supercedes and terminates, as of the Effective Date
hereof, any and all other contracts, agreements or understandings between the
parties covering the sale and delivery of ARCO branded fuels and diesel
fuel-containing materials to Buyer at the Premises for resale therefrom.
BUYER ACKNOWLEDGES THAT BUYER HAS READ THIS AMENDMENT AND FULLY UNDERSTANDS ALL
OF THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
This Amendment is not binding until executed by Buyer and by an authorized
officer or manager of ARCO.
IN WITNESS WHEREOF, the parties have executed this Amendment.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/John Castellucci 9/2/99
- --------------------------------- ------------------------------------
Date Date
/s/ Karen [illegible] 9/2/99 /s/Denise Newton 9/2/99
- --------------------------------- ------------------------------------
Date Date
<PAGE>
Exhibit 10.27
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Karon Shells
Street: 4 Centerpointe Drive
City &: La Palma
State: California 90623-1066
- --------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
Facility: 82062
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated Sept. 2,
1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located at 702 W
Broadway Rd., Phoenix, Arizona 85032, and ARCO Products Company, a division of
Atlantic Richfield Company, a Delaware corporation, with offices at 1055 West
Seventh Street (P.O. Box 2570) in Los Angeles, California 90051-0570 ("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of 702 W Broadway Rd., in
the city of Phoenix, in the state of Arizona, and more specifically described in
Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in
that certain Contract Dealer Gasoline Agreement between the parties hereto,
dated, Sept. 2, 1999, and this Memorandum of Contract Dealer Gasoline Agreement
is subject to all the covenants, conditions and terms set forth in that
Agreement, which is hereby adopted herein and made a part hereof as if all the
covenants, conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
-------------
By: /s/ John Castellucci
---------------------
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
County of Orange
On 9/2/99 before me, Hollie Johnson, Notary Public
------ ----------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE,
NOTARY PUBLIC"
personally appeared John Castellucci and Connie Carroll
---------------------------------------------------
|x| proved to me on the basis of satisfactory evidence
to be the person(s) whose names) are
[S E A L] subscribed to the within instrument and ac-
knowledged to me that they executed the
same in their authorized capacity(ies),
and that by their signatures(s) on the
instrument the person(s), or the entity
upon behalf of which the person(s) acted,
executed the instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
----------------------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
|_| INDIVIDUAL
|x| CORPORATE OFFICER
President/Manager Memorandum of CDGA 82062
- ------------------------------ ------------------------------
TITLE OR TYPE OF DOCUMENTS
|_| PARTNERS |_| LIMITED
|_| GENERAL 1
------------------------------
NUMBER OF PAGES
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: 9/2/99
------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- ---------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
ARCO PRODUCTS CO.
- ----------------------------------
<PAGE>
Exhibit 10.28
Facility Number: 82062
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc.
("Franchisee"), the operator of an ARCO location located at 4100
California Ave., Bakersfield, California 93309 ("Facility").
1. Agreement
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain
products or services may be purchased or performed, e.g. that gasoline may
be pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or
service or receiving cash or a refund from Franchisee through use of the
PayPoint Network to which a participating Financial Institution responds
with an approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute
agreements with Franchisor to participate in or provide services through
the PayPoint Network.
3. PayPoint Network Description
The PayPoint Network shall enable Cardholders to receive cash or to pay
for purchases of products and services by means other than cash, money
order or check. Each Cardholder shall use an access card to initiate a
Transaction. Franchisee shall promptly honor all valid access cards when
presented by Cardholders and shall treat Cardholders from all
participating Financial Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use one or more
Island Card Reader devices ("ICR Device") that are in communication with
the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key
pad. The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via
the PayPoint Account(s). Franchisee shall not permit anyone to complete a
.Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between
Franchisee and Franchisor or, where applicable, the first day of the
thirteenth month following the Commencement Date, Franchisee shall pay to
Franchisor, for participation in the PayPoint Network, transaction fees in
the amount set forth on Exhibit A, which is incorporated herein, made a
part hereof and attached hereto. Such fees shall be due and payable to
Franchisor on or before the tenth day of the month following the month in
which such fees were incurred during the term of this Addendum. Provided,
however, that if Franchisee installs and ICR device at the Facility prior
to the Commencement Date and operates it thereafter, Franchisee shall pay
no fees for participation in the PayPoint Network for the first twelve
months following the Commencement Date and 50% of the applicable fees for
the balance of the term of this Agreement. The term "Commencement Date"
shall mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a
Cardholder at the Facility, is provided to Franchisee through the PayPoint
Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a
new Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee ARCO Retailer) and Franchisee has installed and is operating an
ICR Device and is therefore eligible for the waiver of transaction fees as
set forth above, Franchisee shall pay no transaction fees for
participation in the PayPoint Network for the number of months remaining
of the original twelve month waiver period following the original
Commencement Date referred to in this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to
terminate this Addendum at the end of the thirteenth month following the
Commencement Date, as provided below for Franchisees on their initial
PayPoint agreement, Franchisee shall pay Franchisor as set forth on
Exhibit D, attached hereto, incorporated herein and made a part hereof,
for disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and
sales, use, rental, gross receipts, inventory, excise, income and any
other taxes (including interest, penalties, and additions to tax) imposed
by any federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this
Addendum. Franchisee agrees to pay promptly when due and to hold
Franchisor harmless from all sales or use taxes and other similar taxes
(including interest, penalties and additions to tax) imposed upon or with
respect to charges or the use of any loaned property. Franchisee shall
furnish to Franchisor, promptly upon request, any documentation, which in
Franchisor's discretion is required to evidence the payment of any tax,
including, but not limited to, official receipts of the appropriate taxing
authorities, copies of tax returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving
Franchisor at least 30 days prior written notice, to terminate this
Addendum; to downgrade the number of PayPoint Electronic Cashiers (Island
CardReaders), if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
Franchisee shall require each Cardholder to enter his or her PIN on the
POS Equipment at the Facility in order to initiate a Transaction, except
to complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be
transmitted "in the clear."
6. Transaction Approval or Denial
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint
Network
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
Franchisor and Franchisee shall cooperate to resolve any system
malfunction or problem that interrupts normal operation of the PayPoint
Network. Franchisor shall provide instructions and procedures for the
handling of Transactions that are initiated when communications between
Franchisor, the participating Financial Institutions and the Franchisee
location are interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
Cardholder refund transactions shall not be processed electronically, ,
but shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has
not forwarded such amount to Franchisor within a period of time specified
in a notice to the Franchisee. Such third party beneficiary rights shall
be enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
(a) Cardholder Disputes
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time
limits. Franchisee agrees to cooperate with Franchisor and participating
Financial Institutions to resolve Cardholder disputes or inquiries about
PayPoint Network Transactions. To facilitate resolution of Cardholder
disputes, Franchisee shall retain, for a period of at least one hundred
eighty (180) days, copies of receipts issued to Cardholders pursuant to
Paragraph 10 of this Addendum, or reports from which Transaction
information can be retrieved. In response to an oral request by Franchisor
or a participating Financial Institution, to be confirmed in writing,
Franchisee shall, within three (3) Working Days of the oral request, send
documentation to Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the
requested information within three (3) Working Days, Franchisor shall, at
the request of the participating Financial Institution, debit Franchisee's
Trade Statement or electronically debit the Retailer's Account, for the
amount disputed by the Cardholder and credit, through the participating
Financial Institution, the Cardholder's deposit account for the amount
disputed. The obligations of this Paragraph 11 shall survive termination
of this Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by
check.
(c) Disputes Over-Merchandise or Service
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with
Cardholders and shall indemnify and hold Franchisor and participating
Financial Institutions harmless from any claim, action, damage or expense,
including strict liability in tort, arising out of such disputes or the
sale of goods or services by Franchisee; provided, however, to the extent
Franchisee's petroleum or non-petroleum franchise agreements, if any, are
contrary to this provision as to Franchisor, such petroleum or
non-petroleum franchise agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right
to debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
Franchisor shall process all approved Transactions captured each
Settlement Day and any preceding non-Settlement Day and make arrangements
for the funds to which Franchisee is entitled to be deposited into his or
her Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by
way of the POS Terminal, if possible; otherwise, by way of, written
reports. Franchisor shall also mail to Franchisee, on request, summary
reports of PayPoint Network Transactions at the Facility.
14. Term: Termination
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer,"
i.e., a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum
for any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating
Financial Institutions' trademarks, trade names and trade indicia and
shall remove all decals and signs indicating Franchisee's participation in
the PayPoint Network and, if Franchisee is terminated for cause or because
he/she has been designated a Special Franchisee, Franchisee shall pay the
applicable amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in
the PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
Franchisee acknowledges that all information that is disclosed to, or
comes to the attention of Franchisee for purposes of the development or
operation of any aspect of the PayPoint Network (herein "Information") is
strictly confidential. Franchisee agrees that Franchisee shall not use for
any purpose other than Franchisee's use of the PayPoint Network or
disclose said Information or knowingly permit Franchisee's employees or
contractors to disclose said Information to any person outside Franchisor
and Franchisee, or to any employee or contractor of Franchisor or
Franchisee who does not have a specific need to know in performance of
work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of
information relating to sales by Franchisee (herein "Sales Information")
other than to Financial Institutions and other third parties who require
access to Sales Information for purposes relating to Franchisee's use of
or Franchisor's operation of the PayPoint Network. Franchisor's obligation
of non-disclosure shall not apply to any Sales Information which is or
becomes available to the public other than through breach of this Addendum
by Franchisor. It is presently Franchisor's policy (which may be changed
at any time by Franchisor at its sole option without notice) to destroy
all records of Sales Information after two (2) years. Franchisor's
obligation of non-disclosure with respect to Sales Information shall
terminate upon destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved
by Franchisor and such equipment is maintained in good operating order and
is operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the
PayPoint Network, and to satisfy itself that services are being provided
to the public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or
such institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any
time by giving Franchisee not less than thirty (30) days prior written
notice thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor,
it is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering
or defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks
and any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such
prior written consent shall be void and any assignment or delegation to
which Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfield Company
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9/2/99
- ------------------------------- ------------------------------------
Date LLO-Gas, Inc. Date
/s/ Karen [illegible] 9/2/99 /s/ Denise Newton 9/2/99
- ------------------------------- ------------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
PayPoint Network Fees
Transactions per Month Fee per Transaction
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line --
installation costs plus monthly phone charge including per item phone
calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial
institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be
notified via telephone. The switch contact person will provide the
Franchisee with the data furnished by the financial institution and
request a copy of the cardholder receipt and/or a copy of the
Management Report Printer (MRP) report showing the disputed
transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one
(1) working day of the telephone call. A copy of this form is
attached.
6) The Franchisee will have only three (3) working days after receipt
of the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of
the customer receipt and/or MRP report (the same information
furnished to the financial institution) to the Franchisor switch
within one (1) working day of sending the information to the
financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
RETAILER:_________________________________________________________________
ADDRESS:__________________________________________________________________
CITY:_____________________________________________________________________
STATE/ZIP CODE:___________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO._______________________________________________________________
AT________________________________________________________________________
BRANCH NO.________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:___________________________________
TITLE:________________________________
DATE:_________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
CLAIM NO.:________________________________________________________________
DATE CLAIM RECEIVED:______________________________________________________
TODAY'S DATE:_____________________________________________________________
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:______________________________________________________________
TRANSACTION AMOUNT:______________ TRANSACTION DATE:_____________________
TRANSACTION TIME:________________ REFERENCE NO._________________________
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION:____________________________________________________
ADDRESS:__________________________________________________________________
__________________________________________________________________
CONTACT PERSON:___________________________________________________________
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION IF "REQUESTED
INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME:_____________________________________________________________________
ADDRESS:__________________________________________________________________
__________________________________________________________________
DATE INFORMATION SENT TO FINANCIAL INSTITUTION:___________________________
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
Telephone Line Disconnection $200.00
Each Inside Terminal Disconnection and Removal $200.00
Each Outside Terminal Disconnection and Removal $400.00
<PAGE>
EXHIBIT 10.29
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 05513
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Real Estate to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
1
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer I.D. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached
Exhibit "A". Seller's interest in the Real Estate is a fee interest in
the entirety of the Real Estate, except as otherwise stated in Exhibit "A".
Seller's interest includes the ownership of the improvements that are
located on or under the land that Seller owns in fee, including without
limitation underground storage tanks and gasoline pipelines. The principal
parcel of land included in the Real Estate is commonly known as:
Street Address: 13001 Stockdale Highway
City, State, ZIP Code: Bakersfield, California 93312
County: Kern
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the
attached Exhibit "B".
Deposit: $22,500.00 by Buyer's check payable to Escrow Holder
2
<PAGE>
Purchase Price: $900,000.00
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Stinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10734 PK
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction")
will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed: Mineral Reservation. Seller shall convey the Real Estate to
-----------------------------
Buyer by a Corporation Grant Deed (the "Deed"). In the Deed, Seller will
reserve the rights, below the depth of 500 feet, to minerals and oil, gas, and
other hydrocarbon
3
<PAGE>
substances in and under the land being sold, but without the right of surface
entry.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is
reasonably necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Business Agreement, the Companion Real
Estate Agreements, and the Companion Business Agreements, Seller
has confirmed that (i) Seller is ready and committed to close
those transactions or (ii) if the transaction is being handled
through an escrow, Seller has received notice from the escrow
holder that the escrow holder is ready and committed to close the
escrow.
(b) Other Closing Conditions. All closing conditions for that
------------------------
party's benefit contained in provisions of this Agreement other
than this Section 6.3 have been satisfied, or will be satisfied
as a part of the closing.
(c) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
4
<PAGE>
closing, or will perform those obligations as a part of the
closing.
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The Memorandum
------------------------------------------------
of Contract Dealer Gasoline Agreement (the "Memorandum") referred
to in Section 6.3(c) of the Business Agreement, signed and
acknowledged by Seller, through its division ARCO Products
Company;
(c) Withholding Certifications. (i) A Certification of Non-Foreign
--------------------------
Person Status with respect to Seller's exemption from federal
income tax withholding in connection with the Transaction and
(ii) a comparable certification with respect to Seller's
exemption from state income tax withholding in connection with
the Transaction, if the state in which the Real Estate is located
imposes a withholding requirement on Buyer for income tax that
Seller might owe to the state in connection with the Transaction,
each of which certifications must meet the requirements of
applicable laws and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum, signed and acknowledged by Buyer;
----------
(b) Right of First Refusal Agreement. The Right of First Refusal
--------------------------------
Agreement (as defined in Section 14), signed and acknowledged by
Buyer;
(c) Environmental Declaration. The Environmental Declaration (as
-------------------------
defined in Section 12), signed and acknowledged by Buyer;
(d) Cash. Cash or immediately available funds to pay the balance of
----
5
<PAGE>
the Purchase Price and Buyer's share of closing costs and
prorations; and
(e) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the following documents in the Official Records of the County, in the
following order: The Deed, the Memorandum, the Right of Refusal Agreement, the
Option Agreement, and the Environmental Declaration. These documents must be
recorded before any documents benefitting any lender or other third party are
recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is
committed to issue an ALTA Standard Coverage Owner's Policy of
Title Insurance (the "Title Policy") insuring Buyer in the amount
of the Purchase Price upon the close of Escrow. The Title Policy
must insure Buyer's title to the Real Estate subject to only (i)
the standard exclusions and exceptions of the policy form, (ii)
nondelinquent taxes and assessments, and (iii) the Permitted
Exceptions (as defined in Section 9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for
title insurance, if the Real Estate is located in a state where
title insurers do not issue preliminary title reports) (in either
case, the "Report") covering the condition of title to the Real
Estate. Unless Buyer gives Seller written notice, within ten
days after receiving the Report, objecting to matters shown in
the Report, Buyer will be considered to have approved the
condition of title as shown in the Report. If Buyer so objects
to any matter (each, a "Disapproved Matter") shown in the Report,
Seller will have 30 days after receiving Buyer's written
objection in which to remove the Disapproved Matter from record
title or to obtain the Title
6
<PAGE>
Company's agreement to issue an appropriate endorsement to the
Title Policy. If Seller is unable or unwilling to remove the
Disapproved Matter from record title or to obtain the Title
Company's agreement, Seller may terminate this Agreement by
giving a termination notice to Buyer and Escrow Holder within the
30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow
Holder shall return the Deposit to Buyer; and neither party will
have any further obligation to the other under this Agreement.
The term "Permitted Exception" means each matter shown in the
Report that (i) is not a Disapproved Matter or (ii) is a
Disapproved Matter for which Seller has obtained the Title
Company's agreement to issue an appropriate endorsement to the
Title Policy.
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real
Estate will vest. If Buyer fails to so notify them, title will
vest in Buyer as stated in the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the
Title Policy to Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of real
property taxes, current installments of special taxes and assessments, and any
rents or other income derived from the Real Estate. Utility charges will not be
prorated. Seller shall cause a final reading of the utility meters to be taken
on the day that Escrow closes; and Buyer shall arrange for all utility services
to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
7
<PAGE>
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached Exhibit
"B".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real Estate
are public records, available at the Agency's offices for Buyer's review.
12.3 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.4 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to provide
any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.5 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the Inspection
-------------------------------------
Period, Buyer shall obtain a subsurface investigation report on the extent and
concentrations of any petroleum products in the soil and, if encountered,
groundwater at or under the Real Estate (the "Phase II Report"). Buyer shall
engage a geologist or professional engineer who is licensed by the State of
California and who is not an
8
<PAGE>
affiliate of Buyer or Seller (the "Environmental Consultant"), to perform the
subsurface investigation and prepare and certify the Phase II Report. Buyer
shall initially pay for the cost of the Phase II Report. Escrow Holder shall
prorate the cost of the Phase II Report at the closing so that Buyer and Seller
share equally up to $15,000 of the total cost of the Phase II Report. The
parties shall request that the Environmental Consultant complete the Phase II
Report at least 10 days prior to the end of the Inspection Period. Subject to
the provisions of Section 12.5 (b) below, Buyer shall determine the scope of
work for the Phase II Report, in its reasonable discretion. Buyer shall have the
right to modify the scope of work, as a result of on-site conditions discovered
in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a modification
---------------------
of the original scope of work, that involves any disturbance (including any
drilling or boring) of the surface of the land or any underground vault or
storage tank, underground pipes, or fuel lines ("Special Buyer Testing"), Buyer
must obtain Seller's prior written approval. Seller may withhold its approval
if it determines in good faith that the Special Buyer Testing would interfere
with Seller's business operations or would pose a safety or environmental
hazard. Buyer shall indemnify and defend Seller from all liabilities, damages,
losses, claims, costs and expenses (including reasonable attorneys' fees) that
Seller incurs arising from performance of the Special Buyer Testing. Without
limiting the immediately preceding provisions of this Section 12.5(b), Buyer
shall promptly repair any damage to the Real Estate or any personal property
located at the Real Estate resulting from any Special Buyer Testing. But Buyer
will have no liability regarding any contaminated soil or groundwater it may
discover on or under the Real Estate during the course of the Special Buyer
Testing, unless Buyer caused the release of that contamination, for example by
puncturing the underground storage tanks on the Real Estate. Buyer's liability
under this Section 12.5(b) is in addition to Seller's right to retain the
Deposit and any accrued interest on the Deposit, when Seller is permitted to do
so under any provision of this Agreement concerning liquidated damages for
Buyer's default under this Agreement. A termination of this Agreement will not
terminate Buyer's obligations under this Section 12.5(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics' and
-----
similar liens arising from any and all Phase II Report costs (including without
limitation any Special Buyer Testing) payable by Buyer under this Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at Seller's
----------------------
Environmental Notice Address a copy of the Phase 11 Report, within two days
after Buyer receives the report. Buyer shall not disclose the results of any
test to any regulatory agency or other third party, unless required to do so by
law and unless Buyer delivers to Seller at Seller's Environmental Notice Address
a copy of the disclosure at least ten days before Buyer mails or otherwise
transmits the disclosure to the agency or other third party.
9
<PAGE>
(e) Buyer's Termination Right. If Buyer is not satisfied with the
-------------------------
environmental condition of the Real Estate, Buyer may terminate this Agreement
by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the Escrow and title cancellation charges; after Buyer has
paid its share of those cancellation charges, the Deposit will be returned to
Buyer; and neither party will have any further obligation to the other under
this Agreement. But the Deposit will not be returned to Buyer until Buyer has
delivered to Seller valid, recordable waivers of mechanics' and other statutory
liens from all contractors who conducted tests at Buyer's request.
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ GS
------------------------ --------------------------
Buyer's Initials Seller's Initials
10
<PAGE>
(In order to comply with California Civil Code Section 1677, the above provision
must be in at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031, Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation includes the signing, acknowledgment, and delivery of all documents
that Seller reasonably requests, at no risk or expense to Buyer. Seller shall
indemnify and defend Buyer from all liabilities, damages, claims, costs, and
expenses (including reasonable attorneys' fees) that Buyer might incur in
connection with Buyer's participation in the exchange transaction.
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning laws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
11
<PAGE>
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate, including material violations of regulations of the Environmental
Protection Agency or any state regulatory body concerning the disposal of
hazardous waste, petroleum, underground storage tanks, or any other hazardous
materials at the Real Estate, except as disclosed in the Environmental
Documents.
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial compliance with all applicable laws, statutes, ordinances, codes,
covenants, conditions, and restrictions of any kind or nature affecting the Real
Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
(i) fully operational and (ii) in material compliance with the December 23, 1998
underground storage tank system upgrade standards set forth under Section 25291
or Section 25292(d) and (e) of the California Health and Safety Code, and
related regulations adopted pursuant to Section 25299.3 of the California Health
and Safety Code, according to the certificate of upgrade compliance provided
under Section 25284 of the California Health and Safety Code.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any
12
<PAGE>
representation or warranty, as long as Buyer delivers written notice of the
breach to Seller and exercises any remedy, including the filing of any suit or
other action, within one year after the date that the Escrow closes.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement: Modification: Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
13
<PAGE>
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY,
a Delaware corporation
By: /s/ G. Simning
---------------------------
Gary Simning
Assistant Vice President
Agreed to by Escrow
On Sept. 2 , 1999.
--------------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
----------------------------------------------
Patricia Cusick
Escrow Officer
14
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
15
<PAGE>
LEGAL DESCRIPTION
Parcel A of Parcel Map No. 9105, in the City of Bakersfield, County of Kern,
State of California, as per Map recorded February 27, 1990 in Book 40, Page 8 of
Maps, in the Office of the County Recorder of said County.
Together with a non-exclusive easement, as recorded concurrently herewith in
Book 6357, Page 1885 of Official Records, for driveway, ingress and egress
purposes in common with other over, upon, through, and across that certain
portion of the NE 1/4 of Section 2, Township 30 South, Range 26 East, M.D.M.,
in the City of Bakersfield, County of Kern, State of California, and also being
a portion of Parcel "B" of Parcel Map No. 9105, recorded in Book 40, Page 8 of
Parcel Maps, in the Office of the County Recorder of said County, more
particularly described as follows:
Commencing at the Northeast corner of said Section 2; thence North 89 degrees
22' 08" West along the North line of said Section 2, a distance of 265.00 feet;
thence South 00 degrees 31' 36" West parallel with the East line of said Section
2, a distance of 110.00 feet to a point on the Southerly right-of-way line of
Stockdale Highway; thence North 89 degrees 22' 08" West along said Southerly
right-of-way line, a distance of 20.00 feet, said point being the true point of
beginning for this description; thence South 00 degrees 31' 36" West parallel
with the West line of Parcel "A" of said Parcel Map 9105, a distance of 33.00
feet; thence South 89 degrees 22' 08" East parallel with the North line of said
Section 2, a distance of 20.00 feet to a point on the West line of said Parcel
"A"; thence South 00 degrees 31' 36" West along the West line of said Parcel
"A", a distance of 40.00 feet; thence North 89 degrees 22' 08" West parallel
with the North line of said Section 2, a distance of 20.00 feet; thence South 00
degrees 31' 36" West parallel with the West line of said Parcel "A", a distance
of 82.00 feet to the Westerly prolongation of the South line of said Parcel "A"
thence South 89 degrees 22' 08" East along said prolongation a distance of 20.00
feet to the Southwest corner of said Parcel "A"; thence South 89 degrees 22' 08"
East along the South line of said Parcel "A" a distance of 210.00 feet to a
point on the Westerly right-of-way line of South Allen Road; thence South 00
degrees 31' 36" West along said right-of-way line, a distance of 28.00 feet;
thence North 89 degrees 22' 08" West parallel with the South line of said Parcel
"A", a distance of 260.00 feet; thence North 00 degrees 31' 36" East parallel
with the West line of said Parcel "A", a distance of 183.00 feet to a point on
the Southerly right-of-way line of Stockdale Highway; thence South 89 degrees
22' 08" East along said Southerly right-of-way line, a distance of 30.00 feet to
the true point of beginning.
EXCEPTING from Parcel A of Parcel Map No. 9105, all oil, gas and minerals,
together with all rights incident to the discovery, development and production
of all oil and gas and minerals underlying the lands herein conveyed together
with so much surface thereof as will be necessary for the discovery, development
and production of all or any part of the oil and gas and minerals underlying
said land, and the transportation thereof,
16
<PAGE>
from, through or into the lands herein conveyed, as reserved in the Deed from
Spencer Brittain, Trustee, recorded October 7, 1948 in Book 1570, Page 11 of
Official Records.
Parcel "A" is more particularly described as follows:
Beginning at the Southeast comer of Parcel A of Parcel Map No. 9105, in the City
of Bakersfield, County of Kern, State of California, as per Map recorded
February 27, 1990 in Book 40, Page 8 of Maps, in the Office of the County
Recorder of said County; thence North 89 degrees 22' 08" West 210.00 feet;
thence North 00 degrees 31' 36" East 155.00 feet to a point on the Southerly
Right of Way line of Stockdale Highway, thence along said Southerly Right of Way
line, 190.04 feet; thence South 44 degrees 25' 16" West 28.26 feet to a point on
the Westerly right of way line of South Allen Road; thence along said Westerly
right of way line, South 00 degrees 31' 36" West 135.04 feet to the point of
beginning.
17
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
18
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "B"
19
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
20
<PAGE>
Order No.: 118306 GM
Escrow No.:________________
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND
WHEN RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 05513
Location: 13001 Stockdale Highway
Bakersfield, CA 93312 FOR RECORDER'S USE
- -------------------------------------------------------------------------------
Type 2, 4, and 5 Sites in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND OTHER
ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2, 1999, is made
-----------
by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of Kern,
State of California, described in the attached Exhibit "A" (the "Real Estate").
In connection with the signing and recording of this Declaration, ARCO conveyed
the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions on
the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning
-----------
set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
21
<PAGE>
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
and affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement; cost,
- -----
and expense (including reasonable attorney's fees) arising before or after the
Effective Date, whether or not Owner knew or suspected them to exist on the date
that Owner signed this Declaration or on the Effective Date.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater at or near the Real Estate before the Effective Date, whether or not
Owner knew or suspected it to exist on the date that Owner signed this
Declaration or on the Effective Date.
2. Owner's Acceptance of the Condition of the Real Estate. Owner has
------------------------------------------------------
accepted the Real Estate, including without limitation its environmental
condition, in "AS IS" condition on the Effective Date. Owner acknowledges that
the purchase price paid to ARCO for the Real Estate reflects (i) the effect of
this Declaration on the Real Estate and (ii) any Pre-Closing Contamination.
3. Owner's Waiver and Release of Environmental Claims. Owner, for itself
--------------------------------------------------
and its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to any Pre-Closing
Contamination.
4. Notices. Notices relating to this Declaration must be in writing and
-------
sent to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 4. A written notice will
be considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
To Owner: LLO-Gas, Inc.
22
<PAGE>
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
5. Entire Agreement: Modification; Waiver. This Declaration (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and ARCO with
respect to the matters that are the subject of this Declaration. Any
modification of this Declaration must be in writing and signed by Owner and
ARCO. Any waiver of a provision of this Declaration by Owner or ARCO must be in
writing.
6. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
7. Attorneys' Fees. If a dispute arises with respect to this Declaration
---------------
and if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees.
8. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration (collectively, the "Rights and Restrictions") are for the benefit of
ARCO and its successors and assigns. The Rights and Restrictions run with the
Real Estate and bind Owner's successors and assigns, including future owners of
the Real Estate, for ARCO's benefit. The Rights and Restrictions are intended
(i) to constitute equitable servitudes that burden the Real Estate and (ii) to
be enforceable under Section 1471 of the California Civil Code.
(See signatures on the next page.)
23
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
24
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
------------------------------------------------------------------------------------
[X] personally known to me to be the person whose name is subscribed to the within
[SEAL] instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenants and Conditions
--------- --------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
26
<PAGE>
LEGAL DESCRIPTION
Parcel A of Parcel Map No. 9105, in the City of Bakersfield, County of Kern,
State of California, as per Map recorded February 27, 1990 in Book 40, Page 8 of
Maps, in the Office of the County Recorder of said County.
Together with a non-exclusive easement, as recorded concurrently herewith in
Book 6357, Page 1885 of Official Records, for driveway, ingress and egress
purposes in common with other over, upon, through, and across that certain
portion of the NE 1/4 of Section 2, Township 30 South, Range 26 East, M.D.M.,
in the City of Bakersfield, County of Kern, State of California, and also being
a portion of Parcel "B" of Parcel Map No. 9105, recorded in Book 40, Page 8 of
Parcel Maps, in the Office of the County Recorder of said County, more
particularly described as follows:
Commencing at the Northeast corner of said Section 2; thence North 89 degrees
22' 08" West along the North line of said Section 2, a distance of 265.00 feet;
thence South 00 degrees 31' 36" West parallel with the East line of said Section
2, a distance of 110.00 feet to a point on the Southerly right-of-way line of
Stockdale Highway; thence North 89 degrees 22' 08" West along said Southerly
right-of-way line, a distance of 20.00 feet, said point being the true point of
beginning for this description; thence South 00 degrees 31' 36" West parallel
with the West line of Parcel "A" of said Parcel Map 9105, a distance of 33.00
feet; thence South 89 degrees 22' 08" East parallel with the North line of said
Section 2, a distance of 20.00 feet to a point on the West line of said Parcel
"A"; thence South 00 degrees 31' 36" West along the West line of said Parcel
"A", a distance of 40.00 feet; thence North 89 degrees 22' 08" West parallel
with the North line of said Section 2, a distance of 20.00 feet; thence South 00
degrees 31' 36" West parallel with the West line of said Parcel "A", a distance
of 82.00 feet to the Westerly prolongation of the South line of said Parcel "A"
thence South 89 degrees 22' 08" East along said prolongation a distance of 20.00
feet to the Southwest corner of said Parcel "A"; thence South 89 degrees 22' 08"
East along the South line of said Parcel "A" a distance of 210.00 feet to a
point on the Westerly right-of-way line of South Allen Road; thence South 00
degrees 31' 36" West along said right-of-way line, a distance of 28.00 feet;
thence North 89 degrees 22' 08" West parallel with the South line of said Parcel
"A", a distance of 260.00 feet; thence North 00 degrees 31' 36" East parallel
with the West line of said Parcel "A", a distance of 183.00 feet to a point on
the Southerly right-of-way line of Stockdale Highway; thence South 89 degrees
22' 08" East along said Southerly right-of-way line, a distance of 30.00 feet to
the true point of beginning.
EXCEPTING from Parcel A of Parcel Map No. 9105, all oil, gas and minerals,
together with all rights incident to the discovery, development and production
of all oil and gas and minerals underlying the lands herein conveyed together
with so much surface thereof as will be necessary for the discovery, development
and production of all or any part of the oil and gas and minerals underlying
said land, and the transportation thereof, from, through or into the lands
herein conveyed, as reserved in the Deed from Spencer
27
<PAGE>
Brittain, Trustee, recorded October 7, 1948 in Book 1570, Page 11 of Official
Records. Parcel "A" is more particularly described as follows:
Beginning at the Southeast comer of Parcel A of Parcel Map No. 9105, in the City
of Bakersfield, County of Kern, State of California, as per Map recorded
February 27, 1990 in Book 40, Page 8 of Maps, in the Office of the County
Recorder of said County; thence North 89 degrees 22' 08" West 210.00 feet;
thence North 00 degrees 31' 36" East 155.00 feet to a point on the Southerly
Right of Way line of Stockdale Highway, thence along said Southerly Right of Way
line, 190.04 feet; thence South 44 degrees 25' 16" West 28.26 feet to a point on
the Westerly right of way line of South Allen Road; thence along said Westerly
right of way line, South 00 degrees 31' 36" West 135.04 feet to the point of
beginning.
28
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
29
<PAGE>
Order No.: 118306 GM
Escrow No.:_________
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND
WHEN RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 05513
Location: 13001 Stockdale Highway
Bakersfield, CA 93312 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") dated September 2,
-----------
1999, is made by LLO-GAS, INC., a Delaware corporation ("Owner"), for the
benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Holder").
RECITALS
--------
A. Holder is the former owner of the real property in the County of Kern
(the "County"), State of California, described in the attached Exhibit "A" (the
"Real Estate"). In connection with signing and recording this Agreement,
Holder conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
1. Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
30
<PAGE>
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property
-----------------
used in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate
-------------
Offered Parcel: The Real Estate, a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
31
<PAGE>
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
2. Grant of Right of First Refusal. Owner grants to Holder the Right.
-------------------------------
The Right is governed by the terms of this Agreement and will be in effect
during the Right Duration.
3. Included Rights: Exclusion of Security Interest Transfer.
--------------------------------------------------------
3.1 Offer to Lease or Sublease. The Right includes the right to match
--------------------------
the terms of any lease or sublease that Owner enters into during the Right
Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel when
that part includes all or part of the Real Estate. The Right will exist whether
the leasehold or subleasehold is to begin during or after the Right Duration.
3.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right will include the right to acquire the Offered Parcel and the
Related Property that is to be transferred. If such a separate agreement
exists, it will be considered a Tendered Agreement; and a copy of that signed
separate agreement must be included in the Transfer Notice.
3.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
4. Procedures for Notice and Exercise.
----------------------------------
32
<PAGE>
4.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a Transfer Notice to
Holder. No one other than Owner can satisfy Owner's obligation to send the
Transfer Notice. Holder may acquire the Offered Parcel that is the subject of
the Tendered Agreement, instead of the third party.
4.2 Exercise Notice: Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
4.3 Holder Indemnifies Owner. Holder shall indemnify and defend
------------------------
Owner from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Owner incurs and that arise from Holder's
exercise of the entry right granted under Section 4.2. But Holder will not be
liable for any decrease in the value of any Offered Parcel resulting from
Holder's discovery of any negative matter regarding the Offered Parcel,
including without limitation any contaminated soil or water existing at the
Offered Parcel before the escrow for Holder's purchase closes (the "Pre-Closing
Contamination"). Holder will not be required to remove or dispose of any Pre-
Closing Contamination. Holder may disclose the existence of any Pre-Closing
Contamination, to the extent that Holder is required to do so under applicable
law.
5. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be at the price and on
the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 60
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
(c) Price Allocation When Larger Parcel or Adjacent Parcel is
Offered.
33
<PAGE>
If (i) the Right is for the purchase of a Larger Parcel and (ii)
the purchase price in the Tendered Agreement is allocated between
the Real Estate and the remainder of the Larger Parcel, Holder
may buy the Real Estate and not the remainder by paying only the
consideration allocated to the Real Estate. Or if (i) the Right
is for the purchase of a Larger Parcel and (ii) the purchase
price is not so allocated, Holder may buy only the Real Estate by
paying consideration that is equitable for only the Real Estate,
considering the total purchase price to be paid by the third
party for the Real Estate and the remainder. If Owner and Holder
fail to agree on an equitable amount, that amount will be
determined in accordance with Section 6. The above principles of
this Section 5(c) will apply in like manner if the Right is for
the purchase of the Real Estate and an Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
--------------------------------------------------
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered Agreement
-------------------------------------
provides for delayed payment terms, Holder may pay the total
purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
6. Valuation Disputes.
------------------
6.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the noncash
consideration under Section 5(f), or (iii) the fair market value under Section
8.2 or 12.9, the amount or value (the "Value") will be determined in accordance
with the appraisal procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal in accordance
with this Section 6, Owner and Holder each shall appoint a Qualified Appraiser
(as defined in Section 6.2). If one of them fails to timely appoint a Qualified
Appraiser, the Qualified Appraiser appointed by the other will determine the
Value.
34
<PAGE>
6.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is unaffiliated
with Owner, Holder, and the third party under the Tendered Agreement, and (iii)
has had full-time experience, during each of the immediately preceding five
years, in appraising commercial real property in the area of the Real Estate.
But if Holder will be purchasing Business Property, the Qualified Appraiser must
also have had substantial experience, during the immediately preceding five
years, in appraising business assets in the area of the Real Estate. If the
Appraisal Institute ceases to exist, a reasonably comparable, nationally
recognized organization of real estate appraisers will be substituted in the
definition of Qualified Appraiser.
6.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to Owner and
Holder within 30 days after his appointment. An Appraisal Report must set forth
the appraiser's determination of the Value and the considerations on which his
opinion is based. If two appraisers are appointed and they agree on the Value,
they must deliver a signed joint Appraisal Report to Owner and Holder within 40
days after the appointment of the second appraiser. If two appraisers are
appointed and they fail to agree on the Value, each appraiser must deliver his
signed Appraisal Report to Owner and Holder within 35 days after his
appointment. If the lower of the two determinations is at least 95% of the
higher, the Value will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers to do so, they
must appoint a third appraiser who is a Qualified Appraiser. Within ten days
after his appointment, the third appraiser must select one of the two
determinations as being the same as or the closer to the amount that he
determines as the Value; and the selected determination will be the Value.
6.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third appraiser.
7. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale
of some or all of the Business Property will occur through a separate Escrow
with an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
35
<PAGE>
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing will be considered effected when the County
Recorder accepts the deed for recording.
(b) Extended Coverage Title Policy: Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event,
Holder shall (i) obtain and provide to the title insurer any
survey that the title insurer might require in order to issue the
title policy as an Extended Coverage Title Policy and (ii) pay
the increase in the premium attributable to the extended
coverage. Within three days after Escrow opens, Owner shall send
to Holder a copy of the most recent survey (if any) of the
Offered Parcel that Owner has in its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom
in the County. But if no custom exists for a particular closing
cost, each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect
to (A) the operation of the business conducted at the Offered
Parcel or (B) all or any part of the Offered Parcel, (ii) any
transfer fee that Owner or any of its affiliates is required to
pay to Holder under a Contract Dealer Gasoline Agreement, an
am/pm. Mini Market Agreement, or a SmogPros Center Agreement
pertaining to the business conducted at the Offered Parcel, and
(iii) the unpaid balance of principal and accrued interest on any
loan that is payable to Holder or any of its affiliates and that
is secured, wholly or partially, by any
36
<PAGE>
property that Holder is buying in the Transaction, whether or not
the deducted amounts would otherwise be due when Escrow closes.
8. Entity Changes.
--------------
8.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1(a) or 8.1(b).
8.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a. Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
-----------------------------
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
37
<PAGE>
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
------------------------------
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation and (ii) has control of the management of the parent
corporation and retains control of the management of Owner.
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
-----------------------------------
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
8.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
8.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in accordance with Section 8.3 results from one
or more Values determined in accordance with Section 6 and that part of the
purchase price is greater than 15% of the entire purchase price, Holder may
rescind its Exercise Notice by giving a notice of rescission to Owner. The
notice of rescission must be given within ten days after Holder receives the
last Appraisal Report that may be required under Section 6.3. If Holder
rescinds its Exercise Notice, Holder shall pay the cost of all the appraisers.
9. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims,
liabilities, damages, losses, costs, and expenses (including
reasonable attorneys' fees) that Holder incurs arising from any
environmental contamination occurring or hazardous materials existing
at the real property that Transferor is concurrently conveying to
Holder (the "Real
38
<PAGE>
Property"), to the extent that the contamination or hazardous
materials (i) are present at concentrations that any governmental
agency will require to be remediated or otherwise are not in
compliance with all applicable statutory and regulatory requirements,
(ii) are known or discovered before Holder begins its operations at
the Real Property, and (iii) are not those on which Holder is
obligated to perform any corrective action under a written agreement
between Transferor and Holder. This agreement to indemnify and defend
will survive the closing of Transferor's transfer of the Real Property
to Holder.
10. Owner's Transfer Rights; Notice of Changed Terms. If Holder does not
------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must
include a copy of any signed document changing the price or other terms of the
Tendered Agreement.
11. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the obligation to comply with this Agreement in connection
with any later Tendered Agreement that Owner enters into during the Right
Duration. Holder may void any transfer that Owner makes without complying with
this Agreement. To exercise this right to void a transfer, Holder must give an
Exercise Notice within 25 days after Holder receives actual notice of the
intended or consummated noncomplying transfer and the complete terms of the
transfer.
12. Default on Obligations Secured by Junior Liens.
----------------------------------------------
12.1 Definitions for Section 12. When used in this Section 12 and
--------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
39
<PAGE>
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
Assignment Endorsement: An ALTA Endorsement No. 10.1 to Lender's
----------------------
Title Policy.
Basic Loan Balance: The unpaid balance of the Secured Obligation
------------------
reduced by the Default Amounts.
Default Amounts: All amounts that were added to the balance of the
---------------
Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal property
----------------
that Holder intends to buy from Owner in accordance with this Section 12 after
giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and Lender
---------------------------
stating that Holder elects to buy (i) the Secured Obligation in accordance with
this Section 12, (ii) the Real Estate in accordance with this Section 12, or
(iii) both the Secured Obligation and the Real Estate in accordance with this
Section 12.
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-enforcement
----------------
sale.
Lender: A person for whose benefit a particular Lien exists. "Lender"
------
includes, without limitation, (i) the beneficiary under a deed of trust, (ii) a
mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance insuring
---------------------
its interest with respect to the Lien.
40
<PAGE>
Lien: A lien that (i) encumbers an interest in the Real Estate, (ii)
----
secures a monetary obligation, and (iii) is junior to Holder's rights under this
Agreement.
Lien Enforcement Notice: A notice from Lender to Holder notifying
-----------------------
Holder of Lender's intent to enforce its Lien. The Lien Enforcement Notice must
include (i) a copy of the recorded lien document, (ii) a copy of the promissory
note or other document evidencing the Secured Obligation, (iii) a current
preliminary title report contemplating the issuance of an Assignment
Endorsement, together with legible copies of all recorded documents referenced
in the report, (iv) a statement of the amount of the unpaid balance of the
Secured Obligation, (v) a description of the Loan Default, (vi) an itemization
of the portion of the unpaid balance of the Secured Obligation that is in
default, (vii) an itemization of the Default Amounts, and (viii) a statement of
any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose its
------------
Lien.
Reinstatement Amount: The unpaid balance of the Secured Obligation
--------------------
reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
------------------
12.2 Coverage of this Section 12. The provisions of this Section 12
---------------------------
will apply with respect to each Lien and to each Lender who holds a Lien.
12.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
12.4 Holder's Right to Buy. Before Lender begins enforcement of its
---------------------
Lien, Holder will have the Foreclosure Purchase Right.
12.5 Holder's Exercise Notice to Owner and Lender. If Holder wishes
--------------------------------------------
to exercise the Foreclosure Purchase Right, Holder must send a Foreclosure
Exercise Notice to Owner and Lender within 25 days after Holder actually
receives the Lien Enforcement Notice.
12.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted
41
<PAGE>
on the real property that Holder intends to buy.
12.7 Holder's Purchase of Secured Obligation. If Holder elects to
---------------------------------------
buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise Notice, Holder shall buy from Lender, and Lender shall sell
to Holder, the Secured Obligation and all of Lender's rights in connection with
the Secured Obligation. The purchase price will be equal to the Basic Loan
Balance as of the date of the closing of the purchase and sale transaction. If
Holder wishes, the purchase and sale transaction will occur through an escrow
with a title insurance company acceptable to Holder. At the closing of the
transaction, (i) Holder shall pay the purchase price to Lender in readily
available funds; (ii) Lender shall deliver to holder (A) any promissory note
evidencing the Secured Obligation, endorsed by Lender to Holder or Holder's
nominee, (B) a recordable assignment of the Lien, signed and acknowledged by
Lender, (C) the original of Lender's Title Policy, and (D) the Assignment
Endorsement issued by the title insurance company that issued Lender's Title
Policy; and (iii) Holder and Lender shall sign, acknowledge, and deliver any
other documents necessary or appropriate to consummate the transaction. The
Assignment Endorsement must insure Holder against loss or damage sustained be
reason of lack of priority of the Lien over defects, liens, or encumbrances
other than those shown in Lender's Title Policy and those that Holder approves
in its sole discretion.
12.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a
period of time to close the purchase of the Elected Property that is equal to
the longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the fast Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
12.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice, Holder will receive a credit against the
purchase price for the Basic Loan Balance as of the date that Escrow closes. If
Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation
42
<PAGE>
other than the Secured Obligation that was the subject of the Lien Enforcement
Notice, Holder will receive a credit against the purchase price for the unpaid
balance of that monetary obligation as of the date that Escrow closes.
12.10 Buying Subject to the Lien. If Holder elects to buy the Real
--------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
12.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured Obligation within 30 days after Holder becomes the owner
of the Real Estate by paying the Reinstatement Amount as of the reinstatement
date. Within seven days after the reinstatement date, Lender shall credit the
unpaid balance of the Secured Obligation by the Default Amounts.
12.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
12.13 Lender's Transfer Rights; New Lien Enforcement Notice. If
-----------------------------------------------------
Holder does not exercise the Foreclosure Purchase Right, Lender may proceed with
the enforcement of the Lien and (i) sell the Encumbered Property to a third
party at a Foreclosure Sale, (ii) buy the Encumbered Property by a credit bid at
the Foreclosure Sale, or (iii) accept a deed conveying the Encumbered Property
in lieu of foreclosure, in each case without the requirement of making a further
offer of the Encumbered Property to Holder. But if, within one year after
Holder actually received the Lien Enforcement Notice, Lender's enforcement of
the Lien has not been completed or Lender has not accepted a deed in lieu of
foreclosure, Lender must give a new Lien Enforcement Notice to Holder before
completing the enforcement of the Lien or accepting a deed in lieu of
foreclosure.
12.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys the
Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
43
<PAGE>
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth below in this Section G1. But a party may change
its address for notices by giving notice as required by this Section G1. A
written notice will be considered given (i) when personally delivered, (ii) two
business days after deposit in the United States Mail as first class mail,
certified or registered, return receipt requested, with postage prepaid, (iii)
one business day after deposit with a reputable overnight delivery service for
next business day delivery, or (iv) on the business day of successful
transmission by electronic facsimile. The parties' addresses for notices are as
follows:
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons will be considered "Owner" under this
Agreement with respect to the applicable part of the Real Estate while that
person is the owner or tenant.
G4. Time of Essence: Business Day: Dates. Time is of the essence of each
------------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
44
<PAGE>
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and other similar events) (an "Uncontrollable
Event"). If (i) a party who has the right to exercise a right under this
Agreement has not done so by the last date allowed under this Agreement and (ii)
on that date, the party is prevented from exercising the right due to an
Uncontrollable Event, the date will be extended until the third business day
after the Uncontrollable Event ends.
G6. Entire Agreement: Modification: Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement must be in writing and signed by Owner and Holder. Any waiver of a
provision of this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees.
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
45
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
<TABLE>
<S> <C>
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------
</TABLE>
[X] personally known to me to be the person whose names is subscribed to the
within instrument and acknowledged
to me that he executed the same in
his authorized capacity, and that
by his signature on the instrument
the person, or the entity upon
behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------
SIGNATURE OF NOTARY
===============================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
--------- --------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
<TABLE>
<S> <C>
LLO-Gas, Inc., a Delaware corporation None
- -------------------------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
47
<PAGE>
LEGAL DESCRIPTION
Parcel A of Parcel Map No. 9105, in the City of Bakersfield, County of Kern,
State of California, as per Map recorded February 27, 1990 in Book 40, Page 8 of
Maps, in the Office of the County Recorder of said County.
Together with a non-exclusive easement, as recorded concurrently herewith in
Book 6357, Page 1885 of Official Records, for driveway, ingress and egress
purposes in common with other over, upon, through, and across that certain
portion of the NE 1/4 of Section 2, Township 30 South, Range 26 East, M.D.M.,
in the City of Bakersfield, County of Kern, State of California, and also being
a portion of Parcel "B" of Parcel Map No. 9105, recorded in Book 40, Page 8 of
Parcel Maps, in the Office of the County Recorder of said County, more
particularly described as follows:
Commencing at the Northeast corner of said Section 2; thence North 89 degrees
22' 08" West along the North line of said Section 2, a distance of 265.00 feet;
thence South 00 degrees 31' 36" West parallel with the East line of said Section
2, a distance of 110.00 feet to a point on the Southerly right-of-way line of
Stockdale Highway; thence North 89 degrees 22' 08" West along said Southerly
right-of-way line, a distance of 20.00 feet, said point being the true point of
beginning for this description; thence South 00 degrees 31' 36" West parallel
with the West line of Parcel "A" of said Parcel Map 9105, a distance of 33.00
feet; thence South 89 degrees 22' 08" East parallel with the North line of said
Section 2, a distance of 20.00 feet to a point on the West line of said Parcel
"A"; thence South 00 degrees 31' 36" West along the West line of said Parcel
"A", a distance of 40.00 feet; thence North 89 degrees 22' 08" West parallel
with the North line of said Section 2, a distance of 20.00 feet; thence South 00
degrees 31' 36" West parallel with the West line of said Parcel "A", a distance
of 82.00 feet to the Westerly prolongation of the South line of said Parcel "A"
thence South 89 degrees 22' 08" East along said prolongation a distance of 20.00
feet to the Southwest corner of said Parcel "A"; thence South 89 degrees 22' 08"
East along the South line of said Parcel "A" a distance of 210.00 feet to a
point on the Westerly right-of-way line of South Allen Road; thence South 00
degrees 31' 36" West along said right-of-way line, a distance of 28.00 feet;
thence North 89 degrees 22' 08" West parallel with the South line of said Parcel
"A", a distance of 260.00 feet; thence North 00 degrees 31' 36" East parallel
with the West line of said Parcel "A", a distance of 183.00 feet to a point on
the Southerly right-of-way line of Stockdale Highway; thence South 89 degrees
22' 08" East along said Southerly right-of-way line, a distance of 30.00 feet to
the true point of beginning.
EXCEPTING from Parcel A of Parcel Map No. 9105, all oil, gas and minerals,
together with all rights incident to the discovery, development and production
of all oil and gas and minerals underlying the lands herein conveyed together
with so much surface thereof as will be necessary for the discovery, development
and production of all or any part of the oil and gas and minerals underlying
said land, and the transportation thereof, from, through or into the lands
herein conveyed, as reserved in the Deed from Spencer
48
<PAGE>
Brittain, Trustee, recorded October 7, 1948 in Book 1570, Page 11 of Official
Records.
Parcel "A" is more particularly described as follows:
Beginning at the Southeast comer of Parcel A of Parcel Map No. 9105, in the City
of Bakersfield, County of Kern, State of California, as per Map recorded
February 27, 1990 in Book 40, Page 8 of Maps, in the Office of the County
Recorder of said County; thence North 89 degrees 22' 08" West 210.00 feet;
thence North 00 degrees 31' 36" East 155.00 feet to a point on the Southerly
Right of Way line of Stockdale Highway, thence along said Southerly Right of Way
line, 190.04 feet; thence South 44 degrees 25' 16" West 28.26 feet to a point on
the Westerly right of way line of South Allen Road; thence along said Westerly
right of way line, South 00 degrees 31' 36" West 135.04 feet to the point of
beginning.
49
<PAGE>
EXHIBIT 10.30
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 05513
Dated (for identification): September 2, 1999
This Agreement for Sale of Business to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and PRESTIGE STATIONS, INC., a Delaware corporation ("Seller").
RECITALS
--------
A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the business
at the Real Estate ("Seller's Operations") and that are located at the Real
Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Dealer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate:
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
50
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 13001 Stockdale Highway
City, State, ZIP Code: Bakersfield, California 93312
County: Kern
Deposit: $22,500.00 by Buyer's check payable to Escrow Holder
Purchase Price: $180,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $60,000.00
Estimated Price of Petroleum Inventory: $15,000.00
Franchise Fee: $95,000.00
Closing Date: See Section 6.2.
51
<PAGE>
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10740 PC (be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to ARCO the items required by Section 3 of the Real Estate
Agreement.
4. Business Property. The following items constitute the Business
-----------------
Property:
(a) Equipment. All equipment, furnishings, and trade fixtures (i)
---------
that Seller uses in connection with Seller's Operations, (ii)
that are located at the Real Estate, whether or not those items
are attached to the land or improvements at the Real Estate, and
(iii) that are shown on the attached Schedule 1 (collectively,
the "Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the Real
-------------------
Estate on the day that Escrow (as defined in Section 6.1) closes
(the "Petroleum Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
---------------
Operations (other than the Petroleum Inventory), in its original
packaging, that is located at the Real Estate on the day that
Escrow closes and (ii) all supplies that Seller uses in
connection with Seller's Operations and that are located at the
Real Estate on the day that Escrow
52
<PAGE>
closes (collectively, the "Store Inventory");
(d) Permits. All transferable licenses and permits that Seller holds
-------
in connection with Seller's Operations (collectively, the
"Permits"), including without limitation (i) the permanent beer
and wine license (the "ABC License"), (ii) the underground
storage tank permit for the underground storage tanks at the Real
Estate, (iii) any conditional use permit for Seller's Operations,
and (iv) any operating permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment monitoring and
-----------------
maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, walk-in
coolers, affixed sales counters and food preparation counters, food preparation
equipment, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Business Property and the
------
Franchise Fee is the amount set forth in Section 1. Section 15 provides for the
final determination of the amount payable for the Store Inventory and the
Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall deposit the balance of the Purchase Price into Escrow, in cash or
immediately available funds, by the earlier of the following dates: (i) One
business day before the date scheduled for the close of Escrow or (ii) the date
designated by Escrow Holder so that Escrow Holder can timely file Form 226,
Statement Re Consideration Deposited in Escrow, with the California Department
of Alcoholic Beverage Control (the "ABC") to allow the closing to occur on the
scheduled date.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. If the ABC License is ready to be issued to Buyer,
------------
53
<PAGE>
the Escrow will close simultaneously with the closings under the Real Estate
Agreement, the Companion Business Agreements, and the Companion Real Estate
Agreements. If the ABC License is not ready to be issued to Buyer, but a
temporary beer and wine license is ready to be issued to Buyer, the escrows
under the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements may close before the Escrow closes. In that
case, the Escrow will close when the ABC License is issued to Buyer.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) ABC License. Buyer, Seller, and Escrow Holder have received
-----------
notice that the ABC has transferred the ABC License to Buyer.
(b) Related Transactions Ready to Close. or each of the transactions
-----------------------------------
under the Real Estate Agreement, the Companion Business
Agreements, and the Companion Real Estate Agreements, Seller has
confirmed that (i) Seller is ready and committed to close those
transactions or (ii) if the transaction is being handled through
an escrow, Seller has received notice from the escrow holder that
the escrow holder is ready and committed to close the escrow.
(c) Franchise Documents. ARCO, through its division ARCO Products
-------------------
Company ("APC"), and Buyer (i) have signed a Contract Dealer
Gasoline Agreement (the "Gas Agreement") and a non-lessee am/pm
Mini Market Agreement (the "Mini Market Agreement") for Buyer's
operations at the Real Estate after the closing and (ii) have
signed and have had notarized a Memorandum of Contract Dealer
Gasoline Agreement in recordable form. The am/pm Mini Market
Agreement will provide for the Franchise Fee as set forth in
Section 1, which is included in the Purchase Price. The Gas
Agreement and the Mini Market Agreement each must have a term of
15 years and be in ARCO's standard form.
(d) Other Closing Conditions. All closing conditions for that party's
------------------------
benefit contained in provisions of this Agreement other than this
Section 6.3 have been satisfied, or will be satisfied as a part
of the closing.
(e) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
closing, or will perform those obligations as a part of the
closing.
54
<PAGE>
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Buyer or Escrow Holder the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale") transferring
------------
title to the Business Property to Buyer, signed by Seller;
(b) Business Property. Physical possession of the tangible assets of
-----------------
the Business Property and all tangible evidence of the intangible
assets of the Business Property, to the extent that those items
are in Seller's possession or control;
(c) Permits. All the Permits;
-------
(d) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations; and
(e) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs; and
(b) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
8. Transfer of ABC License. Buyer shall do all that is reasonably
-----------------------
necessary to obtain the ABC's approval of the transfer of the ABC License to
Buyer. Seller shall cooperate with Buyer's efforts to obtain the ABC's approval
of the transfer.
9. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
10. Bulk Sale Notices. Buyer and Seller shall give notice, in compliance
-----------------
with California Business and Professions Code Section 24073, of the intended
transfer of the ABC License. Buyer and Seller instruct Escrow Holder (i) to
cause the notice to state that "the sale of seller's assets to buyer is not
subject to Division 6 of the California Uniform Commercial Code, including
Section 6106.2 of the California Uniform Commercial Code," (ii) to record and
publish the notice, and (iii) in accordance with
55
<PAGE>
California Business and Professions Code Section 24074, to distribute the
Purchase Price to Seller's bona fide creditors who file claims with Escrow
Holder before Escrow Holder receives notice from the ABC of its approval of the
transfer of the ABC License. Upon Escrow Holder's request, Buyer and Seller
shall provide Escrow Holder with the information necessary to prepare the
notice. Seller represents and warrants to Buyer that the sale under this
Agreement is not a bulk sale as contemplated by Division 6 of the California
Uniform Commercial Code. Based on that representation and warranty, Buyer
instructs Escrow Holder not to give notice under Division 6.
11. Tax Clearance Certificates. Seller will not be required to provide to
--------------------------
Buyer tax clearance certificates from applicable governmental agencies. Buyer
and Seller instruct Escrow Holder to not obtain tax clearance certificates.
Seller shall indemnify and defend Buyer from all liabilities, damages, claims,
costs, and expenses (including reasonable attorneys' fees) that Buyer might
incur in connection with any tax liability of Seller related to Seller's
Operations before closing. If required by the ABC, Seller shall provide the ABC
with evidence that Seller is not delinquent in the payment of any taxes that are
the subject of California Business and Professions Code Section 24049.
12. Sales and Use Tax. Buyer represents that it holds a valid
-----------------
Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store inventory
or the Petroleum Inventory to Buyer.
13. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Personal property taxes.
14. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the filing, recording, publication, and other costs
and expenses that Escrow Holder incurs on its behalf, unless the cost or expense
is otherwise allocated under this Agreement. Buyer shall pay all application
and other fees charged by the ABC in connection with the transfer of the ABC
License.
15. Inventory.
---------
15.1 Store Inventory. On the day that Escrow closes, an outside
---------------
inventory service (the "Service") selected by Seller will conduct an in-store
inventory of the Store Inventory. The Service will calculate the retail price
of the Store Inventory. At the completion of the in-store inventory, Buyer and
Seller each shall pay to the Service one half of the fee for the in-store
inventory. After the in-store inventory has been completed and the Service has
calculated the retail price of the Store Inventory, Seller shall calculate the
amount payable for the Store Inventory in accordance with its then-current
pricing policies for the sale of store inventory located at an operating
business of Seller to a person who intends to re-sell the store inventory at the
same location. Seller shall then notify Buyer and Escrow Holder of the amount
payable for
56
<PAGE>
the Store Inventory. Seller's Operations will be closed to the public during the
instore inventory.
15.2 Petroleum Inventory. On the day that Escrow closes, Buyer and
-------------------
ARCO's representative conducting the changeover of Seller's Operations ("ARCO's
Changeover Representative") shall jointly inventory the Petroleum Inventory; and
after the joint inventory has been completed, ARCO's Changeover Representative
shall calculate the amount payable for the Petroleum Inventory. The amount
payable for the Petroleum Inventory will equal Seller's rack price based on
Seller's latest invoices for gasoline delivered to the Real Estate. Seller
shall then notify Buyer and Escrow Holder of the amount payable for the
Petroleum Inventory.
15.3 Adjustment for Estimated Price of Inventory. After the
-------------------------------------------
petroleum inventory and in-store inventory are completed, the sum of the amount
payable for the Petroleum Inventory and the amount payable for the Store
Inventory will be subtracted from the sum of the Estimated Price of Store
Inventory and the Estimated Price of Petroleum Inventory set forth in Section 1.
The resulting overage or shortage will be credited or charged, as applicable, to
the Purchase Price.
16. Equipment Listing. Seller shall attach to the Bill of Sale, or
-----------------
otherwise deliver to Buyer before or at the closing, a list of Equipment. Buyer
may inspect the Equipment before Escrow closes.
17. Seller's Representations and Warranties. Seller's representations and
---------------------------------------
warranties in this Agreement will survive the closing. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the close of
Escrow, as follows:
17.1 Ownership of Assets. Seller has, and at the close of Escrow
-------------------
will transfer to Buyer, title to the Business Property, free and clear of all
liabilities, liens, encumbrances, security interests, leases, contracts, and
claims.
17.2 Leases, Contracts, and Agreements. No leases, contracts,
---------------------------------
commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
17.3 Absence of Litigation. No suit, arbitration, or other
---------------------
proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future.
17.4 Taxes. Seller has filed all tax returns required in connection
-----
with Seller's Operations. Seller has paid, or wilt pay before the close of
Escrow, all taxes (including interest and penalties on the taxes) due from
Seller in connection with
57
<PAGE>
Seller's Operations.
17.5 Equipment. All Equipment is in good working condition. The
---------
underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement, according to the certificate of upgrade
compliance provided under Section 25284 of the California Health and Safety
Code. The PayQuick Island Cashier has been installed at the Real Estate and
compiles with the terms of Section 10.B of the Gas Agreement. The video
surveillance equipment approved by ARCO has been installed at the Real Estate
and is in good working condition. Any secondary containment equipment for the
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
17.6 Permits and Laws. Seller's Operations are in compliance with
----------------
(i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits for
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Manager of
Environment, Health and Safety, Ted Harriss is the Property Management
Representative assigned to the Real Estate, and Lynn Beteag is Seller's Property
Management Manager assigned to the Real Estate.
17.7 Trademark and Trade Dress. Seller's Operations comply with the
-------------------------
trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
17.8 Employees. The employment of all employees of Seller for
---------
Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
18. As-Is Sale. Buyer acknowledges that (i) it is buying the Business
----------
Property solely in reliance on its own investigation; (ii) no covenants,
representations, or warranties have been made by Seller or on Seller's behalf,
except those set forth in this Agreement; (iii) Buyer has made itself aware of
all Laws concerning the Business Property or Buyer's operation of a business
using the Business Property; and (iv) Buyer will be buying the Business Property
in its condition existing when Escrow closes.
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<PAGE>
Nothing in the previous sentence diminishes Seller's obligations as expressly
set forth in this Agreement.
19. Possession of Business Property. Buyer may possess and operate the
-------------------------------
Business Property when Escrow closes. Buyer shall open for business at the Real
Estate within 48 hours after Escrow closes. Any alterations to the building on
the Real Estate will be considered a "conversion" under Section 5.02(b) of the
Mini Market Agreement.
20. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right of
-----------------------------
first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
21. Required Governmental Notices. Promptly following the closing, Buyer
-----------------------------
shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
22. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 22; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ JLS
---------------- -----------------
Buyer's Initials Seller's Initials
23. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other
59
<PAGE>
document necessary to enable Seller to confirm that the individual signing this
Agreement for Buyer is authorized to bind Buyer.
24. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If ARCO terminates the Real Estate Agreement in accordance with its
terms, Seller may terminate this Agreement without further liability to Buyer.
If Buyer terminates the Real Estate Agreement in accordance with its terms,
Buyer may terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this
60
<PAGE>
Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
(See signatures on the next page.)
61
<PAGE>
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------------
John D. Castellucci
President
SELLER
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
----------------------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2, 1999
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
----------------------------
Patricia Cusick
Escrow Officer
62
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
63
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "A"
64
<PAGE>
Exhibit 10.31
Facility Number: 82063
Customer Account Number: 0883348
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2, 1999, between ARCO Products Company (a
division of ATLANTIC RICHFIELD COMPANY - incorporated in Delaware), with an
office at:
4 CENTERPOINTE DRIVE, LA PALMA, CALIFORNIA 90623
("ARCO") and LLO-Gas, Inc.
a Corporation
- --------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"], if partnership, the names of
all partner and State of Organization; if limited partnership, the names of
all general partners and State of Organization; if corporation,
the State of Incorporation; if LLC, the State of Organization)
with an address at 23805 Stuart Ranch Road, Malibu, CA 90265 Bakersfield,
California 93312 ("Operator").
Operator desires to be the franchisee of, and ARCO is willing to grant to
Operator a franchisor for, an am\pm mini market located at the Premises set
forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the
terms and conditions set forth in PARTS I and II of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in PARTS I and II hereof, each of the parties intending to be legally
bound hereby, agrees as follows:
PART I
PART I contains specific terms which relate to the terms and conditions
set forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10
(4/99), attached hereto and incorporated herein.
Section
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
4.03 Store Manager (if Operator has more than one am/pm mini market)
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______ day
of ____________________, ______, ("Commencement Date"), and shall end at
10 a.m. on the first day after the last day of the [_____] 120th or [X]
180th full calendar month following the Commencement Date. If not time
is checked, the box for 120th shall be deemed checked. If no date is set
forth in this Part I, the Commencement Date shall be established by the
"Notice of Final Inspection and Readiness" provided for in Section 5.01
of PART II.
6.01 Premises 4100 California Ave.
(complete address by street number, including, where applicable,
designation of corner)
City Bakersfield State California Zip 93309
7.01(a) Initial franchise fee: Ninety-Five Thousand 00/100 Dollars [$ 95,000.00]
7.01(c) Renewal franchise fee: ______________ Dollars [$_____________ .00]
7.02(a) Minimum royalty fee: One Thousand 00/100 Dollars [$1000.00]
7.03 Security Deposit: One Thousand 00/100 Dollars [$1000.00]
16.01 Operational Designee, if applicable: ___________________________________
17.02 Corporate Designee (Corporate operators only): John Castellucci
1 of 5
<PAGE>
Limited Liability Company Designee (LLC's Only):________________________
Partnership Designee (Limited Partnership Only):________________________
2 of 5
<PAGE>
Facility Number: 82063
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by
a check mark at the left of the required items. ARCO agrees to loan the
equipment initialed by ARCO to the right of such items and to install such
equipment prior to the Commencement Date. Operator agrees to install, at
Operator's expense, on or before the Commencement Date, the equipment initialed
by Operator to the right of such items. All equipment, whether furnished by
Operator or by ARCO, must meet ARCO's specifications including, but not limited
to, specifications with respect to brand, size, color and quality.
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ------------- -------------
<S> <C> <C> <C>
X am/pm Sun & Moon Sign X
- --------- -----
X Building Fascia (illuminated) X
- --------- -----
X Cigarette Merchandiser (Overhead) (Vendor Supplied) X
- --------- -----
X Corner am/pm I.D. Sign
- --------- and where applicable, Sign Pole X
-----
X Interior Signage X
- --------- -----
X Training Materials [Employee Training System ("E.T.S.")] X
- --------- -----
X Bun Toaster X
- --------- -----
X Capuccino Bulk Powder Machine X
- --------- -----
X Cash Register (Primary with PayPoint(R)P.O.S. X
- --------- -----
X Cheese Sauce Dispensers (2) X
- --------- -----
X Coffee Brewer (6 Burner Twin Brewer) X
- --------- -----
X Coffee Brewer Timer X
- --------- -----
X Coffee/ Bakery Menu Board X
- --------- -----
X Coffee Mug Rack X
- --------- -----
X Coffee Lid/Supply Spinner Rack X
- --------- -----
X Computer Software and Hardward X
- --------- -----
X Condiment Pumps (2) X
- --------- -----
X Convection Oven X
- --------- -----
X Convection Oven Racks (4) X
- --------- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
- --------- -----
X Cooler Boxes (Upright) Size______ Number______ X
- --------- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
- --------- -----
X Counter Top Condiment Dispenser Unit X
- --------- -----
X Counter and Shelving (including Condiment Table) X
- --------- -----
X Counter Merchandising System X
- --------- -----
X Cup Dispenser (Hot and Cold) X
- --------- -----
X Fast Food Module (older units only) X
- --------- -----
X Fax Machine X
- --------- -----
X Food Merchandising Warmer X
- --------- -----
X Food Merchandising Rack Identification
- --------- Channels and Strips X
-----
X Food Preparation Table X
- --------- -----
X Fountain Drink and Ice Dispenser with Ice Maker and
Carbonator (Pepsi-Cola) X
- --------- -----
X Fountain Lid and Straw Rack X
- --------- -----
X Prepackaged Electronic Facility Controller (EFC) X
- --------- (see Electronic Drawings for Details) -----
</TABLE>
3 of 5
<PAGE>
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ------------- -------------
<S> <C> <C> <C>
X Freezer Cabinets (Upright) Size______ Number______ X
- --------- -----
X Freezer (Storage Room) X
- --------- -----
X Frozen Carbonated Beverage Machine X
- --------- -----
X Frozen Dessert Graphics Package X
- --------- -----
X Frozen Dessert Cup, Cone Tower X
- --------- -----
X Gondolas Size______ Number______ X
- --------- -----
X Hood and Exhaust Ventilation System for Convection Oven
- --------- (California only and only where locally required) X
-----
X Ice Maker X
- --------- -----
X Ice Merchandiser Size______ Number______ X
- --------- -----
X In-store Television Monitors for display of multi-media
- --------- advertising** X
-----
X Microwave Over (Commercial) X
- --------- -----
X Nacho CheeseSauce Dispensers X
- --------- -----
X PayQuick Island Cashier (PIC) (only if Operator is
- --------- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000)
with PayPoint X
- --------- -----
X Shelving (Storage Room) Size______ Number______ X
- --------- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
- --------- -----
X Shelving (Wall) Size______ Number______ X
- --------- -----
X Sink (3-compartment-food preparation) X
- --------- -----
X Sink (Hand sink in hot food area) X
- --------- -----
X Sink (Service/Mop) X
- --------- -----
X Small Wares (Food Service) X
- --------- -----
X Soft Serve Dispenser X
- --------- -----
X Sports Bottle Rack X
- --------- -----
X Lid/Straw Spinner Rack X
- --------- -----
X (Combination VHS Player/Monitor
- ---------
to utilize ETS/VHS tapes) X
-----
X Water Heater X
- --------- -----
X Video Surveillance Equipment (including six Color
- --------- Cameras.two 20" color Monitors, Flashing Red
Lights for Monitors, Multiplexor Unit to
support up to 9 Cameras, Time-lapse Video
Recorder, Video Tape Library with 31 tapes
(replaced annually with 31 new long playing
Video T-160 tapes) and 24 Hour Surveillance
Decal) X
-----
X VSAT Equipment: (1) Hughes Satellite Dish X
- --------- -----
X (2) Hughes Indoor Unit - Satellite Receiver X
- --------- -----
(3) Deicer (if required for colder climate) X
-----
Other: 1. _____________________________________ _____
2. _____________________________________ _____
3. _____________________________________ _____
</TABLE>
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
4 of 5
<PAGE>
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Connie Carroll 9/2/99 By /s/ John Castellucci 9-2-99
------------------------------ ---------------------------------
Manager Date Manager Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
------------------------------ ---------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
5 of 5
<PAGE>
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Mark and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined in Section 5.01 and continuing during the term
of this Agreement, the non-exclusive right and license to use the trade secrets
and know-how regarding operation of am/pm mini markets, the service mark and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm" service
marks for retail grocery store and convenience store services. ARCO expressly
reserves the right to change, alter or modify the am/pm service mark or service
name or substitute any other service mark or service name at any time by giving
Operator not less than thirty (30) days' prior notice thereof. In the event of
any change, alteration or modification of the service mark or service name,
Operator agrees that only the service mark or service name, as changed, altered
or modified, shall be used by Operator to identify the Store. If the service
mark and service name "am/pm" is changed by ARCO, it is agreed that the new
service mark and service name adopted by ARCO shall be substituted for "am/pm"
wherever "am/pm" appears in this Agreement. ARCO also expressly reserves the
right to change, alter or modify colors and designs and other service marks and
service names used in connection with am/pm mini markets from time to time and
place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service mark and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service mark and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service mark or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service mark,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or attempt to register
1 of 33
<PAGE>
ARCO's service names or service marks, trademarks in Operator's name or that of
any other person and not to use such service marks, trademarks or service names,
or any parts thereat as am part of any corporate or partnership name or any
other business name. It is understood that this covenant shall survive the
termination of this Agreement and shall be binding upon the heirs; successors
and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement
or upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service mark,
trademark rights that may have vested in Operator notwithstanding the provisions
of Section 1.04 as a result of any activities of Operator pursuant to this
Agreement. Operator agrees to use said service marks, trademarks and service
names in connection with, and exclusively for, the promotion and operation of an
am/pm store as provided hereunder, and in accordance with the standards, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service mark or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service mark, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this
Agreement or termination of any subsequent Store Agreement to cease and forever
abstain from using the am/pm service mark and service name and other service
marks and service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during
the term of this agreement to use ARCO's franchise accounting system software at
the am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and after
termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for Operator.
ARTICLE 2
Relationship of Parties
2.01Neither Operator nor any of its employees shall hold itself or
himself out at any time as an agent, representative, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and shall
not bind nor obligate ARCO in any way, manner or thing whatsoever, nor shall
Operator
2 of 33
<PAGE>
represent that it has any right or power to do so. Operator shall undertake all
obligations herein described as an independent contractor and shall exercise and
be responsible for the exclusive control of the Store and Premises and all
activities conducted therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted and
as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
ARTICLE 4
Hours of Operation and Personal Participation
4.01 Operator shall promote the business of the Store and shall cause
the Store to be operated continuously throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN
THE MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly royalty fee for each day Operator fails to cause the Store to be
open for the prescribed hours.
4.03 Operator shall participate in the operation of the am/pm business
for a period of at least 40 hours per week and if Operator has more than one
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
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<PAGE>
program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). For purposes of
personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if Operator is a corporation,
partnership or LLC. The Operational Designee must be a an officer or shareholder
if Operator is a corporation, a member or manager of the LLC if Operator is an
LLC, a general partner if Operator is a limited partnership, a partner if
Operator is a partnership other than a limited partnership. In the case of
Concurrent Operations at the Premises, as more fully described in Article 4.05
hereof, Operator is obligated to participate in the operation of all franchise
businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm
business as described in Section 4.03 and/or, if applicable, to have the Store
Manager designated in PART I employed at the store on a full time basis and/or,
if applicable, to replace such person with another trained Store Manager within
two months from the date the Store Manager designated in PART I or any successor
to such person is no longer employed at the store shall constitute a material
breach of this Agreement.
4.05 In the event the am/pm mini market, with ARCO's approval, is
operated at the Premises by Operator in conjunction with another or more than
one other ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date
first above written. Except as otherwise provided in this Article, the
"Commencement Date" shall be on the date set forth in PART I. If no date is set
forth in PART 1, the Commencement Date shall be the date established by ARCO by
notice to Operator ("Notice of Final Inspection and Readiness") as the date the
Premises are available for occupancy and ready for conduct of the business of
the am/pm mini market. The term hereof shall end as of 10:00 a.m. on the first
day after the last day of the one hundred twentieth (120th) or one hundred
eightieth (180th) full calendar month following the Commencement Date as set
forth in Part I, unless this Agreement is terminated earlier pursuant to the
terms hereof.
5.02(a) In the case of ground-up construction of an am/pm mini market,
as soon as reasonably practicable after execution of the Agreement, but within
six (6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
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(1) Photographs of the entire site, including improvements and
corner signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey should
show all existing elevations and site features and should also include
additional data such as: width of streets; type of curbs and corner
radius; existing sidewalks and/or approaches, including material and
condition; location of existing power poles, light poles, hydrants,
traffic light poles, water, gas and electrical curb boxes, etc.;
buildings and islands on the site, if any, by dimension; paving,
landscaping, trees, fencing, retaining walls, underground motor fuel
storage, if any; property line dimensions, angles and bearings, known
setbacks, easements and code restrictions; North arrow and notes on any
special building, zoning and/or sign code regulations affecting the
property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements, and other changes not
resulting from local requirements, but requested by Operator must be submitted
in writing to ARCO with drawings and specifications and approved in advance by
ARCO. All changes, if any, not mandated by governmental authority but requested
by Operator must be submitted simultaneously as one consolidated request for
modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense, have an architectural or engineering firm of
Operator's choosing make the approved modifications. If Operator elects to have
ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
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(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
(1) General arrangement ("As Built") drawings including
informational sketches and data showing: complete set of drawings used
for construction of building (if available); exterior dimensions,
length, width, and height of every vertical and horizontal surface;
interior dimensions, length, width and height of every room, location of
all existing electrical outlets, plumbing lines, fixtures, switches,
controls, furniture, etc.; obstructions in area to be occupied by
walk-in coolers; all other major obstructions such as columns,
downspouts, vents, ducts, etc.; existing ceiling layout and placement of
all light fixtures, grilles, etc., location of heating, air conditioning
and water heating units, type, size, and condition; electrical panel,
size of service, number of circuits, condition of panel; if reusable as
is, or with supplementary panel and if three-phase service is available;
description of existing structural system, age, type, size, location of
beams, columns, bearing walls, shear walls, etc.; current condition of
building, roof, exterior, interior, restrooms, walkways, existing motor
fuel storage and dispensing system, if any, showing age, size and type
of underground tanks (steel or fiberglass), make and size of suction
pumps, leak detectors, make and model of pumps/dispensers and
self-service console/equipment, if any; describe necessary repairs;
photographs of all four sides of building, interior of office, storage,
bays, electrical panel, heating/air conditioning unit, unusual
conditions, existing islands, signs and canopies; local building
restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements and other changes not
resulting from local requirements but requested by Operator, must be approved in
advance by ARCO. All changes, if any, not mandated by governmental authority but
requested by Operator must be submitted simultaneously as one consolidated guest
for modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense have an architectural or engineering firm
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of Operator's chasing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed 520,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(c) Within 60 days after receipt of the standard Plans, Operator
shall apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if
available in the jurisdiction in which the Store is located. The beer and wine
license must be obtained before ARCO installs or arranges to have installed
illuminated fascia up to ARCO's specifications shown on the Plans, the exterior
am/pm sign, sign pole and interior signage which consists of photo panels,
product area identifiers, striping, fast food menu board and other miscellaneous
decals, and a cigarette overhead merchandiser, if such licenses are available at
the time in the jurisdiction in which Operator's store is located. If a beer and
wine license is not available until construction is completed or the Store is
opened for business, ARCO shall proceed with the necessary work but Operator
shall nevertheless be required to pursue diligently efforts to obtain a beer and
wine license at the earliest possible date in which case the obtaining of a beer
and wine license as a condition to events contemplated in this Article 5,
however, shall be waived and not obtaining a license shall not serve as a ground
for termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on
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the Plans, and the exterior am/pm sign, sign pole and interior signage
which consists of photo panels, product area identifiers, striping, fast food
menu board and other miscellaneous decals, and a cigarette overhead
merchandiser. If Operator is not the sole and exclusive owner of the Premises,
as a condition to ARCO performing its obligations set forth in the preceding
sentence, Operator shall submit, in form satisfactory to ARCO, a consent of all
owners of the Premises to the modification of the Premises, and a waiver in
recordable form, of all claims of the owner, and any party claiming through or
under the owner, including any mortgagees, to any improvements installed by ARCO
on the Premises and consent to removal by ARCO of such improvements upon
termination of the am/pm franchise. After ARCO installs or arranges to have
installed exterior illuminated building fascia, the exterior am/pm sign, sign
pole and interior signage which consists of photo panels, product area
identifiers, striping, fast food menu board and other miscellaneous decals, and
a cigarette overhead merchandiser, and provides the additional items referred to
in the second sentence of this Section 5.03, ARCO shall issue the Notice of
Final Inspection and Readiness. If Operator fails to open the Store for business
on the Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
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ARTICLE 6
Premises and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the
operation of an am/pm mini market on the Premises set forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the
equipment shown on the list entitled "Store Equipment" attached to PART I
("Store Equipment"). ARCO hereby agrees to loan and install or arrange to have
installed exterior illuminated fascia up to ARCO's specifications shown on the
Plans, the exterior am/pm sign, sign pole and interior signage which consists of
photo panels, product area identifiers, striping, fast food menu board and other
miscellaneous decals ("Loaned Store Equipment"), and a cigarette overhead
merchandiser. Operator agrees to install the Store Equipment on or before the
Commencement Date. All Store Equipment must meet ARCO's specifications,
including but not limited to specifications with respect to size, color and
quality. Operator may not install additional equipment, fixtures or machines
without the prior written consent of ARCO. Operator shall maintain all
equipment, including required and optional equipment, ready for use and in
operable condition and shall use or permit the equipment to be used only for its
intended use and only in a manner consistent with the manufacturer's
instructions, and Operator shall utilize the equipment and exert Operator's best
efforts to promote the retail sale of items or services for which the equipment
is designed. In the event that ARCO agrees to lease to Operator and Operator
agrees to lease from ARCO additional equipment during the term of this
Agreement, the list entitled "Store Equipment" attached to PART I shall be
revised accordingly by means of an amendment to this Agreement executed by both
parties hereto. Operator agrees not to remove any of the Store Equipment from
Store without the prior written consent of ARCO except in the event replacement
of the equipment is necessitated by malfunction, in which case Operator may
replace the equipment with equipment meeting the same specifications with
respect to size, color and quality as the equipment replaced. Operator shall
notify ARCO of any such replacement. Title to the Loaned Store Equipment shall
remain in ARCO at all times during the term hereof and Operator shall not suffer
or permit any levy, attachment or execution by Operator's creditors, including
taxing authorities, or by any person or entity having any interest in the
Premises to remain on such Loaned Store Equipment. ARCO reserves the right to
add or delete Equipment during the term of the Agreement and Operator will
install or remove such Equipment within 90 days after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01(a) Operator shall pay ARCO an initial franchise fee in the amount
set forth in PART I upon the signing of this Agreement by
Operator.
(b) The initial fee is not refundable in whole or in part except
in the following circumstances:
(1) If this Agreement is for Premises at which construction of
or conversion to an am/pm mini market is contemplated, after
Operator executes the Agreement, ARCO shall have up to 90 days
to execute the Agreement ARCO shall not be obligated under the
Agreement until it is executed by ARCO. If ARCO has made
changes to the am/pm franchise between the time the offering
circular was given to
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Operator and the time before the offering circular expires by
its own term and Operator has not yet executed the Agreement,
ARCO shall give Operator a new offering circular and a new
Agreement and related agreements reflecting any such changes
and Operator may elect to execute either the agreements
originally given to Operator or those reflecting the changes.
Operator may notify ARCO that Operator does not want an am/pm
franchise and wishes to revoke the Agreement at any time
before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO has
executed the Agreement, ARCO shall return any initial fee paid
by Operator, less ARCO's costs incurred for site selection and
study and preparation of engineering and other plans for the
Premises and any other costs incurred by ARCO in contemplation
of Operator operating an am/pm mini market. If ARCO elects not
to execute the Agreement, ARCO shall return, in full, any
initial fee paid by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises,
if any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred
for site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the Agreement
because Operator is unable to obtain all necessary
construction permits and, under certain conditions, a beer and
wine license; or (ii) ARCO terminates the Agreement because of
Operator's failure to obtain permits within 12 months from the
receipt of final plans and/or complete construction or
conversion of the Premises to suitable am/pm mini market
facilities within 24 months from the receipt of final plans,
for reasons not within Operator's control or Operator's
failure to obtain a beer and wine license, if available in the
jurisdiction in which Operator's am/pm mini market is located.
Except if ARCO's expenses exceed one-half of the initial fee,
in which case ARCO shall deduct its expenses as set forth in
the first sentence of this subsection (3), one-half of the
initial fee shall be returned to Operator if ARCO terminates
the Agreement because of Operator's failure to obtain permits
for and/or complete construction or conversion within the
prescribed time for any other reason.
(4) The initial fee shall be prorated on a monthly basis over
the term of the Agreement and shall be refundable or payable
on such prorated basis if ARCO terminates the Agreement for
the following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation, for
more than 90 consecutive days, which renders
Operator unable to provide for the continued
proper operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part;
of the Premises pursuant to the power of eminent
domain;
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(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and in
the normal course of business to withdraw from and
to no longer maintain the marketing of Motor Fuels
through retail outlets or the am/pm mini market
franchise in the relevant geographic market area
in which Operator's am/pm mini market is located.
In the event Operator's initial fee is returned in whole
or in part for any of the foregoing reasons, no interest shall
be paid on the amount returned.
ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02(a) Unless otherwise agreed to in writing by the parties, Operator
shall pay ARCO, as a monthly royalty fee, six percent (6%) of the monthly gross
sales, as that term is hereinafter defined, but not less than the minimum
royalty fee set forth in PART I; provided, however, that if Operator operates a
Store that is accessible to pedestrian traffic only, unless otherwise agreed to
in writing by the parties, commencing on the Commencement Date, Operator shall
pay ARCO, as a monthly royalty fee, five percent (5%) of the monthly gross
sales, but not less than the minimum royalty fee set forth in PART I.
Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term of this Agreement. For any month this Agreement is in effect
which is less than a full calendar month, the minimum monthly royalty fee shall
be prorated on a daily basis.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated
as described below.
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(1) Gross sales shall be valued in United States currency,
whether received in that form or otherwise, without deduction on
account of any of the following:
(i) the cost of the goods sold, including taxes paid
by Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
(i) all sales of merchandise made from or in the Store
or in the immediate vicinity of the store, such as a cart or
sidewalk sale;
(ii) all compensation received for services performed
from or in the Store including but not limited to, commissions
and referral, commissions on lottery and lotto tickets
(including all payments by state agencies for the sale of
tickets and for the redeeming of winning tickets), handling
and placement fees and fees for placement of coin operated and
other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a
physical inventory is taken of merchandise currently held for sale
in the Store: as required in Section 15.03 (b). The inventory
variation is defined as either the inventory gain (physical
inventory value is greater than book inventory) or the inventory
loss (book inventory value is greater than physical inventory). The
inventory variation subject to gross sales calculation for royalty
reporting is the inventory variation in excess of the allowable
variation. Detailed calculations for variations and allowable
variations are further described in the Store Systems Manual.
(4) The following are not included in gross sales:
(i) gasoline and other motor fuel sales, if any,
including all applicable motor fuel and sales taxes;
(ii) any deposits refunded to customers;
(iii) sale price of property returned by customer when
the full sale price is refunded either in cash or credit.
Where the customer is required to exchange returned
merchandise for other new merchandise, the cashier is required
to ring the sale of the new merchandise on the register and
the sale of the new merchandise is included in gross sales
subject to royalty. For the purpose of this paragraph, refund
or credit of the entire amount shall be deemed to be given
when the purchase price less rehandling and restocking costs,
is refunded or credited to the customer;
(iv) the amount of any tax imposed by the United States
or any city, county, state, or other governmental entity or
agency or instrumentality thereof upon or with respect to
retail sales of tangible personal property measured by a
stated
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percentage of sales price or gross receipts, whether
imposed upon the Operator, as a seller, or upon the customer,
as a purchaser.
(v) for newly constructed or converted am/pm mini
markets only, store sales made during the first 7 days of the
term of the franchise, i.e., during the period comprised of
the Commencement Date as established by the "Notice of Final
Inspection and Readiness" and the next succeeding 6 days of
initial operation.
(vi) store sales made during an eligible Grand Opening
Event for a new store, or for an existing store, following
completion of ARCO-approved remodeling or rebuilding. An
eligible Grand Opening Event, which event is not to exceed
seven consecutive days, is more fully described in Article
14.02 hereof.
Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of the calendar month
succeeding the month in which the sales were made for which said fee is due.
Payment of the royalty fee shall be made in accordance herewith and with forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set
forth in PART I on or before the Commencement Date of this Agreement. If
Operator shall be in default at any time in the performance of any of the terms
and conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing
on the Commencement Date, Operator shall pay an advertising and promotion fee
for each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is
defined in Section 7.02 above.) At any time during the term hereof, on thirty
(30) days' prior written notice to Operator, ARCO may increase or decrease the
advertising and promotion fee, but the total advertising and promotion fee may
not be increased to more than five and one-half percent (5.5%) at any time
during the term of this Agreement and ARCO may not increase the fee by more than
one percent (1%) in any calendar year. The advertising and promotion fee is
payable on or before the tenth (10th) day of the calendar month succeeding the
month in which sales were made upon which the fee is calculated. In addition,
Operator may be required to pay shipping costs, plus the cost of replacement
signs, if Operator requests duplicate signage.
7.05 Any fees and other amounts due and owing ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, c/o
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Citibank NA. For Credit to APC National Credit #4051-4874, New York, New York
10043," and to no other bank or account number unless so advised in writing by
the Credit Manager, ARCO Products Company. If such Agreement requires or permits
payment by automated clearing house ("ACH"), all such payments shall be made to
"ARCO Products Company, c/o Citibank Delaware, For Credit to APC National Credit
- - ACH #3815-2114, New Castle, Delaware 19720," and to no other bank or account
number unless so advised in writing by the Credit Manager, ARCO Products
Company. If such Agreement requires or permits payment by electronic funds
transfer ("EFT"), all such payments shall be made in strict accord with
procedures established and promulgated by the ARCO Products Company credit
department. Operator agrees to indemnify ARCO for any loss or expense caused by
Operator's failure to comply with this Paragraph. Payment shall be deemed made
when, and only when, its receipt has been verified by ARCO. Receipt by ARCO of
any monies due ARCO after notice of termination or nonrenewal does not
constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in
strict accordance with all applicable federal, state and local laws, ordinances,
rules, regulations and lawful directives or orders of public officials
administering such laws. Operator agrees to immediately notify ARCO, in writing,
of any citations, notices of violation or other communications alleging
violations of federal, state or local laws, ordinances, rules, regulations,
directives or orders, affecting the operation of the Store and Premises.
8.03 Operator represents and warrants that as of the date hereof
Operator is in compliance with all leases, contracts and agreements affecting
the Premises and Operator's use and possession of the Premises.
ARTICLE 9
Utilities
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9.01 Operator shall be solely responsible for all costs of and taxes
and assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
10.02 In addition to the requirements of Section 10.01, Operator shall
perform all maintenance, repairs, and replacement, as necessary, of the
Premises, Store and Store Equipment, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious physical
damage shall exclude damages by the elements and acts of God. ARCO shall make
all necessary repairs and replacements to the Loaned Store Equipment resulting
from each such incidence of accidental or malicious physical damage and deduct
all costs so incurred from Operator's security deposit and shall pursue
collection from the person(s) reported by Operator to ARCO as having caused such
damages. Immediately upon such deduction of costs so incurred, Operator shall
pay to ARCO an amount equal to that portion of the security deposit so deducted
so as to restore said security deposit to the amount set forth in PART I.
Operator agrees to execute and deliver any instruments and papers and do
whatever else is necessary or required in order for ARCO to pursue such
collection efforts on behalf of Operator for the amount deducted from Operator's
security deposit. If ARCO's collection efforts result in repayment for all costs
incurred by ARCO in making all necessary repairs and replacements for such an
incidence and in collecting such repayment, ARCO shall reimburse Operator for
the amount deducted from Operator's security deposit. If ARCO's collection
efforts result in partial repayment for all such costs incurred, ARCO shall
reimburse Operator only to the extent that the amount collected and the amount
deducted from Operator's security deposit taken together exceed the total amount
of cost of collection and of repair and replacement incurred by ARCO. Operator
shall return all Loaned Store Equipment to ARCO at the termination or expiration
of this Agreement in the same condition which existed at the time the Loaned
Store Equipment was delivered to Operator, subject to normal wear and tear.
Notwithstanding the foregoing, in the event of destruction of the
Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of such
termination shall relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to
be reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable
times and the right to remain on the Premises for examination and inspection of
the Premises, Store, Store Equipment, Operator's books, records and reports and
for any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost
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incurred in performing such maintenance and repair and the full replacement
cost, without discount or adjustment for any difference between the remaining
term of the franchise and the useful life of the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video
Surveillance equipment for its intended purpose consistent with the
manufacturer's instructions and ARCO's specifications and maintain at all times
the equipment, including all of its components, in good working order.
ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from
and against all claims, losses and damages for personal injury or death (whether
to third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
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Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in whatever form, shall be deemed to benefit
Operator. ARCO shall make no accounting to Operator of the expenditure of
advertising and promotion fees or promotional and other allowances. ARCO may
condition Operator's eligibility for and receipt of promotional, display and
other allowances on Operator's observance of maximum retail selling prices
determined by ARCO or maximum gross profit margins determined by ARCO or a
reduction in Franchisee's retail selling price commensurate with the amount of
the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
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13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A suggested
electronic file or the product file will also be available for the operation of
the Point of Sale scannable register(s).
14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and
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shall permit ARCO and its representatives to enter the Premises and the Store to
examine Operator's business records at all reasonable times. In addition, in
executing this Agreement, Operator grants ARCO the right to electronically
collect certain sales data via Operator's point-of-sale ("P.O.S.") system,
including scanning devices, for purposes of verifying fees and analyzing sales,
as more fully described in the am/pm Store Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance with the terms and
conditions of the franchise; in the event such mystery shops result in a fee
verification review/audit, regardless of whether such review discloses a
deficiency, Operator shall be required to pay ARCO its reasonable costs in
performing the review, including the then-current cost of the mystery shops
(currently $36 each). If a review or audit discloses a liability for royalty,
advertising and promotion fees due to ARCO, Operator shall pay promptly the
amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any
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authorization for release of statements and cancelled checks to ARCO as may be
requited in order for ARCO to obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall
provide reports, statements and data to ARCO as described below and as described
more fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty
fee calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the
service performing the inventory of the total amount of inventory in the
Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all
am/pm franchises, Operator shall provide to ARCO, or to an accounting
service designated by ARCO, such reports and data as are reasonably
requested by ARCO for such purposes and as are more fully described in
the Systems Manual. Such reports and data shall be in a format as
designated by ARCO and transmitted to ARCO, at ARCO's option, either by
diskette or electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise
Accounting System ("F.A.S."), which Operator is required to use, and other
bookkeeping, accounting and physical inventory services. Such services are more
fully described in the Systems Manual. Except for F.A.S., which Operator is
required to use, Operator may elect not to use the other bookkeeping, accounting
and inventory services offered by ARCO and may obtain, at its expense, any other
bookkeeping, accounting and inventory services for Operator's business as
Operator desires. Operator shall nevertheless be required to provide to ARCO, or
to an accounting service designated by ARCO, the information referred to in
Section 15.03.
15.05 The provisions of Article 15 shall survive termination or
expiration of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
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The person(s) required to attend and satisfactorily complete the
training programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
o The sole proprietor, if Operator is a sole proprietor;
o All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
o All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
o All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC). If
no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the general
partner, or if more than one, the general partners), all
shareholders in a corporation or all members in an LLC must
successfully complete the training programs.
2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below: If
Operator has more than one am/pm mini market, Operator must have one
employee who has attended and successfully completed an four week
am/pm Store Manager training program and who is employed on a full
time basis at each store.
16.02 Following is a description of ARCO training programs in
connection with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee,
or any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
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The initial franchisee training program is currently seven weeks, but
may be increased or decreased at ARCO's election, and may include nighttime
hours in connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's
assignee(s), who are required to pay tuition for the initial franchisee training
program at the then-current rate (currently the tuition for the 7-week program
is $15,000), no tuition shall be charged for the initial training program for
Operator, or for one or two employees eligible for training if they attend
before or within thirty-six (36) months after the Commencement Date of the
initial Store Agreement between Operator and ARCO for the Premises. Attendance
by additional persons shall be subject to tuition payable by Operator at the
current rate. The current tuition is $7,500 per additional person, but that is
subject to increase. Tuition must be paid, at ARCO's then-current rate for
initial training, for more than two persons, regardless of whether such persons
in excess of two are partners, shareholders or eligible employees of Operator.
If the franchise is transferred within thirty-six (36) months, a separate
training fee must be paid by the transferee even if only one person has been
trained up to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as
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may be mutually convenient, provided, however, that the cost of such additional
instruction, including transportation, food, lodging and reasonable charges for
time and services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the
Employee Training System, which replacement system will be required when
available. It is estimated that the replacement system will use CD-Rom
technology and will be utilized with personal computers. The current cost for
the training materials is estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of the transfer fee payable to ARCO in
the event of an assignment to a third party. If ARCO does not accept the offer
within 30 days, operator may assign to a third party subject to ARCO's prior
written consort. If Operator offers a lower price or more favorable terms which
have the effect of a lower price to the third party, ARCO's right of first
refusal shall be triggered again and Operator must make the offer to ARCO. If
Operator's proposed assignee has not enrolled in the next available training
school within 90 days after making the original offer to ARCO, the request
assignment will be considered abandoned by the Operator. A further request for
assignment will again trigger the right of first refusal. If the assignment has
not been completed within 210 days after making the original offer to ARCO, the
request for assignment will be considered abandoned by the operator. Any further
request for assignment will again trigger the right of first refusal. All
communications between ARCO and Operator with regard to the assignment, right of
first refusal, offers, withdrawals, changes in terms and acceptances must be in
writing. In any event, Operator may not assign this Agreement and Operator's
interest in the real property and improvements without the prior written consent
of ARCO, which consent shall not be unreasonably withheld. In order to allow
ARCO adequate time to process an assignment request, any such request for ARCO's
consent to an assignment received 45 days or less before the expiration of the
Store Agreement shall be considered for a subsequent Store Agreement between
Operator and ARCO, if such subsequent Agreement has been offered and accepted by
the parties, and shall be in compliance with the provisions of such subsequent
Agreement. Prior to giving its written consent, ARCO has the right to review or
audit Operator's business records, including but not limited to those relating
to the value
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of inventories at cost, and ARCO shall consider, among other things, the
qualifications, character, apparent ability and creditworthiness of the proposed
transferee and such other factors as ARCO deems appropriate, including but not
limited to the following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with
ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the
time of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of
an am/pm mini market, the proposed transferee and any employees who must
be trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training
tuition fee is due and payable by means of a cashier's check before the
proposed transferee begins training school. For prospective transferees,
the training tuition fee, which is payable by the prospective transferee
to ARCO regardless of whether or not the transferor is subject to
payment of a transfer fee, shall be refunded in full in the event ARCO
refines its consent to the transfer prior to the proposed transferee
attending ARCO's training program. In the event that ARCO refuses its
consent after the prospective transferee has started attending ARCO's
training program or the prospective transferee withdraws from the
training program, ARCO shall prorate the refund based on any remainder
of training to be completed. The training tuition fee is not refundable
in whole or in part upon completion of the training program. If the
proposed transferee is a sole proprietor or single shareholder
corporation, ARCO shall offer to train and not charge tuition for one
employee of the proposed transferee who attends the initial training
within twelve months after the effective date of the assignment. ARCO
shall not reimburse the proposed transferee for any expenses incurred in
connection with attendance at the training program of the transferee or
the transferee's employee. An initial supply of 20 uniforms must be
ordered by the transferee while attending ARCO's training program at
ARCO's training center. In addition, prior to the effective date of the
transfer and as a condition of ARCO granting its consent to the
transfer. ARCO shall require that the transferor has all then current
"Merchandising Accessories Items Required" on hand in the Store and in
good condition and that any such items that are no longer clean,
workable and presentable or outdated be replaced by items meeting ARCO's
then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent,
in the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the
effective date of the assignment, all of the agreements and Operator's
duties and obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's
rights under this Agreement and shall release and discharge ARCO from
all duties and obligations to Operator in connection with this Agreement
as of the effective date of the assignment; whereupon Operator
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shall have no further rights, duties or obligations under this
Agreement, except for those obligations that survive the termination of
the Store Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO
of all required approvals of federal, state and local governmental
entities, agencies or instrumentalities thereof or of any third person,
including but not limited to, approval for the transfer of, or issuance
of a new beer and wine license, if available in the jurisdiction in
which Operator's store is located
(i) The proposed transferee must satisfactorily meet the
then-current criteria established by ARCO for new am/pm Operators
including, but not limited to, passing an English proficiency test,
being at least 21 years of age and proof of U.S. citizenship or
permanent resident alien status (green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount
of the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be
deposited in escrow, Operator may, in accordance with ARCO's policies in
this regard, direct payment from such escrow of the remaining portion of
the applicable transfer fee to ARCO which must be paid before ARCO's
final consent to the assignment is given or (b) where the proposed
transferee's transfer price for the businesses shall not be deposited in
escrow, Operator may, in accordance with ARCO's policies in this regard,
pay the remaining portion of the applicable transfer fee by means of a
cashier's check payable to ARCO and given to ARCO before ARCO's final
consent to the assignment is given. In the event that ARCO refuses its
consent to the proposed assignment prior to the proposed transferee
attending ARCO's training program, ARCO shall refund all but $1,000 of
any transfer fee paid. In the event that ARCO refuses its consent to the
proposed assignment because the-proposed transferee does not pass the
English proficiency test and before the proposed transferee attends
training school, ARCO shall refund all but $300 of any transfer fee
paid. Otherwise, the transfer fee is not refundable in whole or in part
and shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event
that Operator requests ARCO to consent to an assignment of Operator's
franchise to: (1) Operator's spouse, adult natural or adopted child, or
parent; (2) a sole proprietorship in which the current shareholder of
Operator, which is a single shareholder corporation, shall be the sole
proprietor, (3) a partnership in which there are only two partners,
current Operator as an individual and one other person, and in which the
current Operator has at least a fifty percent interest; (4) a
corporation in which there are only two shareholders, current Operator
as an individual and one other person, and in which the sole shareholder
of the current Operator has at least fifty percent of the issued and
outstanding voting shares of stock; (5) a corporation in which current
Operator, as an individual shareholder, owns one hundred percent of the
issued and outstanding voting shares of stock; (6) if Operator is a
corporation, the transfer of less than fifty percent of the issued and
outstanding voting shares of stock; or (7) the dissolution of a
two-partner partnership or a two-shareholder corporation resulting in
one of the former partners remaining as the sole proprietor, or one of
the former shareholders remaining as the sole shareholder of the
corporation or as a sole proprietor and the remaining partner or
shareholder or sole proprietor had at least a fifty percent interest in
the partnership or corporation prior to the dissolution.
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ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through merger,
consolidation, organization or reorganization without the prior written consent
of ARCO and except upon such terms and conditions as ARCO shall then require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent to
any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights
or interests under this Agreement and Operator's interest in the real property
and improvements without having received the
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prior written consent of ARCO shall constitute a material breach of this
Agreement and ARCO shall have the right to terminate this Agreement upon written
notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all
or any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations
hereunder and fails to cure such default within thirty (30) days after receipt
of written notice of default from Operator, Operator shall have the right to
terminate this Agreement by giving ARCO not less than fifteen (15) days' prior
written notice of termination.
18.02 This Agreement may be terminated at any time by mutual agreement
in writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business
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of the am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results in
Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance with
the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner or
the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in-interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or all
or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate Designee
or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or more
in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business or
system.
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n. ARCO makes a reasonable determination that continued operation
of the franchise by the Operator will result in an imminent
danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of the
Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of such
termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service mark or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service mark or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove
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any loaned am/pm Store Equipment and to de-identify any Operator
owned equipment that bears the service mark or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to enter
the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article 1
hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
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Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j)
above, this Agreement shall not terminate upon the death or incapacitation for
more than 90 consecutive days, of Operator if Operator, prior to his or her
death or incapacitation, designates a successor-in-interest to his or her
interest in this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator
is a sole proprietor, the sole proprietor, if Operator is a partnership, a
partner of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days
after the death or incapacitation, for more than 90 consecutive days, of
Operator to give written notice of his or her intention (the "Notice of
Intention") to assume and operate the franchise or, in the case of a
successor-in-interest to the corporate designer, written notice of his or her
intention to personally guarantee performance hereof by the corporate
franchisee. The notification shall contain such information regarding business
experience and creditworthiness as is reasonably required by ARCO. Except as
described more fully below, unless the successor-in-interest has previously been
trained by ARCO pursuant to ARCO's current 7 week training program for the
operation of an am/pm mini market, the successor-in-interest must attend and
successfully complete such training as is then required by ARCO for new
franchisees and within 21 days after giving the Notice of Intention commence
such training. In addition, ARCO must approve or disapprove the
successor-in-interest within 10 days after the successor-interest completes such
training. If the successor-in-interest successfully completes training and is
approved by ARCO, ARCO shall give notice of approval to the
successor-in-interest and the successor-in-interest must commence operation of
the franchise (or execute a guarantee of performance by a corporate franchisee)
within 10 days after receipt of such notice by ARCO. The successor-in-interest
shall be required to pay tuition at the then-current rate for assignees and
successors-in-intent. Provided, however, that if there is an Operational
Designee who is different from the Corporate Designee successor-in-interest, it
is the Operational Designee, who must attend and successfully complete the
initial training, unless such Operational Designee has previously been gained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market. An initial supply of 20 uniforms must be ordered by the
successor-in-interest while attending ARCO's training program at ARCO's training
center.
20.04 The franchise available to the successor-in-interest pursuant
hereto is intended to be no greater than the franchise as it exists in the name
of the deceased or incapacitated Operator (or, in the case of a corporate
franchisee, with the deceased or incapacitated Operator as Guarantor) at the
time of such Operator's death or incapacitation. The term of the franchise shall
not be extended by reason of the successor-in-interest assuming (or
guaranteeing) the franchise and ARCO may change the terms of the
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franchise upon its renewal, if it is renewed. ARCO may require Operator to
arrange for the discharge or performance of other franchise obligations such as,
but not limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate
successor-in-interest. The alternate, if one is designated, shall have no right
to assume and operate (or guarantee) the franchise or Operator's interest in the
franchise, as applicable, in the event of any exercise of rights by the primary
successor-in-interest. If the alternate desires to assume and operate (or
guarantee) the franchise or Operator's interest in the franchise, as applicable,
in the event the primary successor-in-interest, fails to do so the alternate
must give notice of intention to do so and otherwise comply with Section 20.03.
(In the case of Concurrent Operations, the primary successor-in-interest, if one
is designated, must be one and the same person designated as the primary
successor-in-interest to succeed to Operator's interest in all agreements
relating to all businesses conducted at the Premises; the alternate successor,
if one is designated, must be one and the same person designated as the
alternate successor-in-interest to succeed to Operator's interest in all
agreements relating to all businesses conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no
operation of the franchise following the death or incapacitation of Operator by
anyone until all parts of the franchise have been expressly assumed as herein
provided, including, but not limited to, such items as licensing and tax
permits.
20.07 If the successor-in-interest assumes the franchise (or, in the
cast of a corporate franchisee, guarantees the franchise), the
successor-in-interest shall account to the heirs or estate of the deceased or
incapacitated Operator (or, in the case of a corporate franchisee, to the
corporation) for the value or other disposition of personal property of the
Operator located at or related to the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO
each incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals, as
from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral representations,
stipulations, warranties or understandings, express or implied, with respect to
the subject matter of this Agreement which are not fully set forth herein and in
the Manuals, and all prior or contemporaneous promises, representations,
agreements or understandings, express or implied, in connection with the Store
and the am/pm franchise are expressly merged herein and in the Manuals
incorporated herein by reference.
21.04 Compliance with Applicable Laws. In the event any provisions of
this Agreement provide for periods of notice less than those required by
applicable law, provide for termination other than in accordance with applicable
law or are otherwise inconsistent with applicable law, to the extent such
provisions are inconsistent with applicable law, they shall not be effective and
ARCO and Operator shall comply with applicable law regarding such matters.
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21.05 Excused Performance. In the event that either party hereto shall
be delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If the
excused performance is for a period less than a full month, the minimum royalty
fee shall be prorated for such partial month and Operator shall pay, as a
royalty fee for such month, the greater of the royalty fee based on a percentage
of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices required
or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require performance
of any provision of this Agreement shall not affect either party's right to
require full performance thereof at any time thereafter and the waiver by either
Operator or ARCO of any provision hereof shall not constitute or be deemed a
waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration, modification
or waiver of any provision of this Agreement shall be of any effect unless in
writing and signed by Operator and an authorized representative of ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior to
such execution hereof by ARCO shall not be construed as a waiver by ARCO of this
requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include
the masculine, feminine and neuter pronouns.
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Facility: 82063
STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
facility located at 13001 Stockdale Hwy., Bakersfield, California 93312 hereby
represents and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this
facility other than as income, earnings, inheritances, gifts or other
non-investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above,
as well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including
without limitation any misrepresentations regarding assets, debts,
credit status and history, investments and loans and regarding partners,
stockholders, stakeholders, backers, other investors or lenders and
regarding citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ John Castellucci 9-2-99
- ------------------------------------------- ----------------------------------
LLO-Gas, Inc. Date
<PAGE>
Exhibit 10.32
Customer Acct # 0883355
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Facility # 82064
-----
CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
- --------- ----
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and
LLO-Gas, Inc.
- -------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, corporation or limited
liability company [LLC]; if partnership, the names
a Corporation ("Buyer").
- --------------------------------------------------------------
of all partners and State of organization; if corporation, the State of
incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
-------------------- --
Palma, in the State of California. Buyer's principal place of business is
- ----- ----------
located at 23805 Stuart Ranch Road, Suite 265 in the City of Malibu, in the
---------------------------------- ------
State of California with the ZIP code 90265. This Agreement constitutes a
---------- -----
"franchise" as defined in the Petroleum Marketing Practices Act, 15 U.S.C.
(S)(S) 2801-2806 ("PMPA").
Recitals
--------
A. ARCO markets motor fuels comprising gasolines and gasoline containing
materials bearing the ARCO(R) trademark and other identifying symbols (herein
collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and improvements
which Buyer would like to operate as a retail facility selling Gasoline to end
users. The property and improvements are located at 13001 Stockdale Highway, in
-----------------------
the city or town of Bakersfield in the State of California with the ZIP code
----------- ----------
93312. (The "Premises").
- -----
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective
----
on the date first set forth above. Subject to earlier termination under
Paragraph 17.1 below, the "Commencement Date" of this Agreement shall begin at
10:00 a.m. on the _____ day of _______________, _____ and the term shall end at
10:00 a.m. on the _____ day of _______________, _____. If no Commencement Date
is set forth, at the time this Agreement is executed, the Commencement Date
shall be established by ARCO by notice to Buyer as the date the Premises are
ready to receive Gasoline delivery, which notice shall also set forth the
expiration date which shall be 15 years after the Commencement Date.
--
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2. Orders. Buyer will order and make available for retail sale all
------
grades of Gasoline which ARCO offers to Buyer (hereinafter collectively,
"Product"), in amounts sufficient to satisfy all foreseeable retail customer
demand for Product at the Premises and will at all times have available for sale
some of each grade of Product, subject only to allocation of Product by ARCO in
a manner determined in ARCO's sole discretion in Buyer's geographic area. ARCO
will use its best efforts to fill Buyer's orders; however, ARCO may discontinue
sale of any grade of Product at any time upon fifteen (15) calendar days' prior
written notice to Buyer. ARCO reserves the right to provide automatic Gasoline
ordering and delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
--------------
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
--------
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
------
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
-------
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require
a product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
Page 2 of 21
<PAGE>
financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend
------
credit to Buyer in whatever amounts, and on whatever terms ARCO alone selects.
If ARCO extends Buyer credit, ARCO may withdraw it at any time without notice
and for any reason. In ARCO's sole judgment, ARCO may do any or all of the
following: (i) require that Buyer pay for Product by cashier's check, money
order or bank wire transfer prior to delivery, (ii) require that Buyer post as
irrevocable letter of credit issued by a bank satisfactory to ARCO, (iii)
require Buyer present evidence of financial solvency, and (iv) declare Buyer in
default of this Agreement if Buyer fails to pay any indebtedness when due,
provide evidence of financial solvency upon request or comply with any other
term of this Agreement. Buyer agrees that regardless of whether and for how
long ARCO has extended it credit, ARCO may cease extending credit at any time
and instead require that payment be made in the manner set forth in this
Paragraph or in Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact
----------------
nature of any nonconformity in the type, quantity or price of any Product
delivered to Buyer within thirty (30) calendar days after delivery. Buyer
hereby waives any claim against ARCO based on any nonconformity of which Buyer
does not so notify ARCO.
Page 3 of 21
<PAGE>
9. Record Keeping. For each delivery of Product, Buyer shall at all
--------------
times keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
---------
10.A Storage and Dispensers. Buyer will maintain storage tanks or
----------------------
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
-------------
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection with
the operation of ARCO authorized businesses. Buyer agrees not to tamper with,
alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair of
the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
Page 4 of 21
<PAGE>
manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed and
bonded armored security service to do the following: make cash pick ups at least
3 times per week, maintain possession of all keys to the outer door and the
vault of the PIC Equipment, handle all removal of cash cassettes from the PIC
Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video Surveillance
Equipment Program. In addition, Buyer must install, keep operational and use one
or more video surveillance cameras dedicated to recording the customer activity
at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to use
the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required to
upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that
-----------------------------
with respect to any Product storage facilities located on the Premises,
including without limitation underground storage tanks and related equipment,
Buyer is solely responsible for taking, and will take the following leak and
water contamination prevention and detection measures:
Page 5 of 21
<PAGE>
11.1 Stick Readings. Using a properly calibrated wooden tank
--------------
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
---------------
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
----------------
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
----------
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
---------------------
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
------------
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a
leak is confirmed all Product must be removed from the storage tanks immediately
and the tanks secured. In addition, Buyer will keep fill caps tight, keep fill
boxes free of dirt, ice and snow, and immediately remove any water in excess of
one inch (1") in any Product storage tank.
12. Gasoline Regulations.
--------------------
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
--------
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
Page 6 of 21
<PAGE>
12.2 Disclosures and Warnings. Buyer acknowledges that it has been
------------------------
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
-----
13.1 Payment by Buyer. Buyer will pay promptly when due and hold ARCO
----------------
harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
-------------------------------------
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor fuel
---------------
seller number and use tax registration number. Further, Buyer will provide ARCO
with any information requested by ARCO relating to tax credits claimed by Buyer
for motor fuel, sales, use and other taxes paid by Buyer in connection with the
Product for the purpose of resolving any threatened or pending tax dispute with
any governmental authority or for the purpose of confirming Buyer's compliance
with the terms of this Agreement.
14. Trademarks and Trade Dress.
--------------------------
14.1 Compliance. Within one hundred fifty (150) calendar days after
----------
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
Page 7 of 21
<PAGE>
otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
--------
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or
their manner of display without prior notice to Buyer. Upon receiving notice of
any withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the cost
---------------
of acquiring, transporting and installing certain signs and other trade dress
required hereunder and set forth is Exhibit B, as specified below. The amount
of such reimbursement shall be the lesser of (i) one half of Buyer's actual
verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing
reimbursement shall be in writing and accompanied by all original invoices (of
Page 8 of 21
<PAGE>
which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that
the trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other
remedies available to it, ARCO may offset against any amounts owed to Buyer, the
amount of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph
14.3, Buyer may be obliged to pay ARCO for any reimbursements received and
direct vendor payments made by ARCO hereunder upon the termination or nonrenewal
of this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
------------
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained
by Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
------------------------------
15.1 Compliance With Laws and Regulations. Buyer shall comply with
------------------------------------
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
Page 9 of 21
<PAGE>
any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
---------------
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
------------------------------
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of
---------
this Agreement each of the following forms of insurance from a financially sound
and reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with products-
completed operations coverage in amounts of at least $1,000,000 combined single
limit each occurrence applicable to personal injury, sickness or death and loss
of or damage to property (with liquor law liability coverage if Buyer will sell
or dispense alcoholic beverages), on which ARCO is named as an additional
insured. Buyer will furnish ARCO with certificates of insurance evidencing the
foregoing coverage and providing that no policy of insurance may be canceled or
materially modified without at least thirty (30) calendar days' prior written
notice to ARCO.
Page 10 of 21
<PAGE>
17. Termination and Nonrenewal.
--------------------------
17.1 Triggering Events for Termination or Nonrenewal. In addition to
-----------------------------------------------
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out the
provisions of this Agreement following written notice to Buyer from ARCO of such
failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial determination
of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the prolonged
severe physical or mental disability or disablement of Buyer (if Buyer is an
individual). Buyer's majority shareholder (if Buyer is a corporation) or any of
Buyer's general partners (if Buyer is a partnership) for at least three (3)
months which renders Buyer unable to provide for the continued proper operation
of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of the
Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO is
legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(l) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
Page 11 of 21
<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a Loan
Agreement and Security Agreement and Related Promissory Note, and Buyer fails to
cure any default under the foregoing Loan Agreement, Loan Agreement and Security
Agreement and Promissory Note as requested, ARCO may terminate this Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
--------------------------------
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe and
healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal course
of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
Page 12 of 21
<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
-----------------------------------
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for the
supply of Product at the Premises, Buyer will repay ARCO all reimbursements and
direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for the
supply of Product at the Premises with a term of more than one year and Buyer
has been a party to an agreement regarding the Premises with ARCO for the supply
of Product for less than thirty-six months, then after the first twelve months
Buyer will pay ARCO, on a pro rata basis as described below, the amount of all
--- ----
reimbursements and direct payments made by ARCO under Paragraph 14.3 upon the
mutual termination of this Agreement or termination or nonrenewal by Buyer or by
ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
--- ----
amount
Page 13 of 21
<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the total of
the reimbursements and direct payments made by ARCO under Paragraph 14.3 times
(a) two-thirds during the thirteenth through twenty-fourth month of this
Agreement or (b) one-third during the twenty-fifth through thirty-sixth month of
this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
-------------------------------------------------------------
18.1 Assignment. Buyer will not sell, assign, give or otherwise
----------
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
----------------------
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If
ARCO does not exercise its right of first refusal, Buyer may consummate the
proposed transfer, but not at lower price or on more favorable terms than those
offered to ARCO. If Buyer does not do so within ninety (90) calendar days from
the date ARCO received Buyer's written offer, then Buyer must recommence the
foregoing right of first refusal procedure and satisfy the requirements of this
Paragraph 18.2. ARCO's exercise of its right of first refusal shall not be
dependent on its prior refusal to approve the proposed transferee. Buyer agrees
to execute a memorandum of this
Page 14 of 21
<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
----------------------
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
----------------------
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
-------------
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
--------------
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
-------------
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
Page 15 of 21
<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
-------
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
---------------------------
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
------
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all applicable
----------
government requirements and obtain and maintain all necessary licenses and
permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
---------
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
-----------------------
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver such
------------------
other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO may
---------------
establish additional ARCO or other brand or no brand Gasoline facilities in any
location and proximity to the Premises.
Page 16 of 21
<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise be
--------------
governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this Agreement
-------------------
are intended solely for convenience of reference and shall not in any way or
manner amplify, limit, modify or otherwise affect the interpretation of any
provision of this Agreement, and the neuter gender and the singular or plural
number shall be deemed to include the other genders or numbers whenever the
context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
----------------
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castillucci
- -------------------------------- -----------------------------------------
Name Name /s/John Castillucci
Title: Manager Title: President
-------------------------- -----------------------------------
Witness: /s/ Denise Newton Witness: /s/ Denise Newton
------------------------ ---------------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
Page 17 of 21
<PAGE>
trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
- -------------------------------- -----------------------------------------
Name Name
Title: Title:
-------------------------- -----------------------------------
Witness: Witness:
------------------------ ---------------------------------
Page 18 of 21
<PAGE>
Exhibit A
Trade Dress Requirements
------------------------
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
Page 19 of 21
<PAGE>
Exhibit B
Shared Trade Dress Costs
------------------------
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- -------------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs -
Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
Page 20 of 21
<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- -------------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
and (2) Hughes Indoor Unit - Satellite
Receiver (3) Deicer (if required for
colder climate)
</TABLE>
Page 21 of 21
<PAGE>
Exhibit 10.33
AMENDMENT TO CONTRACT
DEALER GASOLINE AGREEMENT
(Branded Diesel Fuel)
Facility: 82063
Customer Account: 0883348
THIS AMENDMENT, dated as of Sept. 2, 1999, amends the Contract Dealer Gasoline
Agreement ("Agreement") dated Sept. 2, 1999, between ARCO Products Company (a
division of Atlantic Richfield Company, incorporated in Delaware) ("ARCO") and
LLO-Gas, Inc. ("Buyer") with delivery premises at 13001 Stockdale Hwy.,
Bakersfield, California 93312 ("Premises").
It is hereby agreed by and between the parties that effective on the date
written above or the Commencement Date of the Agreement, whichever is later, the
Agreement is hereby amended to provide that except as set forthbelow, any
references to "motor fuels comprising gasolines and gasoline-containing
materials bearing the ARCO trademark and other identifying symbols," "gasoline"
and "product" shall be construed to include such motor fuels comprising diesel
fuel and diesel fuel-containing materials bearing the ARCO trademark and other
identifying symbols ("ARCO branded diesel fuels and diesel fuel-containing
materials") as Buyer may purchase and receive from ARCO and ARCO may sell and
deliver to Buyer at the Premises during the term hereof.
It is understood and agreed by and between the parties that Temporary Voluntary
Allowances ("TVA's") are not applicable to diesel fuel or diesel fuel-containing
materials and, therefore, the terms and conditions relating to TVA's set forth
in the Prices provisions, Paragraph 5 of the Agreement, are not amended and
supplemented by this Amendment. It is further understood and agreed by and
between the parties that, except as herein specifically amended and
supplemented, all other terms and conditions of the Agreement, as previously
amended and supplemented, shall be and remain in full force and effect.
This Amendment automatically supercedes and terminates, as of the Effective Date
hereof, any and all other contracts, agreements or understandings between the
parties covering the sale and delivery of ARCO branded fuels and diesel
fuel-containing materials to Buyer at the Premises for resale therefrom.
BUYER ACKNOWLEDGES THAT BUYER HAS READ THIS AMENDMENT AND FULLY UNDERSTANDS ALL
OF THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
This Amendment is not binding until executed by Buyer and by an authorized
officer or manager of ARCO.
IN WITNESS WHEREOF, the parties have executed this Amendment.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9/2/99
- ------------------------------------- ----------------------------------
Date Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
- ------------------------------------- ----------------------------------
Date Date
<PAGE>
Exhibit 10.34
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Denise Newton
Street: 4 Centerpointe Drive
City &: La Palma
State:California 90623-1066
- --------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
Facility: 82063
-----
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated September 2,
1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located at 13001
Stockdale Hwy.. Bakersfield, California 93312, and ARCO Products Company, a
division of Atlantic Richfield Company, a Delaware corporation, with offices at
1055 West Seventh Street (P.O. Box 2570) in Los Angeles, California 90051-0570
("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of13001 Stockdale Hwy.,
in the city of Bakersfield, in the state of California, and more specifically
described in Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in
that certain Contract Dealer Gasoline Agreement between the parties hereto,
dated, _________, and this Memorandum of Contract Dealer Gasoline Agreement is
subject to all the covenants, conditions and terms set forth in that Agreement,
which is hereby adopted herein and made a part hereof as if all the covenants,
conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
By: /s/ John Castellucci
-------------------------------------
John D. Castellucci
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
-------------------------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
County of Orange
On 9/2/99 before me, Hollie Johnson, Notary Public
--------- --------------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE, NOTARY PUBLIC
personally appeared John Castellucci and Connie Carroll
----------------------------------------------------------
|X| proved to me on the basis of satisfactory
evidence to be the person(s) whose names)
[S E A L] are subscribed to the within instrument
and acknowledged to me that they executed
the same in their authorized
capacity(ies), and that by their
signatures(s) on the instrument the
person(s), or the entity upon behalf of
which the person(s) acted, executed the
instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-----------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
|_| INDIVIDUAL
|X| CORPORATE OFFICER
President/Manager Memorandum of CDGA 82063
- ------------------------------------ --------------------------------------
TITLE OR TYPE OF DOCUMENTS
|_| PARTNERS |_| LIMITED
|_| GENERAL 1
--------------------------------------
NUMBER OF PAGES
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: 9/2/99
--------------------------------
- ----------
<PAGE>
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- ------------------------------------ --------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
ARCO PRODUCTS CO.
- ------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.35
Facility Number: 82063
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc.
("Franchisee"), the operator of an ARCO location located at 4100
California Ave., Bakersfield, California 93309 ("Facility").
1. Agreement
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain
products or services may be purchased or performed, e.g. that gasoline may
be pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or
service or receiving cash or a refund from Franchisee through use of the
PayPoint Network to which a participating Financial Institution responds
with an approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute
agreements with Franchisor to participate in or provide services through
the PayPoint Network.
3. PayPoint Network Description
The PayPoint Network shall enable Cardholders to receive cash or to pay
for purchases of products and services by means other than cash, money
order or check. Each Cardholder shall use an access card to initiate a
Transaction. Franchisee shall promptly honor all valid access cards when
presented by Cardholders and shall treat Cardholders from all
participating Financial Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use one or more
Island Card Reader devices ("ICR Device") that are in communication with
the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key
pad. The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via
the PayPoint Account(s). Franchisee shall not permit anyone to complete a
Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between
Franchisee and Franchisor or, where applicable, the first day of the
thirteenth month following the Commencement Date, Franchisee shall pay to
Franchisor, for participation in the PayPoint Network, transaction fees in
the amount set forth on Exhibit A, which is incorporated herein, made a
part hereof and attached hereto. Such fees shall be due and payable to
Franchisor on or before the tenth day of the month following the month in
which such fees were incurred during the term of this Addendum. Provided,
however, that if Franchisee installs and ICR device at the Facility prior
to the Commencement Date and operates it thereafter, Franchisee shall pay
no fees for participation in the PayPoint Network for the first twelve
months following the Commencement Date and 50% of the applicable fees for
the balance of the term of this Agreement. The term "Commencement Date"
shall mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a
Cardholder at the Facility, is provided to Franchisee through the PayPoint
Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a
new Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee ARCO Retailer) and Franchisee has installed and is operating an
ICR Device and is therefore eligible for the waiver of transaction fees as
set forth above, Franchisee shall pay no transaction fees for
participation in the PayPoint Network for the number of months remaining
of the original twelve month waiver period following the original
Commencement Date referred to in this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to
terminate this Addendum at the end of the thirteenth month following the
Commencement Date, as provided below for Franchisees on their initial
PayPoint agreement, Franchisee shall pay Franchisor as set forth on
Exhibit D, attached hereto, incorporated herein and made a part hereof,
for disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and
sales, use, rental, gross receipts, inventory, excise, income and any
other taxes (including interest, penalties, and additions to tax) imposed
by any federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this
Addendum. Franchisee agrees to pay promptly when due and to hold
Franchisor harmless from all sales or use taxes and other similar taxes
(including interest, penalties and additions to tax) imposed upon or with
respect to charges or the use of any loaned property. Franchisee shall
furnish to Franchisor, promptly upon request, any documentation, which in
Franchisor's discretion is required to evidence the payment of any tax,
including, but not limited to, official receipts of the appropriate taxing
authorities, copies of tax returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving
Franchisor at least 30 days prior written notice, to terminate this
Addendum; to downgrade the number of PayPoint Electronic Cashiers (Island
CardReaders), if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
Franchisee shall require each Cardholder to enter his or her PIN on the
POS Equipment at the Facility in order to initiate a Transaction, except
to complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be
transmitted "in the clear."
6. Transaction Approval or Denial
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint
Network
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
Franchisor and Franchisee shall cooperate to resolve any system
malfunction or problem that interrupts normal operation of the PayPoint
Network. Franchisor shall provide instructions and procedures for the
handling of Transactions that are initiated when communications between
Franchisor, the participating Financial Institutions and the Franchisee
location are interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
Cardholder refund transactions shall not be processed electronically, ,
but shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has
not forwarded such amount to Franchisor within a period of time specified
in a notice to the Franchisee. Such third party beneficiary rights shall
be enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
(a) Cardholder Disputes
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time
limits. Franchisee agrees to cooperate with Franchisor and participating
Financial Institutions to resolve Cardholder disputes or inquiries about
PayPoint Network Transactions. To facilitate resolution of Cardholder
disputes, Franchisee shall retain, for a period of at least one hundred
eighty (180) days, copies of receipts issued to Cardholders pursuant to
Paragraph 10 of this Addendum, or reports from which Transaction
information can be retrieved. In response to an oral request by Franchisor
or a participating Financial Institution, to be confirmed in writing,
Franchisee shall, within three (3) Working Days of the oral request, send
documentation to Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the
requested information within three (3) Working Days, Franchisor shall, at
the request of the participating Financial Institution, debit Franchisee's
Trade Statement or electronically debit the Retailer's Account, for the
amount disputed by the Cardholder and credit, through the participating
Financial Institution, the Cardholder's deposit account for the amount
disputed. The obligations of this Paragraph 11 shall survive termination
of this Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by
check.
(c) Disputes Over-Merchandise or Service
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with
Cardholders and shall indemnify and hold Franchisor and participating
Financial Institutions harmless from any claim, action, damage or expense,
including strict liability in tort, arising out of such disputes or the
sale of goods or services by Franchisee; provided, however, to the extent
Franchisee's petroleum or non-petroleum franchise agreements, if any, are
contrary to this provision as to Franchisor, such petroleum or
non-petroleum franchise agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right
to debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
Franchisor shall process all approved Transactions captured each
Settlement Day and any preceding non-Settlement Day and make arrangements
for the funds to which Franchisee is entitled to be deposited into his or
her Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by
way of the POS Terminal, if possible; otherwise, by way of, written
reports. Franchisor shall also mail to Franchisee, on request, summary
reports of PayPoint Network Transactions at the Facility.
14. Term: Termination
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer,"
i.e., a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum
for any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating
Financial Institutions' trademarks, trade names and trade indicia and
shall remove all decals and signs indicating Franchisee's participation in
the PayPoint Network and, if Franchisee is terminated for cause or because
he/she has been designated a Special Franchisee, Franchisee shall pay the
applicable amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in
the PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
Franchisee acknowledges that all information that is disclosed to, or
comes to the attention of Franchisee for purposes of the development or
operation of any aspect of the PayPoint Network (herein "Information") is
strictly confidential. Franchisee agrees that Franchisee shall not use for
any purpose other than Franchisee's use of the PayPoint Network or
disclose said Information or knowingly permit Franchisee's employees or
contractors to disclose said Information to any person outside Franchisor
and Franchisee, or to any employee or contractor of Franchisor or
Franchisee who does not have a specific need to know in performance of
work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of
information relating to sales by Franchisee (herein "Sales Information")
other than to Financial Institutions and other third parties who require
access to Sales Information for purposes relating to Franchisee's use of
or Franchisor's operation of the PayPoint Network. Franchisor's obligation
of non-disclosure shall not apply to any Sales Information which is or
becomes available to the public other than through breach of this Addendum
by Franchisor. It is presently Franchisor's policy (which may be changed
at any time by Franchisor at its sole option without notice) to destroy
all records of Sales Information after two (2) years. Franchisor's
obligation of non-disclosure with respect to Sales Information shall
terminate upon destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved
by Franchisor and such equipment is maintained in good operating order and
is operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the
PayPoint Network, and to satisfy itself that services are being provided
to the public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or
such institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any
time by giving Franchisee not less than thirty (30) days prior written
notice thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor,
it is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering
or defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks
and any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such
prior written consent shall be void and any assignment or delegation to
which Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfield Company
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9-2-99
- --------------------------------------- ---------------------------------
Date LLO-Gas, Inc. Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
- --------------------------------------- ---------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
- --------------------------------------------------------------------------------
PayPoint Network Fees
Transactions per Month Fee per Transaction
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line --
installation costs plus monthly phone charge including per item phone
calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial
institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be
notified via telephone. The switch contact person will provide the
Franchisee with the data furnished by the financial institution and
request a copy of the cardholder receipt and/or a copy of the
Management Report Printer (MRP) report showing the disputed
transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one
(1) working day of the telephone call. A copy of this form is
attached.
6) The Franchisee will have only three (3) working days after receipt
of the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of
the customer receipt and/or MRP report (the same information
furnished to the financial institution) to the Franchisor switch
within one (1) working day of sending the information to the
financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
RETAILER: ______________________________________________________________________
ADDRESS: _______________________________________________________________________
CITY: __________________________________________________________________________
STATE/ZIP CODE: ________________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO. ____________________________________________________________________
AT _____________________________________________________________________________
BRANCH NO. _____________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:______________________________________
TITLE:___________________________________
DATE:____________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
CLAIM NO.:______________________________________________________________________
DATE CLAIM RECEIVED:____________________________________________________________
TODAY'S DATE:___________________________________________________________________
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:____________________________________________________________________
TRANSACTION AMOUNT: ________________ TRANSACTION DATE: ________________________
TRANSACTION TIME: __________________ REFERENCE NO. ____________________________
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION: _________________________________________________________
ADDRESS: _______________________________________________________________________
CONTACT PERSON: ________________________________________________________________
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION IF "REQUESTED
INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME: __________________________________________________________________________
ADDRESS: _______________________________________________________________________
DATE INFORMATION SENT TO FINANCIAL INSTITUTION: ________________________________
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
Telephone Line Disconnection $ 200.00
Each Inside Terminal Disconnection and Removal $ 200.00
Each Outside Terminal Disconnection and Removal $ 400.00
<PAGE>
Exhibit 10.36
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 05972
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Real Estate to Contract Deafer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer LD. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached
Exhibit "A". Seller's interest in the Real Estate is a fee interest in the
entirety of the Real Estate, except as otherwise stated in Exhibit "A".
Seller's interest includes the ownership of the improvements that are
located on or under the land that Seller owns in fee, including without
limitation underground storage tanks and gasoline pipelines. The principal
parcel of land included in the Real Estate is commonly known as:
Street Address: 64200 20th Street
City, State, ZIP Code: North Palm Springs, California 92258
County: Riverside
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the
attached Exhibit "B".
2
<PAGE>
Deposit: $20,000.00 by Buyer's check payable to Escrow Holder
Purchase Price: $800,000.00
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Stinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: [ILLEGIBLE NO.]
---------------
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction") will
be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed; Mineral Reservation. Seller shall convey the Real Estate to
-----------------------------
Buyer by a Corporation Grant Deed (the "Deed"). In the Deed, Seller will
reserve the
3
<PAGE>
rights, below the depth of 500 feet, to minerals and oil, gas, and other
hydrocarbon substances in and under the land being sold, but without the right
of surface entry.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Business Agreement, the Companion Real
Estate Agreements, and the Companion Business Agreements, Seller
has confirmed that (i) Seller is ready and committed to close
those transactions or (ii) if the transaction is being handled
through an escrow, Seller has received notice from the escrow
holder that the escrow holder is ready and committed to close the
escrow.
(b) Other Closing Conditions. All closing conditions for that party's
benefit contained in provisions of this Agreement other than this
Section 6.3 have been satisfied, or will be satisfied as a part
of the closing.
4
<PAGE>
(c) Other Party's Obligations. atq ions. The other party has
performed all its obligations under this Agreement to be
performed before the closing, or will perform those obligations
as a part of the closing.
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The Memorandum
------------------------------------------------
of Contract Dealer Gasoline Agreement (the "Memorandum") referred
to in Section 6.3(c) of the Business Agreement, signed and
acknowledged by Seller, through its division ARCO Products
Company;
(c) Withholding Certifications. (i) A Certification of Non-Foreign
--------------------------
Person Status with respect to Seller's exemption from federal
income tax withholding in connection with the Transaction and
(ii) a comparable certification with respect to Seller's
exemption from state income tax withholding in connection with
the Transaction, if the state in which the Real Estate is located
imposes a withholding requirement on Buyer for income tax that
Seller might owe to the state in connection with the Transaction,
each of which certifications must meet the requirements of
applicable laws and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum; signed and acknowledged by Buyer;
----------
(b) Right of First Refusal Agreement. The Right of (as defined in
--------------------------------
Section 14), signed and First Refusal Agreement acknowledged by
Buyer;
(c) Environmental Declaration. The Environmental Declaration (as
-------------------------
defined in Section 12), signed and acknowledged by Buyer;
5
<PAGE>
(d) Cash. Cash or immediately available funds to pay Purchase Price
----
and Buyer's share of closing the balance of the costs and
prorations; and
(e) Other Documents and Funds. All other funds reasonably required
-------------------------
to complete the instruments, documents, and Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the following documents in the Official Records of the County, in the
following order: The Deed, the Memorandum, the Right of Refusal Agreement, the
Option Agreement, and the Environmental Declaration. These documents must be
recorded before any documents benefiting any lender or other third party are
recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is committed to issue
an ALTA Standard Coverage Owner's Policy of Title Insurance (the "Title Policy")
insuring Buyer in the amount of the Purchase Price upon the close of Escrow. The
Title Policy must insure Buyer's title to the Real Estate subject to only (i)
the standard exclusions and exceptions of the policy form, (ii) nondelinquent
taxes and assessments, and (iii) the Permitted Exceptions (as defined in Section
9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for title
insurance, if the Real Estate is located in a state where title insurers do not
issue preliminary title reports) (in either case, the "Report") covering the
condition of title to the Real Estate. Unless Buyer gives Seller written
notice, within ten days after receiving the Report, objecting to matters shown
in the Report, Buyer will be considered to have approved the condition of title
as shown in the Report. If Buyer so objects to any matter (each, a "Disapproved
Matter") shown in the Report, Seller will have 30 days after receiving Buyer's
written objection in which to remove the Disapproved Matter from record title or
to obtain the Title Company's agreement to issue an appropriate endorsement to
the Title Policy. If Seller is unable or unwilling to remove the Disapproved
Matter from record title or to obtain the Title Company's agreement, Seller may
terminate this Agreement by giving a termination notice to Buyer and Escrow
Holder within the 30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow Holder shall return
the Deposit to Buyer; and neither party will have any further obligation to the
other under this Agreement. The term "Permitted Exception" means
6
<PAGE>
each matter shown in the Report that (i) is not a Disapproved Matter or (ii) is
a Disapproved Matter for which Seller has obtained the Title Company's agreement
to issue an appropriate endorsement to the Title Policy.
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real Estate will
vest. If Buyer fails to so notify them, title will vest in Buyer as stated in
the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the Title Policy to
Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of
real property taxes, current installments of special taxes and assessments, and
any rents or other income derived from the Real Estate. Utility charges will
not be prorated. Seller shall cause a final reading of the utility meters to be
taken on the day that Escrow closes; and Buyer shall arrange for all utility
services to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached Exhibit
"B".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
7
<PAGE>
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real Estate
are public records, available at the Agency's offices for Buyer's review.
12.3 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.4 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to
provide any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.5 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the Inspection
-------------------------------------
Period, Buyer shall obtain a subsurface investigation report on the extent and
concentrations of any petroleum products in the soil and, if encountered,
groundwater at or under the Real Estate (the "Phase II Report"). Buyer shall
engage a geologist or professional engineer who is licensed by the State of
California and who is not an affiliate of Buyer or Seller (the "Environmental
Consultant"), to perform the subsurface investigation and prepare and certify
the Phase II Report. Buyer shall initially pay for the cost of the Phase II
Report. Escrow Holder shall prorate the cost of the Phase II Report at the
closing so that Buyer and Seller share equally up to $15,000 of the total cost
of the Phase II Report. The parties shall request that the Environmental
8
<PAGE>
Consultant complete the Phase II Report at least 10 days prior to the end of the
Inspection Period. Subject to the provisions of Section 12.5 (b) below, Buyer
shall determine the scope of work for the Phase II Report, in its reasonable
discretion. Buyer shall have the right to modify the scope of work, as a result
of on-site conditions discovered in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a modification
---------------------
of the original scope of work, that involves any disturbance (including any
drilling or boring) of the surface of the land or any underground vault or
storage tank, underground pipes, or fuel lines ("Special Buyer Testing"), Buyer
must obtain Seller's prior written approval. Seller may withhold its approval
if it determines in good faith that the Special Buyer Testing would interfere
with Seller's business operations or would pose a safety or environmental
hazard. Buyer shall indemnify and defend Seller from all liabilities, damages,
losses, claims, costs and expenses (including reasonable attorneys' fees) that
Seller incurs arising from performance of the Special Buyer Testing. Without
limiting the immediately preceding provisions of this Section 12.5(b), Buyer
shall promptly repair any damage to the Real Estate or any personal property
located at the Real Estate resulting from any Special Buyer Testing. But Buyer
will have no liability regarding any contaminated soil or groundwater it may
discover on or under the Real Estate during the course of the Special Buyer
Testing, unless Buyer caused the release of that contamination, for example by
puncturing the underground storage tanks on the Real Estate. Buyer's liability
under this Section 12.5(b) is in addition to Seller's right to retain the
Deposit and any accrued interest on the Deposit, when Seller is permitted to do
so under any provision of this Agreement concerning liquidated damages for
Buyer's default under this Agreement. A termination of this Agreement will not
terminate Buyer's obligations under this Section 12.5(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics' and
-----
similar liens arising from any and all Phase II Report costs (including without
limitation any Special Buyer Testing) payable by Buyer under this Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at Seller's
----------------------
Environmental Notice Address a copy of the Phase 11 Report, within two days
after Buyer receives the report. Buyer shall not disclose the results of any
test to any regulatory agency or other third party, unless required to do so by
law and unless Buyer delivers to Seller at Seller's Environmental Notice Address
a copy of the disclosure at least ten days before Buyer mails or otherwise
transmits the disclosure to the agency or other third party.
(e) Buyer's Termination Right. If Buyer is not satisfied with the
-------------------------
environmental condition of the Real Estate, Buyer may terminate this Agreement
by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the
9
<PAGE>
Escrow and title cancellation charges; after Buyer has paid its share of those
cancellation charges, the Deposit will be returned to Buyer; and neither party
will have any further obligation to the other under this Agreement. But the
Deposit will not be returned to Buyer until Buyer has delivered to Seller valid,
recordable waivers of mechanics' and other statutory liens from all contractors
who conducted tests at Buyer's request.
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO
KEEP THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW
HOLDER THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INI IALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ GS
---------------------------- ------------------------------
Buyer's Initials Seller's Initials
(In order to comply with California Civil Code Section 1677, the above provision
must be in at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031,
10
<PAGE>
Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation includes the signing, acknowledgment, and delivery of all documents
that Seller reasonably requests, at no risk or expense to Buyer. Seller shall
indemnify and defend Buyer from all liabilities, damages, claims, costs, and
expenses (including reasonable attorneys' fees) that Buyer might incur in
connection with Buyer's participation in the exchange transaction.
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning taws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate,
11
<PAGE>
including material violations of regulations of the Environmental Protection
Agency or any state regulatory body concerning the disposal of hazardous waste,
petroleum, underground storage tanks, or any other hazardous materials at the
Real Estate, except as disclosed in the Environmental
Documents.
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial compliance with all applicable laws, statutes, ordinances, codes,
covenants, conditions, and restrictions of any kind or nature affecting the Real
Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
(i) fully operational and (ii) in material compliance with the December 23, 1998
underground storage tank system upgrade standards set forth under Section 25291
or Section 25292(d) and (e) of the California Health and Safety Code, and
related regulations adopted pursuant to Section 25299.3 of the California Health
and Safety Code, according to the certificate of upgrade compliance provided
under Section 25284 of the California Health and Safety Code.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any representation or
warranty, as long as Buyer delivers written notice of the breach to Seller and
exercises any remedy, including the filing of any suit or other action, within
one year after the date that the Escrow closes.
12
<PAGE>
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the, other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence; Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
13
<PAGE>
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY,
a Delaware corporation
By: /s/ G. Simning
---------------------------------------
Gary Simning
Assistant Vice President
Agreed to by Escrow Holder
on Sept. 2 , 1999.
---------------------------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
-------------------------
Patricia Cusick
Escrow Officer
14
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION
That portion of the West half of Section 14, Township 3 South, Range 4 East, San
Bernardino Base and Meridian, in the County of Riverside, State of California,
according to the official plat thereof, described as follows:
Beginning at the most Southerly corner of that property described in deed to
Shell Oil Company recorded August 25, 1964 as Instrument No. 104165, Official
Records, said corner being on the East line of that property as Parcel A in Deed
to the State of California, recorded October 18, 1955 as Instrument No. 66635,
Official Records;
thence South 00 degrees 14'00" West on the East line of the Parcel conveyed to
the State of California above referred to 4.49 feet to a point on the
Northeasterly line of that certain Parcel conveyed to the State of California by
Deed recorded January 12, 1966 as Instrument No. 3948, Official Records;
thence South 45 degrees 12'51" East on the Northeasterly line of said Parcel,
384.19 feet;
thence North 00 degrees 14'00" East parallel with the East line of the Shell Oil
Company property 471.54 feet;
thence North 89 degrees 46'00" West, 273.78 feet to the East line of the Shell
Oil Company property;
thence 00 degrees 14'00" West on the East line of said Shell Oil Company
property, 197.52 feet to the point of beginning.
Page 1 of 1
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "B"
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
<PAGE>
Order No.: 119601-13 CA
Escrow No.: _______________
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 05972
Location: 64200 20th Street
North Palm Springs,
CA FOR RECORDER'S USE
- -------------------------------------------------------------------------------
Type 2, 4, and 5 Sites in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2, 1999, is made
-----------
by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of
Riverside, State of California, described in the attached Exhibit "A" (the "Real
Estate"). In connection with the signing and recording of this Declaration,
ARCO conveyed the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions on
the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning
-----------
set forth beside it.
<PAGE>
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
and affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement, cost,
- -----
and expense (including reasonable attorney's fees) arising before or after the
Effective Date, whether or not Owner knew or suspected them to exist on the date
that Owner signed this Declaration or on the Effective Date.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater at or near the Real Estate before the Effective Date, whether or not
Owner knew or suspected it to exist on the date that Owner signed this
Declaration or on the Effective Date.
2. Owner's Acceptance of the Condition of the Real Estate. Owner has
------------------------------------------------------
accepted the Real Estate, including without limitation its environmental
condition, in "AS IS" condition on the Effective Date. Owner acknowledges that
the purchase price paid to ARCO for the Real Estate reflects (i) the effect of
this Declaration on the Real Estate and (ii) any Pre-Closing Contamination.
3. Owner's Waiver and Release of Environmental Claims. Owner, for itself
--------------------------------------------------
and its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to any Pre-Closing
Contamination.
4. Notices. Notices relating to this Declaration must be in writing and
-------
sent to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 4. A written notice will
be considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
2
<PAGE>
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
5. Entire Agreement: Modification: Waiver. This Declaration (including
----------------
any attached Exhibits) contains the entire agreement between Owner and ARCO with
respect to the matters that are the subject of this Declaration. Any
modification of this Declaration must be in writing and signed by Owner and
ARCO. Any waiver of a provision of this Declaration by Owner or ARCO must be in
writing.
6. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
7. Attorneys' Fees. If a dispute arises with respect to this Declaration
---------------
and if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees.
8. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration (collectively, the "Rights and Restrictions") are for the benefit of
ARCO and its successors and assigns. The Rights and Restrictions run with the
Real Estate and bind Owner's successors and assigns, including future owners of
the Real Estate, for ARCO's benefit. The Rights and Restrictions are intended
(i) to constitute equitable servitudes that burden the Real Estate and (ii) to
be enforceable under Section 1471 of the California Civil Code.
(See signatures on the next page.)
3
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
4
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
=================================================================================================================
STATE OF CALIFORNIA
-----------
COUNTY OF ORANGE
------
<S> <C> <C>
On September 2, 1999 before me, M. Bird, Notary Public
-------------------------------- -------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
----------------------------------------------------------------------------------------------
[X] personally known to me to be the person whose names is subscribed to the within instrument and acknowledged to
[SEAL] me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------
SIGNATURE OF NOTARY
===========================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenants and Conditions
--------- --------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT
-------------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
-------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------- -------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION
That portion of the West half of Section 14, Township 3 South, Range 4 East, San
Bernardino Base and Meridian, in the County of Riverside, State of California,
according to the official plat thereof, described as follows:
Beginning at the most Southerly corner of that property described in deed to
Shell Oil Company recorded August 25, 1964 as Instrument No. 104165, Official
Records, said corner being on the East line of that property as Parcel A in Deed
to the State of California, recorded October 18, 1955 as Instrument No. 66635,
Official Records;
thence South 00 degrees 14'00" West on the East line of the Parcel conveyed to
the State of California above referred to 4.49 feet to a point on the
Northeasterly line of that certain Parcel conveyed to the State of California by
Deed recorded January 12, 1966 as Instrument No. 3948, Official Records;
thence South 45 degrees 12'51" East on the Northeasterly line of said Parcel,
384.19 feet;
thence North 00 degrees 14'00" East parallel with the East line of the Shell Oil
Company property 471.54 feet;
thence North 89 degrees 46'00" West, 273.78 feet to the East line of the Shell
Oil Company property;
thence 00 degrees 14'00" West on the East line of said Shell Oil Company
property, 197.52 feet to the point of beginning.
Page 1 of 1
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
<PAGE>
Order No.: 119601-13 CA
Escrow No.: __________________
RECORDING REQUESTED BY OLD
REPUBLIC TITLE COMPANY AND WHEN
RECORDED, RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar D. Castellon
Facility No.: 05972
Location: 64200 20th Street
North Palm Springs, CA 92258 FOR RECORDER'S USE
- ------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") dated
September 2, 1999, is made by LLO-GAS, INC., a Delaware corporation ("Owner"),
- -----------
for the benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation
("Holder").
RECITALS
--------
A. Holder is the former owner of the real property in the County of
Riverside (the "County"), State of California, described in the attached Exhibit
"A" (the "Real Estate"). In connection with signing and recording this
Agreement, Holder conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
1. Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
<PAGE>
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property used
-----------------
in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate.
-------------
Offered Parcel. The Real Estate, a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
2
<PAGE>
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
2. Grant of Right of First Refusal. Owner grants to Holder the Right. The
-------------------------------
Right is governed by the terms of this Agreement and will be in effect during
the Right Duration.
3. Included Rights; Exclusion of Security Interest Transfer.
--------------------------------------------------------
3.1 Offer to Lease or Sublease. The Right includes the right to
--------------------------
match the terms of any lease or sublease that Owner enters into during the Right
Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel when
that part includes all or part of the Real Estate. The Right will exist whether
the leasehold or subleasehold is to begin during or after the Right Duration.
3.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right will include the right to acquire the Offered Parcel and the
Related Property that is to be transferred. If such a separate agreement
exists, it will be considered a Tendered Agreement; and a copy of that signed
separate agreement must be included in the Transfer Notice.
3.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
4. Procedures for Notice and Exercise.
----------------------------------
3
<PAGE>
4.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a Transfer Notice to
Holder. No one other than Owner can satisfy Owner's obligation to send the
Transfer Notice. Holder may acquire the Offered Parcel that is the subject of
the Tendered Agreement, instead of the third party.
4.2 Exercise Notice; Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
4.3 Holder Indemnifies Owner. older shall indemnify and defend Owner
------------------------
from all liabilities, damages, claims, costs, and expenses (including reasonable
attorneys' fees) that Owner incurs and that arise from Holder's exercise of the
entry right granted under Section 4.2. But Holder will not be liable for any
decrease in the value of any Offered Parcel resulting from Holder's discovery of
any negative matter regarding the Offered Parcel, including without limitation
any contaminated soil or water existing at the Offered Parcel before the escrow
for Holder's purchase closes (the "Pre-Closing Contamination"). Holder will not
be required to remove or dispose of any Pre-Closing Contamination. Holder may
disclose the existence of any Pre-Closing Contamination, to the extent that
Holder is required to do so under applicable law.
5. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be at the price and on
the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 80
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
4
<PAGE>
(c) Price Allocation When Larger Parcel or Adjacent Parcel is
---------------------------------------------------------
Offered. If (i) the Right is for the purchase of a Larger Parcel
-------
and (ii) the purchase price in the Tendered Agreement is
allocated between the Real Estate and the remainder of the Larger
Parcel, Holder may buy the Real Estate and not the remainder by
paying only the consideration allocated to the Real Estate. Or
if (i) the Right is for the purchase of a Larger Parcel and (ii)
the purchase price is not so allocated, Holder may buy only the
Real Estate by paying consideration that is equitable for only
the Real Estate, considering the total purchase price to be paid
by the third party for the Real Estate and the remainder. If
Owner and Holder fail to agree on an equitable amount, that
amount will be determined in accordance with Section 6. The
above principles of this Section 5(c) will apply in like manner
if the Right is for the purchase of the Real Estate and an
Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
--------------------------------------------------
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered Agreement
-------------------------------------
provides for delayed payment terms, Holder may pay the total
purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
6. Valuation Disputes.
------------------
6.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the noncash
consideration under Section 5(f), or (iii) the fair market value under Section
8.2 or 12.9, the amount or value (the "Value") will be determined in accordance
with the appraisal procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal in accordance
with this Section 6, Owner and Holder each shall appoint a Qualified Appraiser
(as defined in Section 6.2). If one of them fails to timely appoint a Qualified
Appraiser, the Qualified Appraiser appointed by the other will determine the
Value.
5
<PAGE>
6.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is unaffiliated
with Owner, Holder, and the third party under the Tendered Agreement, and (iii)
has had full-time experience, during each of the immediately preceding five
years, in appraising commercial real property in the area of the Real Estate.
But if Holder will be purchasing Business Property; the Qualified Appraiser must
also have had substantial experience, during the immediately preceding five
years, in appraising business assets in the area of the Real Estate. If the
Appraisal Institute ceases to exist, a reasonably comparable, nationally
recognized organization of real estate appraisers will be substituted in the
definition of Qualified Appraiser.
6.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to Owner and
Holder within 30 days after his appointment. An Appraisal Report must set forth
the appraiser's determination of the Value and the considerations on which his
opinion is based. If two appraisers are appointed and they agree on the Value,
they must deliver a signed joint Appraisal Report to Owner and Holder within 40
days after the appointment of the second appraiser. If two appraisers are
appointed and they fail to agree on the Value, each appraiser must deliver his
signed Appraisal Report to Owner and Holder within 35 days after his
appointment. If the lower of the two determinations is at least 95% of the
higher, the Value will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers to do so, they
must appoint a third appraiser who is a Qualified Appraiser. Within ten days
after his appointment, the third appraiser must select one of the two
determinations as being the same as or the closer to the amount that he
determines as the Value; and the selected determination will be the Value.
6.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third appraiser.
7. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale
of some or all of the Business Property will occur through a separate Escrow
with an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
6
<PAGE>
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing will be considered effected when the County
Recorder accepts the deed for recording.
(b) Extended Coverage Title Policy; Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event,
Holder shall (i) obtain and provide to the title insurer any
survey that the title insurer might require in order to issue the
title policy as an Extended Coverage Title Policy and (ii) pay
the increase in the premium attributable to the extended
coverage. Within three days after Escrow opens, Owner shall send
to Holder a copy of the most recent survey (if any) of the
Offered Parcel that Owner has in its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom
in the County. But if no custom exists for a particular closing
cost, each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect
to (A) the operation of the business conducted at the Offered
Parcel or (B) all or any part of the Offered Parcel, (ii) any
transfer fee that Owner or any of its affiliates is required to
pay to Holder under a Contract Dealer Gasoline Agreement, an
am/pm Mini Market Agreement, or a SmogPros Center Agreement
pertaining to the business conducted at the Offered Parcel, and
(iii) the unpaid balance of principal and accrued interest on any
loan that is payable to Holder or any of its affiliates and that
is secured, wholly
7
<PAGE>
or partially, by any property that Holder is buying in the
Transaction, whether or not the deducted amounts would otherwise
be due when Escrow closes.
8. Entity Changes.
--------------
8.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1(a) or 8.1(b).
8.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
-----------------------------
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
8
<PAGE>
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
------------------------------
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation and (ii) has control of the management of the parent
corporation and retains control of the management of Owner.
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
-----------------------------------
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
8.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
8.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in accordance with Section 8.3 results from one
or more Values determined in accordance with Section 6 and that part of the
purchase price is greater than 15% of the entire purchase price, Holder may
rescind its Exercise Notice by giving a notice of rescission to Owner. The
notice of rescission must be given within ten days after Holder receives the
last Appraisal Report that may be required under Section 6.3. If Holder
rescinds its Exercise Notice, Holder shall pay the cost of all the appraisers.
9. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims, liabilities,
damages, losses, costs, and expenses (including reasonable attorneys' fees)
that Holder incurs arising from any environmental contamination occurring
or hazardous materials existing at the real property that Transferor is
concurrently conveying to Holder (the "Real Property"), to the extent that
the contamination or hazardous materials (i) are present at
9
<PAGE>
concentrations that any governmental agency will require to be remediated
or otherwise are not in compliance with all applicable statutory and
regulatory requirements, (ii) are known or discovered before Holder begins
its operations at the Real Property, and (iii) are not those on which
Holder is obligated to perform any corrective action under a written
agreement between Transferor and Holder. This agreement to indemnify and
defend will survive the closing of Transferor's transfer of the Real
Property to Holder.
10. Owner's Transfer Rights: Notice of Changed Terms. If Holder does not
-------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may-
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must
include a copy of any signed document changing the price or other terms of the
Tendered Agreement.
11. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the obligation to comply with this Agreement in connection
with any later Tendered Agreement that Owner enters into during the Right
Duration. Holder may void any transfer that Owner makes without complying with
this Agreement. To exercise this right to void a transfer, Holder must give an
Exercise Notice within 25 days after Holder receives actual notice of the
intended or consummated noncomplying transfer and the complete terms of the
transfer.
12. Default on Obligations Secured by Junior Liens.
----------------------------------------------
12.1 Definitions for Section 12. When used in this Section 12 and
--------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
10
<PAGE>
Assignment Endorsement: An ALTA Endorsement No. 10.1 to Lender's
----------------------
Title Policy.
Basic Loan Balance: The unpaid balance of the Secured Obligation
------------------
reduced by the Default Amounts.
Default Amounts: All amounts that were added to the balance of the
---------------
Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal property
----------------
that Holder intends to buy from Owner in accordance with this Section 12 after
giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and Lender
---------------------------
stating that Holder elects to buy (i) the Secured Obligation in accordance with
this Section 12, (ii) the Real Estate in accordance with this Section 12, or
(iii) both the Secured Obligation and the Real Estate in accordance with this
Section 12.
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-enforcement
----------------
sale.
Lender: A person for whose benefit a particular Lien exists. "Lender"
------
includes, without limitation, (i) the beneficiary under a deed of trust, (ii) a
mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance insuring
---------------------
its interest with respect to the Lien.
Lien: A lien that (i) encumbers an interest in the Real Estate, (ii)
----
secures a monetary obligation, and (iii) is junior to Holder's rights under this
Agreement.
11
<PAGE>
Lien Enforcement Notice: A notice from Lender to Holder notifying
-----------------------
Holder of Lender's intent to enforce its Lien. The Lien Enforcement Notice must
include (i) a copy of the recorded lien document, (ii) a copy of the promissory
note or other document evidencing the Secured Obligation, (iii) a current
preliminary title report contemplating the issuance of an Assignment
Endorsement, together with legible copies of all recorded documents referenced
in the report, (iv) a statement of the amount of the unpaid balance of the
Secured Obligation, (v) a description of the Loan Default, (vi) an itemization
of the portion of the unpaid balance of the Secured Obligation that is in
default, (vii) an itemization of the Default Amounts, and (viii) a statement of
any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose its
------------
Lien.
Reinstatement Amount: The unpaid balance of the Secured Obligation
--------------------
reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
------------------
12.2 Coverage of this Section 12. The provisions of this Section 12
---------------------------
will apply with respect to each Lien and to each Lender who holds a Lien.
12.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
12.4 Holder's Right to Buy. Before Lender begins enforcement of its
---------------------
Lien, Holder will have the Foreclosure Purchase Right.
12.5 Holder's Exercise Notice to Owner and Lender. If Holder wishes
--------------------------------------------
to exercise the Foreclosure Purchase Right, Holder must send a Foreclosure
Exercise Notice to Owner and Lender within 25 days after Holder actually
receives the Lien Enforcement Notice.
12.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted on the
real property that Holder intends to buy.
12
<PAGE>
12.7 Holder's Purchase of Secured Obligation. If Holder elects to
---------------------------------------
buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise Notice, Holder shall buy from Lender, and Lender shall sell
to Holder, the Secured Obligation and all of Lender's rights in connection with
the Secured Obligation. The purchase price will be equal to the Basic Loan
Balance as of the date of the closing of the purchase and sale transaction. If
Holder wishes, the purchase and sale transaction will occur through an escrow
with a title insurance company acceptable to Holder. At the closing of the
transaction, (i) Holder shall pay the purchase price to Lender in readily
available funds; (ii) Lender shall deliver to holder (A) any promissory note
evidencing the Secured Obligation, endorsed by Lender to Holder or Holder's
nominee, (B) a recordable assignment of the Lien, signed and acknowledged by
Lender, (C) the original of Lender's Title Policy, and (D) the Assignment
Endorsement issued by the title insurance company that issued Lender's Title
Policy; and (iii) Holder and Lender shall sign, acknowledge, and deliver any
other documents necessary or appropriate to consummate the transaction. The
Assignment Endorsement must insure Holder against loss or damage sustained be
reason of lack of priority of the Lien over defects, liens, or encumbrances
other than those shown in Lender's Title Policy and those that Holder approves
in its sole discretion.
12.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a
period of time to close the purchase of the Elected Property that is equal to
the longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the last Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
12.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice, Holder will receive a credit against the
purchase price for the Basic Loan Balance as of the date that Escrow closes. If
Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation other than the Secured Obligation that was the subject of
the Lien Enforcement Notice, Holder will receive a credit against the purchase
price for the unpaid balance of that
13
<PAGE>
monetary obligation as of the date that Escrow closes.
12.10 Buying Subject to the Lien. If Holder elects to buy the Real
--------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
12.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured Obligation within 30 days after Holder becomes the owner
of the Real Estate by paying the Reinstatement Amount as of the reinstatement
date. Within seven days after the reinstatement date, Lender shall credit the
unpaid balance of the Secured Obligation by the Default Amounts.
12.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
12.13 Lender's Transfer Rights; New Lien Enforcement Notice. If Holder
-----------------------------------------------------
does not exercise the Foreclosure Purchase Right, Lender may proceed with the
enforcement of the Lien and (i) sell the Encumbered Property to a third party at
a Foreclosure Sale, (ii) buy the Encumbered Property by a credit bid at the
Foreclosure Sale, or (iii) accept a deed conveying the Encumbered Property in
lieu of foreclosure, in each case without the requirement of making a further
offer of the Encumbered Property to Holder. But if, within one year after
Holder actually received the Lien Enforcement Notice, Lender's enforcement of
the Lien has not been completed or Lender has not accepted a deed in lieu of
foreclosure, Lender must give a new Lien Enforcement Notice to Holder before
completing the enforcement of the Lien or accepting a deed in lieu of
foreclosure.
12.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys the
Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to
14
<PAGE>
the addresses set forth below in this Section G1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the United States Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile. The parties' addresses for notices are as follows:
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons will be considered "Owner" under this
Agreement with respect to the applicable part of the Real Estate while that
person is the owner or tenant.
G4. Time of Essence: Business Day Dates. Time is of the essence of each
-----------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and
15
<PAGE>
other similar events) (an "Uncontrollable Event"). If (i) a party who has the
right to exercise a right under this Agreement has not done so by the last date
allowed under this Agreement and (ii) on that date, the party is prevented from
exercising the right due to an Uncontrollable Event, the date will be extended
until the third business day after the Uncontrollable Event ends.
G6. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement must be in writing and signed by Owner and Holder. Any waiver of a
provision of this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees:
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
16
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
On September 2, 1999 before me, M. Bird, Notary Public
-------------------- ------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
------------------------------------------------------------------------------------
[X] personally known to me to be the person whose name is subscribed to the within
[SEAL] instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
-----------------------------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
--------- --------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT --------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
--------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- --------------------------------------- --------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION
That portion of the West half of Section 14, Township 3 South, Range 4 East, San
Bernardino Base and Meridian, in the County of Riverside, State of California,
according to the official plat thereof, described as follows:
Beginning at the most Southerly corner of that property described in deed to
Shell Oil Company recorded August 25, 1964 as Instrument No. 104165, Official
Records, said corner being on the East line of that property as Parcel A in Deed
to the State of California, recorded October 18, 1955 as Instrument No. 66635,
Official Records;
thence South 00 degrees 14'00" West on the East line of the Parcel conveyed to
the State of California above referred to 4.49 feet to a point on the
Northeasterly line of that certain Parcel conveyed to the State of California by
Deed recorded January 12, 1966 as Instrument No. 3948, Official Records;
thence South 45 degrees 12'51" East on the Northeasterly line of said Parcel,
384.19 feet;
thence North 00 degrees 14'00" East parallel with the East line of the Shell Oil
Company property 471.54 feet;
thence North 89 degrees 46'00" West, 273.78 feet to the East line of the Shell
Oil Company property;
thence 00 degrees 14'00" West on the East line of said Shell Oil Company
property, 197.52 feet to the point of beginning.
Page 1 of 1
<PAGE>
EXHIBIT 10.37
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 05972
Dated (for identification): September 2, 1999
-----------
This Agreement for Sale of Business to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and PRESTIGE STATIONS, INC., a Delaware corporation ("Seller").
RECITALS
--------
A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the business
at the Real Estate ("Seller's Operations") and that are located at the Real
Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Dealer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
----------------
Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 64200 20th Street
City, State, ZIP Code: North Palm Springs, California 92258
County: Riverside
Deposit: $20,000.00 by Buyer's check payable to Escrow Holder
Purchase Price: $180,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $60,000.00
Estimated Price of Petroleum Inventory: $15,000.00
Franchise Fee: $95,000.00
Closing Date: See Section 6.2.
2
<PAGE>
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10741 PC (To be completed by Escrow Holder)
--------
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to ARCO the items required by Section 3 of the Real Estate
Agreement.
4. Business Property. The following items constitute the Business
-----------------
Property:
(a) Equipment. All equipment, furnishings, and trade fixtures (i)
---------
that Seller uses in connection with Seller's Operations, (ii) that
are located at the Real Estate, whether or not those items are
attached to the land or improvements at the Real Estate, and (iii)
that are shown on the attached Schedule 1 (collectively, the
"Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the Real
-------------------
Estate on the day that Escrow (as defined in Section 6.1) closes
(the "Petroleum Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
---------------
Operations (other than the Petroleum inventory), in its original
packaging, that is located at the Real Estate on the day that
Escrow closes and (ii) all supplies that Seller uses in connection
with Seller's Operations
3
<PAGE>
and that are located at the Real Estate on the day that Escrow
closes (collectively, the "Store Inventory");
(d) Permits. All transferable licenses and permits that Seller holds
-------
in connection with Seller's Operations (collectively, the
"Permits"), including without limitation (i) the permanent beer
and wine license (the "ABC License"), (ii) the underground storage
tank permit for the underground storage tanks at the Real Estate,
(iii) any conditional use permit for Seller's Operations, and (iv)
any operating permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment monitoring and
-----------------
maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, walk-in
coolers, affixed sales counters and food preparation counters, food preparation
equipment, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines.
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Business Property and the
------
Franchise Fee is the amount set forth in Section 1. Section 15 provides for the
final determination of the amount payable for the Store Inventory and the
Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall deposit the balance of the Purchase Price into Escrow, in cash or
immediately available funds, by the earlier of the following dates: (i) One
business day before the date scheduled for the close of Escrow or (ii) the date
designated by Escrow Holder so that Escrow Holder can timely file Form 226,
Statement Re Consideration Deposited in Escrow, with the California Department
of Alcoholic Beverage Control (the "ABC") to allow the closing to occur on the
scheduled date.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is
reasonably necessary to close the Escrow.
4
<PAGE>
6.2 Closing Date. If the ABC License is ready to be issued to Buyer,
------------
the Escrow will close simultaneously with the closings under the Real Estate
Agreement, the Companion Business Agreements, and the Companion Real Estate
Agreements. If the ABC License is not ready to be issued to Buyer, but a
temporary beer and wine license is ready to be issued to Buyer, the escrows
under the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements may close before the Escrow closes. In that
case, the Escrow will close when the ABC License is issued to Buyer.
6.3 Closing Conditions. Each party's obligation to complete the
------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) ABC License. Buyer, Seller, and Escrow Holder have received
-----------
notice that the ABC has transferred the ABC License to Buyer.
(b) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Real Estate Agreement, the Companion
Business Agreements, and the Companion Real Estate Agreements,
Seller has confirmed that (i) Seller is ready and committed to
close those transactions or (ii) if the transaction is being
handled through an escrow, Seller has received notice from the
escrow holder that the escrow holder is ready and committed to
close the escrow.
(c) Franchise Documents. ARCO, through its division ARCO Products
-------------------
Company ("APC"), and Buyer (i) have signed a Contract Dealer
Gasoline Agreement (the "Gas Agreement") and a non-lessee am/pm
Mini Market Agreement (the "Mini Market Agreement") for Buyer's
operations at the Real Estate after the closing and (ii) have
signed and have had notarized a Memorandum of Contract Dealer
Gasoline Agreement in recordable form. The am/pm Mini Market
Agreement will provide for the Franchise Fee as set forth in
Section 1, which is included in the Purchase Price. The Gas
Agreement and the Mini Market Agreement each must have a term of
15 years and be in ARCO's standard form.
(d) Other Closings Conditions. All closing conditions for that
-------------------------
party's benefit contained in provisions of this Agreement other
than this Section 6.3 have been satisfied, or will be satisfied
as a part of the closing.
(e) Other Party's Obligations. The other party has performed all its
-------------------------
obligations under this Agreement to be performed before the
5
<PAGE>
closing, or will perform those obligations as a part of the
closing.
7. Delivery of Documents and Funds.
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Buyer or Escrow Holder the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale") transferring
------------
title to the Business Property to Buyer, signed by Seller;
(b) Business Property. Physical possession of the tangible assets of
-----------------
the Business Property and all tangible evidence of the intangible
assets of the Business Property, to the extent that those items
are in Seller's possession or control;
(c) Permits. All the Permits;
-------
(d) Equipment Records. All records regarding equipment monitoring
-----------------
and maintenance for Seller's Operations; and
(e) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs; and
(b) Other Documents and Funds. All other instruments, documents, and
-------------------------
funds reasonably required to complete the Transaction.
8. Transfer of ABC License. Buyer shall do all that is reasonably
-----------------------
necessary to obtain the ABC's approval of the transfer of the ABC License to
Buyer. Seller shall cooperate with Buyer's efforts to obtain the ABC's approval
of the transfer.
9. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
10. Bulk Sale Notices. Buyer and Seller shall give notice, in compliance
-----------------
with California Business and Professions Code Section 24073, of the intended
transfer of the ABC License. Buyer and Seller instruct Escrow Holder (i) to
cause the notice to state that "the sale of seller's assets to buyer is not
subject to Division 6 of the
6
<PAGE>
California Uniform Commercial Code, including Section 6106.2 of the California
Uniform Commercial Code," (ii) to record and publish the notice, and (iii) in
accordance with California Business and Professions Code Section 24074, to
distribute the Purchase Price to Seller's bona fide creditors who file claims
with Escrow Holder before Escrow Holder receives notice from the ABC of its
approval of the transfer of the ABC License. Upon Escrow Holder's request, Buyer
and Seller shall provide Escrow Holder with the information necessary to prepare
the notice. Seller represents and warrants to Buyer that the sale under this
Agreement is not a bulk sale as contemplated by Division 6 of the California
Uniform Commercial Code. Based on that representation and warranty, Buyer
instructs Escrow Holder not to give notice under Division 6.
11. Tax Clearance Certificates. Seller will not be required to provide to
--------------------------
Buyer tax clearance certificates from applicable governmental agencies. Buyer
and Seller instruct Escrow Holder to not obtain tax clearance certificates.
Seller shall indemnify and defend Buyer from all liabilities, damages, claims,
costs, and expenses (including reasonable attorneys' fees) that Buyer might
incur in connection with any tax liability of Seller related to Seller's
Operations before closing. If required by the ABC, Seller shall provide the ABC
with evidence that Seller is not delinquent in the payment of any taxes that are
the subject of California Business and Professions Code Section 24049.
12. Sales and Use Tax. Buyer represents that it holds a valid
-----------------
Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store Inventory
or the Petroleum Inventory to Buyer.
13. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Personal property taxes.
14. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the filing, recording, publication, and other costs
and expenses that Escrow Holder incurs on its behalf, unless the cost or expense
is otherwise allocated under this Agreement. Buyer shall pay all application
and other fees charged by the ABC in connection with the transfer of the ABC
License.
15. Inventory.
---------
15.1 Store Inventory. On the day that Escrow closes, an outside
---------------
inventory service (the "Service") selected by Seller will conduct an in-store
inventory of the Store Inventory. The Service will calculate the retail price
of the Store Inventory. At the completion of the in-store inventory, Buyer and
Seller each shall pay to the Service one half of the fee for the in-store
inventory. After the in-store inventory has been completed and the Service has
calculated the retail price of the Store Inventory, Seller shall calculate the
amount payable for the Store Inventory in accordance with its then-current
pricing policies for the sale of store inventory located at an operating
7
<PAGE>
business of Seller to a person who intends to re-sell the store inventory at the
same location. Seller shall then notify Buyer and Escrow Holder of the amount
payable for the Store Inventory. Seller's Operations will be closed to the
public during the instore inventory.
15.2 Petroleum Inventory. On the day that Escrow closes, Buyer and
-------------------
ARCO's representative conducting the changeover of Seller's Operations ("ARCO's
Changeover Representative") shall jointly inventory the Petroleum Inventory; and
after the joint inventory has been completed, ARCO's Changeover Representative
shall calculate the amount payable for the Petroleum Inventory. The amount
payable for the Petroleum Inventory will equal Seller's rack price based on
Seller's latest invoices for gasoline delivered to the Real Estate. Seller
shall then notify Buyer and Escrow Holder of the amount payable for the
Petroleum Inventory.
15.3 Adjustment for Estimated Price of Inventory. After the
-------------------------------------------
petroleum inventory and in-store inventory are completed, the sum of the amount
payable for the Petroleum Inventory and the amount payable for the Store
Inventory will be subtracted from the sum of the Estimated Price of Store
Inventory and the Estimated Price of Petroleum Inventory set forth in Section 1.
The resulting overage or shortage will be credited or charged, as applicable, to
the Purchase Price.
16. Equipment Listing. Seller shall attach to the Bill of Sale, or
-----------------
otherwise deliver to Buyer before or at the closing, a list of Equipment. Buyer
may inspect the Equipment before Escrow closes.
17. Seller's Representations and Warranties. Seller's representations and
---------------------------------------
warranties in this Agreement will survive the closing. Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the close of
Escrow, as follows:
17.1 Ownership of Assets. Seller has, and at the close of Escrow
-------------------
will transfer to Buyer, title to the Business Property, free and clear of all
liabilities, liens, encumbrances, security interests, leases, contracts, and
claims.
17.2 Leases, Contracts, and Agreements. No leases, contracts,
---------------------------------
commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
17.3 Absence of Litigation. No suit, arbitration, or other
---------------------
proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future.
8
<PAGE>
17.4 Taxes. Seller has filed all tax returns required in connection
-----
with Seller's Operations. Seller has paid, or will pay before the close of
Escrow, all taxes (including interest and penalties on the taxes) due from
Seller in connection with Seller's Operations.
17.5 Equipment. All Equipment is in good working condition. The
---------
underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement, according to the certificate of upgrade
compliance provided under Section 25284 of the California Health and Safety
Code. The PayQuick Island Cashier has been installed at the Real Estate and
compiles with the terms of Section 10.13 of the Gas Agreement. The video
surveillance equipment approved by ARCO has been installed at the Real Estate
and is in good working condition. Any secondary containment equipment for the
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
17.6 Permits and Laws. Seller's Operations are in compliance with
----------------
(i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits for
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Manager of
Environment, Health and Safety, Ted Harriss is the Property Management
Representative assigned to the Real Estate, and Lynn Beteag is Seller's Property
Management Manager assigned to the Real Estate.
17.7 Trademark and Trade Dress. Seller's Operations comply with the
-------------------------
trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
17.8 Employees. The employment of all employees of Seller for
---------
Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
18. As-Is Sale. Buyer acknowledges that (i) it is buying the Business
----------
Property solely in reliance on its own investigation; (ii) no covenants,
representations, or warranties have been made by Seller or on Seller's behalf,
except those set forth in this
9
<PAGE>
Agreement; (iii) Buyer has made itself aware of all Laws concerning the Business
Property or Buyer's operation of a business using the Business Property; and
(iv) Buyer will be buying the Business Property in its condition existing when
Escrow closes. Nothing in the previous sentence diminishes Seller's obligations
as expressly set forth in this Agreement.
19. Possession of Business Property. Buyer may possess and operate the
-------------------------------
Business Property when Escrow closes. Buyer shall open for business at the Real
Estate within 48 hours after Escrow closes. Any alterations to the building on
the Real Estate will be considered a "conversion" under Section 5.02(b) of the
Mini Market Agreement.
20. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right of
-----------------------------
first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
21. Required Governmental Notices. Promptly following the closing, Buyer
-----------------------------
shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
22. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S DEFAULT,
------------------
ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 22; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ JLS
---------------------- ------------------------
Buyer's Initials Seller's Initials
10
<PAGE>
23. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
24. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If ARCO terminates the Real Estate Agreement in accordance with its
terms, Seller may terminate this Agreement without further liability to Buyer.
If Buyer terminates the Real Estate Agreement in accordance with its terms,
Buyer may terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given (i) when personally delivered, (ii) two business
days after deposit in the U.S. Mail as first class mail, certified or
registered, return receipt requested, with postage prepaid, (iii) one business
day after deposit with a reputable overnight delivery service for next business
day delivery, or (iv) on the business day of successful transmission by
electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence; Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
11
<PAGE>
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement: Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
(See signatures on the next page.)
12
<PAGE>
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------------------
John D. Castellucci
President
SELLER:
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
---------------------------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2 , 1999
-------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
------------------------------
Patricia Cusick
Escrow Officer
13
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
<TABLE>
<S> <C>
ARCO Facility No.: 01860
Street Address; City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
</TABLE>
EXHIBIT "A"
<PAGE>
Exhibit 10.38
Facility Number: 82064
Customer Account Number: 0883355
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2 , 1999, between ARCO Products Company (a
division of ATLANTIC RICHFIELD COMPANY - incorporated in Delaware), with an
office at: 4 CENTERPOINTE DRIVE, LA PALMA, CALIFORNIA 90623 ("ARCO") and
LLO-Gas, Inc. a Corporation
- --------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"], if partnership, the names of
all partner and State of Organization; if limited partnership, the names of all
general partners and State of Organization; if corporation, the State of
Incorporation; if LLC, the State of Organization)
with an address at 23805 Stuart Ranch Road, Suite 265 Malibu, California 90265
("Operator").
Operator desires to be the franchisee of, and ARCO is willing to grant to
Operator a franchisor for, an am\pm mini market located at the Premises set
forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the
terms and conditions set forth in PARTS I and II of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in PARTS I and II hereof, each of the parties intending to be legally
bound hereby, agrees as follows:
PART I
PART I contains specific terms which relate to the terms and conditions
set forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10
(4/99), attached hereto and incorporated herein.
Section
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
_______________________________________________________________________
_______________________________________________________________________
4.03 Store Manager (if Operator has more than one am/pm mini market)
_______________________________________________________________________
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______
day of ____________________, ______, ("Commencement Date"), and shall
end at 10 a.m. on the first day after the last day of the [_____] 120th
or [_____] 180th full calendar month following the Commencement Date.
If no time is checked, the box for 120th shall be deemed checked. If no
date is set forth in this Part I, the Commencement Date shall be
established by the "Notice of Final Inspection and Readiness" provided
for in Section 5.01 of PART II.
6.01 Premises
64200 20th St., Palm Springs, California 92258
-----------------------------------------------------------------------
(complete address by street number, including, where
applicable, designation of corner)
City Palm Springs State California Zip 92258
7.01(a) Initial franchise fee: Ninety-Five Thousand 00/100
__________________ Dollars [$ 95,000.00]
7.01(c) Renewal franchise fee:
_______________________________________________________________________
__________________ Dollars [$ ______________.00]
7.02(a) Minimum royalty fee: One Thousand 00/100
__________________ Dollars [$ 1,000.00]
--------
7.03 Security Deposit: One Thousand 00/100
__________________ Dollars [$ 1000.00]
-------
16.01 Operational Designee, if applicable:___________________________________
17.02 Corporate Designee (Corporate operators only): John Castellucci
1 of 5
<PAGE>
Limited Liability Company Designee (LLC's Only):_______________________
Partnership Designee (Limited Partnership Only):_______________________
2 of 5
<PAGE>
Facility Number: 82064
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by
a check mark at the left of the required items. ARCO agrees to loan the
equipment initialed by ARCO to the right of such items and to install such
equipment prior to the Commencement Date. Operator agrees to install, at
Operator's expense, on or before the Commencement Date, the equipment initialed
by Operator to the right of such items. All equipment, whether furnished by
Operator or by ARCO, must meet ARCO's specifications including, but not limited
to, specifications with respect to brand, size, color and quality.
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X am/pm Sun & Moon Sign X
- --------- -----
X Building Fascia (illuminated) X
- --------- -----
X Cigarette Merchandiser (Overhead)(Vendor Supplied) X
- --------- -----
X Corner am/pm I.D. Sign
- --------- and where applicable, Sign Pole X
-----
X Interior Signage X
- --------- -----
X Training Materials [Employee Training System ("E.T.S.")] X
- --------- -----
X Bun Toaster X
- --------- -----
X Capuccino Bulk Powder Machine X
- --------- -----
X Cash Register (Primary with PayPoint(R)P.O.S. X
- --------- -----
X Cheese Sauce Dispensers (2) X
- --------- -----
X Coffee Brewer (6 Burner Twin Brewer) X
- --------- -----
X Coffee Brewer Timer X
- --------- -----
X Coffee/ Bakery Menu Board X
- --------- -----
X Coffee Mug Rack X
- --------- -----
X Coffee Lid/Supply Spinner Rack X
- --------- -----
X Computer Software and Hardward X
- --------- -----
X Condiment Pumps (2) X
- --------- -----
X Convection Oven X
- --------- -----
X Convection Oven Racks (4) X
- --------- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
- --------- -----
X Cooler Boxes (Upright) Size______ Number______ X
- --------- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
- --------- -----
X Counter Top Condiment Dispenser Unit X
- --------- -----
X Counter and Shelving (including Condiment Table) X
- --------- -----
X Counter Merchandising System X
- --------- -----
X Cup Dispenser (Hot and Cold) X
- --------- -----
X Fast Food Module (older units only) X
- --------- -----
X Fax Machine X
- --------- -----
X Food Merchandising Warmer X
- --------- -----
X Food Merchandising Rack Identification Channels and Strips X
- --------- -----
X Food Preparation Table X
- --------- -----
X Fountain Drink and Ice Dispenser with Ice Maker and
- --------- Carbonator (Pepsi-Cola) X
-----
X Fountain Lid and Straw Rack X
- --------- -----
X Prepackaged Electronic Facility Controller (EFC) X
- --------- (see Electronic Drawings for Details) -----
</TABLE>
3 of 5
<PAGE>
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X Freezer Cabinets (Upright) Size______ Number______ X
- --------- -----
X Freezer (Storage Room) X
- --------- -----
X Frozen Carbonated Beverage Machine X
- --------- -----
X Frozen Dessert Graphics Package X
- --------- -----
X Frozen Dessert Cup, Cone Tower X
- --------- -----
X Gondolas Size______ Number______ X
- --------- -----
X Hood and Exhaust Ventilation System for Convection Oven
- --------- (California only and only where locally required) X
-----
X Ice Maker X
- --------- -----
X Ice Merchandiser Size______ Number______ X
- --------- -----
X In-store Television Monitors for display of multi-media
- --------- advertising** X
-----
X Microwave Over (Commercial) X
- --------- -----
X Nacho CheeseSauce Dispensers X
- --------- -----
X PayQuick Island Cashier (PIC) (only if Operator is
- --------- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000) with PayPoint X
- --------- -----
X Shelving (Storage Room) Size______ Number______ X
- --------- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
- --------- -----
X Shelving (Wall) Size______ Number______ X
- --------- -----
X Sink (3-compartment-food preparation) X
- --------- -----
X Sink (Hand sink in hot food area) X
- --------- -----
X Sink (Service/Mop) X
- --------- -----
X Small Wares (Food Service) X
- --------- -----
X Soft Serve Dispenser X
- --------- -----
X Sports Bottle Rack X
- --------- -----
X Lid/Straw Spinner Rack X
- --------- -----
X (Combination VHS Player/Monitor
- --------- to utilize ETS/VHS tapes) X
-----
X Water Heater X
- --------- -----
X Video Surveillance Equipment (including six Color
- --------- Cameras.two 20" color Monitors, Flashing Red Lights for
Monitors, Multiplexor Unit to support up to 9 Cameras,
Time-lapse Video Recorder, Video Tape Library with 31 tapes
(replaced annually with 31 new long playing Video T-160 tapes)
and 24 Hour Surveillance Decal) X
-----
X VSAT Equipment: (1) Hughes Satellite Dish X
- --------- -----
X (2) Hughes Indoor Unit - Satellite Receiver X
- --------- -----
(3) Deicer (if required for colder climate) X
-----
Other: 1.____________________
- ---------- -----
2.____________________
-----
3.____________________
-----
</TABLE>
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
4 of 5
<PAGE>
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Connie Carroll 9/2/99 By /s/ John Castellucci 9-2-99
----------------------------------- ---------------------------------
Manager Date Date
/s/ Hollie Johnson 9/2/99 /s/ Denise Newton 9/2/99
- -------------------------------------- ------------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
5 of 5
<PAGE>
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Mark and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined in Section 5.01 and continuing during the term
of this Agreement, the non-exclusive right and license to use the trade secrets
and know-how regarding operation of am/pm mini markets, the service mark and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm" service
marks for retail grocery store and convenience store services. ARCO expressly
reserves the right to change, alter or modify the am/pm service mark or service
name or substitute any other service mark or service name at any time by giving
Operator not less than thirty (30) days' prior notice thereof. In the event of
any change, alteration or modification of the service mark or service name,
Operator agrees that only the service mark or service name, as changed, altered
or modified, shall be used by Operator to identify the Store. If the service
mark and service name "am/pm" is changed by ARCO, it is agreed that the new
service mark and service name adopted by ARCO shall be substituted for "am/pm"
wherever "am/pm" appears in this Agreement. ARCO also expressly reserves the
right to change, alter or modify colors and designs and other service marks and
service names used in connection with am/pm mini markets from time to time and
place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service mark and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service mark and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service mark or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service mark,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or attempt to register
1 of 33
<PAGE>
ARCO's service names or service marks, trademarks in Operator's name or that of
any other person and not to use such service marks, trademarks or service names,
or any parts thereat as am part of any corporate or partnership name or any
other business name. It is understood that this covenant shall survive the
termination of this Agreement and shall be binding upon the heirs; successors
and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement or
upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service mark,
trademark rights that may have vested in Operator notwithstanding the provisions
of Section 1.04 as a result of any activities of Operator pursuant to this
Agreement. Operator agrees to use said service marks, trademarks and service
names in connection with, and exclusively for, the promotion and operation of an
am/pm store as provided hereunder, and in accordance with the standards, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service mark or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service mark, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this Agreement
or termination of any subsequent Store Agreement to cease and forever abstain
from using the am/pm service mark and service name and other service marks and
service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during the
term of this agreement to use ARCO's franchise accounting system software at the
am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and after
termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for Operator.
ARTICLE 2
Relationship of Parties
2.01 Neither Operator nor any of its employees shall hold itself or
himself out at any time as an agent, representative, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and shall
not bind nor obligate ARCO in any way, manner or thing whatsoever, nor shall
Operator
2 of 33
<PAGE>
represent that it has any right or power to do so. Operator shall undertake all
obligations herein described as an independent contractor and shall exercise and
be responsible for the exclusive control of the Store and Premises and all
activities conducted therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted and
as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
ARTICLE 4
Hours of Operation and Personal Participation
4.01 Operator shall promote the business of the Store and shall cause the
Store to be operated continuously throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN THE
MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly royalty fee for each day Operator fails to cause the Store to be
open for the prescribed hours.
4.03. Operator shall participate in the operation of the am/pm business
for a period of at least 40 hours per week and if Operator has more than one
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
3 of 33
<PAGE>
program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). For purposes of
personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if Operator is a corporation,
partnership or LLC. The Operational Designee must be a an officer or shareholder
if Operator is a corporation, a member or manager of the LLC if Operator is an
LLC, a general partner if Operator is a limited partnership, a partner if
Operator is a partnership other than a limited partnership. In the case of
Concurrent Operations at the Premises, as more fully described in Article 4.05
hereof, Operator is obligated to participate in the operation of all franchise
businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm
business as described in Section 4.03 and/or, if applicable, to have the Store
Manager designated in PART I employed at the store on a full time basis and/or,
if applicable, to replace such person with another trained Store Manager within
two months from the date the Store Manager designated in PART I or any successor
to such person is no longer employed at the store shall constitute a material
breach of this Agreement.
4.05 In the event the am/pm mini market, with ARCO's approval, is operated
at the Premises by Operator in conjunction with another or more than one other
ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date first
above written. Except as otherwise provided in this Article, the "Commencement
Date" shall be on the date set forth in PART I. If no date is set forth in PART
1, the Commencement Date shall be the date established by ARCO by notice to
Operator ("Notice of Final Inspection and Readiness") as the date the Premises
are available for occupancy and ready for conduct of the business of the am/pm
mini market. The term hereof shall end as of 10:00 a.m. on the first day after
the last day of the one hundred twentieth (120th) or one hundred eightieth
(180th) full calendar month following the Commencement Date as set forth in Part
I, unless this Agreement is terminated earlier pursuant to the terms hereof.
5.02 (a) In the case of ground-up construction of an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, but within six
(6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
4 of 33
<PAGE>
(1) Photographs of the entire site, including improvements and
corner signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey should
show all existing elevations and site features and should also include
additional data such as: width of streets; type of curbs and corner
radius; existing sidewalks and/or approaches, including material and
condition; location of existing power poles, light poles, hydrants,
traffic light poles, water, gas and electrical curb boxes, etc.; buildings
and islands on the site, if any, by dimension; paving, landscaping, trees,
fencing, retaining walls, underground motor fuel storage, if any; property
line dimensions, angles and bearings, known setbacks, easements and code
restrictions; North arrow and notes on any special building, zoning and/or
sign code regulations affecting the property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements, and other changes not
resulting from local requirements, but requested by Operator must be submitted
in writing to ARCO with drawings and specifications and approved in advance by
ARCO. All changes, if any, not mandated by governmental authority but requested
by Operator must be submitted simultaneously as one consolidated request for
modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense, have an architectural or engineering firm of
Operator's choosing make the approved modifications. If Operator elects to have
ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
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(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
(1) General arrangement ("As Built") drawings including
informational sketches and data showing: complete set of drawings used for
construction of building (if available); exterior dimensions, length,
width, and height of every vertical and horizontal surface; interior
dimensions, length, width and height of every room, location of all
existing electrical outlets, plumbing lines, fixtures, switches, controls,
furniture, etc.; obstructions in area to be occupied by walk-in coolers;
all other major obstructions such as columns, downspouts, vents, ducts,
etc.; existing ceiling layout and placement of all light fixtures,
grilles, etc., location of heating, air conditioning and water heating
units, type, size, and condition; electrical panel, size of service,
number of circuits, condition of panel; if reusable as is, or with
supplementary panel and if three-phase service is available; description
of existing structural system, age, type, size, location of beams,
columns, bearing walls, shear walls, etc.; current condition of building,
roof, exterior, interior, restrooms, walkways, existing motor fuel storage
and dispensing system, if any, showing age, size and type of underground
tanks (steel or fiberglass), make and size of suction pumps, leak
detectors, make and model of pumps/dispensers and self-service
console/equipment, if any; describe necessary repairs; photographs of all
four sides of building, interior of office, storage, bays, electrical
panel, heating/air conditioning unit, unusual conditions, existing
islands, signs and canopies; local building restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements and other changes not
resulting from local requirements but requested by Operator, must be approved in
advance by ARCO. All changes, if any, not mandated by governmental authority but
requested by Operator must be submitted simultaneously as one consolidated guest
for modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense have an architectural or engineering firm
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of Operator's chasing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed 520,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(c) Within 60 days after receipt of the standard Plans, Operator
shall apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if
available in the jurisdiction in which the Store is located. The beer and wine
license must be obtained before ARCO installs or arranges to have installed
illuminated fascia up to ARCO's specifications shown on the Plans, the exterior
am/pm sign, sign pole and interior signage which consists of photo panels,
product area identifiers, striping, fast food menu board and other miscellaneous
decals, and a cigarette overhead merchandiser, if such licenses are available at
the time in the jurisdiction in which Operator's store is located. If a beer and
wine license is not available until construction is completed or the Store is
opened for business, ARCO shall proceed with the necessary work but Operator
shall nevertheless be required to pursue diligently efforts to obtain a beer and
wine license at the earliest possible date in which case the obtaining of a beer
and wine license as a condition to events contemplated in this Article 5,
however, shall be waived and not obtaining a license shall not serve as a ground
for termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on
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the Plans, and the exterior am/pm sign, sign pole and interior signage which
consists of photo panels, product area identifiers, striping, fast food menu
board and other miscellaneous decals, and a cigarette overhead merchandiser. If
Operator is not the sole and exclusive owner of the Premises, as a condition to
ARCO performing its obligations set forth in the preceding sentence, Operator
shall submit, in form satisfactory to ARCO, a consent of all owners of the
Premises to the modification of the Premises, and a waiver in recordable form,
of all claims of the owner, and any party claiming through or under the owner,
including any mortgagees, to any improvements installed by ARCO on the Premises
and consent to removal by ARCO of such improvements upon termination of the
am/pm franchise. After ARCO installs or arranges to have installed exterior
illuminated building fascia, the exterior am/pm sign, sign pole and interior
signage which consists of photo panels, product area identifiers, striping, fast
food menu board and other miscellaneous decals, and a cigarette overhead
merchandiser, and provides the additional items referred to in the second
sentence of this Section 5.03, ARCO shall issue the Notice of Final Inspection
and Readiness. If Operator fails to open the Store for business on the
Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
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ARTICLE 6
Premises and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the
operation of an am/pm mini market on the Premises set forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the equipment
shown on the list entitled "Store Equipment" attached to PART I ("Store
Equipment"). ARCO hereby agrees to loan and install or arrange to have installed
exterior illuminated fascia up to ARCO's specifications shown on the Plans, the
exterior am/pm sign, sign pole and interior signage which consists of photo
panels, product area identifiers, striping, fast food menu board and other
miscellaneous decals ("Loaned Store Equipment"), and a cigarette overhead
merchandiser. Operator agrees to install the Store Equipment on or before the
Commencement Date. All Store Equipment must meet ARCO's specifications,
including but not limited to specifications with respect to size, color and
quality. Operator may not install additional equipment, fixtures or machines
without the prior written consent of ARCO. Operator shall maintain all
equipment, including required and optional equipment, ready for use and in
operable condition and shall use or permit the equipment to be used only for its
intended use and only in a manner consistent with the manufacturer's
instructions, and Operator shall utilize the equipment and exert Operator's best
efforts to promote the retail sale of items or services for which the equipment
is designed. In the event that ARCO agrees to lease to Operator and Operator
agrees to lease from ARCO additional equipment during the term of this
Agreement, the list entitled "Store Equipment" attached to PART I shall be
revised accordingly by means of an amendment to this Agreement executed by both
parties hereto. Operator agrees not to remove any of the Store Equipment from
Store without the prior written consent of ARCO except in the event replacement
of the equipment is necessitated by malfunction, in which case Operator may
replace the equipment with equipment meeting the same specifications with
respect to size, color and quality as the equipment replaced. Operator shall
notify ARCO of any such replacement. Title to the Loaned Store Equipment shall
remain in ARCO at all times during the term hereof and Operator shall not suffer
or permit any levy, attachment or execution by Operator's creditors, including
taxing authorities, or by any person or entity having any interest in the
Premises to remain on such Loaned Store Equipment. ARCO reserves the right to
add or delete Equipment during the term of the Agreement and Operator will
install or remove such Equipment within 90 days after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01 (a) Operator shall pay ARCO an initial franchise fee in the amount
set forth in PART I upon the signing of this Agreement by
Operator.
(b) The initial fee is not refundable in whole or in part except
in the following circumstances:
(1) If this Agreement is for Premises at which construction of
or conversion to an am/pm mini market is contemplated, after
Operator executes the Agreement, ARCO shall have up to 90 days
to execute the Agreement ARCO shall not be obligated under the
Agreement until it is executed by ARCO. If ARCO has made
changes to the am/pm franchise between the time the offering
circular was given to
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Operator and the time before the offering circular expires by
its own term and Operator has not yet executed the Agreement,
ARCO shall give Operator a new offering circular and a new
Agreement and related agreements reflecting any such changes
and Operator may elect to execute either the agreements
originally given to Operator or those reflecting the changes.
Operator may notify ARCO that Operator does not want an am/pm
franchise and wishes to revoke the Agreement at any time
before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO has
executed the Agreement, ARCO shall return any initial fee paid
by Operator, less ARCO's costs incurred for site selection and
study and preparation of engineering and other plans for the
Premises and any other costs incurred by ARCO in contemplation
of Operator operating an am/pm mini market. If ARCO elects not
to execute the Agreement, ARCO shall return, in full, any
initial fee paid by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises,
if any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred
for site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the Agreement
because Operator is unable to obtain all necessary
construction permits and, under certain conditions, a beer and
wine license; or (ii) ARCO terminates the Agreement because of
Operator's failure to obtain permits within 12 months from the
receipt of final plans and/or complete construction or
conversion of the Premises to suitable am/pm mini market
facilities within 24 months from the receipt of final plans,
for reasons not within Operator's control or Operator's
failure to obtain a beer and wine license, if available in the
jurisdiction in which Operator's am/pm mini market is located.
Except if ARCO's expenses exceed one-half of the initial fee,
in which case ARCO shall deduct its expenses as set forth in
the first sentence of this subsection (3), one-half of the
initial fee shall be returned to Operator if ARCO terminates
the Agreement because of Operator's failure to obtain permits
for and/or complete construction or conversion within the
prescribed time for any other reason.
(4) The initial fee shall be prorated on a monthly basis over
the term of the Agreement and shall be refundable or payable
on such prorated basis if ARCO terminates the Agreement for
the following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation, for
more than 90 consecutive days, which renders
Operator unable to provide for the continued
proper operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part;
of the Premises pursuant to the power of eminent
domain;
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(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and in
the normal course of business to withdraw from and
to no longer maintain the marketing of Motor Fuels
through retail outlets or the am/pm mini market
franchise in the relevant geographic market area
in which Operator's am/pm mini market is located.
In the event Operator's initial fee is returned in whole
or in part for any of the foregoing reasons, no interest shall
be paid on the amount returned.
ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02 (a) Unless otherwise agreed to in writing by the parties, Operator
shall pay ARCO, as a monthly royalty fee, six percent (6%) of the monthly gross
sales, as that term is hereinafter defined, but not less than the minimum
royalty fee set forth in PART I; provided, however, that if Operator operates a
Store that is accessible to pedestrian traffic only, unless otherwise agreed to
in writing by the parties, commencing on the Commencement Date, Operator shall
pay ARCO, as a monthly royalty fee, five percent (5%) of the monthly gross
sales, but not less than the minimum royalty fee set forth in PART I.
Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term of this Agreement. For any month this Agreement is in effect
which is less than a full calendar month, the minimum monthly royalty fee shall
be prorated on a daily basis.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated as
described below.
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(1) Gross sales shall be valued in United States currency,
whether received in that form or otherwise, without deduction on
account of any of the following:
(i) the cost of the goods sold, including taxes paid by
Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
(i) all sales of merchandise made from or in the Store
or in the immediate vicinity of the store, such as a cart or
sidewalk sale;
(ii) all compensation received for services performed
from or in the Store including but not limited to, commissions
and referral, commissions on lottery and lotto tickets
(including all payments by state agencies for the sale of
tickets and for the redeeming of winning tickets), handling
and placement fees and fees for placement of coin operated and
other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a
physical inventory is taken of merchandise currently held for sale
in the Store: as required in Section 15.03 (b). The inventory
variation is defined as either the inventory gain (physical
inventory value is greater than book inventory) or the inventory
loss (book inventory value is greater than physical inventory). The
inventory variation subject to gross sales calculation for royalty
reporting is the inventory variation in excess of the allowable
variation. Detailed calculations for variations and allowable
variations are further described in the Store Systems Manual.
(4) The following are not included in gross sales:
(i) gasoline and other motor fuel sales, if any,
including all applicable motor fuel and sales taxes;
(ii) any deposits refunded to customers;
(iii) sale price of property returned by customer when
the full sale price is refunded either in cash or credit.
Where the customer is required to exchange returned
merchandise for other new merchandise, the cashier is required
to ring the sale of the new merchandise on the register and
the sale of the new merchandise is included in gross sales
subject to royalty. For the purpose of this paragraph, refund
or credit of the entire amount shall be deemed to be given
when the purchase price less rehandling and restocking costs,
is refunded or credited to the customer;
(iv) the amount of any tax imposed by the United States
or any city, county, state, or other governmental entity or
agency or instrumentality thereof upon or with respect to
retail sales of tangible personal property measured by a
stated
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percentage of sales price or gross receipts, whether imposed
upon the Operator, as a seller, or upon the customer, as a
purchaser.
(v) for newly constructed or converted am/pm mini
markets only, store sales made during the first 7 days of the
term of the franchise, i.e., during the period comprised of
the Commencement Date as established by the "Notice of Final
Inspection and Readiness" and the next succeeding 6 days of
initial operation.
(vi) store sales made during an eligible Grand Opening
Event for a new store, or for an existing store, following
completion of ARCO-approved remodeling or rebuilding. An
eligible Grand Opening Event, which event is not to exceed
seven consecutive days, is more fully described in Article
14.02 hereof.
Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of the calendar month
succeeding the month in which the sales were made for which said fee is due.
Payment of the royalty fee shall be made in accordance herewith and with forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set forth
in PART I on or before the Commencement Date of this Agreement. If Operator
shall be in default at any time in the performance of any of the terms and
conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing on
the Commencement Date, Operator shall pay an advertising and promotion fee for
each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is defined in
Section 7.02 above.) At any time during the term hereof, on thirty (30) days'
prior written notice to Operator, ARCO may increase or decrease the advertising
and promotion fee, but the total advertising and promotion fee may not be
increased to more than five and one-half percent (5.5%) at any time during the
term of this Agreement and ARCO may not increase the fee by more than one
percent (1%) in any calendar year. The advertising and promotion fee is payable
on or before the tenth (10th) day of the calendar month succeeding the month in
which sales were made upon which the fee is calculated. In addition, Operator
may be required to pay shipping costs, plus the cost of replacement signs, if
Operator requests duplicate signage.
7.05 Any fees and other amounts due and owing ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, c/o
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Citibank NA. For Credit to APC National Credit #4051-4874, New York, New York
10043," and to no other bank or account number unless so advised in writing by
the Credit Manager, ARCO Products Company. If such Agreement requires or permits
payment by automated clearing house ("ACH"), all such payments shall be made to
"ARCO Products Company, c/o Citibank Delaware, For Credit to APC National Credit
- - ACH #3815-2114, New Castle, Delaware 19720," and to no other bank or account
number unless so advised in writing by the Credit Manager, ARCO Products
Company. If such Agreement requires or permits payment by electronic funds
transfer ("EFT"), all such payments shall be made in strict accord with
procedures established and promulgated by the ARCO Products Company credit
department. Operator agrees to indemnify ARCO for any loss or expense caused by
Operator's failure to comply with this Paragraph. Payment shall be deemed made
when, and only when, its receipt has been verified by ARCO. Receipt by ARCO of
any monies due ARCO after notice of termination or nonrenewal does not
constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in strict
accordance with all applicable federal, state and local laws, ordinances, rules,
regulations and lawful directives or orders of public officials administering
such laws. Operator agrees to immediately notify ARCO, in writing, of any
citations, notices of violation or other communications alleging violations of
federal, state or local laws, ordinances, rules, regulations, directives or
orders, affecting the operation of the Store and Premises.
8.03 Operator represents and warrants that as of the date hereof Operator
is in compliance with all leases, contracts and agreements affecting the
Premises and Operator's use and possession of the Premises.
ARTICLE 9
Utilities
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9.01 Operator shall be solely responsible for all costs of and taxes and
assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
10.02 In addition to the requirements of Section 10.01, Operator shall
perform all maintenance, repairs, and replacement, as necessary, of the
Premises, Store and Store Equipment, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious physical
damage shall exclude damages by the elements and acts of God. ARCO shall make
all necessary repairs and replacements to the Loaned Store Equipment resulting
from each such incidence of accidental or malicious physical damage and deduct
all costs so incurred from Operator's security deposit and shall pursue
collection from the person(s) reported by Operator to ARCO as having caused such
damages. Immediately upon such deduction of costs so incurred, Operator shall
pay to ARCO an amount equal to that portion of the security deposit so deducted
so as to restore said security deposit to the amount set forth in PART I.
Operator agrees to execute and deliver any instruments and papers and do
whatever else is necessary or required in order for ARCO to pursue such
collection efforts on behalf of Operator for the amount deducted from Operator's
security deposit. If ARCO's collection efforts result in repayment for all costs
incurred by ARCO in making all necessary repairs and replacements for such an
incidence and in collecting such repayment, ARCO shall reimburse Operator for
the amount deducted from Operator's security deposit. If ARCO's collection
efforts result in partial repayment for all such costs incurred, ARCO shall
reimburse Operator only to the extent that the amount collected and the amount
deducted from Operator's security deposit taken together exceed the total amount
of cost of collection and of repair and replacement incurred by ARCO. Operator
shall return all Loaned Store Equipment to ARCO at the termination or expiration
of this Agreement in the same condition which existed at the time the Loaned
Store Equipment was delivered to Operator, subject to normal wear and tear.
Notwithstanding the foregoing, in the event of destruction of the Premises
to the extent that the normal authorized uses are no longer practicable, either
party may terminate this Agreement within 120 days of such destruction by giving
the other party written notice. The effective date of such termination shall
relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to be
reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable times
and the right to remain on the Premises for examination and inspection of the
Premises, Store, Store Equipment, Operator's books, records and reports and for
any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost
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incurred in performing such maintenance and repair and the full replacement
cost, without discount or adjustment for any difference between the remaining
term of the franchise and the useful life of the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video Surveillance
equipment for its intended purpose consistent with the manufacturer's
instructions and ARCO's specifications and maintain at all times the equipment,
including all of its components, in good working order.
ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from and
against all claims, losses and damages for personal injury or death (whether to
third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
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Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in whatever form, shall be deemed to benefit
Operator. ARCO shall make no accounting to Operator of the expenditure of
advertising and promotion fees or promotional and other allowances. ARCO may
condition Operator's eligibility for and receipt of promotional, display and
other allowances on Operator's observance of maximum retail selling prices
determined by ARCO or maximum gross profit margins determined by ARCO or a
reduction in Franchisee's retail selling price commensurate with the amount of
the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
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13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A suggested
electronic file or the product file will also be available for the operation of
the Point of Sale scannable register(s).
14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and
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shall permit ARCO and its representatives to enter the Premises and the Store to
examine Operator's business records at all reasonable times. In addition, in
executing this Agreement, Operator grants ARCO the right to electronically
collect certain sales data via Operator's point-of-sale ("P.O.S.") system,
including scanning devices, for purposes of verifying fees and analyzing sales,
as more fully described in the am/pm Store Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance with the terms and
conditions of the franchise; in the event such mystery shops result in a fee
verification review/audit, regardless of whether such review discloses a
deficiency, Operator shall be required to pay ARCO its reasonable costs in
performing the review, including the then-current cost of the mystery shops
(currently $36 each). If a review or audit discloses a liability for royalty,
advertising and promotion fees due to ARCO, Operator shall pay promptly the
amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any
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authorization for release of statements and cancelled checks to ARCO as may be
requited in order for ARCO to obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall provide
reports, statements and data to ARCO as described below and as described more
fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty fee
calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the service
performing the inventory of the total amount of inventory in the Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all am/pm
franchises, Operator shall provide to ARCO, or to an accounting service
designated by ARCO, such reports and data as are reasonably requested by
ARCO for such purposes and as are more fully described in the Systems
Manual. Such reports and data shall be in a format as designated by ARCO
and transmitted to ARCO, at ARCO's option, either by diskette or
electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise Accounting
System ("F.A.S."), which Operator is required to use, and other bookkeeping,
accounting and physical inventory services. Such services are more fully
described in the Systems Manual. Except for F.A.S., which Operator is required
to use, Operator may elect not to use the other bookkeeping, accounting and
inventory services offered by ARCO and may obtain, at its expense, any other
bookkeeping, accounting and inventory services for Operator's business as
Operator desires. Operator shall nevertheless be required to provide to ARCO, or
to an accounting service designated by ARCO, the information referred to in
Section 15.03.
15.05 The provisions of Article 15 shall survive termination or expiration
of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
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The person(s) required to attend and satisfactorily complete the training
programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
o The sole proprietor, if Operator is a sole proprietor;
o All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
o All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
o All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC). If
no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the general
partner, or if more than one, the general partners), all
shareholders in a corporation or all members in an LLC must
successfully complete the training programs.
2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below: If
Operator has more than one am/pm mini market, Operator must have one
employee who has attended and successfully completed an four week
am/pm Store Manager training program and who is employed on a full
time basis at each store.
16.02 Following is a description of ARCO training programs in connection
with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee, or
any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
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The initial franchisee training program is currently seven weeks, but may
be increased or decreased at ARCO's election, and may include nighttime hours in
connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's assignee(s),
who are required to pay tuition for the initial franchisee training program at
the then-current rate (currently the tuition for the 7-week program is $15,000),
no tuition shall be charged for the initial training program for Operator, or
for one or two employees eligible for training if they attend before or within
thirty-six (36) months after the Commencement Date of the initial Store
Agreement between Operator and ARCO for the Premises. Attendance by additional
persons shall be subject to tuition payable by Operator at the current rate. The
current tuition is $7,500 per additional person, but that is subject to
increase. Tuition must be paid, at ARCO's then-current rate for initial
training, for more than two persons, regardless of whether such persons in
excess of two are partners, shareholders or eligible employees of Operator. If
the franchise is transferred within thirty-six (36) months, a separate training
fee must be paid by the transferee even if only one person has been trained up
to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as
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may be mutually convenient, provided, however, that the cost of such additional
instruction, including transportation, food, lodging and reasonable charges for
time and services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the Employee
Training System, which replacement system will be required when available. It is
estimated that the replacement system will use CD-Rom technology and will be
utilized with personal computers. The current cost for the training materials is
estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of the transfer fee payable to ARCO in
the event of an assignment to a third party. If ARCO does not accept the offer
within 30 days, operator may assign to a third party subject to ARCO's prior
written consort. If Operator offers a lower price or more favorable terms which
have the effect of a lower price to the third party, ARCO's right of first
refusal shall be triggered again and Operator must make the offer to ARCO. If
Operator's proposed assignee has not enrolled in the next available training
school within 90 days after making the original offer to ARCO, the request
assignment will be considered abandoned by the Operator. A further request for
assignment will again trigger the right of first refusal. If the assignment has
not been completed within 210 days after making the original offer to ARCO, the
request for assignment will be considered abandoned by the operator. Any further
request for assignment will again trigger the right of first refusal. All
communications between ARCO and Operator with regard to the assignment, right of
first refusal, offers, withdrawals, changes in terms and acceptances must be in
writing. In any event, Operator may not assign this Agreement and Operator's
interest in the real property and improvements without the prior written consent
of ARCO, which consent shall not be unreasonably withheld. In order to allow
ARCO adequate time to process an assignment request, any such request for ARCO's
consent to an assignment received 45 days or less before the expiration of the
Store Agreement shall be considered for a subsequent Store Agreement between
Operator and ARCO, if such subsequent Agreement has been offered and accepted by
the parties, and shall be in compliance with the provisions of such subsequent
Agreement. Prior to giving its written consent, ARCO has the right to review or
audit Operator's business records, including but not limited to those relating
to the value
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of inventories at cost, and ARCO shall consider, among other things, the
qualifications, character, apparent ability and creditworthiness of the proposed
transferee and such other factors as ARCO deems appropriate, including but not
limited to the following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the time
of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of an
am/pm mini market, the proposed transferee and any employees who must be
trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training tuition
fee is due and payable by means of a cashier's check before the proposed
transferee begins training school. For prospective transferees, the
training tuition fee, which is payable by the prospective transferee to
ARCO regardless of whether or not the transferor is subject to payment of
a transfer fee, shall be refunded in full in the event ARCO refines its
consent to the transfer prior to the proposed transferee attending ARCO's
training program. In the event that ARCO refuses its consent after the
prospective transferee has started attending ARCO's training program or
the prospective transferee withdraws from the training program, ARCO shall
prorate the refund based on any remainder of training to be completed. The
training tuition fee is not refundable in whole or in part upon completion
of the training program. If the proposed transferee is a sole proprietor
or single shareholder corporation, ARCO shall offer to train and not
charge tuition for one employee of the proposed transferee who attends the
initial training within twelve months after the effective date of the
assignment. ARCO shall not reimburse the proposed transferee for any
expenses incurred in connection with attendance at the training program of
the transferee or the transferee's employee. An initial supply of 20
uniforms must be ordered by the transferee while attending ARCO's training
program at ARCO's training center. In addition, prior to the effective
date of the transfer and as a condition of ARCO granting its consent to
the transfer. ARCO shall require that the transferor has all then current
"Merchandising Accessories Items Required" on hand in the Store and in
good condition and that any such items that are no longer clean, workable
and presentable or outdated be replaced by items meeting ARCO's
then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent, in
the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the
effective date of the assignment, all of the agreements and Operator's
duties and obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's
rights under this Agreement and shall release and discharge ARCO from all
duties and obligations to Operator in connection with this Agreement as of
the effective date of the assignment; whereupon Operator
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shall have no further rights, duties or obligations under this Agreement,
except for those obligations that survive the termination of the Store
Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO
of all required approvals of federal, state and local governmental
entities, agencies or instrumentalities thereof or of any third person,
including but not limited to, approval for the transfer of, or issuance of
a new beer and wine license, if available in the jurisdiction in which
Operator's store is located
(i) The proposed transferee must satisfactorily meet the
then-current criteria established by ARCO for new am/pm Operators
including, but not limited to, passing an English proficiency test, being
at least 21 years of age and proof of U.S. citizenship or permanent
resident alien status (green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount of
the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be deposited
in escrow, Operator may, in accordance with ARCO's policies in this
regard, direct payment from such escrow of the remaining portion of the
applicable transfer fee to ARCO which must be paid before ARCO's final
consent to the assignment is given or (b) where the proposed transferee's
transfer price for the businesses shall not be deposited in escrow,
Operator may, in accordance with ARCO's policies in this regard, pay the
remaining portion of the applicable transfer fee by means of a cashier's
check payable to ARCO and given to ARCO before ARCO's final consent to the
assignment is given. In the event that ARCO refuses its consent to the
proposed assignment prior to the proposed transferee attending ARCO's
training program, ARCO shall refund all but $1,000 of any transfer fee
paid. In the event that ARCO refuses its consent to the proposed
assignment because the-proposed transferee does not pass the English
proficiency test and before the proposed transferee attends training
school, ARCO shall refund all but $300 of any transfer fee paid.
Otherwise, the transfer fee is not refundable in whole or in part and
shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event that
Operator requests ARCO to consent to an assignment of Operator's franchise
to: (1) Operator's spouse, adult natural or adopted child, or parent; (2)
a sole proprietorship in which the current shareholder of Operator, which
is a single shareholder corporation, shall be the sole proprietor, (3) a
partnership in which there are only two partners, current Operator as an
individual and one other person, and in which the current Operator has at
least a fifty percent interest; (4) a corporation in which there are only
two shareholders, current Operator as an individual and one other person,
and in which the sole shareholder of the current Operator has at least
fifty percent of the issued and outstanding voting shares of stock; (5) a
corporation in which current Operator, as an individual shareholder, owns
one hundred percent of the issued and outstanding voting shares of stock;
(6) if Operator is a corporation, the transfer of less than fifty percent
of the issued and outstanding voting shares of stock; or (7) the
dissolution of a two-partner partnership or a two-shareholder corporation
resulting in one of the former partners remaining as the sole proprietor,
or one of the former shareholders remaining as the sole shareholder of the
corporation or as a sole proprietor and the remaining partner or
shareholder or sole proprietor had at least a fifty percent interest in
the partnership or corporation prior to the dissolution.
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ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through merger,
consolidation, organization or reorganization without the prior written consent
of ARCO and except upon such terms and conditions as ARCO shall then require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent to
any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights or
interests under this Agreement and Operator's interest in the real property and
improvements without having received the
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prior written consent of ARCO shall constitute a material breach of this
Agreement and ARCO shall have the right to terminate this Agreement upon written
notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all or
any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations hereunder
and fails to cure such default within thirty (30) days after receipt of written
notice of default from Operator, Operator shall have the right to terminate this
Agreement by giving ARCO not less than fifteen (15) days' prior written notice
of termination.
18.02 This Agreement may be terminated at any time by mutual agreement in
writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business
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of the am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results in
Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance with
the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner or
the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in- interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or all
or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate Designee
or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or more
in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business or
system.
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n. ARCO makes a reasonable determination that continued operation
of the franchise by the Operator will result in an imminent
danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of the
Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of such
termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service mark or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service mark or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove
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any loaned am/pm Store Equipment and to de-identify any Operator
owned equipment that bears the service mark or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to enter
the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article 1
hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
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Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j) above,
this Agreement shall not terminate upon the death or incapacitation for more
than 90 consecutive days, of Operator if Operator, prior to his or her death or
incapacitation, designates a successor-in-interest to his or her interest in
this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator is
a sole proprietor, the sole proprietor, if Operator is a partnership, a partner
of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days after
the death or incapacitation, for more than 90 consecutive days, of Operator to
give written notice of his or her intention (the "Notice of Intention") to
assume and operate the franchise or, in the case of a successor-in-interest to
the corporate designer, written notice of his or her intention to personally
guarantee performance hereof by the corporate franchisee. The notification shall
contain such information regarding business experience and creditworthiness as
is reasonably required by ARCO. Except as described more fully below, unless the
successor-in-interest has previously been trained by ARCO pursuant to ARCO's
current 7 week training program for the operation of an am/pm mini market, the
successor-in-interest must attend and successfully complete such training as is
then required by ARCO for new franchisees and within 21 days after giving the
Notice of Intention commence such training. In addition, ARCO must approve or
disapprove the successor-in-interest within 10 days after the successor-interest
completes such training. If the successor-in-interest successfully completes
training and is approved by ARCO, ARCO shall give notice of approval to the
successor-in-interest and the successor-in-interest must commence operation of
the franchise (or execute a guarantee of performance by a corporate franchisee)
within 10 days after receipt of such notice by ARCO. The successor-in-interest
shall be required to pay tuition at the then-current rate for assignees and
successors-in-intent. Provided, however, that if there is an Operational
Designee who is different from the Corporate Designee successor-in-interest, it
is the Operational Designee, who must attend and successfully complete the
initial training, unless such Operational Designee has previously been gained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market. An initial supply of 20 uniforms must be ordered by the
successor-in-interest while attending ARCO's training program at ARCO's training
center.
20.04 The franchise available to the successor-in-interest pursuant hereto
is intended to be no greater than the franchise as it exists in the name of the
deceased or incapacitated Operator (or, in the case of a corporate franchisee,
with the deceased or incapacitated Operator as Guarantor) at the time of such
Operator's death or incapacitation. The term of the franchise shall not be
extended by reason of the successor-in-interest assuming (or guaranteeing) the
franchise and ARCO may change the terms of the
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franchise upon its renewal, if it is renewed. ARCO may require Operator to
arrange for the discharge or performance of other franchise obligations such as,
but not limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate
successor-in-interest. The alternate, if one is designated, shall have no right
to assume and operate (or guarantee) the franchise or Operator's interest in the
franchise, as applicable, in the event of any exercise of rights by the primary
successor-in-interest. If the alternate desires to assume and operate (or
guarantee) the franchise or Operator's interest in the franchise, as applicable,
in the event the primary successor-in-interest, fails to do so the alternate
must give notice of intention to do so and otherwise comply with Section 20.03.
(In the case of Concurrent Operations, the primary successor-in-interest, if one
is designated, must be one and the same person designated as the primary
successor-in-interest to succeed to Operator's interest in all agreements
relating to all businesses conducted at the Premises; the alternate successor,
if one is designated, must be one and the same person designated as the
alternate successor-in-interest to succeed to Operator's interest in all
agreements relating to all businesses conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no operation
of the franchise following the death or incapacitation of Operator by anyone
until all parts of the franchise have been expressly assumed as herein provided,
including, but not limited to, such items as licensing and tax permits.
20.07 If the successor-in-interest assumes the franchise (or, in the cast
of a corporate franchisee, guarantees the franchise), the successor-in-interest
shall account to the heirs or estate of the deceased or incapacitated Operator
(or, in the case of a corporate franchisee, to the corporation) for the value or
other disposition of personal property of the Operator located at or related to
the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO each
incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals, as
from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral representations,
stipulations, warranties or understandings, express or implied, with respect to
the subject matter of this Agreement which are not fully set forth herein and in
the Manuals, and all prior or contemporaneous promises, representations,
agreements or understandings, express or implied, in connection with the Store
and the am/pm franchise are expressly merged herein and in the Manuals
incorporated herein by reference.
21.04 Compliance with Applicable Laws. In the event any provisions of this
Agreement provide for periods of notice less than those required by applicable
law, provide for termination other than in accordance with applicable law or are
otherwise inconsistent with applicable law, to the extent such provisions are
inconsistent with applicable law, they shall not be effective and ARCO and
Operator shall comply with applicable law regarding such matters.
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21.05 Excused Performance. In the event that either party hereto shall be
delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If the
excused performance is for a period less than a full month, the minimum royalty
fee shall be prorated for such partial month and Operator shall pay, as a
royalty fee for such month, the greater of the royalty fee based on a percentage
of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices required
or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require performance of
any provision of this Agreement shall not affect either party's right to require
full performance thereof at any time thereafter and the waiver by either
Operator or ARCO of any provision hereof shall not constitute or be deemed a
waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration, modification or
waiver of any provision of this Agreement shall be of any effect unless in
writing and signed by Operator and an authorized representative of ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior to
such execution hereof by ARCO shall not be construed as a waiver by ARCO of this
requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include the
masculine, feminine and neuter pronouns.
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Facility: 82064
STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
facility located at 64200 20th St., Palm Springs, California 92258 hereby
represents and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this facility
other than as income, earnings, inheritances, gifts or other
non-investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above, as
well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including without
limitation any misrepresentations regarding assets, debts, credit status
and history, investments and loans and regarding partners, stockholders,
stakeholders, backers, other investors or lenders and regarding
citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ John Castellucci 9-2-99
- --------------------------------- -----------------------------------------
LLO-Gas, Inc. Date
<PAGE>
Exhibit 10.39
Customer Acct # 0883355
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Facility # 82064
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CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and LLO-Gas, Inc. (state whether a sole proprietorship, partnership,
corporation or limited liability company [LLC]; if partnership, the names a
Corporation ("Buyer"). of all partners and State of organization; if
corporation, the State of incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
Palma, in the State of California. Buyer's principal place of business is
located at 23805 Stuart Ranch Road, Suite 265 in the City of Malibu, in the
State of California with the ZIP code 90265. This Agreement constitutes a
"franchise" as defined in the Petroleum Marketing Practices Act, 15 U.S.C.
ss.ss. 2801-2806 ("PMPA").
Recitals
A. ARCO markets motor fuels comprising gasolines and gasoline
containing materials bearing the ARCO(R)trademark and other identifying symbols
(herein collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and
improvements which Buyer would like to operate as a retail facility selling
Gasoline to end users. The property and improvements are located at 64200 20th
St., in the city or town of Palm Springs in the State of California with the ZIP
code 92258. (The "Premises").
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective on
the date first set forth above. Subject to earlier termination under Paragraph
17.1 below, the "Commencement Date" of this Agreement shall begin at 10:00 a.m.
on the _____ day of _______________, _____ and the term shall end at 10:00 a.m.
on the _____ day of _______________, _____. If no Commencement Date is set
forth, at the time this Agreement is executed, the Commencement Date shall be
established by ARCO by notice to Buyer as the date the Premises are ready to
receive Gasoline delivery, which notice shall also set forth the expiration date
which shall be ____ years after the Commencement Date.
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2. Orders. Buyer will order and make available for retail sale all grades
of Gasoline which ARCO offers to Buyer (hereinafter collectively, "Product"), in
amounts sufficient to satisfy all foreseeable retail customer demand for Product
at the Premises and will at all times have available for sale some of each grade
of Product, subject only to allocation of Product by ARCO in a manner determined
in ARCO's sole discretion in Buyer's geographic area. ARCO will use its best
efforts to fill Buyer's orders; however, ARCO may discontinue sale of any grade
of Product at any time upon fifteen (15) calendar days' prior written notice to
Buyer. ARCO reserves the right to provide automatic Gasoline ordering and
delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require a
product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
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financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend credit
to Buyer in whatever amounts, and on whatever terms ARCO alone selects. If ARCO
extends Buyer credit, ARCO may withdraw it at any time without notice and for
any reason. In ARCO's sole judgment, ARCO may do any or all of the following:
(i) require that Buyer pay for Product by cashier's check, money order or bank
wire transfer prior to delivery, (ii) require that Buyer post as irrevocable
letter of credit issued by a bank satisfactory to ARCO, (iii) require Buyer
present evidence of financial solvency, and (iv) declare Buyer in default of
this Agreement if Buyer fails to pay any indebtedness when due, provide evidence
of financial solvency upon request or comply with any other term of this
Agreement. Buyer agrees that regardless of whether and for how long ARCO has
extended it credit, ARCO may cease extending credit at any time and instead
require that payment be made in the manner set forth in this Paragraph or in
Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact nature
of any nonconformity in the type, quantity or price of any Product delivered to
Buyer within thirty (30) calendar days after delivery. Buyer hereby waives any
claim against ARCO based on any nonconformity of which Buyer does not so notify
ARCO.
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9. Record Keeping. For each delivery of Product, Buyer shall at all times
keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
10.A Storage and Dispensers. Buyer will maintain storage tanks or
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection
with the operation of ARCO authorized businesses. Buyer agrees not to tamper
with, alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair
of the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
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<PAGE>
manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed
and bonded armored security service to do the following: make cash pick ups at
least 3 times per week, maintain possession of all keys to the outer door and
the vault of the PIC Equipment, handle all removal of cash cassettes from the
PIC Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video
Surveillance Equipment Program. In addition, Buyer must install, keep
operational and use one or more video surveillance cameras dedicated to
recording the customer activity at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to
use the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required
to upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that with
respect to any Product storage facilities located on the Premises, including
without limitation underground storage tanks and related equipment, Buyer is
solely responsible for taking, and will take the following leak and water
contamination prevention and detection measures:
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<PAGE>
11.1 Stick Readings. Using a properly calibrated wooden tank
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a leak
is confirmed all Product must be removed from the storage tanks immediately and
the tanks secured. In addition, Buyer will keep fill caps tight, keep fill boxes
free of dirt, ice and snow, and immediately remove any water in excess of one
inch (1") in any Product storage tank.
12. Gasoline Regulations.
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
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<PAGE>
12.2 Disclosures and Warnings. Buyer acknowledges that it has been
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
13.1 Payment by Buyer. Buyer will pay promptly when due and hold
ARCO harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor
fuel seller number and use tax registration number. Further, Buyer will provide
ARCO with any information requested by ARCO relating to tax credits claimed by
Buyer for motor fuel, sales, use and other taxes paid by Buyer in connection
with the Product for the purpose of resolving any threatened or pending tax
dispute with any governmental authority or for the purpose of confirming Buyer's
compliance with the terms of this Agreement.
14. Trademarks and Trade Dress.
14.1 Compliance. Within one hundred fifty (150) calendar days after
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
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otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or their
manner of display without prior notice to Buyer. Upon receiving notice of any
withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the
cost of acquiring, transporting and installing certain signs and other trade
dress required hereunder and set forth is Exhibit B, as specified below. The
amount of such reimbursement shall be the lesser of (i) one half of Buyer's
actual verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing reimbursement
shall be in writing and accompanied by all original invoices (of
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which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that the
trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other remedies
available to it, ARCO may offset against any amounts owed to Buyer, the amount
of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph 14.3,
Buyer may be obliged to pay ARCO for any reimbursements received and direct
vendor payments made by ARCO hereunder upon the termination or nonrenewal of
this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained by
Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
15.1 Compliance With Laws and Regulations. Buyer shall comply with
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
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any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of this
Agreement each of the following forms of insurance from a financially sound and
reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with
products-completed operations coverage in amounts of at least $1,000,000
combined single limit each occurrence applicable to personal injury, sickness or
death and loss of or damage to property (with liquor law liability coverage if
Buyer will sell or dispense alcoholic beverages), on which ARCO is named as an
additional insured. Buyer will furnish ARCO with certificates of insurance
evidencing the foregoing coverage and providing that no policy of insurance may
be canceled or materially modified without at least thirty (30) calendar days'
prior written notice to ARCO.
Page 10 of 21
<PAGE>
17. Termination and Nonrenewal.
17.1 Triggering Events for Termination or Nonrenewal. In addition to
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out
the provisions of this Agreement following written notice to Buyer from ARCO of
such failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial
determination of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the
prolonged severe physical or mental disability or disablement of Buyer (if Buyer
is an individual). Buyer's majority shareholder (if Buyer is a corporation) or
any of Buyer's general partners (if Buyer is a partnership) for at least three
(3) months which renders Buyer unable to provide for the continued proper
operation of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of
the Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the
Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO
is legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(1) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
Page 11 of 21
<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a
Loan Agreement and Security Agreement and Related Promissory Note, and Buyer
fails to cure any default under the foregoing Loan Agreement, Loan Agreement and
Security Agreement and Promissory Note as requested, ARCO may terminate this
Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe
and healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal
course of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
Page 12 of 21
<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises, Buyer will repay ARCO all reimbursements
and direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises with a term of more than one year and
Buyer has been a party to an agreement regarding the Premises with ARCO for the
supply of Product for less than thirty-six months, then after the first twelve
months Buyer will pay ARCO, on a pro rata basis as described below, the amount
of all reimbursements and direct payments made by ARCO under Paragraph 14.3 upon
the mutual termination of this Agreement or termination or nonrenewal by Buyer
or by ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
amount
Page 13 of 21
<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the total of
the reimbursements and direct payments made by ARCO under Paragraph 14.3 times
(a) two-thirds during the thirteenth through twenty-fourth month of this
Agreement or (b) one-third during the twenty-fifth through thirty-sixth month of
this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
18.1 Assignment. Buyer will not sell, assign, give or otherwise
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If ARCO
does not exercise its right of first refusal, Buyer may consummate the proposed
transfer, but not at lower price or on more favorable terms than those offered
to ARCO. If Buyer does not do so within ninety (90) calendar days from the date
ARCO received Buyer's written offer, then Buyer must recommence the foregoing
right of first refusal procedure and satisfy the requirements of this Paragraph
18.2. ARCO's exercise of its right of first refusal shall not be dependent on
its prior refusal to approve the proposed transferee. Buyer agrees to execute a
memorandum of this
Page 14 of 21
<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
Page 15 of 21
<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all applicable
government requirements and obtain and maintain all necessary licenses and
permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver such
other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO may
establish additional ARCO or other brand or no brand Gasoline facilities in any
location and proximity to the Premises.
Page 16 of 21
<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise be
governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this Agreement
are intended solely for convenience of reference and shall not in any way or
manner amplify, limit, modify or otherwise affect the interpretation of any
provision of this Agreement, and the neuter gender and the singular or plural
number shall be deemed to include the other genders or numbers whenever the
context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castillucci
- ------------------------------------ --------------------------------------
Name Name /s/John Castillucci
Title: Manager Title: President
------------------------------ --------------------------------
Witness: /s/ Hollie Johnson Witness: /s/ Denise Newton
--------------------------- ------------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
Page 17 of 21
<PAGE>
trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
_____________________________________ _______________________________________
Name Name
Title: _______________________________ Title:_________________________________
Witness: _____________________________ Witness:_______________________________
Page 18 of 21
<PAGE>
Exhibit A
Trade Dress Requirements
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
Page 19 of 21
<PAGE>
Exhibit B
Shared Trade Dress Costs
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs -
Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
Page 20 of 21
<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
and (2) Hughes Indoor Unit - Satellite
Receiver (3) Deicer (if required for
colder climate)
</TABLE>
Page 21 of 21
<PAGE>
Exhibit 10.40
AMENDMENT TO CONTRACT
DEALER GASOLINE AGREEMENT
(Branded Diesel Fuel)
Facility: 82064
Customer Account: 0883355
THIS AMENDMENT, dated as of Sept. 2, 1999, amends the Contract Dealer Gasoline
Agreement ("Agreement") dated Sept. 2, 1999, between ARCO Products Company (a
division of Atlantic Richfield Company, incorporated in Delaware) ("ARCO") and
LLO-Gas, Inc. ("Buyer") with delivery premises at 64200 20th St., Palm Springs,
California 92258 ("Premises").
It is hereby agreed by and between the parties that effective on the date
written above or the Commencement Date of the Agreement, whichever is later, the
Agreement is hereby amended to provide that except as set forthbelow, any
references to "motor fuels comprising gasolines and gasoline-containing
materials bearing the ARCO trademark and other identifying symbols," "gasoline"
and "product" shall be construed to include such motor fuels comprising diesel
fuel and diesel fuel-containing materials bearing the ARCO trademark and other
identifying symbols ("ARCO branded diesel fuels and diesel fuel-containing
materials") as Buyer may purchase and receive from ARCO and ARCO may sell and
deliver to Buyer at the Premises during the term hereof.
It is understood and agreed by and between the parties that Temporary Voluntary
Allowances ("TVA's") are not applicable to diesel fuel or diesel fuel-containing
materials and, therefore, the terms and conditions relating to TVA's set forth
in the Prices provisions, Paragraph 5 of the Agreement, are not amended and
supplemented by this Amendment. It is further understood and agreed by and
between the parties that, except as herein specifically amended and
supplemented, all other terms and conditions of the Agreement, as previously
amended and supplemented, shall be and remain in full force and effect.
This Amendment automatically supercedes and terminates, as of the Effective Date
hereof, any and all other contracts, agreements or understandings between the
parties covering the sale and delivery of ARCO branded fuels and diesel
fuel-containing materials to Buyer at the Premises for resale therefrom.
BUYER ACKNOWLEDGES THAT BUYER HAS READ THIS AMENDMENT AND FULLY UNDERSTANDS ALL
OF THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
This Amendment is not binding until executed by Buyer and by an authorized
officer or manager of ARCO.
IN WITNESS WHEREOF, the parties have executed this Amendment.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9/2/99
- ------------------------------------- -------------------------------------
Date Date
/s/ Hollie Johnson 9/2/99 /s/ Denise Newton 9/2/99
- ------------------------------------- -------------------------------------
Date Date
<PAGE>
Exhibit 10.41
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Karon Shells
Street: 4 Centerpointe Drive
City &: La Palma
State: California 90623-1066
- --------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
Facility: 82064
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated Sept. 2,
1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located at 64200
20th St., Palm Springs, California 92258, and ARCO Products Company, a division
of Atlantic Richfield Company, a Delaware corporation, with offices at 1055 West
Seventh Street (P.O. Box 2570) in Los Angeles, California 90051-0570 ("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of 64200 20th St., in the
city of Palm Springs, in the state of California, and more specifically
described in Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in
that certain Contract Dealer Gasoline Agreement between the parties hereto,
dated, Sept. 2, 1999, and this Memorandum of Contract Dealer Gasoline Agreement
is subject to all the covenants, conditions and terms set forth in that
Agreement, which is hereby adopted herein and made a part hereof as if all the
covenants, conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
By: /s/ John Castellucci
-------------------------------------
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
-------------------------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
County of Orange
On 9/2/99 before me, Hollie Johnson, Notary Public
------- --------------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE, NOTARY PUBLIC
personally appeared John Castellucci
------------------------------------------------------------
|X| proved to me on the basis of satisfactory
evidence to be the person(s) whose names)
[S E A L] are subscribed to the within instrument
and acknowledged to me that they executed
the same in their authorized
capacity(ies), and that by their
signatures(s) on the instrument the
person(s), or the entity upon behalf of
which the person(s) acted, executed the
instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-----------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
|_| INDIVIDUAL
|X| CORPORATE OFFICER
Memorandum of CDGA 82064
- ------------------------------------ --------------------------------------
TITLE OR TYPE OF DOCUMENTS
|_| PARTNERS |_| LIMITED
|_| GENERAL 1
--------------------------------------
NUMBER OF PAGES
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: 9/2/99
--------------------------------
- ----------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- ------------------------------------ --------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
- ------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
County of Orange
On 9/2/99 before me, Hollie Johnson, Notary Public
------- --------------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE, NOTARY PUBLIC
personally appeared Connie Carroll
------------------------------------------------------------
|X| Personally known to me to be the person(s)
whose names) are subscribed to the
[S E A L]
within instrument and acknowledged to me that they
executed the same in their authorized capacity(ies), and
that by their signatures(s) on the instrument the
person(s), or the entity upon behalf of which the
person(s) acted, executed the instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-----------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
|_| INDIVIDUAL
|X| CORPORATE OFFICER
Manager Memorandum of CDGA 82064
- ------------------------------------ --------------------------------------
TITLE OR TYPE OF DOCUMENTS
|_| PARTNERS |_| LIMITED
|_| GENERAL 1
--------------------------------------
NUMBER OF PAGES
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: 9/2/99
--------------------------------
- ----------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
ARCO Products Co. None
- ------------------------------------ --------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
- ------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.42
Facility Number: 82064
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc.
("Franchisee"), the operator of an ARCO location located at 4100
California Ave., Bakersfield, California 93309 ("Facility").
1. Agreement
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain
products or services may be purchased or performed, e.g. that gasoline may
be pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or
service or receiving cash or a refund from Franchisee through use of the
PayPoint Network to which a participating Financial Institution responds
with an approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute
agreements with Franchisor to participate in or provide services through
the PayPoint Network.
3. PayPoint Network Description
The PayPoint Network shall enable Cardholders to receive cash or to pay
for purchases of products and services by means other than cash, money
order or check. Each Cardholder shall use an access card to initiate a
Transaction. Franchisee shall promptly honor all valid access cards when
presented by Cardholders and shall treat Cardholders from all
participating Financial Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use one or more
Island Card Reader devices ("ICR Device") that are in communication with
the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key
pad. The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via
the PayPoint Account(s). Franchisee shall not permit anyone to complete a
Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between
Franchisee and Franchisor or, where applicable, the first day of the
thirteenth month following the Commencement Date, Franchisee shall pay to
Franchisor, for participation in the PayPoint Network, transaction fees in
the amount set forth on Exhibit A, which is incorporated herein, made a
part hereof and attached hereto. Such fees shall be due and payable to
Franchisor on or before the tenth day of the month following the month in
which such fees were incurred during the term of this Addendum. Provided,
however, that if Franchisee installs and ICR device at the Facility prior
to the Commencement Date and operates it thereafter, Franchisee shall pay
no fees for participation in the PayPoint Network for the first twelve
months following the Commencement Date and 50% of the applicable fees for
the balance of the term of this Agreement. The term "Commencement Date"
shall mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a
Cardholder at the Facility, is provided to Franchisee through the PayPoint
Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a
new Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee ARCO Retailer) and Franchisee has installed and is operating an
ICR Device and is therefore eligible for the waiver of transaction fees as
set forth above, Franchisee shall pay no transaction fees for
participation in the PayPoint Network for the number of months remaining
of the original twelve month waiver period following the original
Commencement Date referred to in this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to
terminate this Addendum at the end of the thirteenth month following the
Commencement Date, as provided below for Franchisees on their initial
PayPoint agreement, Franchisee shall pay Franchisor as set forth on
Exhibit D, attached hereto, incorporated herein and made a part hereof,
for disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and
sales, use, rental, gross receipts, inventory, excise, income and any
other taxes (including interest, penalties, and additions to tax) imposed
by any federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this
Addendum. Franchisee agrees to pay promptly when due and to hold
Franchisor harmless from all sales or use taxes and other similar taxes
(including interest, penalties and additions to tax) imposed upon or with
respect to charges or the use of any loaned property. Franchisee shall
furnish to Franchisor, promptly upon request, any documentation, which in
Franchisor's discretion is required to evidence the payment of any tax,
including, but not limited to, official receipts of the appropriate taxing
authorities, copies of tax returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving
Franchisor at least 30 days prior written notice, to terminate this
Addendum; to downgrade the number of PayPoint Electronic Cashiers (Island
CardReaders), if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
Franchisee shall require each Cardholder to enter his or her PIN on the
POS Equipment at the Facility in order to initiate a Transaction, except
to complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be
transmitted "in the clear."
6. Transaction Approval or Denial
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint
Network
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
Franchisor and Franchisee shall cooperate to resolve any system
malfunction or problem that interrupts normal operation of the PayPoint
Network. Franchisor shall provide instructions and procedures for the
handling of Transactions that are initiated when communications between
Franchisor, the participating Financial Institutions and the Franchisee
location are interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
Cardholder refund transactions shall not be processed electronically, ,
but shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has
not forwarded such amount to Franchisor within a period of time specified
in a notice to the Franchisee. Such third party beneficiary rights shall
be enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
(a) Cardholder Disputes
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time
limits. Franchisee agrees to cooperate with Franchisor and participating
Financial Institutions to resolve Cardholder disputes or inquiries about
PayPoint Network Transactions. To facilitate resolution of Cardholder
disputes, Franchisee shall retain, for a period of at least one hundred
eighty (180) days, copies of receipts issued to Cardholders pursuant to
Paragraph 10 of this Addendum, or reports from which Transaction
information can be retrieved. In response to an oral request by Franchisor
or a participating Financial Institution, to be confirmed in writing,
Franchisee shall, within three (3) Working Days of the oral request, send
documentation to Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the
requested information within three (3) Working Days, Franchisor shall, at
the request of the participating Financial Institution, debit Franchisee's
Trade Statement or electronically debit the Retailer's Account, for the
amount disputed by the Cardholder and credit, through the participating
Financial Institution, the Cardholder's deposit account for the amount
disputed. The obligations of this Paragraph 11 shall survive termination
of this Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by
check.
(c) Disputes Over-Merchandise or Service
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with
Cardholders and shall indemnify and hold Franchisor and participating
Financial Institutions harmless from any claim, action, damage or expense,
including strict liability in tort, arising out of such disputes or the
sale of goods or services by Franchisee; provided, however, to the extent
Franchisee's petroleum or non-petroleum franchise agreements, if any, are
contrary to this provision as to Franchisor, such petroleum or
non-petroleum franchise agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right
to debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
Franchisor shall process all approved Transactions captured each
Settlement Day and any preceding non-Settlement Day and make arrangements
for the funds to which Franchisee is entitled to be deposited into his or
her Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by
way of the POS Terminal, if possible; otherwise, by way of, written
reports. Franchisor shall also mail to Franchisee, on request, summary
reports of PayPoint Network Transactions at the Facility.
14. Term: Termination
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer,"
i.e., a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum
for any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating
Financial Institutions' trademarks, trade names and trade indicia and
shall remove all decals and signs indicating Franchisee's participation in
the PayPoint Network and, if Franchisee is terminated for cause or because
he/she has been designated a Special Franchisee, Franchisee shall pay the
applicable amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in
the PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
Franchisee acknowledges that all information that is disclosed to, or
comes to the attention of Franchisee for purposes of the development or
operation of any aspect of the PayPoint Network (herein "Information") is
strictly confidential. Franchisee agrees that Franchisee shall not use for
any purpose other than Franchisee's use of the PayPoint Network or
disclose said Information or knowingly permit Franchisee's employees or
contractors to disclose said Information to any person outside Franchisor
and Franchisee, or to any employee or contractor of Franchisor or
Franchisee who does not have a specific need to know in performance of
work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of
information relating to sales by Franchisee (herein "Sales Information")
other than to Financial Institutions and other third parties who require
access to Sales Information for purposes relating to Franchisee's use of
or Franchisor's operation of the PayPoint Network. Franchisor's obligation
of non-disclosure shall not apply to any Sales Information which is or
becomes available to the public other than through breach of this Addendum
by Franchisor. It is presently Franchisor's policy (which may be changed
at any time by Franchisor at its sole option without notice) to destroy
all records of Sales Information after two (2) years. Franchisor's
obligation of non-disclosure with respect to Sales Information shall
terminate upon destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved
by Franchisor and such equipment is maintained in good operating order and
is operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the
PayPoint Network, and to satisfy itself that services are being provided
to the public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or
such institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any
time by giving Franchisee not less than thirty (30) days prior written
notice thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor,
it is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering
or defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks
and any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such
prior written consent shall be void and any assignment or delegation to
which Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfield Company
/s/ Connie Carroll 9/2/99 /s/ John Castellucci 9-2-99
- --------------------------------------- ---------------------------------
Date LLO-Gas, Inc. Date
/s/ Hollie Johnson 9/2/99 /s/ Denise Newton 9/2/99
- --------------------------------------- ---------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
- --------------------------------------------------------------------------------
PayPoint Network Fees
Transactions per Month Fee per Transaction
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line --
installation costs plus monthly phone charge including per item phone
calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial
institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be
notified via telephone. The switch contact person will provide the
Franchisee with the data furnished by the financial institution and
request a copy of the cardholder receipt and/or a copy of the
Management Report Printer (MRP) report showing the disputed
transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one
(1) working day of the telephone call. A copy of this form is
attached.
6) The Franchisee will have only three (3) working days after receipt
of the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of
the customer receipt and/or MRP report (the same information
furnished to the financial institution) to the Franchisor switch
within one (1) working day of sending the information to the
financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
RETAILER: ______________________________________________________________________
ADDRESS: _______________________________________________________________________
CITY: __________________________________________________________________________
STATE/ZIP CODE: ________________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO. ____________________________________________________________________
AT _____________________________________________________________________________
BRANCH NO. _____________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:______________________________________
TITLE:___________________________________
DATE:____________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
CLAIM NO.:______________________________________________________________________
DATE CLAIM RECEIVED:____________________________________________________________
TODAY'S DATE:___________________________________________________________________
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:____________________________________________________________________
TRANSACTION AMOUNT: ________________ TRANSACTION DATE: ________________________
TRANSACTION TIME: __________________ REFERENCE NO. ____________________________
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION: _________________________________________________________
ADDRESS: _______________________________________________________________________
CONTACT PERSON: ________________________________________________________________
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION IF "REQUESTED
INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME: __________________________________________________________________________
ADDRESS: _______________________________________________________________________
DATE INFORMATION SENT TO FINANCIAL INSTITUTION: ________________________________
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
Telephone Line Disconnection $200.00
Each Inside Terminal Disconnection and Removal $200.00
Each Outside Terminal Disconnection and Removal $400.00
<PAGE>
Exhibit 10.43
AGREEMENT FOR SALE OF REAL ESTATE TO CONTRACT DEALER
Sale of Facility No.: 06202
Dated (for identification): September 2 , 1999
------------
This Agreement for Sale of Real Estate to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation
("Buyer"), and ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Seller").
RECITALS
--------
A. Seller owns the land and improvements that are included in the Real
Estate (as defined in Section 1). Prestige Stations, Inc. ("PSI"), a Delaware
corporation and a wholly owned subsidiary of Seller, operates an ARCO retail
gasoline station and am/pm mini market at the Real Estate.
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
the Real Estate.
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign an Agreement for Sale of Business to Contract Dealer (the
"Business Agreement") for Buyer's purchase of PSI's interest in certain assets
that PSI uses in connection with the operation of the business at the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Real Estate on the
day that Buyer becomes the owner of the assets covered by the Business
Agreement.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of the Companion Real
Estate (as defined in Section 1).
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
PSI will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for Buyer's purchase of PSI's interest in
certain assets that PSI uses in connection with the operation of the businesses
at the Companion Real Estate.
AGREEMENT
---------
THEREFORE, Buyer and Seller agree as follows:
-1-
<PAGE>
1. Basic Provisions.
Seller's Information: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Gary Simning
Assistant Vice President
Telephone: (714) 670-5393
Facsimile: (714) 670-5439
Taxpayer I.D. No.: 23-0371610
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Real Estate:
The Real Estate is the real property legally described in the attached Exhibit
"A". Seller's interest in the Real Estate is a fee interest in the entirety of
the Real Estate, except as otherwise stated in Exhibit "A". Seller's interest
includes the ownership of the improvements that are located on or under the land
that Seller owns in fee, including without limitation underground storage tanks
and gasoline pipelines. The principal parcel of land included in the Real Estate
is commonly known as:
Street Address: 4100 California Avenue
City, State, ZIP Code: Bakersfield, California 93309
County: Kern
Companion Real Estate: The Companion Real Estate is the real property at the
locations (other than the location of the Real Estate) described in the
attached Exhibit "B".
Deposit: $20,500.00 by Buyer's check payable to Escrow Holder
Purchase Price: $820,000.00
-2-
<PAGE>
Closing Date: October 27, 1999
Title Company: Old Republic Title Company
101 East Glenoaks Boulevard
Glendale, California 91209
Attn: Michael Stinger
Telephone: (800) 228-4853
Facsimile: (818) 543-6570
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: 10736 PC
-----------
(To be completed by Escrow Holder)
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to
-----------------
buy from Seller, the Real Estate. The purchase and sale (the "Transaction")
will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must deliver the
-------------------
following items to Seller within 10 business days after Buyer receives this
Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check payable to
Escrow Holder as named in Section 1 in the amount of the Deposit as set forth in
Section 1, and (iii) written proof that Buyer has, or will have, sufficient
funds to complete the Transaction. This proof must consist of evidence showing
that (i) Buyer has sufficient cash or other liquid assets to complete the
Transaction or (ii) Buyer has submitted to an institutional lender a fully
completed application for a loan in an amount sufficient to complete the
Transaction. Buyer must deliver these items to Seller at the same time that
Buyer delivers to PSI the items required by Section 3 of the Business Agreement.
4. The Deed: Mineral Reservation. Seller shall convey the Real Estate to
-----------------------------
Buyer by a Corporation Grant Deed (the "Deed"). In the Deed, Seller will reserve
the rights, below the depth of 500 feet, to minerals and oil, gas, and other
hydrocarbon substances in and under the land being sold, but without the right
of surface entry.
-3-
<PAGE>
5. Purchase Price.
--------------
5.1 Amount. The Purchase Price for the Real Estate is the amount set
------
forth in Section 1.
5.2 Payment. Subject to the collection of Buyer's check for the
-------
Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall pay the balance of the Purchase Price in cash or immediately available
funds at closing.
6. Escrow and Closing.
------------------
6.1 Escrow. Closing will occur through an escrow (the "Escrow") at
------
Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check for
the Deposit to Escrow Holder. Escrow will be considered opened on the date that
Escrow Holder signs this Agreement. This Agreement constitutes joint escrow
instructions to Escrow Holder. Buyer and Seller shall do all that is reasonably
necessary to close the Escrow.
6.2 Closing Date. The Escrow will close on or before the Closing
------------
Date as set forth in Section 1, unless the Closing Date is delayed in accordance
with other provisions of this Agreement.
6.3 Closings Conditions. Each party's obligation to complete the
-------------------
Transaction is contingent on the satisfaction of the following conditions,
unless that party waives the condition before Escrow closes:
(a) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Business Agreement, the Companion
Real Estate Agreements, and the Companion Business
Agreements, Seller has confirmed that (i) Seller is ready
and committed to close those transactions or (ii) if the
transaction is being handled through an escrow, Seller has
received notice from the escrow holder that the escrow
holder is ready and committed to close the escrow.
(b) Other Closing Conditions. All closing conditions for that
------------------------
party's benefit contained in provisions of this Agreement
other than this Section 6.3 have been satisfied, or will be
satisfied as a part of the closing.
(c) Other Party's Obligations. The other party has performed
-------------------------
all its obligations under this Agreement to be performed
before the closing, or will perform those obligations as a
part of the closing.
-4-
<PAGE>
7. Delivery of Documents and Funds:
-------------------------------
7.1 Deliveries by Seller. At or before the closing, Seller shall
--------------------
deliver to Escrow Holder the following:
(a) Deed. The Deed, signed and acknowledged by Seller;
----
(b) Memorandum of Contract Dealer Gasoline Agreement. The
------------------------------------------------
Memorandum of Contract Dealer Gasoline Agreement (the
"Memorandum") referred to in Section 6.3(c) of the Business
Agreement, signed and acknowledged by Seller, through its
division ARCO Products Company;
(c) Withholdings Certifications. (i) A Certification of Non-Foreign
---------------------------
Person Status with respect to Seller's exemption from federal
income tax withholding in connection with the Transaction and
(ii) a comparable certification with respect to Seller's
exemption from state income tax withholding in connection with
the Transaction, if the state in which the Real Estate is located
imposes a withholding requirement on Buyer for income tax that
Seller might owe to the state in connection with the Transaction,
each of which certifications must meet the requirements of
applicable laws and regulations and must be signed by Seller; and
(d) Other Documents. All other instruments and documents reasonably
---------------
required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
-------------------
deliver to Escrow Holder the following:
(a) Memorandum. The Memorandum, signed and acknowledged by Buyer;
----------
(b) Right of First Refusal Agreement. The Right of First Refusal
--------------------------------
Agreement (as defined in Section 14), signed and acknowledged by
Buyer;
(c) Environmental Declaration. The Environmental Declaration (as
-------------------------
defined in Section 12), signed and acknowledged by Buyer;
(d) Cash. Cash or immediately available funds to pay the balance of
----
the Purchase Price and Buyer's share of closing costs and
prorations; and
-5-
<PAGE>
(e) Other Documents and Funds. All other instruments, documents,
-------------------------
and funds reasonably required to complete the Transaction.
7.3 Recording. As part of the close of Escrow, Escrow Holder shall
---------
record the following documents in the Official Records of the County, in the
following order: The Deed; the Memorandum, the Right of Refusal Agreement, the
Option Agreement, and the Environmental Declaration. These documents must be
recorded before any documents benefitting any lender or other third party are
recorded.
8. Possession. Upon the close of Escrow, Seller shall deliver vacant
----------
possession of the Real Estate to Buyer, subject to Seller's rights under the
Environmental Declaration.
9. Title.
-----
9.1 Title Policy. Buyer will not be required to complete the
------------
Transaction unless the Title Company as named in Section 1 is committed to issue
an ALTA Standard Coverage Owner's Policy of Title Insurance (the "Title Policy")
insuring Buyer in the amount of the Purchase Price upon the close of Escrow. The
Title Policy must insure Buyer's title to the Real Estate subject to only (i)
the standard exclusions and exceptions of the policy form, (ii) nondelinquent
taxes and assessments, and (iii) the Permitted Exceptions (as defined in Section
9.2).
9.2 Title Review and Approval. Seller shall cause the Title Company
-------------------------
to issue to Buyer a preliminary title report (or a commitment for title
insurance, if the Real Estate is located in a state where title insurers do not
issue preliminary title reports) (in either case, the "Report") covering the
condition of title to the Real Estate. Unless Buyer gives Seller written notice,
within ten days after receiving the Report, objecting to matters shown in the
Report, Buyer will be considered to have approved the condition of title as
shown in the Report. If Buyer so objects to any matter (each, a "Disapproved
Matter") shown in the Report, Seller will have 30 days after receiving Buyer's
written objection in which to remove the Disapproved Matter from record title or
to obtain the Title Company's agreement to issue an appropriate endorsement to
the Title Policy. If Seller is unable or unwilling to remove the Disapproved
Matter from record title or to obtain the Title Company's agreement, Seller may
terminate this Agreement by giving a termination notice to Buyer and Escrow
Holder within the 30-day period. If Seller so terminates this Agreement, Seller
shall pay all escrow and title cancellation charges; Escrow Holder shall return
the Deposit to Buyer; and neither party will have any further obligation to the
other under this Agreement. The term "Permitted Exception" means each matter
shown in the Report that (i) is not a Disapproved Matter or (ii) is a
Disapproved Matter for which Seller has obtained the Title Company's agreement
to issue an appropriate endorsement to the Title Policy.
-6-
<PAGE>
9.3 Vesting of Title. At least 30 days before the Closing Date,
----------------
Buyer shall notify Seller and Escrow Holder how title to the Real Estate will
vest. If Buyer fails to so notify them, title will vest in Buyer as stated in
the first sentence of this Agreement.
9.4 Copy of Title Policy to Seller and Its Attorney. Within 15 days
-----------------------------------------------
after Escrow closes, Escrow Holder shall mail a photocopy of the Title Policy
to Seller and Seller's attorney.
10. Prorations. Escrow Holder shall prorate the following items between
----------
Seller and Buyer as of the date that Escrow closes: Current installments of real
property taxes, current installments of special taxes and assessments, and
any rents or other income derived from the Real Estate. Utility charges will
not be prorated. Seller shall cause a final reading of the utility meters to
be taken on the day that Escrow closes; and Buyer shall arrange for all utility
services to be transferred into its name on the day that Escrow closes.
11. Fees and Costs. Buyer and Seller each shall pay (i) one half of
--------------
Escrow Holder's fee and (ii) the costs and expenses that Escrow Holder incurs on
its behalf, unless the cost or expense is otherwise allocated under this
Agreement. Buyer shall pay state and local real estate transfer taxes and sales
taxes, if any; the recording fee for the Deed; and the premium for the Title
Policy. But Seller shall pay for any endorsements that Seller obtains in
accordance with Section 9.2.
12. Environmental Matters.
---------------------
12.1 Definitions. Each underlined, capitalized term below has the
-----------
meaning set forth beside it.
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on and
about the Real Estate.
Environmental Declaration: The Declaration of Environmental Restriction and
- -------------------------
Other Environmental Covenants and Conditions in the form of the attached
Exhibit "B".
Environmental Documents: Each of the items listed on the attached Schedule 1.
- -----------------------
Inspection Period: 45 days after Buyer receives this Agreement signed by Buyer
- -----------------
and Seller.
-7-
<PAGE>
Seller's Environmental Notice Address:
- -------------------------------------
Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
12.2 Environmental Reports. Buyer acknowledges that Seller has
---------------------
delivered to Buyer a copy of the Environmental Documents. Buyer understands
that all reports filed by Seller with the Agency with respect to the Real
Estate are public records, available at the Agency's offices for Buyer's
review.
12.3 Recording of Environmental Declaration. Before Escrow closes,
--------------------------------------
Buyer shall sign, have notarized, and deposit into Escrow the Environmental
Declaration.
12.4 No Representations by Seller. Buyer acknowledges that Seller
----------------------------
has not made any representations or warranties regarding the environmental
condition of the Real Estate, including without limitation any representation or
warranty with respect to the accuracy of information included in any report or
other written document regarding the environmental condition of the Real Estate,
other than as set forth in Section 19. Seller will have no obligation to provide
any lender with any covenants, indemnities, or warranties regarding the
environmental condition of the Real Estate or any corrective action performed on
the Real Estate in order to facilitate Buyer's obtaining any loan.
12.5 Buyer's Environmental Due Diligence.
-----------------------------------
(a) Buyer's Inspection and Testing Rights. During the Inspection
-------------------------------------
Period, Buyer shall obtain a subsurface investigation report on the extent and
concentrations of any petroleum products in the soil and, if encountered,
groundwater at or under the Real Estate (the "Phase II Report"). Buyer shall
engage a geologist or professional engineer who is licensed by the State of
California and who is not an affiliate of Buyer or Seller (the "Environmental
Consultant"), to perform the subsurface investigation and prepare and certify
the Phase II Report. Buyer shall initially pay for the cost of the Phase II
Report. Escrow Holder shall prorate the cost of the Phase II Report at the
closing so that Buyer and Seller share equally up to $15,000 of the total cost
of the Phase 11 Report. The parties shall request that the Environmental
Consultant complete the Phase II Report at least 10 days prior to the end of the
Inspection Period. Subject to the provisions of Section 12.5 (b) below, Buyer
shall determine the scope of work for the Phase II Report, in its reasonable
discretion. Buyer
-8-
<PAGE>
shall have the right to modify the scope of work, as a result of on-site
conditions discovered in the course of the investigation.
(b) Special Buyer Testing. If Buyer requests work, or a modification
---------------------
of the original scope of work, that involves any disturbance (including any
drilling or boring) of the surface of the land or any underground vault or
storage tank, underground pipes, or fuel lines ("Special Buyer Testing"), Buyer
must obtain Seller's prior written approval. Seller may withhold its approval if
it determines in good faith that the Special Buyer Testing would interfere with
Seller's business operations or would pose a safety or environmental hazard.
Buyer shall indemnify and defend Seller from all liabilities, damages, losses,
claims, costs and expenses (including reasonable attorneys' fees) that Seller
incurs arising from performance of the Special Buyer Testing. Without limiting
the immediately preceding provisions of this Section 12.5(b), Buyer shall
promptly repair any damage to the Real Estate or any personal property located
at the Real Estate resulting from any Special Buyer Testing. But Buyer will have
no liability regarding any contaminated soil or groundwater it may discover on
or under the Real Estate during the course of the Special Buyer Testing, unless
Buyer caused the release of that contamination, for example by puncturing the
underground storage tanks on the Real Estate. Buyer's liability under this
Section 12.5(b) is in addition to Seller's right to retain the Deposit and any
accrued interest on the Deposit, when Seller is permitted to do so under any
provision of this Agreement concerning liquidated damages for Buyer's default
under this Agreement. A termination of this Agreement will not terminate Buyer's
obligations under this Section 12.5(b).
(c) Liens. Buyer shall keep the Real Estate free from mechanics' and
-----
similar liens arising from any and all Phase II Report costs (including without
limitation any Special Buyer Testing) payable by Buyer under this Agreement.
(d) Reports and Disclosure. Buyer shall deliver to Seller at Seller's
----------------------
Environmental Notice Address a copy of the Phase 11 Report, within two days
after Buyer receives the report. Buyer shall not disclose the results of any
test to any regulatory agency or other third party, unless required to do so by
law and unless Buyer delivers to Seller at Seller's Environmental Notice Address
a copy of the disclosure at least ten days before Buyer mails or otherwise
transmits the disclosure to the agency or other third party.
(e) Buyer's Termination Right. If Buyer is not satisfied with the
-------------------------
environmental condition of the Real Estate, Buyer may terminate this Agreement
by giving notice of termination to Seller and Escrow Holder during the
Inspection Period. If Buyer terminates this Agreement, Buyer and Seller each
shall pay one half of the Escrow and title cancellation charges; after Buyer has
paid its share of those cancellation charges, the Deposit will be returned to
Buyer; and neither party will have any further obligation to the other under
this Agreement. But the Deposit will not be returned to Buyer until Buyer has
delivered to Seller valid, recordable waivers of
-9-
<PAGE>
mechanics' and other statutory liens from all contractors who conducted tests at
Buyer's request.
13. As-Is Sale. Buyer acknowledges that (i) it is buying the Real Estate
----------
solely in reliance on its own investigation; (ii) no covenants, representations,
or warranties have been made by Seller or on Seller's behalf, except those set
forth in this Agreement; (iii) Buyer has made itself aware of all governmental
laws, regulations, and requirements concerning the Real Estate or Buyer's
operation of a business on the Real Estate; and (iv) Buyer will be buying the
Real Estate in its condition existing when Escrow closes.
14. Seller's Right of First Refusal. Before Escrow closes, Buyer shall
-------------------------------
sign, have notarized, and deposit into Escrow a Right of First Refusal Agreement
(the "Right of First Refusal Agreement") in the form of the attached Exhibit
"D".
15. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S
------------------
DEFAULT, ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY ACCRUED
INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD BE
REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO KEEP
THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW HOLDER
THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER THE
DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 15; AND BY ITS INITIALS IMMEDIATELY BELOW, IT AGREES
TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ GS
---------------- ----------------
Buyer's Initials Seller's Initial
(In order to comply with California Civil Code Section 1677, the above provision
must be m at least 10-point bold type. The above provision is in 11-point bold
type.)
16. Tax-Deferred Exchange. If Seller elects to complete the sale of the
---------------------
Real Estate through a tax-deferred exchange under Internal Revenue Code Section
1031, Buyer shall cooperate with Seller in the exchange transaction. Buyer's
cooperation includes the signing, acknowledgment, and delivery of all documents
that Seller reasonably requests, at no risk or expense to Buyer. Seller shall
indemnify and defend
-10-
<PAGE>
Buyer from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Buyer might incur in connection with Buyer's
participation in the exchange transaction.
17. Buyer's Authority. Within ten days after Buyer signs this Agreement,
-----------------
Buyer shall provide Seller with a copy of Buyer's governing documents (for
example, Articles of Incorporation, Bylaws, Agreement of Partnership, Limited
Liability Company Operating Agreement, or Declaration of Trust), authorizing
action (for example, corporate resolutions, consent of partners, or consent of
members), and any other document necessary to enable Seller to confirm that the
individual signing this Agreement for Buyer is authorized to bind Buyer.
18. Business Agreement. This Agreement will not become effective unless
------------------
the Business Agreement, the Companion Real Estate Agreements, and the Companion
Business Agreements are signed at the same time that this Agreement is signed.
If PSI terminates the Business Agreement in accordance with its terms, Seller
may terminate this Agreement without further liability to Buyer. If Buyer
terminates the Business Agreement in accordance with its terms, Buyer may
terminate this Agreement without further liability to Seller.
19. Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
19.1 No Notices of Violation. To Seller's actual knowledge, Seller
-----------------------
(i) is not aware that the Real Estate violates any applicable laws (including
zoning laws), except as disclosed in Schedule 2 attached hereto and (ii) has not
received any written notice from appropriate governmental authorities that the
Real Estate violates any applicable laws (including zoning laws), except as
disclosed in Schedule 2 attached hereto.
19.2 No Notices of Defects. To Seller's actual knowledge, Seller (i)
---------------------
is not aware of any material defects in the improvements on the Real Estate and
(ii) has not received any written notice from any insurance company, board of
fire underwriters, governmental agency, or similar organization regarding any
material defects in the improvements on the Real Estate.
19.3 No Pending or Threatened Claims. To Seller's actual knowledge,
-------------------------------
no litigation or claims of any kind are pending or threatened, and no facts or
circumstances exist, that may in any way materially adverse affect the Real
Estate, including material violations of regulations of the Environmental
Protection Agency or any state regulatory body concerning the disposal of
hazardous waste, petroleum, underground storage tanks, or any other hazardous
materials at the Real Estate, except as disclosed in the Environmental
Documents.
-11-
<PAGE>
19.4 Construction of Improvements. To Seller's actual knowledge, all
----------------------------
structures and improvements on the Real Estate (i) are in good condition,
reasonable wear and tear excepted and (ii) were constructed and installed in
substantial compliance with all applicable laws, statutes, ordinances, codes,
covenants, conditions, and restrictions of any kind or nature affecting the Real
Estate.
19.5 Underground Storage Tanks. The underground storage tanks and
-------------------------
associated underground piping and vapor recovery systems at the Real Estate are
(i) fully operational and (ii) in material compliance with the December 23, 1998
underground storage tank system upgrade standards set forth under Section 25291
or Section 25292(d) and (e) of the California Health and Safety Code, and
related regulations adopted pursuant to Section 25299.3 of the California Health
and Safety Code, according to the certificate of upgrade compliance provided
under Section 25284 of the California Health and Safety Code.
"To Seller's actual knowledge" means to the actual knowledge of Kyle Christie,
Linda Cohu, Ted Harriss, or Lynn Beteag, without independent inquiry, file
review, or any investigation whatsoever. Seller represents to Buyer that Kyle
Christie is Seller's Facility Remediation Manager assigned to the Real Estate,
Linda Cohu is Seller's Manager of Environment, Health and Safety, Ted Harriss is
the Property Management Representative assigned to the Real Estate, and Lynn
Beteag is Seller's Property Management Manager assigned to the Real Estate. All
representations and warranties made in this Agreement will be considered to be
made on the date of this Agreement and again on the date that Escrow closes. A
condition of Buyer's obligation to close is that all warranties and
representations made are true on the date that Escrow closes. All those
representations and warranties will survive the Escrow closing and will not be
considered to have merged into and be governed by the closing documents for one
year after the Escrow closing. If Buyer discovers before closing, that any
representation or warranty in this Agreement is not true, then Buyer may, as its
sole remedy, either (i) terminate this Agreement by delivering notice to Seller
before the Closing Date, in which case Escrow Holder shall return the Deposit to
Buyer, or (ii) elect to purchase the Real Estate subject to the untrue warranty
or representation, without any reduction in the Purchase Price. If Buyer
discovers after the Escrow closing that any representation or warranty in this
Agreement is not true, Buyer may exercise all rights and remedies available at
law or in equity as a result of the untruthfulness of any representation or
warranty, as long as Buyer delivers written notice of the breach to Seller and
exercises any remedy, including the filing of any suit or other action, within
one year after the date that the Escrow closes.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth in Section 1. But a party may change its
address for notices by giving notice as required by this Section G1. A written
notice will be considered given
-12-
<PAGE>
(i) when personally delivered, (ii) two business days after deposit in the U.S.
Mail as first class mail, certified or registered, return receipt requested,
with postage prepaid, (iii) one business day after deposit with a reputable
overnight delivery service for next business day delivery, or (iv) on the
business day of successful transmission by electronic facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
G4. Time of Essence; Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the other
genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term" includes
any covenant, condition, representation, warranty,
-13-
<PAGE>
or other provision that is part of an agreement. Whenever a provision of this
Agreement requires Buyer or Seller to perform an act, that person must do so at
its sole cost (unless otherwise stated in connection with that provision).
BUYER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-----------------------------------
John D. Castellucci
President
SELLER:
ATLANTIC RICHFIELD COMPANY, a Delaware
corporation
By: /s/ G. Simning
-----------------------------------
Gary Simning
Assistant Vice President
Agreed to by Escrow Holder
on Sept. 2 , 1999.
---------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
-------------------------------
Patricia Cusick
Escrow Officer
-14-
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION
All that portion of Lot 3 of Tract No. 3202, in the City of Bakersfield, County
of Kern, State of California, and is described as follows:
Beginning at the Southwest corner of said Lot 3; thence along the South line of
said Lot 3 and the North line of California Avenue, and along a curve concave
Southeasterly, having a radius of 2155.00 feet and a central angle of 12 degrees
19'28", a distance of 463.545 feet to the end of said curve; thence North 89
degrees 14'00" East 141.768 feet to the true point of beginning of this
description, said point of beginning also being the beginning of a curve concave
Northwesterly, having a radius of 20 feet and a central angle of 89 degrees
25'19", thence along said curve 31.214 feet to the end of said curve and to a
point on the East line of said Lot 3; thence North 0 degrees 11'19" West, along
said East line, said East line also being the West line of Chester Lane, 130.201
feet to a point; thence South 89 degrees 14' 00" West, 175.00 feet to a point;
thence South 0 degrees 11'19" East, 150.00 feet, more or less, to a point on the
South line of said Lot 3, thence Easterly along said South line to the true
point of beginning.
EXCEPT all oil, gas and other minerals contained within the property hereinabove
described, whether now known to exist or hereafter discovered all oil, gas and
other mineral rights belonging or appertaining to said property, the exclusive
right to prospect for, drill for, produce, mine, extract and remove oil, gas
and other minerals upon and from said property, the exclusive right to drill
upon, to drill through and otherwise to use said property to produce, mine,
extract and remove oil, gas and other minerals from adjacent or neighboring
lands and the exclusive right to inject in, store under, and thereafter
withdraw from said property, oil, gas and other minerals and products thereof,
whether produced from said property or elsewhere, but unless the Grantee
therein or its successors or assigns, shall give written consent to the drilling
of wells upon the surface of said lands, all of the foregoing rights shall be
exercised only by the drilling of wells from locations on adjacent or
neighboring lands into or without entering upon or using any portion of said
property lying above said depth, as reserved by Kern County Land Company, in
deed recorded December 29, 1967 in Book 4116, Page 612 of Official Records.
ALSO EXCEPT all water and water rights in and under said land.
Page 1 of 1
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "B" following this cover sheet.)
EXHIBIT "B"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "B"
<PAGE>
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
(See Exhibit "C" following this cover sheet.)
EXHIBIT "C"
<PAGE>
Order No.: 118305 GM
Escrow No.:
RECORDING REQUESTED BY AMERICAN
TITLE COMPANY AND WHEN RECORDED,
RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR6-163
La Palma, California 90623-1066
Attn: Oscar Castellon
Facility No.: 06202
Location: 4100 California Avenue
Bakersfield, CA 93309 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
Type 2, 4, and 5 Sites in Multiple Site Sale
DECLARATION OF ENVIRONMENTAL RESTRICTION AND
OTHER ENVIRONMENTAL COVENANTS AND CONDITIONS
This Declaration of Environmental Restriction and Other Environmental
Covenants and Conditions (this "Declaration") dated September 2 , 1999, is made
-------------
by LLO-GAS, INC., a Delaware corporation ("Owner"), for the benefit of ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("ARCO").
RECITALS
--------
A. ARCO is the former owner of the real property in the County of Kern,
State of California, described in the attached Exhibit "A" (the "Real Estate").
In connection with the signing and recording of this Declaration, ARCO conveyed
the Real Estate to Owner.
B. By this Declaration, Owner intends to impose certain restrictions on
the Real Estate.
AGREEMENT
---------
THEREFORE, Owner agrees and declares as follows:
1. Definitions. Each underlined, capitalized term below has the meaning
-----------
set forth beside it.
<PAGE>
Agency: The environmental regulatory agency that has jurisdiction over the
- ------
assessment and remediation of petroleum products in soil or groundwater on or
about the Real Estate.
ARCO Entities: ARCO's officers, directors, employees, subsidiaries, divisions,
- -------------
and affiliates.
Claim: Any liability, damage, loss, claim, suit, judgment, settlement, cost,
- -----
and expense (including reasonable attorney's fees) arising before or after the
Effective Date, whether or not Owner knew or suspected them to exist on the date
that Owner signed this Declaration or on the Effective Date.
Effective Date: The date on which this Declaration is recorded.
- --------------
Hazardous Material: Any material, substance, or waste that has been determined
- ------------------
by any governmental authority to be capable of posing a risk of injury to
health, safety, or property.
Pre-Closing Contamination: Any Hazardous Material released into the soil or
- -------------------------
groundwater at or near the Real Estate before the Effective Date, whether or not
Owner knew or suspected it to exist on the date that Owner signed this
Declaration or on the Effective Date.
2. Owner's Acceptance of the Condition of the Real Estate. Owner has
------------------------------------------------------
accepted the Real Estate, including without limitation its environmental
condition, in "AS IS" condition on the Effective Date. Owner acknowledges that
the purchase price paid to ARCO for the Real Estate reflects (i) the effect of
this Declaration on the Real Estate and (ii) any Pre-Closing Contamination.
3. Owner's Waiver and Release of Environmental Claims. Owner, for itself
--------------------------------------------------
and its heirs, successors, and assigns (including without limitation all future
owners of the Real Estate), waives and releases any Claim that it might have
against ARCO or the ARCO Entities based on or related to any Pre-Closing
Contamination.
4. Notices. Notices relating to this Declaration must be in writing and
-------
sent to the addresses set forth below. But a party may change its address for
notices by giving notice as required by this Section 4. A written notice will be
considered given (i) when personally delivered, (ii) two business days after
deposit in the United States Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile. The parties' addresses for notices are as follows:
-2-
<PAGE>
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
To ARCO: Atlantic Richfield Company
4 Centerpointe Drive, LPR 4-183
La Palma, California 90623-1066
Attn: Manager of Western Environmental Projects
Facsimile: (714) 670-5195
5. Entire Agreement: Modification; Waiver. This Declaration (including
--------------------------------------
any attached Exhibits) contains the entire agreement between Owner and ARCO
with respect to the matters that are the subject of this Declaration. Any
modification of this Declaration must be in writing and signed by Owner and
ARCO. Any waiver of a provision of this Declaration by Owner or ARCO must be in
writing.
6. Further Acts. Owner and ARCO shall each do all things that the other
------------
reasonably requests to carry out the purpose of this Declaration.
7. Attorneys' Fees. If a dispute arises with respect to this Declaration
---------------
and if ARCO prevails in the dispute, then ARCO will be entitled to recover from
Owner the reasonable costs and expenses that ARCO incurred in enforcing its
rights under this Declaration, including reasonable attorneys' fees:
8. Restrictions Run with the Land. ARCO's rights under this Declaration,
------------------------------
Owner's obligations under this Declaration, any restrictions on the use and
operation of the Real Estate, and any waivers and releases by Owner under this
Declaration (collectively, the "Rights and Restrictions") are for the benefit of
ARCO and its successors and assigns. The Rights and Restrictions run with the
Real Estate and bind Owner's successors and assigns, including future owners of
the Real Estate, for ARCO's benefit. The Rights and Restrictions are intended
(i) to constitute equitable servitudes that burden the Real Estate and (ii) to
be enforceable under Section 1471 of the California Civil Code.
(See signatures on the next page.)
-3-
<PAGE>
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
-4-
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
========================================================================
STATE OF CALIFORNIA
----------
COUNTY OF ORANGE
------
<TABLE>
<S> <C>
On September 2, 1999 before me, M. Bird, Notary Public
----------------- ---------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
---------------------------------------------------------------------------
[X] personally known to me - OR - [_] proved to me on the basis of satisfactory evidence to be the
person(s)
[SEAL] whose names(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.
WITNESS my hand and official seal.
/s/ M. Bird
------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
====================================OPTIONAL====================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Environmental Covenants and Conditions
--------- -------------------------------------
TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT ----------------------------
[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
-------------------------------
DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- -------------------------------------------- ---------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LEGAL DESCRIPTION
All that portion of Lot 3 of Tract No. 3202, in the City of Bakersfield, County
of Kern, State of California, and is described as follows:
Beginning at the Southwest corner of said Lot 3; thence along the South line of
said Lot 3 and the North line of California Avenue, and along a curve concave
Southeasterly, having a radius of 2155.00 feet and a central angle of 12 degrees
19'28", a distance of 463.545 feet to the end of said curve; thence North 89
degrees14'00" East, 141.768 feet to the true point of beginning of this
description, said point of beginning also being the beginning of a curve concave
Northwesterly, having a radius of 20 feet and a central angle of 89 degrees
25'19", thence along said curve 31.214 feet to the end of said curve and to a
point on the East line of said Lot 3; thence North 0 degree 11'19" West, along
said East line, said East line also being the West line of Chester Lane, 130.201
feet to a point; thence South 89 degrees 14' 00" West, 175.00 feet to a point;
thence South 0 degrees 11'19" East, 150.00 feet, more or less, to a point on the
South line of said Lot 3, thence Easterly along said South line to the true
point of beginning.
EXCEPT all oil, gas and other minerals contained within the property hereinabove
described, whether now known to exist or hereafter discovered all oil, gas and
other mineral rights belonging or appertaining to said property, the exclusive
right to prospect for, drill for, produce, mine, extract and remove oil, gas and
other minerals upon and from said property, the exclusive right to drill upon,
to drill through and otherwise to use said property to produce, mine, extract
and remove oil, gas and other minerals from adjacent or neighboring lands and
the exclusive right to inject in, store under, and thereafter withdraw from said
property, oil, gas and other minerals and products thereof, whether produced
from said property or elsewhere, but unless the Grantee therein or its
successors or assigns, shall give written consent to the drilling of wells upon
the surface of said lands, all of the foregoing rights shall be exercised only
by the drilling of wells from locations on adjacent or neighboring lands into or
without entering upon or using any portion of said property lying above said
depth, as reserved by Kern County Land Company, in deed recorded December 29,
1967 in Book 4116, Page 612 of Official Records.
ALSO EXCEPT all water and water rights in and under said land.
Page 1 of 1
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
(See Exhibit "D" following this cover sheet.)
EXHIBIT "D"
<PAGE>
Order No.: 118305GM
Escrow No.: _____________
RECORDING REQUESTED BY
AMERICAN
TITLE COMPANY AND WHEN
RECORDED,
RETURN TO:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-163
La Palma, California 90623-1066
Attn: Oscar D. Castellon
Facility No.: 06202
Location: 4100 California Avenue
Bakersfield, CA 93309 FOR RECORDER'S USE
- --------------------------------------------------------------------------------
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") dated Sept. 2 ,
--------
1999, is made by LLO-GAS, INC., a Delaware corporation ("Owner"), for the
benefit of ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Holder").
RECITALS
--------
A. Holder is the former owner of the real property in the County of Kern
(the "County"), State of California, described in the attached Exhibit "A" (the
"Real Estate"). In connection with signing and recording this Agreement, Holder
conveyed the Real Estate to Owner.
B. By this Agreement, Owner intends to grant to Holder certain rights to
buy or lease the Real Estate and certain other property.
AGREEMENT
---------
THEREFORE, Owner agrees as follows:
1. Definitions. When used in this Agreement, each underlined, capitalized
-----------
term set forth below in this Section 1 has the meaning set forth beside it.
Certain other terms are defined throughout this Agreement.
<PAGE>
Adjacent Parcel: A parcel adjacent to the Real Estate. A parcel that
---------------
is separated from the Real Estate only by a driveway, street, or other means of
access will be considered an Adjacent Parcel.
Alcoholic Beverage License: A transferable license for the sale of
--------------------------
alcoholic beverages at the Offered Parcel.
Business Property: All tangible and intangible personal property used
-----------------
in the operation of any business conducted on an Offered Parcel. "Business
Property" includes, without limitation, (i) equipment, furnishings, and trade
fixtures, (ii) resalable inventory, (iii) supplies, and (iv) transferable
licenses and transferable permits, including without limitation any Alcoholic
Beverage License.
Escrow: Each escrow for the Transaction.
------
Escrow Agent: Individually, the Title Company and any escrow holder
------------
for the separate business property escrow contemplated by Section 7.
Exercise Notice: A notice from Holder to Owner in which Holder states
---------------
that it elects to acquire the Offered Parcel at the price and on the other terms
contained in the Tendered Agreement or at another price and on other terms that
are mutually acceptable to Owner and Holder.
Extended Coverage Title Policy: An ALTA Extended Coverage Owner's
------------------------------
Policy of Title Insurance.
Improvements: All improvements on or under the land of an Offered
------------
Parcel.
Larger Parcel: Any larger parcel that includes the Real Estate
-------------
Offered Parcel: The Real Estate, a Larger Parcel, or the Real Estate
--------------
and any Adjacent Parcel. "Offered Parcel" includes land, the Improvements, and
all appurtenant rights and privileges.
Recordation Date: The date that this Agreement is recorded in the
----------------
Official Records of the County.
Related Property: The Improvements and the Business Property.
----------------
Right: The right to acquire Owner's interest in an Offered Parcel in
-----
accordance with the terms of this Agreement.
Right Duration: A period of 25 years beginning on the Recordation
--------------
Date.
-2-
<PAGE>
Tendered Agreement: A bona fide agreement entered into by Owner for
------------------
Owner's transfer of an interest in an Offered Parcel to a third party.
Title Company: A title insurance company acceptable to Holder.
-------------
Transaction: A purchase and sale transaction resulting from Holder's
-----------
exercise of the Right.
Transfer Notice: A notice from Owner to Holder notifying Holder that
---------------
Owner has entered into a Tendered Agreement. The Transfer Notice must include
(i) a copy of the signed Tendered Agreement and (ii) all information in Owner's
possession about the ultimate beneficial owner of the third party to whom the
Tendered Agreement contemplates that Owner will transfer an interest in an
Offered Parcel.
2. Grant of Right of First Refusal. Owner grants to Holder the Right.
-------------------------------
The Right is governed by the terms of this Agreement and will be in effect
during the Right Duration.
3. Included Rights: Exclusion of Security Interest Transfer.
--------------------------------------------------------
3.1 Offer to Lease or Sublease. The Right includes the right to
--------------------------
match the terms of any lease or sublease that Owner enters into during the
Right Duration covering (i) an Offered Parcel or (ii) part of an Offered Parcel
when that part includes all or part of the Real Estate. The Right will exist
whether the leasehold or subleasehold is to begin during or after the Right
Duration.
3.2 Right Includes Related Property. If (i) the Tendered Agreement
-------------------------------
covers both an intended transfer of the Offered Parcel and an intended transfer
by Owner of any Related Property or (ii) in connection with the Tendered
Agreement, Owner enters into a separate agreement to transfer any Related
Property, the Right wilt include the right to acquire the Offered Parcel and the
Related Property that is to be transferred. If such a separate agreement exists,
it will be considered a Tendered Agreement; and a copy of that signed separate
agreement must be included in the Transfer Notice.
3.3 Exclusion of Security Interest Transfer. The Right will not
---------------------------------------
apply to Owner's transfer of a security interest in an Offered Parcel to a third
party in a financing transaction. But see Section 12 for Holder's rights in the
event of an intended sale of an interest in the Real Estate to enforce a junior
lien encumbering that interest.
4. Procedures for Notice and Exercise.
----------------------------------
4.1 Transfer Notice. If, during the Right Duration, Owner enters
---------------
into a Tendered Agreement, Owner shall promptly send a 'transfer Notice to
Holder. No one
-3-
<PAGE>
other than Owner can satisfy Owner's obligation to send the Transfer Notice.
Holder may acquire the Offered Parcel that is the subject of the Tendered
Agreement, instead of the third party.
4.2 Exercise Notice; Holder's Assessment and Testing Rights. If
-------------------------------------------------------
Holder wishes to exercise the Right for a transaction covered by a Transfer
Notice, Holder must send an Exercise Notice to Owner within 25 days after Holder
receives the Transfer Notice. During that 25-day period, Holder and its agents,
employees, contractors, and consultants may enter on the Offered Parcel to
conduct reasonable and customary environmental and other assessments and tests
of the Offered Parcel.
4.3 Holder Indemnifies Owner. Holder shall indemnify and defend
------------------------
Owner from all liabilities, damages, claims, costs, and expenses (including
reasonable attorneys' fees) that Owner incurs and that arise from Holder's
exercise of the entry right granted under Section 4.2. But Holder will not be
liable for any decrease in the value of any Offered Parcel resulting from
Holder's discovery of any negative matter regarding the Offered Parcel,
including without limitation any contaminated soil or water existing at the
Offered Parcel before the escrow for Holder's purchase closes (the "Pre-Closing
Contamination"). Holder will not be required to remove or dispose of any Pre-
Closing Contamination. Holder may disclose the existence of any Pre-Closing
Contamination, to the extent that Holder is required to do so under applicable
law.
5. Additional Purchase Terms. If Holder's exercise of the Right is for
-------------------------
the purchase of the Offered Parcel, the Transaction will be at the price and on
the other terms contained in the Tendered Agreement, but subject to the
following:
(a) Variation of Terms. Owner and Holder may vary the price and
------------------
other terms in any manner that is mutually acceptable to them.
(b) Closing Date. Holder will have a period of time to close the
------------
Transaction that is equal to the longer of (i) the period of time
given to the third party in the Tendered Agreement, but the
period will begin on the date of the Exercise Notice, (ii) 60
days after the opening of Escrow, (iii) 15 days after Holder
receives the last Appraisal Report (as defined in Section 6.3)
that may be required under Section 6.3, or (iv) the date on which
Holder receives notice from the applicable governmental authority
that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the
Business Property.
(c) Price Allocation When Larder Parcel or Adjacent Parcel is
---------------------------------------------------------
Offered. If (i) the Right is for the purchase of a Larger Parcel
and (ii) the purchase price in the Tendered Agreement is
allocated between the Real Estate and the remainder of the Larger
Parcel, Holder
-4-
<PAGE>
may buy the Real Estate and not the remainder by paying only the
consideration allocated to the Real Estate. Or if (i) the Right
is for the purchase of a Larger Parcel and (ii) the purchase
price is not so allocated, Holder may buy only the Real Estate by
paying consideration that is equitable for only the Real Estate,
considering the total purchase price to be paid by the third
party for the Real Estate and the remainder. If Owner and Holder
fail to agree on an equitable amount, that amount will be
determined in accordance with Section 6. The above principles of
this Section 5(c) will apply in like manner if the Right is for
the purchase of the Real Estate and an Adjacent Parcel.
(d) Price Allocation When Business Property Is Offered. If the Right
--------------------------------------------------
is for the purchase of both the Offered Parcel and any Business
Property and Holder exercises the Right, Holder must buy both the
Offered Parcel and the Business Property.
(e) Cash Instead of Delayed Payment Terms. If the Tendered
-------------------------------------
Agreement provides for delayed payment terms, Holder may pay the
total purchase price in cash at the closing of the Transaction.
(f) Noncash Consideration. If the Tendered Agreement provides for
---------------------
any noncash consideration, Holder may pay cash equal to the fair
market value of the noncash consideration, as agreed to by Owner
and Holder or, failing their agreement, as determined in
accordance with Section 6.
6. Valuation Disputes.
------------------
6.1 Appointing Appraisers. If Owner and Holder cannot agree on (i)
---------------------
the equitable amount under Section 5(c), (ii) the value of the noncash
consideration under Section 5(f), or (iii) the fair market value under Section
8.2 or 12.9, the amount or value (the "Value") will be determined in accordance
with the appraisal procedures contained in this Section 6. Within 15 days after
Owner or Holder receives a demand from the other for an appraisal in accordance
with this Section 6, Owner and Holder each shall appoint a Qualified Appraiser
(as defined in Section 6.2). If one of them fails to timely appoint a Qualified
Appraiser, the Qualified Appraiser appointed by the other will determine the
Value.
6.2 Qualified Appraiser. "Qualified Appraiser" means a real estate
-------------------
appraiser who (i) is a member of the Appraisal Institute, (ii) is unaffiliated
with Owner, Holder, and the third party under the Tendered Agreement, and (iii)
has had full-time experience, during each of the immediately preceding five
years, in appraising commercial real property in the area of the Real Estate.
But if Holder will be purchasing
-5-
<PAGE>
Business Property, the Qualified Appraiser must also have had substantial
experience, during the immediately preceding five years, in appraising business
assets in the area of the Real Estate. If the Appraisal Institute ceases to
exist, a reasonably comparable, nationally recognized organization of real
estate appraisers will be substituted in the definition of Qualified Appraiser.
6.3 Determination of Value. If only one appraiser is appointed, the
----------------------
appraiser must deliver a signed report (an "Appraisal Report") to Owner and
Holder within 30 days after his appointment. An Appraisal Report must set forth
the appraiser's determination of the Value and the considerations on which his
opinion is based. If two appraisers are appointed and they agree on the Value,
they must deliver a signed joint Appraisal Report to Owner and Holder within 40
days after the appointment of the second appraiser. If two appraisers are
appointed and they fail to agree on the Value, each appraiser must deliver his
signed Appraisal Report to Owner and Holder within 35 days after his
appointment. If the lower of the two determinations is at least 95% of the
higher, the Value will be the average of the two determinations. If not, then
within ten days after Owner or Holder requests the two appraisers to do so, they
must appoint a third appraiser who is a Qualified Appraiser. Within ten days
after his appointment, the third appraiser must select one of the two
determinations as being the same as or the closer to the amount that he
determines as the Value; and the selected determination will be the Value.
6.4 Appraisal Fees. Owner and Holder each shall bear the cost of the
--------------
appraiser that it appoints and one half of the cost of the third appraiser.
7. Escrow. If Holder's exercise of the Right is for the purchase of the
------
Offered Parcel, the Transaction will occur through an Escrow with the Title
Company. But if required by law or if Holder so wishes, the purchase and sale of
some or all of the Business Property will occur through a separate Escrow with
an escrow company that specializes in business property escrows and that is
acceptable to Holder. Owner and Holder shall promptly sign escrow instructions
and open the Escrow. Owner shall apply to the Title Company for a preliminary
title report on the condition of title of the Offered Parcel. Despite anything
to the contrary in the Tendered Agreement or elsewhere:
(a) Deed and Title Insurance. Owner shall provide the Title Company
------------------------
with a deed conveying title to the Offered Parcel, free of
encumbrances, except those that Holder elects to accept. Owner
shall provide Holder with an ALTA Standard Coverage Owner's
Policy of Title Insurance insuring title, subject only to the
printed exceptions of the policy and those encumbrances that
Holder elects to accept. The policy must be issued by the Title
Company (or another insurer acceptable to Holder) and have a
liability amount equal to the purchase price of the Offered
Parcel. Closing
-6-
<PAGE>
will be considered effected when the County Recorder accepts the
deed for recording.
(b) Extended Coverage Title Policy; Survey. Notwithstanding the
--------------------------------------
provisions of Section 7(a), Holder may require that the title
policy be an Extended Coverage Title Policy. In that event, Holder
shall (i) obtain and provide to the title insurer any survey that
the title insurer might require in order to issue the title policy
as an Extended Coverage Title Policy and (ii) pay the increase in
the premium attributable to the extended coverage. Within three
days after Escrow opens, Owner shall send to Holder a copy of the
most recent survey (if any) of the Offered Parcel that Owner has
in its possession.
(c) Taxes and Rent. Taxes, rentals, and other items of income and
--------------
expense related to the Offered Parcel will be prorated as of the
date that Escrow closes.
(d) Closing Costs. Owner and Holder each shall pay one half of
-------------
Escrow Agent's fee for handling the Escrow. Owner shall pay the
premium for Holder's title insurance policy. Owner and Holder
shall pay all other closing costs in accordance with the custom in
the County. But if no custom exists for a particular closing cost,
each shall pay one half of that cost.
(e) Deductions by Holder. Holder may deduct from the purchase price
--------------------
or from any other amounts that Holder is required to pay to Owner
in connection with the Transaction any or all of the following:
(i) Any trade payables or other amounts that Owner or any of its
affiliates owes to Holder or any of its affiliates with respect to
(A) the operation of the business conducted at the Offered Parcel
or (B) all any part of the Offered Parcel, (ii) any transfer fee
that Owner or any of its affiliates is required to pay to Holder
under a Contract Dealer Gasoline Agreement, an am/pm Mini Market
Agreement, or a SmogPros Center Agreement pertaining to the
business conducted at the Offered Parcel, and (iii) the unpaid
balance of principal and accrued interest on any loan that is
payable to Holder or any of its affiliates and that is secured,
wholly or partially, by any property that Holder is buying in the
Transaction, whether or not the deducted amounts would otherwise
be due when Escrow closes.
-7-
<PAGE>
8. Entity Changes.
--------------
8.1 Triggering Events. Each of the following events (each, a
-----------------
"Triggering Event") will be considered a transfer of all Offered Parcels and
Related Property that Owner owns or leases at the time of the Triggering Event:
(a) Change in Ownership Interests. A sale, assignment, other
-----------------------------
disposition, hypothecation, encumbrance, or change in vesting of
(i) an ownership, voting, or economic interest (including,
without limitation, shares of stock in a corporation, a
partnership interest in a general or limited partnership, or a
membership interest in a limited liability company) in Owner or
in a person that holds, directly or indirectly, an ownership,
voting, or economic interest in Owner (a "Constituent Owner") or
(ii) a consolidation or merger of Owner or a Constituent Owner,
whether voluntarily, involuntarily, by operation of law, or
otherwise;
(b) Disposition of Assets. A sale, lease, assignment, or other
---------------------
disposition of all or substantially all of Owner's assets; or
(c) Signing of Agreement. The signing of an agreement to enter into
--------------------
a transaction described in Section 8.1(a) or 8.1(b).
8.2 Exclusions from Triggering Events. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, none of the following events will be considered
a Triggering Event:
(a) Immediate Sale of Stock in Owner. A sale of up to 25% of stock
--------------------------------
in Owner, within 30 days after the Recordation Date, as long as
(i) John D. Castellucci, or a revocable trust whose trustor,
trustee, and beneficiary are all John D. Castellucci, retains
ownership of 75% of the stock in Owner and (ii) John D.
Castellucci retains control of the management of Owner.
(b) Future Sale of Stock in Owner. A sale of up to 15% of stock in
-----------------------------
Owner, as long as (i) John D. Castellucci, or a revocable trust
whose trustor, trustee, and beneficiary are all John D.
Castellucci, retains ownership of 75% of the stock in Owner and
(ii) John D. Castellucci retains control of the management of
Owner.
(c) Transfer to Parent Corporation. A transfer of any Offered Parcel
------------------------------
or Related Property to a parent corporation of Owner, as long as
John D. Castellucci (i) owns 75% of the stock in the parent
corporation
-8-
<PAGE>
and (ii) has control of the management of the parent corporation
and retains control of the management of Owner.
(d) Transfer to Wholly-Owned Subsidiary. A transfer of any Offered
-----------------------------------
Parcel or Related Property to a wholly-owned subsidiary of Owner,
as long as John D. Castellucci (i) owns 75% of the stock in the
wholly-owned subsidiary and (ii) retains control of the
management of Owner and has control of the management of the
wholly-owned subsidiary.
8.3 Purchase at Fair Market Value. Each Triggering Event will give
-----------------------------
rise to the Right entitling Holder to buy all the Offered Parcels and Related
Property owned by Owner (i) at a price equal to their fair market value, as
agreed to by Owner and Holder or, failing their agreement, as determined in
accordance with Section 6, and (ii) on any other applicable terms contained in
any agreement to enter into the Triggering Event.
8.4 Rescission by Holder. If the entire purchase price for a
--------------------
purchase by Holder in accordance with Section 8.3 results from one or more
Values determined in accordance with Section 6, Holder may rescind its Exercise
Notice by giving a notice of rescission to Owner. If only part of the purchase
price for a purchase by Holder in accordance with Section 8.3 results from one
or more Values determined in accordance with Section 6 and that part of the
purchase price is greater than 15% of the entire purchase price, Holder may
rescind its Exercise Notice by giving a notice of rescission to Owner. The
notice of rescission must be given within ten days after Holder receives the
last Appraisal Report that may be required under Section 6.3. If Holder rescinds
its Exercise Notice, Holder shall pay the cost of all the appraisers.
9. Environmental Indemnification. If Holder acquires an Offered Parcel
-----------------------------
covered by a Transfer Notice or if Holder acquires the Real Estate in accordance
with Section 12, the person transferring the Offered Parcel or the Real Estate
to Holder ("Transferor") shall sign and deliver to Holder through the Escrow an
indemnification agreement containing the following provision:
Transferor shall indemnify and defend Holder from all claims,
liabilities, damages, losses, costs, and expenses (including
reasonable attorneys' fees) that Holder incurs arising from any
environmental contamination occurring or hazardous materials existing
at the real property that Transferor is concurrently conveying to
Holder (the "Real Property"), to the extent that the contamination or
hazardous materials (i) are present at concentrations that any
governmental agency will require to be remediated or otherwise are not
in compliance with all applicable statutory
-9-
<PAGE>
and regulatory requirements, (ii) are known or discovered before
Holder begins its operations at the Real Property, and (iii) are not
those on which Holder is obligated to perform any corrective action
under a written agreement between Transferor and Holder. This
agreement to indemnify and defend will survive the closing of
Transferor's transfer of the Real Property to Holder.
10. Owner's Transfer Rights; Notice of Changed Terms. If Holder does not
------------------------------------------------
exercise the Right for a transaction covered by a Transfer Notice, Owner may
then transfer the interest in the Offered Parcel and any Related Property to the
third party but (i) only for the price and on the other terms contained in the
Tendered Agreement; (ii) only to the third party named in the Tendered
Agreement; (iii) only within 120 days after Holder receives the Transfer Notice;
and (iv) subject to Holder's rights under this Agreement, which will continue
with respect to each future intended transfer of an Offered Parcel by any owner
or tenant of the Real Estate. Any change in (i) the identity of the third party
or the ultimate beneficial owner of the third party or (ii) the price or other
terms of the Tendered Agreement will give rise to a new Right exercisable by
Holder; and Owner must notify Holder of the changes. Owner's notice must include
a copy of any signed document changing the price or other terms of the Tendered
Agreement.
11. Survival of Holder's Rights. Holder's failure to exercise the Right
---------------------------
with respect to a Tendered Agreement covered by a Transfer Notice will not
relieve Owner from the obligation to comply with this Agreement in connection
with any later Tendered Agreement that Owner enters into during the Right
Duration. Holder may void any transfer that Owner makes without complying with
this Agreement. To exercise this right to void a transfer, Holder must give an
Exercise Notice within 25 days after Holder receives actual notice of the
intended or consummated noncomplying transfer and the complete terms of the
transfer.
12. Default on Obligations Secured by Junior Liens.
----------------------------------------------
12.1 Definitions for Section 12. When used in this Section 12 and
---------------------------
elsewhere in this Agreement, each underlined, capitalized term set forth below
in this Section 12.1 has the meaning set forth beside it. Certain other terms
are defined throughout this Section 12.
Accelerated Amount: Any amount that became due on or under the
------------------
Secured Obligation because Lender exercised an acceleration right arising from
the Loan Default.
Assignment Endorsement: An ALTA Endorsement No. 10.1 to
----------------------
Lender's Title Policy.
-10-
<PAGE>
Basic Loan Balance: The unpaid balance of the Secured
------------------
Obligation reduced by the Default Amounts.
Default Amounts: All amounts that were added to the balance of
---------------
the Secured Obligation by reason of the Loan Default, whether those amounts have
been paid or remain unpaid. "Default Amounts" include, without limitation, (i)
late charges, (ii) the excess of any interest that accrued at a default rate
over the interest that would have accrued if Lender had not imposed the default
rate, (iii) any prepayment penalty, and (iv) any interest that accrued on any of
the amounts described in clauses (i) through (iii) of this sentence.
Elected Property: The items of real property and personal
----------------
property that Holder intends to buy from Owner in accordance with this Section
12 after giving a Foreclosure Exercise Notice.
Encumbered Property: The property that is encumbered by a Lien.
-------------------
Foreclosure Exercise Notice: A notice from Holder to Owner and
---------------------------
Lender stating that Holder elects to buy (i) the Secured Obligation in
accordance with this Section 12, (ii) the Real Estate in accordance with this
Section 12, or (iii) both the Secured Obligation and the Real Estate in
accordance with this Section 12.
Foreclosure Purchase Right: The right to buy (i) the Secured
--------------------------
Obligation in accordance with this Section 12, (ii) the Real Estate in
accordance with this Section 12, or (iii) both the Secured Obligation and the
Real Estate in accordance with this Section 12.
Foreclosure Sale: A foreclosure, execution, or other lien-
----------------
enforcement sale.
Lender: A person for whose benefit a particular Lien exists.
------
"Lender" includes, without limitation, (i) the beneficiary under a deed of
trust, (ii) a mortgagee, and (iii) a judgment lien holder.
Lender's Title Policy: Lender's policy of title insurance
---------------------
insuring its interest with respect to the Lien.
Lien: A lien that (i) encumbers an interest in the Real Estate,
----
(ii) secures a monetary obligation, and (iii) is junior to Holder's rights under
this Agreement.
Lien Enforcement Notice: A notice from Lender to Holder
-----------------------
notifying Holder of Lender's intent to enforce its Lien. The Lien Enforcement
Notice must include (i) a copy of the recorded lien document, (ii) a copy of the
promissory note or other document evidencing the Secured Obligation, (iii) a
current preliminary title report
-11-
<PAGE>
contemplating the issuance of an Assignment Endorsement, together with legible
copies of all recorded documents referenced in the report, (iv) a statement of
the amount of the unpaid balance of the Secured Obligation, (v) a description of
the Loan Default, (vi) an itemization of the portion of the unpaid balance of
the Secured Obligation that is in default, (vii) an itemization of the Default
Amounts, and (viii) a statement of any Accelerated Amount.
Loan Default: The breach for which Lender intends to foreclose
------------
its Lien.
Reinstatement Amount: The unpaid balance of the Secured
--------------------
Obligation reduced by (i) the Accelerated Amount and (ii) the Default Amounts.
Secured Obligation: The monetary obligation secured by a Lien.
12.2 Coverage of this Section 12. The provisions of this
---------------------------
Section 12 will apply with respect to each Lien and to each Lender who holds a
Lien.
12.3 Lender's Lien Enforcement Notice to Holder. Before Lender
------------------------------------------
begins enforcement of its Lien (whether by private power of sale, judicial
foreclosure, or otherwise), Lender shall send a Lien Enforcement Notice to
Holder.
12.4 Holder's Right to Buy. Before Lender begins enforcement
---------------------
of its Lien, Holder will have the Foreclosure Purchase Right.
12.5 Holder's Exercise Notice to Owner and Lender. If Holder
--------------------------------------------
wishes to exercise the Foreclosure Purchase Right, Holder must send a
Foreclosure Exercise Notice to Owner and Lender within 25 days after Holder
actually receives the Lien Enforcement Notice.
12.6 Holder's Purchase of Real Estate. If Holder exercises the
--------------------------------
Foreclosure Purchase Right with respect to the Real Estate, the Foreclosure
Purchase Right will include the right to buy the Real Estate and all
improvements on or under the Real Estate, together with all or any portion of
the following that Holder wishes to buy and in which Owner holds an interest:
(i) Any Larger Parcel, (ii) any Adjacent Parcel, (iii) the improvements on or
under any Larger Parcel or Adjacent Parcel that Holder elects to buy, and (iv)
all Business Property used in the operation of any business conducted on the
real property that Holder intends to buy.
12.7 Holder's Purchase of Secured Obligation. If Holder elects
---------------------------------------
to buy the Secured Obligation, then within 20 days after the date of the
Foreclosure Exercise Notice, Holder shall buy from Lender, and Lender shall sell
to Holder, the Secured Obligation and all of Lender's rights in connection with
the Secured Obligation. The purchase price will be equal to the Basic Loan
Balance as of the date of the closing of the purchase and sale transaction. If
Holder wishes, the purchase and sale transaction
-12-
<PAGE>
will occur through an escrow with a title insurance company acceptable to
Holder. At the closing of the transaction, (i) Holder shall pay the purchase
price to Lender in readily available funds; (ii) Lender shall deliver to holder
(A) any promissory note evidencing the Secured Obligation, endorsed by Lender to
Holder or Holder's nominee, (B) a recordable assignment of the Lien, signed and
acknowledged by Lender, (C) the original of Lender's Title Policy, and (D) the
Assignment Endorsement issued by the title insurance company that issued
Lender's Title Policy; and (iii) Holder and Lender shall sign, acknowledge, and
deliver any other documents necessary or appropriate to consummate the
transaction. The Assignment Endorsement must insure Holder against loss or
damage sustained be reason of lack of priority of the Lien over defects, liens,
or encumbrances other than those shown in Lender's Title Policy and those that
Holder approves in its sole discretion.
12.8 Holder's Purchase of Elected Property. If Holder elects to buy
-------------------------------------
the Elected Property, the purchase and sale transaction will be consummated in
accordance with the procedures described in Section 7. Holder will have a period
of time to close the purchase of the Elected Property that is equal to the
longer of (i) 60 days after the opening of Escrow, (ii) 15 days after Holder
receives the last Appraisal Report that may be required under Section 6.3, or
(iii) the date on which Holder receives notice from the applicable governmental
authority that the authority has transferred to Holder (or an affiliate of
Holder) any Alcoholic Beverage License that is included in the Elected Property.
12.9 Purchase Price for Elected Property; Reduction and Credits. The
----------------------------------------------------------
purchase price for the Elected Property will be equal to 80% of the fair market
value of the Elected Property, as agreed to by Owner and Holder or, failing
their agreement, as determined in accordance with Section 6. But the purchase
price will be reduced by the total costs (including attorneys' fees) that Holder
incurs in connection with the purchase and sale of the Elected Property, to the
extent that those costs exceed the costs that Holder would have incurred if
Holder had purchased the Elected Property after Holder's exercise of the Right
with respect to a Tendered Agreement for Owner's sale of the Elected Property.
If Holder elects to buy the Elected Property subject to the Lien that was the
subject of the Lien Enforcement Notice, Holder will receive a credit against the
purchase price for the Basic Loan Balance as of the date that Escrow closes. If
Holder elects to buy the Elected Property subject to a lien that secures a
monetary obligation other than the Secured Obligation that was the subject of
the Lien Enforcement Notice, Holder will receive a credit against the purchase
price for the unpaid balance of that monetary obligation as of the date that
Escrow closes.
12.10 Buying Subject to the Lien. If Holder elects to buy the Real
---------------------------
Estate in accordance with this Section 12, Holder may buy the Real Estate
subject to the Lien and without assuming the obligations secured by the Lien.
Additionally, any person who later buys the Real Estate from Holder may buy the
Real Estate subject to the Lien and without assuming the obligations secured by
the Lien.
-13-
<PAGE>
12.11 Reinstating the Secured Obligation. If Holder becomes the
----------------------------------
owner of the Real Estate in accordance with this Section 12, Holder may
reinstate the Secured Obligation within 30 days after Holder becomes the owner
of the Real Estate by paying the Reinstatement Amount as of the reinstatement
date. Within seven days after the reinstatement date, Lender shall credit the
unpaid balance of the Secured Obligation by the Default Amounts.
12.12 No Prepayment Penalty. At any time after Holder reinstates the
---------------------
Secured Obligation, Holder or any person who later buys the Real Estate from
Holder may prepay all or any portion of the unpaid balance of the Secured
Obligation without the imposition of a prepayment penalty.
12.13 Lender's Transfer Rights; New Lien Enforcement Notice. If
-----------------------------------------------------
Holder does not exercise the Foreclosure Purchase Right, Lender may proceed
with the enforcement of the Lien and (i) sell the Encumbered Property to a
third party at a Foreclosure Sale, (ii) buy the Encumbered Property by a credit
bid at the Foreclosure Sale, or (iii) accept a deed conveying the Encumbered
Property in lieu of foreclosure, in each case without the requirement of
making a further offer of the Encumbered Property to Holder. But if, within
one year after Holder actually received the Lien Enforcement Notice, Lender's
enforcement of the Lien has not been completed or Lender has not accepted a
deed in lieu of foreclosure, Lender must give a new Lien Enforcement Notice to
Holder before completing the enforcement of the Lien or accepting a deed in
lieu of foreclosure.
12.14 Holder's Rights Bind Foreclosure Purchaser. If Holder does not
------------------------------------------
exercise the Foreclosure Purchase Right and (i) Lender or a third party buys
the Encumbered Property at the Foreclosure Sale or (ii) Lender accepts a deed
conveying the Encumbered Property in lieu of foreclosure, the new owner of the
Encumbered Property will acquire the Real Estate subject to Holder's rights
under this Agreement, which will continue with respect to each future intended
transfer of an Offered Parcel by any owner or tenant of the Real Estate.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
-------
sent to the addresses set forth below in this Section G1. But a party may
change its address for notices by giving notice as required by this Section G1.
A written notice will be considered given (i) when personally delivered, (ii)
two business days after deposit in the United States Mail as first class mail,
certified or registered, return receipt requested, with postage prepaid, (iii)
one business day after deposit with a reputable overnight delivery service for
next business day delivery, or (iv) on the business day of successful
transmission by electronic facsimile. The parties' addresses for notices are
as follows:
-14-
<PAGE>
To Holder: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, California 90623-1066
Attn: Manager, Real Estate and Dealer Acquisitions
Facsimile: (714) 670-5439
To Owner: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Facsimile: (310) 456-6094
G2. Further Acts. Owner and Holder each shall do everything that the
------------
other reasonably requests to carry out the purpose of this Agreement.
G3. Successors and Assigns. The rights and obligations under this
----------------------
Agreement bind and benefit the respective successors and assigns of Owner and
Holder. For example, the covenants and obligations of Owner contained in this
Agreement will bind each future owner or tenant of all or part of the Real
Estate; and each of those persons will be considered "Owner" under this
Agreement with respect to the applicable part of the Real Estate while that
person is the owner or tenant.
G4. Time of Essence: Business Day: Dates. Time is of the essence of each
------------------------------------
provision of this Agreement in which time is a factor. In this Agreement, the
term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California. If the date by which
an event is to occur under this Agreement falls on a day that is not a business
day, the event may occur on the next business day.
G5. Uncontrollable Events. The date by which a party is to perform an
---------------------
obligation (other than the payment of money) under this Agreement will be
extended for the period during which the party is prevented from performing by
an event beyond its reasonable control (including, without limitation, acts of
God, work stoppage, riots, and other similar events) (an "Uncontrollable
Event"). If (i) a party who has the right to exercise a right under this
Agreement has not done so by the last date allowed under this Agreement and
(ii) on that date, the party is prevented from exercising the right due to an
Uncontrollable Event, the date will be extended until the third business day
after the Uncontrollable Event ends.
G6. Entire Agreement; Modification; Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Owner and Holder with
respect to the Right granted under this Agreement. Any modification of this
Agreement
-15-
<PAGE>
must be in writing and signed by Owner and Holder. Any waiver of a provision of
this Agreement by Owner or Holder must be in writing.
G7. Governing Law. The internal laws of the State of California govern
-------------
this Agreement.
G8. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the
other genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Owner or Holder to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
G9. Attorneys' Fees. If a dispute arises with respect to this Agreement
---------------
and if Holder prevails in the dispute, then Holder will be entitled to recover
from Owner the reasonable costs and expenses that Holder incurred in enforcing
its rights under this Agreement, including reasonable attorneys' fees.
OWNER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------------
John D. Castellucci
President
(ATTACH NOTARY ACKNOWLEDGMENT)
-16-
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
STATE OF CALIFORNIA
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COUNTY OF ORANGE
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<TABLE>
<S> <C>
On September 2, 1999 before me, M. Bird, Notary Public
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NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared John D. Castellucci,
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[X] personally known to me to be the person whose names is subscribed to the
within instrument and acknowledged to me
[SEAL] that he executed the same in his authorized
capacity, and that by his signature on the
instrument the person, or the entity upon
behalf of which the person acted, executed
the instrument.
WITNESS my hand and official seal.
/s/ M. Bird
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SIGNATURE OF NOTARY
===========================OPTIONAL=========================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
[_] INDIVIDUAL
[X] CORPORATE OFFICER
President Right of First Refusal Agreement
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TITLE OR TYPE OF DOCUMENTS
PARTNER(S) [_] LIMITED
[_] GENERAL
[_] ATTORNEY-IN-FACT
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[_] TRUSTEE(S) NUMBER OF PAGES
[_] GUARDIAN/CONSERVATOR
[_] OTHER September 2, 1999
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DATE OF DOCUMENTS
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc., a Delaware corporation None
- -------------------------------------------------------- ---------------------------------------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
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<PAGE>
LEGAL DESCRIPTION OF THE REAL ESTATE
(See Exhibit "A" following this cover sheet.)
-17-
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
All that portion of Lot 3 of Tract No. 3202, in the City of Bakersfield, County
of Kern, State of California, and is described as follows:
Beginning at the Southwest comer of said Lot 3; thence along the South line of
said Lot 3 and the North line of California Avenue, and along a curve concave
Southeasterly, having a radius of 2155.00 feet and a central angle of 12 degrees
19' 28", a distance of 463.545 feet to the end of said curve; thence North 89
degrees 14' 00" East, 141.768 feet to the true point of beginning of this
description, said point of beginning also being the beginning of a curve concave
Northwesterly, having a radius of 20 feet and a central angle of 89 degrees 25'
19", thence along said curve 31.214 feet to the end of said curve and to a point
on the East line of said Lot 3; thence North 0 degrees 11' 19" West, along said
East line, said East line also being the West line of Chester Lane, 130.201 feet
to a point; thence South 89 degrees 14' 00" West, 175.00 feet to a point; thence
South 0 degrees 11' 19" East, 150.00 feet, more or less, to a point on the South
line of said Lot 3, thence Easterly along said South line to the true point of
beginning.
EXCEPT all oil, gas and other minerals contained within the property hereinabove
described, whether now known to exist or hereafter discovered all oil, gas and
other mineral rights belonging or appertaining to said property, the exclusive
right to prospect for, drill for, produce, mine, extract and remove oil, gas
and other minerals upon and from said property, the exclusive right to drill
upon, to drill through and otherwise to use said property to produce, mine,
extract and remove oil, gas and other minerals from adjacent or neighboring
lands and the exclusive right to inject in, store under, and thereafter
withdraw from said property, oil, gas and other minerals and products thereof,
whether produced from said property or elsewhere, but unless the Grantee
therein or its successors or assigns, shall give written consent to the drilling
of wells upon the surface of said lands, all of the foregoing rights shall be
exercised only by the drilling of wells from locations on adjacent or
neighboring lands into or without entering upon or using any portion of said
property lying above said depth, as reserved by Kern County Land Company, in
deed recorded December 29, 1967 in Book 4116, Page 612 of Official Records.
ALSO EXCEPT all water and water rights in and under said land.
Page 1 of 1
<PAGE>
EXHIBIT 10.44
AGREEMENT FOR SALE OF BUSINESS TO CONTRACT DEALER
Sale of Facility No.: 06202
Dated (for identification): September 2, 1999
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This Agreement for Sale of Business to Contract Dealer (this
"Agreement") is entered into by LLO-GAS, INC., a Delaware corporation ("Buyer"),
and PRESTIGE STATIONS, INC., a Delaware corporation ("Seller"):
RECITALS
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A. Seller is a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("ARCO"). Seller operates an ARCO retail gasoline station
and am/pm mini market at the Real Estate (as defined in Section 1).
B. Seller wishes to sell to Buyer, and Buyer wishes to buy from Seller,
certain assets that Seller uses in connection with the operation of the
business at the Real Estate ("Seller's Operations") and that are located at the
Real Estate. Section 4 describes these assets (the "Business Property").
C. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign an Agreement for Sale of Real Estate to Contract Deafer (the
"Real Estate Agreement") for Buyer's purchase of ARCO's interest in the Real
Estate.
D. Buyer and Seller intend to transfer ownership of the Business Property
on the day that Buyer becomes the owner of ARCO's interest in the Real Estate.
E. At the same time that Buyer and Seller sign this Agreement, Buyer and
Seller will sign five Agreements for Sale of Business to Contract Dealer (the
"Companion Business Agreements") for certain assets that Seller uses in
connection with the operation of the businesses at the real property (the
"Companion Real Estate") at the locations (other than the location of the Real
Estate) described in the attached Exhibit "A".
F. At the same time that Buyer and Seller sign this Agreement, Buyer and
ARCO will sign five Agreements for Sale of Real Estate to Contract Dealer (the
"Companion Real Estate Agreements") for Buyer's purchase of ARCO's interest in
the Companion Real Estate.
AGREEMENT
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THEREFORE, Buyer and Seller agree as follows:
<PAGE>
1. Basic Provisions.
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Seller's Information: Prestige Stations, Inc.
4 Centerpointe Drive, LPR 4-306
La Palma, California 90623-1066
Attn: Joseph Scherer
President
Telephone: (714) 670-5145
Facsimile: (714) 670-5142
Buyer's Information: LLO-Gas, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Attn: John D. Castellucci
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
Taxpayer I.D. No.: 77-0489023
Resale/Sales Tax Permit No.: SRARJ41644875
Real Estate: Street Address: 4100 California Avenue
City, State, ZIP Code: Bakersfield, California 93309
County: Kern
Deposit: $20,500.00 by Buyer's check payable to Escrow Holder
Purchase Price: $180,000.00
Purchase Price Components:
Equipment: $10,000.00
Estimated Price of Store Inventory: $60,000.00
Estimated Price of Petroleum Inventory: $15,000.00
Franchise Fee: $95,000.00
Closing Date: See Section 6.2.
Escrow Holder: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard, Suite 130
Seal Beach, California 90740
Attn: Patricia Cusick
Escrow Officer
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<PAGE>
Telephone: (562) 799-1490
Facsimile: (562) 799-1494
Escrow No.: Citywide Escrow Services, Inc.
12501 Seal Beach Boulevard,
2. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer
-----------------
agrees to buy from Seller, the Business Property. The purchase and sale (the
"Transaction") will be on the terms set forth in this Agreement.
3. Acceptance by Buyer. To accept this Agreement, Buyer must
-------------------
deliver the following items to Seller within 10 business days after Buyer
receives this Agreement: (i) This Agreement signed by Buyer, (ii) Buyer's check
payable to Escrow Holder as named in Section 1 in the amount of the Deposit as
set forth in Section 1, and (iii) written proof that Buyer has, or will have,
sufficient funds to complete the Transaction. This proof must consist of
evidence showing that (i) Buyer has sufficient cash or other liquid assets to
complete the Transaction or (ii) Buyer has submitted to an institutional
lender a fully completed application for a loan in an amount sufficient to
complete the Transaction. Buyer must deliver these items to Seller at the same
time that Buyer delivers to ARCO the items required by Section 3 of the Real
Estate Agreement.
4. Business Property. The following items constitute the Business
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Property:
(a) Equipment. All equipment, furnishings, and trade fixtures
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(i) that Seller uses in connection with Seller's
Operations, (ii) that are located at the Real Estate,
whether or not those items are attached to the land or
improvements at the Real Estate, and (iii) that are shown
on the attached Schedule 1 (collectively, the "Equipment");
(b) Petroleum Inventory. The petroleum inventory located at the
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Real Estate on the day that Escrow (as defined in Section
6.1) closes (the "Petroleum Inventory");
(c) Store Inventory. (i) All resalable inventory of Seller's
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Operations (other than the Petroleum Inventory), in its
original packaging, that is located at the Real Estate on
the day that Escrow closes and (ii) all supplies that
Seller uses in connection with Seller's Operations and that
are located at the Real Estate on the day that Escrow
closes (collectively, the "Store Inventory");
3
<PAGE>
(d) Permits. All transferable licenses and permits that Seller
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holds in connection with Seller's Operations (Collectively,
the "Permits"), including without limitation (i) the
permanent beer and wine license (the "ABC License"), (ii)
the underground storage tank permit for the underground
storage tanks at the Real Estate, (iii) any conditional use
permit for Seller's Operations, and (iv) any operating
permit for Seller's Operations; and
(e) Equipment Records. All records regarding equipment
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monitoring and maintenance for Seller's Operations.
The Equipment includes, without limitation, all gasoline dispensers, walk-in
coolers, affixed sales counters and food preparation counters, food preparation
equipment, cash registers, debit card machines, and PayQuick Island Cashier
(PIC) machines.
5. Purchase Price.
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5.1 Amount. The Purchase Price for the Business Property and the
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Franchise Fee is the amount set forth in Section 1. Section 15 provides for the
final determination of the amount payable for the Store Inventory and the
Petroleum Inventory.
5.2 Payment. Subject to the collection of Buyer's check for the
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Deposit, Escrow Holder shall credit the Deposit to the Purchase Price. Buyer
shall deposit the balance of the Purchase Price into Escrow, in cash or
immediately available funds, by the earlier of the following dates: (i) One
business day before the date scheduled for the close of Escrow or (ii) the date
designated by Escrow Holder so that Escrow Holder can timely file Form 226,
Statement Re Consideration Deposited in Escrow, with the California Department
of Alcoholic Beverage Control (the "ABC|) to allow the closing to occur on the
scheduled date.
6. Escrow and Closing.
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6.1 Escrow. Closing will occur through an escrow (the "Escrow")
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at Escrow Holder's office. After Buyer and Seller have signed this Agreement,
Seller shall deliver a fully signed original of this Agreement and the check
for the Deposit to Escrow Holder. Escrow will be considered opened on the date
that Escrow Holder signs this Agreement. This Agreement constitutes joint
escrow instructions to Escrow Holder. Buyer and Seller shall do all that is
reasonably necessary to close the Escrow.
6.2 Closing Date. If the ABC License is ready to be issued to
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Buyer, the Escrow will close simultaneously with the closings under the Real
Estate Agreement, the Companion Business Agreements, and the Companion Real
Estate
<PAGE>
Agreements. If the ABC License is not ready to be issued to Buyer, but a
temporary beer and wine license is ready to be issued to Buyer, the escrows
under the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements may close before the Escrow closes. In that
case, the Escrow will close when the ABC License is issued to Buyer.
6.3 Closing Conditions. Each party's obligation to complete the
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Transaction is contingent on the satisfaction of the following conditions;
unless that party waives the condition before Escrow closes:
(a) ABC License. Buyer, Seller, and Escrow Holder have
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received notice that the ABC has transferred the ABC
License to Buyer.
(b) Related Transactions Ready to Close. For each of the
-----------------------------------
transactions under the Real Estate Agreement, the
Companion Business Agreements, and the Companion Real
Estate Agreements, Seller has confirmed that (i) Seller
is ready and committed to close those transactions or
(ii) if the transaction is being handled through an
escrow, Seller has received notice from the escrow
holder that the escrow holder is ready and committed to
close the escrow.
(c) Franchise Documents. ARCO, through its division ARCO
Products Company ("APC|), and Buyer (i) have signed a
Contract Dealer Gasoline Agreement (the "Gas
Agreement") and a non-lessee am/pm Mini Market
Agreement (the "Mini Market Agreement") for Buyer's
operations at the Real Estate after the closing, and
(ii) have signed and have had notarized Memorandum of
Contract Dealer Gasoline Agreement in recordable form.
The am/pm Mini Market Agreement will provide for the
Franchise Fee as set forth in Section 1, which is
included in the Purchase Price. The Gas Agreement and
the Mini Market Agreement each must have a term of 15
years and be in ARCO's standard form.
(d) Other Closing Conditions. All closing conditions for
that party's benefit contained in provisions of this
Agreement other than this Section 6.3 have been
satisfied, or will be satisfied as a part of the
closing.
5
<PAGE>
(e) Other Party's Obligations. The other party has
performed all its obligations under this Agreement to
be performed before the closing, or will perform those
obligations as a part of the closing.
7. Delivery of Documents and Funds.
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7.1 Deliveries by Seller. At or before the closing, Seller
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shall deliver to Buyer or Escrow Holder the following:
(a) Bill of Sale. A bill of sale (the "Bill of Sale")
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transferring title to the Business Property to Buyer,
signed by Seller;
(b) Business Property. Physical possession of the
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tangible assets of the Business Property and all
tangible evidence of the intangible assets of the
Business Property, to the extent that those items are
in Seller's possession or control;
(c) Permits. All the Permits;
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(d) Equipment Records. All records regarding equipment
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monitoring and maintenance for Seller's Operations;
and
(e) Other Documents. All other instruments and documents
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reasonably required to complete the Transaction.
7.2 Deliveries by Buyer. At or before the closing, Buyer shall
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deliver to Escrow Holder the following:
(a) Cash. Cash or immediately available funds to pay the
----
balance of the Purchase Price and Buyer's share of
closing costs; and
(b) Other Documents and Funds. All other instruments;
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documents, and funds reasonably required to complete
the Transaction.
8. Transfer of ABC License. Buyer shall do all that is reasonably
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necessary to obtain the ABC's approval of the transfer of the ABC License to
Buyer. Seller shall cooperate with Buyer's efforts to obtain the ABC's
approval of the transfer.
6
<PAGE>
9. No Assumed Liabilities. Buyer will not assume any liabilities of
----------------------
Seller or Seller's Operations.
10. Bulk Sale Notices. Buyer and Seller shall give notice, in
-----------------
compliance with California Business and Professions Code Section 24073, of the
intended transfer of the ABC License. Buyer and Seller instruct Escrow Holder
(i) to cause the notice to state that "the sale of seller's assets to buyer is
not subject to Division 6 of the California Uniform Commercial Code, including
Section 6106.2 of the California Uniform Commercial Code," (ii) to record and
publish the notice, and (iii) in accordance with California Business and
Professions Code Section 24074, to distribute the Purchase Price to Seller's
bona fide creditors who file claims with Escrow Holder before Escrow Holder
receives notice from the ABC of its approval of the transfer of the ABC
License. Upon Escrow Holder's request, Buyer and Seller shall provide Escrow
Holder with the information necessary to prepare the notice. Seller represents
and warrants to Buyer that the sale under this Agreement is not a bulk sale as
contemplated by Division 6 of the California Uniform Commercial Code. Based
on that representation and warranty, Buyer instructs Escrow Holder not to give
notice under Division 6.
11. Tax Clearance Certificates. Seller will not be required to
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provide to Buyer tax clearance certificates from applicable governmental
agencies. Buyer and Seller instruct Escrow Holder to not obtain tax clearance
certificates. Seller shall indemnify and defend Buyer from all liabilities,
damages, claims, costs, and expenses (including reasonable attorneys' fees)
that Buyer might incur in connection with any tax liability of Seller related
to Seller's Operations before closing. If required by the ABC, Seller shall
provide the ABC with evidence that Seller is not delinquent in the payment of
any taxes that are the subject of California Business and Professions Code
Section 24049.
12. Sales and Use Tax. Buyer represents that it holds a valid
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Resale/Sales Tax Permit with the identifying number set forth in Section 1.
Therefore, Seller will not collect sales tax on the sale of the Store Inventory
or the Petroleum Inventory to Buyer.
13. Prorations. Escrow Holder shall prorate the following items
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between Seller and Buyer as of the date that Escrow closes: Personal property
taxes.
14. Fees and Costs. Buyer and Seller each shall pay (i) one half of
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Escrow Holder's fee and (ii) the filing, recording, publication, and other costs
and expenses that Escrow Holder incurs on its behalf, unless the cost or
expense is otherwise allocated under this Agreement. Buyer shall pay all
application and other fees charged by the ABC in connection with the transfer
of the ABC License.
7
<PAGE>
15. Inventory.
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15.1 Store Inventory. On the day that Escrow closes, an outside
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inventory service (the "Service") selected by Seller will conduct an in-store
inventory of the Store Inventory. The Service will calculate the retail price
of the Store Inventory. At the completion of the in-store inventory, Buyer
and Seller each shall pay to the Service one half of the fee for the in-store
inventory. After the in-store inventory has been completed and the Service has
calculated the retail price of the Store Inventory, Seller shall calculate the
amount payable for the Store Inventory in accordance with its then-current
pricing policies for the sale of store inventory located at an operating
business of Seller to a person who intends to re-sell the store inventory at the
same location. Seller shall then notify Buyer and Escrow Holder of the amount
payable for the Store Inventory. Seller's Operations will be closed to the
public during the instore inventory.
15.2 Petroleum Inventory. On the day that Escrow closes, Buyer
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and ARCO's representative conducting the changeover of Seller's Operations
("ARCO's Changeover Representative") shall jointly inventory the Petroleum
Inventory; and after the joint inventory has been completed, ARCO's Changeover
Representative shall calculate the amount payable for the Petroleum Inventory.
The amount payable for the Petroleum Inventory will equal Seller's rack price
based on Seller's latest invoices for gasoline delivered to the Real Estate.
Seller shall then notify Buyer and Escrow Holder of the amount payable for the
Petroleum Inventory.
15.3 Adjustment for Estimated Price of Inventory. After the
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petroleum inventory and in-store inventory are completed, the sum of the amount
payable for the Petroleum Inventory and the amount payable for the Store
Inventory will be subtracted from the sum of the Estimated Price of Store
Inventory and the Estimated Price of Petroleum Inventory set forth in Section
1. The resulting overage or shortage will be credited or charged, as
applicable, to the Purchase Price.
16. Equipment Listing. Seller shall attach to the Bill of Sale, or
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otherwise deliver to Buyer before or at the closing, a list of Equipment. Buyer
may inspect the Equipment before Escrow closes.
17. Seller's Representations and Warranties. Seller's
---------------------------------------
representations and warranties in this Agreement will survive the closing.
Seller represents and warrants to Buyer, as of the date of this Agreement and
as of the close of Escrow, as follows:
17.1 Ownership of Assets. Seller has, and at the close of Escrow
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will transfer to Buyer, title to the Business Property, free and clear of all
liabilities, liens, encumbrances, security interests, leases, contracts, and
claims.
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<PAGE>
17.2 Leases. Contracts, and Agreements. No leases, contracts,
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commitments, or understandings connected with Seller's Operations will be
binding on Buyer after the closing.
17.3 Absence of Litigation. No suit, arbitration, or other
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proceeding is pending against Seller, the Business Property, or Seller's
Operations that would prevent Seller from completing the Transaction. Seller
knows of no claim or potential claim that could give rise to such a matter in
the future.
17.4 Taxes. Seller has filed all tax returns required in
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connection with Seller's Operations. Seller has paid, or will pay before the
close of Escrow, all taxes (including interest and penalties on the taxes) due
from Seller in connection with Seller's Operations.
17.5 Equipment. All Equipment is in good working condition. The
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underground storage tanks and gasoline dispensers comply with the terms of
Section 10.A of the Gas Agreement, according to the certificate of upgrade
compliance provided under Section 25284 of the California Health and Safety
Code. The PayQuick Island Cashier has been installed at the Real Estate and
compiles with the terms of Section 10.B of the Gas Agreement. The video
surveillance equipment approved by ARCO has been installed at the Real Estate
and is in good working condition. Any secondary containment equipment for the
underground storage tanks required by Section 11.5 of the Gas Agreement has been
installed at the Real Estate.
17.6 Permits and Laws. Seller's Operations are in compliance
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with (i) a conditional use permit, (ii) all applicable governmental laws,
regulations, and orders as required by Section 15.1 of the Gas Agreement
(collectively, "Laws"), and (iii) the regulations governing operators of retail
gasoline stations in Arizona and California set forth in the ARCO Products
Company auditing regulatory compliance checklist. To Seller's actual knowledge,
Seller has not received notice from any governmental agency of any violation of
any Laws in connection with Seller's Operations. All necessary permits foe
Seller's Operations have been obtained. "To Seller's actual knowledge" means to
the actual knowledge of Kyle Christie, Linda Cohu, Ted Harriss, or Lynn Beteag,
without independent inquiry, file review, or any investigation whatsoever.
Seller represents to Buyer that Kyle Christie is Seller's Facility Remediation
Manager assigned to the Real Estate, Linda Cohu is Seller's Manager of
Environment, Health and Safety, Ted Harriss is the Property Management
Representative assigned to the Real Estate, and Lynn Beteag is Seller's Property
Management Manager assigned to the Real Estate.
17.7 Trademark and Trade Dress. Seller's Operations comply with
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the trademark and trade dress requirements set forth in Section 14.1 of the Gas
Agreement. All signs required by Section 14.3 of the Gas Agreement have been
installed at the Real Estate.
9
<PAGE>
17.8 Employees. The employment of all employees of Seller for
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Seller's Operations will be terminated as of the date that the Escrow closes or
the changeover of Seller's Operations is completed.
18. As-Is Sale. Buyer acknowledges that (i) it is buying the
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Business Property solely in reliance on its own investigation; (ii) no
covenants, representations, or warranties have been made by Seller or on
Seller's behalf, except those set forth in this Agreement; (iii) Buyer has made
itself aware of all Laws concerning the Business Property or Buyer's operation
of a business using the Business Property; and (iv) Buyer will be buying the
Business Property in its condition existing when Escrow closes. Nothing in the
previous sentence diminishes Seller's obligations as expressly set forth in
this Agreement.
19. Possession of Business Property. Buyer may possess and operate
-------------------------------
the Business Property when Escrow closes. Buyer shall open for business at the
Real Estate within 48 hours after Escrow closes. Any alterations to the
building on the Real Estate will be considered a "conversion" under Section
5.02(b) of the Mini Market Agreement.
20. ARCO's Right of First Refusal. Buyer shall grant to ARCO a right
-----------------------------
of first refusal to acquire the Business Property by signing the Right of First
Refusal Agreement, as defined in and required under the Real Estate Agreement.
21. Required Governmental Notices. Promptly following the closing,
-----------------------------
Buyer shall notify the governmental agencies that issued the Permits that Seller
transferred the Permits to Buyer and that they should send notices relating to
the Permits to Buyer.
22. Liquidated Damages. IF ESCROW FAILS TO CLOSE DUE TO BUYER'S
------------------
DEFAULT, ESTABLISHING SELLER'S ACTUAL DAMAGES CAUSED BY BUYER'S DEFAULT WOULD
BE IMPRACTICAL OR EXTREMELY DIFFICULT. AWARDING SELLER THE DEPOSIT AND ANY
ACCRUED INTEREST ON THE DEPOSIT AS LIQUIDATED DAMAGES FOR BUYER'S DEFAULT WOULD
BE REASONABLE. THEREFORE, SELLER'S SOLE REMEDY FOR BUYER'S DEFAULT WILL BE TO
KEEP THE DEPOSIT AND ANY ACCRUED INTEREST. IF SELLER GIVES NOTICE TO ESCROW
HOLDER THAT BUYER HAS DEFAULTED AND INSTRUCTS ESCROW HOLDER TO PAY TO SELLER
THE DEPOSIT (IF THEN HELD IN ESCROW) AND ANY ACCRUED INTEREST, BUYER AUTHORIZES
ESCROW HOLDER TO COMPLY WITH SELLER'S INSTRUCTION WITHOUT BUYER'S FURTHER
CONSENT OR INSTRUCTIONS.
SELLER AND BUYER EACH ACKNOWLEDGE THAT IT HAS READ AND UNDERSTANDS THE ABOVE
PROVISIONS OF THIS SECTION 22; AND BY ITS
10
<PAGE>
INITIALS IMMEDIATELY BELOW, IT AGREES TO BE BOUND BY THOSE PROVISIONS.
/s/ JC /s/ JLS
---------------- -----------------
Buyer's Initials Seller's Initials
23. Buyer's Authority. Within ten days after Buyer signs this
-----------------
Agreement, Buyer shall provide Seller with a copy of Buyer's governing documents
(for example, Articles of Incorporation, Bylaws, Agreement of Partnership,
Limited Liability Company Operating Agreement, or Declaration of Trust),
authorizing action (for example, corporate resolutions, consent of partners, or
consent of members), and any other document necessary to enable Seller to
confirm that the individual signing this Agreement for Buyer is authorized to
bind Buyer.
24. Real Estate Agreement. This Agreement will not become effective
---------------------
unless the Real Estate Agreement, the Companion Business Agreements, and the
Companion Real Estate Agreements are signed at the same time that this Agreement
is signed. If ARCO terminates the Real Estate Agreement in accordance with its
terms, Seller may terminate this Agreement without further liability to Buyer.
If Buyer terminates the Real Estate Agreement in accordance with its terms,
Buyer may terminate this Agreement without further liability to Seller.
GENERAL PROVISIONS
------------------
G1. Notices. Notices relating to this Agreement must be in writing and
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sent to the addresses set forth in Section 1. But a party may change its address
for notices by giving notice as required by this Section G1. A written notice
will be considered given (i) when personally delivered, (ii) two business days
after deposit in the U.S. Mail as first class mail, certified or registered,
return receipt requested, with postage prepaid, (iii) one business day after
deposit with a reputable overnight delivery service for next business day
delivery, or (iv) on the business day of successful transmission by electronic
facsimile.
G2. Additional Instruments. Seller and Buyer shall sign, acknowledge, and
----------------------
deliver to the other any further instruments reasonably required to carry out
the provisions of this Agreement.
G3. Successors and Assigns. Each party's rights and obligations under
----------------------
this Agreement bind and benefit its successors and assigns. But Buyer shall not
assign or otherwise transfer its interest under this Agreement without Seller's
prior written consent, which Seller may withhold in its sole discretion. An
assignment or other transfer by Buyer without Seller's prior written consent
will be void.
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<PAGE>
G4. Time of Essence: Business Day. Time is of the essence of each
-----------------------------
provision of this Agreement in which time is a factor. In this Agreement,
the term "business day" means days other than Saturdays, Sundays, and holidays
observed by the United States or the State of California.
G5. Uncontrollable Events. Neither party will be liable to the other for
---------------------
its failure to perform under this Agreement due to events beyond its control,
including without limitation work stoppages, riots, acts of God, or other
similar events.
G6. Survival. All representations, warranties, indemnities, and releases
--------
contained in this Agreement will survive the close of Escrow or the termination
of this Agreement.
G7. Entire Agreement: Modification: Waiver. This Agreement (including any
--------------------------------------
attached Exhibits) contains the entire agreement between Buyer and Seller with
respect to the Transaction, including all representations and warranties between
them. Any modification of this Agreement must be in writing and signed by both
parties. Any waiver of a provision of this Agreement by a party must be in
writing.
G8. Governing Law. The internal laws of the State of California govern
this Agreement.
G9. Interpretation. The captions appearing in this Agreement are for
--------------
convenience of reference only, and they do not affect the meanings of the
provisions of this Agreement. In this Agreement, each gender includes the
other genders. Words in the singular include the plural and vice versa, when
appropriate. The word "person" includes natural individuals and all other
entities. The word "cost" includes any cost or expense. The word "term"
includes any covenant, condition, representation, warranty, or other provision
that is part of an agreement. Whenever a provision of this Agreement requires
Buyer or Seller to perform an act, that person must do so at its sole cost
(unless otherwise stated in connection with that provision).
(See signatures on the next page.)
12
<PAGE>
BUYER:
LLO-GAS, INC., a Delaware corporation
By: /s/ John Castellucci
--------------------
John D. Castellucci
President
SELLER:
PRESTIGE STATIONS, INC.,
a Delaware corporation
By: /s/ Joseph L. Scherer
---------------------
Joseph Scherer
President
Agreed to by Escrow Holder
on Sept. 2 , 1999
-------------------------
CITYWIDE ESCROW SERVICES, INC.
By: /s/ Patricia Cusick
-------------------
Patricia Cusick
Escrow Officer
13
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
(See Exhibit "A" following this cover sheet.)
EXHIBIT "A"
<PAGE>
LOCATION OF THE COMPANION REAL ESTATE
ARCO Facility No.: 01860
Street Address, City, and State: 3817 W. Third Street
Los Angeles, California 90020
ARCO Facility No.: 05502
Street. Address, City, and State: 702 West Broadway
Phoenix, Arizona 85032
ARCO Facility No.: 05212
Street Address, City, and State: 3366 N. San Gabriel Boulevard
Rosemead, California 91770
ARCO Facility No.: 05513
Street Address, City, and State: 13001 Stockdale Highway
Bakersfield, California 93312
ARCO Facility No.: 05972
Street Address, City, and State: 64200 20th Street
North Palm Springs, California 92258
ARCO Facility No.: 06202
Street Address, City, and State: 4100 California Avenue
Bakersfield, California 93309
EXHIBIT "A"
<PAGE>
Exhibit 10.45
Facility Number: 82065
Customer Account Number: 0883363
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2 , 1999, between ARCO Products Company (a
division of ATLANTIC RICHFIELD COMPANY - incorporated in Delaware), with an
office at: 4 CENTERPOINTE DRIVE, LA PALMA, CALIFORNIA 90623 ("ARCO") and
LLO-Gas, Inc.
a Corporation
- --------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"], if partnership, the names of
all partner and State of Organization; if limited partnership, the names of all
general partners and State of Organization; if corporation, the State of
Incorporation; if LLC, the State of Organization)
with an address at 23805 Stuart Ranch Road, Malibu, CA 90265 Bakersfield,
California 93309 ("Operator").
Operator desires to be the franchisee of, and ARCO is willing to grant to
Operator a franchisor for, an am\pm mini market located at the Premises set
forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the
terms and conditions set forth in PARTS I and II of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in PARTS I and II hereof, each of the parties intending to be legally
bound hereby, agrees as follows:
PART I
PART I contains specific terms which relate to the terms and conditions
set forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10
(4/99), attached hereto and incorporated herein.
Section
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
4.03 Store Manager (if Operator has more than one am/pm mini market)
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______
day of ____________________, ______, ("Commencement Date"), and shall
end at 10 a.m. on the first day after the last day of the [_____] 120th
or [_____] 180th full calendar month following the Commencement Date.
If not time is checked, the box for 120th shall be deemed checked. If
no date is set forth in this Part I, the Commencement Date shall be
established by the "Notice of Final Inspection and Readiness" provided
for in Section 5.01 of PART II.
6.01 Premises
4100 California Ave.
-----------------------------------------------------------------------
(complete address by street number, including,
where applicable, designation of corner)
City Bakersfield State California Zip 93309
7.01(a) Initial franchise fee: Ninety-Five Thousand 00/100 Dollars
[$ 95,000.00]
7.01(c) Renewal franchise fee:
-----------------------------------------------------------------------
Dollars [$ .00]
------------------ --------------
7.02(a) Minimum royalty fee: One Thousand 00/100 Dollars [$1000.00]
7.03 Security Deposit: One Thousand 00/100 Dollars [$1000.00]
16.01 Operational Designee, if applicable:
17.02 Corporate Designee (Corporate operators only): John Castellucci
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<PAGE>
Limited Liability Company Designee (LLC's Only):________________________________
Partnership Designee (Limited Partnership Only):________________________________
2 of 5
<PAGE>
Facility Number: 82065
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by
a check mark at the left of the required items. ARCO agrees to loan the
equipment initialed by ARCO to the right of such items and to install such
equipment prior to the Commencement Date. Operator agrees to install, at
Operator's expense, on or before the Commencement Date, the equipment initialed
by Operator to the right of such items. All equipment, whether furnished by
Operator or by ARCO, must meet ARCO's specifications including, but not limited
to, specifications with respect to brand, size, color and quality.
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X am/pm Sun & Moon Sign X
- --------- -----
X Building Fascia (illuminated) X
- --------- -----
X Cigarette Merchandiser (Overhead)(Vendor Supplied) X
- --------- -----
X Corner am/pm I.D. Sign
- --------- and where applicable, Sign Pole X
-----
X Interior Signage X
- --------- -----
X Training Materials [Employee Training System ("E.T.S.")] X
- --------- -----
X Bun Toaster X
- --------- -----
X Capuccino Bulk Powder Machine X
- --------- -----
X Cash Register (Primary with PayPoint(R)P.O.S. X
- --------- -----
X Cheese Sauce Dispensers (2) X
- --------- -----
X Coffee Brewer (6 Burner Twin Brewer) X
- --------- -----
X Coffee Brewer Timer X
- --------- -----
X Coffee/ Bakery Menu Board X
- --------- -----
X Coffee Mug Rack X
- --------- -----
X Coffee Lid/Supply Spinner Rack X
- --------- -----
X Computer Software and Hardward X
- --------- -----
X Condiment Pumps (2) X
- --------- -----
X Convection Oven X
- --------- -----
X Convection Oven Racks (4) X
- --------- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
- --------- -----
X Cooler Boxes (Upright) Size______ Number______ X
- --------- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
- --------- -----
X Counter Top Condiment Dispenser Unit X
- --------- -----
X Counter and Shelving (including Condiment Table) X
- --------- -----
X Counter Merchandising System X
- --------- -----
X Cup Dispenser (Hot and Cold) X
- --------- -----
X Fast Food Module (older units only) X
- --------- -----
X Fax Machine X
- --------- -----
X Food Merchandising Warmer X
- --------- -----
X Food Merchandising Rack Identification Channels and Strips X
- --------- -----
X Food Preparation Table X
- --------- -----
X Fountain Drink and Ice Dispenser with Ice Maker and
- --------- Carbonator (Pepsi-Cola) X
-----
X Fountain Lid and Straw Rack X
- --------- -----
X Prepackaged Electronic Facility Controller (EFC) X
- --------- (see Electronic Drawings for Details) -----
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
<S> <C> <C> <C>
X Freezer Cabinets (Upright) Size______ Number______ X
- --------- -----
X Freezer (Storage Room) X
- --------- -----
X Frozen Carbonated Beverage Machine X
- --------- -----
X Frozen Dessert Graphics Package X
- --------- -----
X Frozen Dessert Cup, Cone Tower X
- --------- -----
X Gondolas Size______ Number______ X
- --------- -----
X Hood and Exhaust Ventilation System for Convection Oven
- --------- (California only and only where locally required) X
-----
X Ice Maker X
- --------- -----
X Ice Merchandiser Size______ Number______ X
- --------- -----
X In-store Television Monitors for display of multi-media
- --------- advertising** X
-----
X Microwave Over (Commercial) X
- --------- -----
X Nacho CheeseSauce Dispensers X
- --------- -----
X PayQuick Island Cashier (PIC) (only if Operator is
- --------- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000) with PayPoint X
- --------- -----
X Shelving (Storage Room) Size______ Number______ X
- --------- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
- --------- -----
X Shelving (Wall) Size______ Number______ X
- --------- -----
X Sink (3-compartment-food preparation) X
- --------- -----
X Sink (Hand sink in hot food area) X
- --------- -----
X Sink (Service/Mop) X
- --------- -----
X Small Wares (Food Service) X
- --------- -----
X Soft Serve Dispenser X
- --------- -----
X Sports Bottle Rack X
- --------- -----
X Lid/Straw Spinner Rack X
- --------- -----
X (Combination VHS Player/Monitor
- --------- to utilize ETS/VHS tapes) X
-----
X Water Heater X
- --------- -----
X Video Surveillance Equipment (including six Color
- --------- Cameras.two 20" color Monitors, Flashing Red Lights for
Monitors, Multiplexor Unit to support up to 9 Cameras,
Time-lapse Video Recorder, Video Tape Library with 31 tapes
(replaced annually with 31 new long playing Video T-160 tapes)
and 24 Hour Surveillance Decal) X
-----
X VSAT Equipment: (1) Hughes Satellite Dish X
- --------- -----
X (2) Hughes Indoor Unit - Satellite Receiver X
- --------- -----
(3) Deicer (if required for colder climate) X
-----
Other: 1.
- ---------- ------------------------ -----
2.
------------------------ -----
3.
------------------------ -----
</TABLE>
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
4 of 5
<PAGE>
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Connie Carroll 9/2/99 By /s/ John Castellucci 9-2-99
--------------------------------- ---------------------------------
Manager Date John Castellucci Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
- ----------------------------------- ---------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
5 of 5
<PAGE>
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Mark and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined in Section 5.01 and continuing during the term
of this Agreement, the non-exclusive right and license to use the trade secrets
and know-how regarding operation of am/pm mini markets, the service mark and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm" service
marks for retail grocery store and convenience store services. ARCO expressly
reserves the right to change, alter or modify the am/pm service mark or service
name or substitute any other service mark or service name at any time by giving
Operator not less than thirty (30) days' prior notice thereof. In the event of
any change, alteration or modification of the service mark or service name,
Operator agrees that only the service mark or service name, as changed, altered
or modified, shall be used by Operator to identify the Store. If the service
mark and service name "am/pm" is changed by ARCO, it is agreed that the new
service mark and service name adopted by ARCO shall be substituted for "am/pm"
wherever "am/pm" appears in this Agreement. ARCO also expressly reserves the
right to change, alter or modify colors and designs and other service marks and
service names used in connection with am/pm mini markets from time to time and
place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service mark and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service mark and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service mark or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service mark,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or attempt to register
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<PAGE>
ARCO's service names or service marks, trademarks in Operator's name or that of
any other person and not to use such service marks, trademarks or service names,
or any parts thereat as am part of any corporate or partnership name or any
other business name. It is understood that this covenant shall survive the
termination of this Agreement and shall be binding upon the heirs; successors
and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement or
upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service mark,
trademark rights that may have vested in Operator notwithstanding the provisions
of Section 1.04 as a result of any activities of Operator pursuant to this
Agreement. Operator agrees to use said service marks, trademarks and service
names in connection with, and exclusively for, the promotion and operation of an
am/pm store as provided hereunder, and in accordance with the standards, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service mark or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service mark, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this Agreement
or termination of any subsequent Store Agreement to cease and forever abstain
from using the am/pm service mark and service name and other service marks and
service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during the
term of this agreement to use ARCO's franchise accounting system software at the
am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and after
termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for Operator.
ARTICLE 2
Relationship of Parties
2.01 Neither Operator nor any of its employees shall hold itself or
himself out at any time as an agent, representative, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and shall
not bind nor obligate ARCO in any way, manner or thing whatsoever, nor shall
Operator
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<PAGE>
represent that it has any right or power to do so. Operator shall undertake all
obligations herein described as an independent contractor and shall exercise and
be responsible for the exclusive control of the Store and Premises and all
activities conducted therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted and
as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
ARTICLE 4
Hours of Operation and Personal Participation
4.01 Operator shall promote the business of the Store and shall cause the
Store to be operated continuously throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN THE
MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly royalty fee for each day Operator fails to cause the Store to be
open for the prescribed hours.
4.03. Operator shall participate in the operation of the am/pm business
for a period of at least 40 hours per week and if Operator has more than one
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
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program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). For purposes of
personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if Operator is a corporation,
partnership or LLC. The Operational Designee must be a an officer or shareholder
if Operator is a corporation, a member or manager of the LLC if Operator is an
LLC, a general partner if Operator is a limited partnership, a partner if
Operator is a partnership other than a limited partnership. In the case of
Concurrent Operations at the Premises, as more fully described in Article 4.05
hereof, Operator is obligated to participate in the operation of all franchise
businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm
business as described in Section 4.03 and/or, if applicable, to have the Store
Manager designated in PART I employed at the store on a full time basis and/or,
if applicable, to replace such person with another trained Store Manager within
two months from the date the Store Manager designated in PART I or any successor
to such person is no longer employed at the store shall constitute a material
breach of this Agreement.
4.05 In the event the am/pm mini market, with ARCO's approval, is operated
at the Premises by Operator in conjunction with another or more than one other
ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date first
above written. Except as otherwise provided in this Article, the "Commencement
Date" shall be on the date set forth in PART I. If no date is set forth in PART
1, the Commencement Date shall be the date established by ARCO by notice to
Operator ("Notice of Final Inspection and Readiness") as the date the Premises
are available for occupancy and ready for conduct of the business of the am/pm
mini market. The term hereof shall end as of 10:00 a.m. on the first day after
the last day of the one hundred twentieth (120th) or one hundred eightieth
(180th) full calendar month following the Commencement Date as set forth in Part
I, unless this Agreement is terminated earlier pursuant to the terms hereof.
5.02 (a) In the case of ground-up construction of an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, but within six
(6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
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(1) Photographs of the entire site, including improvements and
corner signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey should
show all existing elevations and site features and should also include
additional data such as: width of streets; type of curbs and corner
radius; existing sidewalks and/or approaches, including material and
condition; location of existing power poles, light poles, hydrants,
traffic light poles, water, gas and electrical curb boxes, etc.; buildings
and islands on the site, if any, by dimension; paving, landscaping, trees,
fencing, retaining walls, underground motor fuel storage, if any; property
line dimensions, angles and bearings, known setbacks, easements and code
restrictions; North arrow and notes on any special building, zoning and/or
sign code regulations affecting the property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements, and other changes not
resulting from local requirements, but requested by Operator must be submitted
in writing to ARCO with drawings and specifications and approved in advance by
ARCO. All changes, if any, not mandated by governmental authority but requested
by Operator must be submitted simultaneously as one consolidated request for
modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense, have an architectural or engineering firm of
Operator's choosing make the approved modifications. If Operator elects to have
ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
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(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
(1) General arrangement ("As Built") drawings including
informational sketches and data showing: complete set of drawings used for
construction of building (if available); exterior dimensions, length,
width, and height of every vertical and horizontal surface; interior
dimensions, length, width and height of every room, location of all
existing electrical outlets, plumbing lines, fixtures, switches, controls,
furniture, etc.; obstructions in area to be occupied by walk-in coolers;
all other major obstructions such as columns, downspouts, vents, ducts,
etc.; existing ceiling layout and placement of all light fixtures,
grilles, etc., location of heating, air conditioning and water heating
units, type, size, and condition; electrical panel, size of service,
number of circuits, condition of panel; if reusable as is, or with
supplementary panel and if three-phase service is available; description
of existing structural system, age, type, size, location of beams,
columns, bearing walls, shear walls, etc.; current condition of building,
roof, exterior, interior, restrooms, walkways, existing motor fuel storage
and dispensing system, if any, showing age, size and type of underground
tanks (steel or fiberglass), make and size of suction pumps, leak
detectors, make and model of pumps/dispensers and self-service
console/equipment, if any; describe necessary repairs; photographs of all
four sides of building, interior of office, storage, bays, electrical
panel, heating/air conditioning unit, unusual conditions, existing
islands, signs and canopies; local building restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All modifications
to meet local building codes and other requirements and other changes not
resulting from local requirements but requested by Operator, must be approved in
advance by ARCO. All changes, if any, not mandated by governmental authority but
requested by Operator must be submitted simultaneously as one consolidated guest
for modification of the preliminary plans. If modifications are mandated by
governmental authority, copy of the specific instructions to change the plans
must be submitted along with the request for change. ARCO is willing, within the
limitations set forth below, to make the approved modifications, or Operator
may, at Operator's expense have an architectural or engineering firm
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of Operator's chasing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed 520,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(c) Within 60 days after receipt of the standard Plans, Operator
shall apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if
available in the jurisdiction in which the Store is located. The beer and wine
license must be obtained before ARCO installs or arranges to have installed
illuminated fascia up to ARCO's specifications shown on the Plans, the exterior
am/pm sign, sign pole and interior signage which consists of photo panels,
product area identifiers, striping, fast food menu board and other miscellaneous
decals, and a cigarette overhead merchandiser, if such licenses are available at
the time in the jurisdiction in which Operator's store is located. If a beer and
wine license is not available until construction is completed or the Store is
opened for business, ARCO shall proceed with the necessary work but Operator
shall nevertheless be required to pursue diligently efforts to obtain a beer and
wine license at the earliest possible date in which case the obtaining of a beer
and wine license as a condition to events contemplated in this Article 5,
however, shall be waived and not obtaining a license shall not serve as a ground
for termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on
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the Plans, and the exterior am/pm sign, sign pole and interior signage which
consists of photo panels, product area identifiers, striping, fast food menu
board and other miscellaneous decals, and a cigarette overhead merchandiser. If
Operator is not the sole and exclusive owner of the Premises, as a condition to
ARCO performing its obligations set forth in the preceding sentence, Operator
shall submit, in form satisfactory to ARCO, a consent of all owners of the
Premises to the modification of the Premises, and a waiver in recordable form,
of all claims of the owner, and any party claiming through or under the owner,
including any mortgagees, to any improvements installed by ARCO on the Premises
and consent to removal by ARCO of such improvements upon termination of the
am/pm franchise. After ARCO installs or arranges to have installed exterior
illuminated building fascia, the exterior am/pm sign, sign pole and interior
signage which consists of photo panels, product area identifiers, striping, fast
food menu board and other miscellaneous decals, and a cigarette overhead
merchandiser, and provides the additional items referred to in the second
sentence of this Section 5.03, ARCO shall issue the Notice of Final Inspection
and Readiness. If Operator fails to open the Store for business on the
Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
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ARTICLE 6
Premises and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the
operation of an am/pm mini market on the Premises set forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the equipment
shown on the list entitled "Store Equipment" attached to PART I ("Store
Equipment"). ARCO hereby agrees to loan and install or arrange to have installed
exterior illuminated fascia up to ARCO's specifications shown on the Plans, the
exterior am/pm sign, sign pole and interior signage which consists of photo
panels, product area identifiers, striping, fast food menu board and other
miscellaneous decals ("Loaned Store Equipment"), and a cigarette overhead
merchandiser. Operator agrees to install the Store Equipment on or before the
Commencement Date. All Store Equipment must meet ARCO's specifications,
including but not limited to specifications with respect to size, color and
quality. Operator may not install additional equipment, fixtures or machines
without the prior written consent of ARCO. Operator shall maintain all
equipment, including required and optional equipment, ready for use and in
operable condition and shall use or permit the equipment to be used only for its
intended use and only in a manner consistent with the manufacturer's
instructions, and Operator shall utilize the equipment and exert Operator's best
efforts to promote the retail sale of items or services for which the equipment
is designed. In the event that ARCO agrees to lease to Operator and Operator
agrees to lease from ARCO additional equipment during the term of this
Agreement, the list entitled "Store Equipment" attached to PART I shall be
revised accordingly by means of an amendment to this Agreement executed by both
parties hereto. Operator agrees not to remove any of the Store Equipment from
Store without the prior written consent of ARCO except in the event replacement
of the equipment is necessitated by malfunction, in which case Operator may
replace the equipment with equipment meeting the same specifications with
respect to size, color and quality as the equipment replaced. Operator shall
notify ARCO of any such replacement. Title to the Loaned Store Equipment shall
remain in ARCO at all times during the term hereof and Operator shall not suffer
or permit any levy, attachment or execution by Operator's creditors, including
taxing authorities, or by any person or entity having any interest in the
Premises to remain on such Loaned Store Equipment. ARCO reserves the right to
add or delete Equipment during the term of the Agreement and Operator will
install or remove such Equipment within 90 days after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01 (a) Operator shall pay ARCO an initial franchise fee in the amount
set forth in PART I upon the signing of this Agreement by
Operator.
(b) The initial fee is not refundable in whole or in part except
in the following circumstances:
(1) If this Agreement is for Premises at which construction of
or conversion to an am/pm mini market is contemplated, after
Operator executes the Agreement, ARCO shall have up to 90 days
to execute the Agreement ARCO shall not be obligated under the
Agreement until it is executed by ARCO. If ARCO has made
changes to the am/pm franchise between the time the offering
circular was given to
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Operator and the time before the offering circular expires by
its own term and Operator has not yet executed the Agreement,
ARCO shall give Operator a new offering circular and a new
Agreement and related agreements reflecting any such changes
and Operator may elect to execute either the agreements
originally given to Operator or those reflecting the changes.
Operator may notify ARCO that Operator does not want an am/pm
franchise and wishes to revoke the Agreement at any time
before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO has
executed the Agreement, ARCO shall return any initial fee paid
by Operator, less ARCO's costs incurred for site selection and
study and preparation of engineering and other plans for the
Premises and any other costs incurred by ARCO in contemplation
of Operator operating an am/pm mini market. If ARCO elects not
to execute the Agreement, ARCO shall return, in full, any
initial fee paid by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises,
if any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred
for site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the Agreement
because Operator is unable to obtain all necessary
construction permits and, under certain conditions, a beer and
wine license; or (ii) ARCO terminates the Agreement because of
Operator's failure to obtain permits within 12 months from the
receipt of final plans and/or complete construction or
conversion of the Premises to suitable am/pm mini market
facilities within 24 months from the receipt of final plans,
for reasons not within Operator's control or Operator's
failure to obtain a beer and wine license, if available in the
jurisdiction in which Operator's am/pm mini market is located.
Except if ARCO's expenses exceed one-half of the initial fee,
in which case ARCO shall deduct its expenses as set forth in
the first sentence of this subsection (3), one-half of the
initial fee shall be returned to Operator if ARCO terminates
the Agreement because of Operator's failure to obtain permits
for and/or complete construction or conversion within the
prescribed time for any other reason.
(4) The initial fee shall be prorated on a monthly basis over
the term of the Agreement and shall be refundable or payable
on such prorated basis if ARCO terminates the Agreement for
the following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation, for
more than 90 consecutive days, which renders
Operator unable to provide for the continued
proper operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part;
of the Premises pursuant to the power of eminent
domain;
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(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and in
the normal course of business to withdraw from and
to no longer maintain the marketing of Motor Fuels
through retail outlets or the am/pm mini market
franchise in the relevant geographic market area
in which Operator's am/pm mini market is located.
In the event Operator's initial fee is returned in whole
or in part for any of the foregoing reasons, no interest shall
be paid on the amount returned.
ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02 (a) Unless otherwise agreed to in writing by the parties, Operator
shall pay ARCO, as a monthly royalty fee, six percent (6%) of the monthly gross
sales, as that term is hereinafter defined, but not less than the minimum
royalty fee set forth in PART I; provided, however, that if Operator operates a
Store that is accessible to pedestrian traffic only, unless otherwise agreed to
in writing by the parties, commencing on the Commencement Date, Operator shall
pay ARCO, as a monthly royalty fee, five percent (5%) of the monthly gross
sales, but not less than the minimum royalty fee set forth in PART I.
Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term of this Agreement. For any month this Agreement is in effect
which is less than a full calendar month, the minimum monthly royalty fee shall
be prorated on a daily basis.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated as
described below.
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(1) Gross sales shall be valued in United States currency, whether
received in that form or otherwise, without deduction on account of any of
the following:
(i) the cost of the goods sold, including taxes paid by
Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
(i) all sales of merchandise made from or in the Store or in
the immediate vicinity of the store, such as a cart or sidewalk
sale;
(ii) all compensation received for services performed from or
in the Store including but not limited to, commissions and referral,
commissions on lottery and lotto tickets (including all payments by
state agencies for the sale of tickets and for the redeeming of
winning tickets), handling and placement fees and fees for placement
of coin operated and other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a physical
inventory is taken of merchandise currently held for sale in the Store: as
required in Section 15.03 (b). The inventory variation is defined as
either the inventory gain (physical inventory value is greater than book
inventory) or the inventory loss (book inventory value is greater than
physical inventory). The inventory variation subject to gross sales
calculation for royalty reporting is the inventory variation in excess of
the allowable variation. Detailed calculations for variations and
allowable variations are further described in the Store Systems Manual.
(4) The following are not included in gross sales:
(i) gasoline and other motor fuel sales, if any, including all
applicable motor fuel and sales taxes;
(ii) any deposits refunded to customers;
(iii) sale price of property returned by customer when the
full sale price is refunded either in cash or credit. Where the
customer is required to exchange returned merchandise for other new
merchandise, the cashier is required to ring the sale of the new
merchandise on the register and the sale of the new merchandise is
included in gross sales subject to royalty. For the purpose of this
paragraph, refund or credit of the entire amount shall be deemed to
be given when the purchase price less rehandling and restocking
costs, is refunded or credited to the customer;
(iv) the amount of any tax imposed by the United States or any
city, county, state, or other governmental entity or agency or
instrumentality thereof upon or with respect to retail sales of
tangible personal property measured by a stated
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percentage of sales price or gross receipts, whether imposed upon
the Operator, as a seller, or upon the customer, as a purchaser.
(v) for newly constructed or converted am/pm mini markets
only, store sales made during the first 7 days of the term of the
franchise, i.e., during the period comprised of the Commencement
Date as established by the "Notice of Final Inspection and
Readiness" and the next succeeding 6 days of initial operation.
(vi) store sales made during an eligible Grand Opening Event
for a new store, or for an existing store, following completion of
ARCO-approved remodeling or rebuilding. An eligible Grand Opening
Event, which event is not to exceed seven consecutive days, is more
fully described in Article 14.02 hereof.
Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of the calendar month
succeeding the month in which the sales were made for which said fee is due.
Payment of the royalty fee shall be made in accordance herewith and with forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set forth
in PART I on or before the Commencement Date of this Agreement. If Operator
shall be in default at any time in the performance of any of the terms and
conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing on
the Commencement Date, Operator shall pay an advertising and promotion fee for
each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is defined in
Section 7.02 above.) At any time during the term hereof, on thirty (30) days'
prior written notice to Operator, ARCO may increase or decrease the advertising
and promotion fee, but the total advertising and promotion fee may not be
increased to more than five and one-half percent (5.5%) at any time during the
term of this Agreement and ARCO may not increase the fee by more than one
percent (1%) in any calendar year. The advertising and promotion fee is payable
on or before the tenth (10th) day of the calendar month succeeding the month in
which sales were made upon which the fee is calculated. In addition, Operator
may be required to pay shipping costs, plus the cost of replacement signs, if
Operator requests duplicate signage.
7.05 Any fees and other amounts due and owing ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, c/o
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Citibank NA. For Credit to APC National Credit #4051-4874, New York, New York
10043," and to no other bank or account number unless so advised in writing by
the Credit Manager, ARCO Products Company. If such Agreement requires or permits
payment by automated clearing house ("ACH"), all such payments shall be made to
"ARCO Products Company, c/o Citibank Delaware, For Credit to APC National Credit
- - ACH #3815-2114, New Castle, Delaware 19720," and to no other bank or account
number unless so advised in writing by the Credit Manager, ARCO Products
Company. If such Agreement requires or permits payment by electronic funds
transfer ("EFT"), all such payments shall be made in strict accord with
procedures established and promulgated by the ARCO Products Company credit
department. Operator agrees to indemnify ARCO for any loss or expense caused by
Operator's failure to comply with this Paragraph. Payment shall be deemed made
when, and only when, its receipt has been verified by ARCO. Receipt by ARCO of
any monies due ARCO after notice of termination or nonrenewal does not
constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in strict
accordance with all applicable federal, state and local laws, ordinances, rules,
regulations and lawful directives or orders of public officials administering
such laws. Operator agrees to immediately notify ARCO, in writing, of any
citations, notices of violation or other communications alleging violations of
federal, state or local laws, ordinances, rules, regulations, directives or
orders, affecting the operation of the Store and Premises.
8.03 Operator represents and warrants that as of the date hereof Operator
is in compliance with all leases, contracts and agreements affecting the
Premises and Operator's use and possession of the Premises.
ARTICLE 9
Utilities
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9.01 Operator shall be solely responsible for all costs of and taxes and
assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
10.02 In addition to the requirements of Section 10.01, Operator shall
perform all maintenance, repairs, and replacement, as necessary, of the
Premises, Store and Store Equipment, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious physical
damage shall exclude damages by the elements and acts of God. ARCO shall make
all necessary repairs and replacements to the Loaned Store Equipment resulting
from each such incidence of accidental or malicious physical damage and deduct
all costs so incurred from Operator's security deposit and shall pursue
collection from the person(s) reported by Operator to ARCO as having caused such
damages. Immediately upon such deduction of costs so incurred, Operator shall
pay to ARCO an amount equal to that portion of the security deposit so deducted
so as to restore said security deposit to the amount set forth in PART I.
Operator agrees to execute and deliver any instruments and papers and do
whatever else is necessary or required in order for ARCO to pursue such
collection efforts on behalf of Operator for the amount deducted from Operator's
security deposit. If ARCO's collection efforts result in repayment for all costs
incurred by ARCO in making all necessary repairs and replacements for such an
incidence and in collecting such repayment, ARCO shall reimburse Operator for
the amount deducted from Operator's security deposit. If ARCO's collection
efforts result in partial repayment for all such costs incurred, ARCO shall
reimburse Operator only to the extent that the amount collected and the amount
deducted from Operator's security deposit taken together exceed the total amount
of cost of collection and of repair and replacement incurred by ARCO. Operator
shall return all Loaned Store Equipment to ARCO at the termination or expiration
of this Agreement in the same condition which existed at the time the Loaned
Store Equipment was delivered to Operator, subject to normal wear and tear.
Notwithstanding the foregoing, in the event of destruction of the Premises
to the extent that the normal authorized uses are no longer practicable, either
party may terminate this Agreement within 120 days of such destruction by giving
the other party written notice. The effective date of such termination shall
relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to be
reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable times
and the right to remain on the Premises for examination and inspection of the
Premises, Store, Store Equipment, Operator's books, records and reports and for
any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost
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incurred in performing such maintenance and repair and the full replacement
cost, without discount or adjustment for any difference between the remaining
term of the franchise and the useful life of the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video Surveillance
equipment for its intended purpose consistent with the manufacturer's
instructions and ARCO's specifications and maintain at all times the equipment,
including all of its components, in good working order.
ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from and
against all claims, losses and damages for personal injury or death (whether to
third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
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Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in whatever form, shall be deemed to benefit
Operator. ARCO shall make no accounting to Operator of the expenditure of
advertising and promotion fees or promotional and other allowances. ARCO may
condition Operator's eligibility for and receipt of promotional, display and
other allowances on Operator's observance of maximum retail selling prices
determined by ARCO or maximum gross profit margins determined by ARCO or a
reduction in Franchisee's retail selling price commensurate with the amount of
the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
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13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A suggested
electronic file or the product file will also be available for the operation of
the Point of Sale scannable register(s).
14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and
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shall permit ARCO and its representatives to enter the Premises and the Store to
examine Operator's business records at all reasonable times. In addition, in
executing this Agreement, Operator grants ARCO the right to electronically
collect certain sales data via Operator's point-of-sale ("P.O.S.") system,
including scanning devices, for purposes of verifying fees and analyzing sales,
as more fully described in the am/pm Store Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance with the terms and
conditions of the franchise; in the event such mystery shops result in a fee
verification review/audit, regardless of whether such review discloses a
deficiency, Operator shall be required to pay ARCO its reasonable costs in
performing the review, including the then-current cost of the mystery shops
(currently $36 each). If a review or audit discloses a liability for royalty,
advertising and promotion fees due to ARCO, Operator shall pay promptly the
amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any
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authorization for release of statements and cancelled checks to ARCO as may be
requited in order for ARCO to obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall provide
reports, statements and data to ARCO as described below and as described more
fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty fee
calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the service
performing the inventory of the total amount of inventory in the Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all am/pm
franchises, Operator shall provide to ARCO, or to an accounting service
designated by ARCO, such reports and data as are reasonably requested by
ARCO for such purposes and as are more fully described in the Systems
Manual. Such reports and data shall be in a format as designated by ARCO
and transmitted to ARCO, at ARCO's option, either by diskette or
electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise Accounting
System ("F.A.S."), which Operator is required to use, and other bookkeeping,
accounting and physical inventory services. Such services are more fully
described in the Systems Manual. Except for F.A.S., which Operator is required
to use, Operator may elect not to use the other bookkeeping, accounting and
inventory services offered by ARCO and may obtain, at its expense, any other
bookkeeping, accounting and inventory services for Operator's business as
Operator desires. Operator shall nevertheless be required to provide to ARCO, or
to an accounting service designated by ARCO, the information referred to in
Section 15.03.
15.05 The provisions of Article 15 shall survive termination or expiration
of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
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The person(s) required to attend and satisfactorily complete the training
programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
o The sole proprietor, if Operator is a sole proprietor;
o All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
o All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
o All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC). If
no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the general
partner, or if more than one, the general partners), all
shareholders in a corporation or all members in an LLC must
successfully complete the training programs.
2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below: If
Operator has more than one am/pm mini market, Operator must have one
employee who has attended and successfully completed an four week
am/pm Store Manager training program and who is employed on a full
time basis at each store.
16.02 Following is a description of ARCO training programs in connection
with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee, or
any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
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The initial franchisee training program is currently seven weeks, but may
be increased or decreased at ARCO's election, and may include nighttime hours in
connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's assignee(s),
who are required to pay tuition for the initial franchisee training program at
the then-current rate (currently the tuition for the 7-week program is $15,000),
no tuition shall be charged for the initial training program for Operator, or
for one or two employees eligible for training if they attend before or within
thirty-six (36) months after the Commencement Date of the initial Store
Agreement between Operator and ARCO for the Premises. Attendance by additional
persons shall be subject to tuition payable by Operator at the current rate. The
current tuition is $7,500 per additional person, but that is subject to
increase. Tuition must be paid, at ARCO's then-current rate for initial
training, for more than two persons, regardless of whether such persons in
excess of two are partners, shareholders or eligible employees of Operator. If
the franchise is transferred within thirty-six (36) months, a separate training
fee must be paid by the transferee even if only one person has been trained up
to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as
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may be mutually convenient, provided, however, that the cost of such additional
instruction, including transportation, food, lodging and reasonable charges for
time and services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the Employee
Training System, which replacement system will be required when available. It is
estimated that the replacement system will use CD-Rom technology and will be
utilized with personal computers. The current cost for the training materials is
estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of the transfer fee payable to ARCO in
the event of an assignment to a third party. If ARCO does not accept the offer
within 30 days, operator may assign to a third party subject to ARCO's prior
written consort. If Operator offers a lower price or more favorable terms which
have the effect of a lower price to the third party, ARCO's right of first
refusal shall be triggered again and Operator must make the offer to ARCO. If
Operator's proposed assignee has not enrolled in the next available training
school within 90 days after making the original offer to ARCO, the request
assignment will be considered abandoned by the Operator. A further request for
assignment will again trigger the right of first refusal. If the assignment has
not been completed within 210 days after making the original offer to ARCO, the
request for assignment will be considered abandoned by the operator. Any further
request for assignment will again trigger the right of first refusal. All
communications between ARCO and Operator with regard to the assignment, right of
first refusal, offers, withdrawals, changes in terms and acceptances must be in
writing. In any event, Operator may not assign this Agreement and Operator's
interest in the real property and improvements without the prior written consent
of ARCO, which consent shall not be unreasonably withheld. In order to allow
ARCO adequate time to process an assignment request, any such request for ARCO's
consent to an assignment received 45 days or less before the expiration of the
Store Agreement shall be considered for a subsequent Store Agreement between
Operator and ARCO, if such subsequent Agreement has been offered and accepted by
the parties, and shall be in compliance with the provisions of such subsequent
Agreement. Prior to giving its written consent, ARCO has the right to review or
audit Operator's business records, including but not limited to those relating
to the value
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of inventories at cost, and ARCO shall consider, among other things, the
qualifications, character, apparent ability and creditworthiness of the proposed
transferee and such other factors as ARCO deems appropriate, including but not
limited to the following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the time
of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of an
am/pm mini market, the proposed transferee and any employees who must be
trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training tuition
fee is due and payable by means of a cashier's check before the proposed
transferee begins training school. For prospective transferees, the
training tuition fee, which is payable by the prospective transferee to
ARCO regardless of whether or not the transferor is subject to payment of
a transfer fee, shall be refunded in full in the event ARCO refines its
consent to the transfer prior to the proposed transferee attending ARCO's
training program. In the event that ARCO refuses its consent after the
prospective transferee has started attending ARCO's training program or
the prospective transferee withdraws from the training program, ARCO shall
prorate the refund based on any remainder of training to be completed. The
training tuition fee is not refundable in whole or in part upon completion
of the training program. If the proposed transferee is a sole proprietor
or single shareholder corporation, ARCO shall offer to train and not
charge tuition for one employee of the proposed transferee who attends the
initial training within twelve months after the effective date of the
assignment. ARCO shall not reimburse the proposed transferee for any
expenses incurred in connection with attendance at the training program of
the transferee or the transferee's employee. An initial supply of 20
uniforms must be ordered by the transferee while attending ARCO's training
program at ARCO's training center. In addition, prior to the effective
date of the transfer and as a condition of ARCO granting its consent to
the transfer. ARCO shall require that the transferor has all then current
"Merchandising Accessories Items Required" on hand in the Store and in
good condition and that any such items that are no longer clean, workable
and presentable or outdated be replaced by items meeting ARCO's
then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent, in
the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the
effective date of the assignment, all of the agreements and Operator's
duties and obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's
rights under this Agreement and shall release and discharge ARCO from all
duties and obligations to Operator in connection with this Agreement as of
the effective date of the assignment; whereupon Operator
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shall have no further rights, duties or obligations under this Agreement,
except for those obligations that survive the termination of the Store
Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO
of all required approvals of federal, state and local governmental
entities, agencies or instrumentalities thereof or of any third person,
including but not limited to, approval for the transfer of, or issuance of
a new beer and wine license, if available in the jurisdiction in which
Operator's store is located
(i) The proposed transferee must satisfactorily meet the
then-current criteria established by ARCO for new am/pm Operators
including, but not limited to, passing an English proficiency test, being
at least 21 years of age and proof of U.S. citizenship or permanent
resident alien status (green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount of
the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be deposited
in escrow, Operator may, in accordance with ARCO's policies in this
regard, direct payment from such escrow of the remaining portion of the
applicable transfer fee to ARCO which must be paid before ARCO's final
consent to the assignment is given or (b) where the proposed transferee's
transfer price for the businesses shall not be deposited in escrow,
Operator may, in accordance with ARCO's policies in this regard, pay the
remaining portion of the applicable transfer fee by means of a cashier's
check payable to ARCO and given to ARCO before ARCO's final consent to the
assignment is given. In the event that ARCO refuses its consent to the
proposed assignment prior to the proposed transferee attending ARCO's
training program, ARCO shall refund all but $1,000 of any transfer fee
paid. In the event that ARCO refuses its consent to the proposed
assignment because the-proposed transferee does not pass the English
proficiency test and before the proposed transferee attends training
school, ARCO shall refund all but $300 of any transfer fee paid.
Otherwise, the transfer fee is not refundable in whole or in part and
shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event that
Operator requests ARCO to consent to an assignment of Operator's franchise
to: (1) Operator's spouse, adult natural or adopted child, or parent; (2)
a sole proprietorship in which the current shareholder of Operator, which
is a single shareholder corporation, shall be the sole proprietor, (3) a
partnership in which there are only two partners, current Operator as an
individual and one other person, and in which the current Operator has at
least a fifty percent interest; (4) a corporation in which there are only
two shareholders, current Operator as an individual and one other person,
and in which the sole shareholder of the current Operator has at least
fifty percent of the issued and outstanding voting shares of stock; (5) a
corporation in which current Operator, as an individual shareholder, owns
one hundred percent of the issued and outstanding voting shares of stock;
(6) if Operator is a corporation, the transfer of less than fifty percent
of the issued and outstanding voting shares of stock; or (7) the
dissolution of a two-partner partnership or a two-shareholder corporation
resulting in one of the former partners remaining as the sole proprietor,
or one of the former shareholders remaining as the sole shareholder of the
corporation or as a sole proprietor and the remaining partner or
shareholder or sole proprietor had at least a fifty percent interest in
the partnership or corporation prior to the dissolution.
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ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through merger,
consolidation, organization or reorganization without the prior written consent
of ARCO and except upon such terms and conditions as ARCO shall then require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent to
any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights or
interests under this Agreement and Operator's interest in the real property and
improvements without having received the
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prior written consent of ARCO shall constitute a material breach of this
Agreement and ARCO shall have the right to terminate this Agreement upon written
notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all or
any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations hereunder
and fails to cure such default within thirty (30) days after receipt of written
notice of default from Operator, Operator shall have the right to terminate this
Agreement by giving ARCO not less than fifteen (15) days' prior written notice
of termination.
18.02 This Agreement may be terminated at any time by mutual agreement in
writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business
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of the am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results in
Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance with
the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner or
the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in- interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or all
or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate Designee
or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or more
in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business or
system.
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n. ARCO makes a reasonable determination that continued operation
of the franchise by the Operator will result in an imminent
danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of the
Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of such
termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service mark or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service mark or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove
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any loaned am/pm Store Equipment and to de-identify any Operator
owned equipment that bears the service mark or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to enter
the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article 1
hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
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Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j) above,
this Agreement shall not terminate upon the death or incapacitation for more
than 90 consecutive days, of Operator if Operator, prior to his or her death or
incapacitation, designates a successor-in-interest to his or her interest in
this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator is
a sole proprietor, the sole proprietor, if Operator is a partnership, a partner
of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days after
the death or incapacitation, for more than 90 consecutive days, of Operator to
give written notice of his or her intention (the "Notice of Intention") to
assume and operate the franchise or, in the case of a successor-in-interest to
the corporate designer, written notice of his or her intention to personally
guarantee performance hereof by the corporate franchisee. The notification shall
contain such information regarding business experience and creditworthiness as
is reasonably required by ARCO. Except as described more fully below, unless the
successor-in-interest has previously been trained by ARCO pursuant to ARCO's
current 7 week training program for the operation of an am/pm mini market, the
successor-in-interest must attend and successfully complete such training as is
then required by ARCO for new franchisees and within 21 days after giving the
Notice of Intention commence such training. In addition, ARCO must approve or
disapprove the successor-in-interest within 10 days after the successor-interest
completes such training. If the successor-in-interest successfully completes
training and is approved by ARCO, ARCO shall give notice of approval to the
successor-in-interest and the successor-in-interest must commence operation of
the franchise (or execute a guarantee of performance by a corporate franchisee)
within 10 days after receipt of such notice by ARCO. The successor-in-interest
shall be required to pay tuition at the then-current rate for assignees and
successors-in-intent. Provided, however, that if there is an Operational
Designee who is different from the Corporate Designee successor-in-interest, it
is the Operational Designee, who must attend and successfully complete the
initial training, unless such Operational Designee has previously been gained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market. An initial supply of 20 uniforms must be ordered by the
successor-in-interest while attending ARCO's training program at ARCO's training
center.
20.04 The franchise available to the successor-in-interest pursuant hereto
is intended to be no greater than the franchise as it exists in the name of the
deceased or incapacitated Operator (or, in the case of a corporate franchisee,
with the deceased or incapacitated Operator as Guarantor) at the time of such
Operator's death or incapacitation. The term of the franchise shall not be
extended by reason of the successor-in-interest assuming (or guaranteeing) the
franchise and ARCO may change the terms of the
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franchise upon its renewal, if it is renewed. ARCO may require Operator to
arrange for the discharge or performance of other franchise obligations such as,
but not limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate
successor-in-interest. The alternate, if one is designated, shall have no right
to assume and operate (or guarantee) the franchise or Operator's interest in the
franchise, as applicable, in the event of any exercise of rights by the primary
successor-in-interest. If the alternate desires to assume and operate (or
guarantee) the franchise or Operator's interest in the franchise, as applicable,
in the event the primary successor-in-interest, fails to do so the alternate
must give notice of intention to do so and otherwise comply with Section 20.03.
(In the case of Concurrent Operations, the primary successor-in-interest, if one
is designated, must be one and the same person designated as the primary
successor-in-interest to succeed to Operator's interest in all agreements
relating to all businesses conducted at the Premises; the alternate successor,
if one is designated, must be one and the same person designated as the
alternate successor-in-interest to succeed to Operator's interest in all
agreements relating to all businesses conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no operation
of the franchise following the death or incapacitation of Operator by anyone
until all parts of the franchise have been expressly assumed as herein provided,
including, but not limited to, such items as licensing and tax permits.
20.07 If the successor-in-interest assumes the franchise (or, in the cast
of a corporate franchisee, guarantees the franchise), the successor-in-interest
shall account to the heirs or estate of the deceased or incapacitated Operator
(or, in the case of a corporate franchisee, to the corporation) for the value or
other disposition of personal property of the Operator located at or related to
the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO each
incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals, as
from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral representations,
stipulations, warranties or understandings, express or implied, with respect to
the subject matter of this Agreement which are not fully set forth herein and in
the Manuals, and all prior or contemporaneous promises, representations,
agreements or understandings, express or implied, in connection with the Store
and the am/pm franchise are expressly merged herein and in the Manuals
incorporated herein by reference.
21.04 Compliance with Applicable Laws. In the event any provisions of this
Agreement provide for periods of notice less than those required by applicable
law, provide for termination other than in accordance with applicable law or are
otherwise inconsistent with applicable law, to the extent such provisions are
inconsistent with applicable law, they shall not be effective and ARCO and
Operator shall comply with applicable law regarding such matters.
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21.05 Excused Performance. In the event that either party hereto shall be
delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If the
excused performance is for a period less than a full month, the minimum royalty
fee shall be prorated for such partial month and Operator shall pay, as a
royalty fee for such month, the greater of the royalty fee based on a percentage
of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices required
or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require performance of
any provision of this Agreement shall not affect either party's right to require
full performance thereof at any time thereafter and the waiver by either
Operator or ARCO of any provision hereof shall not constitute or be deemed a
waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration, modification or
waiver of any provision of this Agreement shall be of any effect unless in
writing and signed by Operator and an authorized representative of ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior to
such execution hereof by ARCO shall not be construed as a waiver by ARCO of this
requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include the
masculine, feminine and neuter pronouns.
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Facility: 82065
STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
facility located at 4100 California Ave., Bakersfield, California 93309 hereby
represents and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this facility
other than as income, earnings, inheritances, gifts or other
non-investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above, as
well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including without
limitation any misrepresentations regarding assets, debts, credit status
and history, investments and loans and regarding partners, stockholders,
stakeholders, backers, other investors or lenders and regarding
citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ John Castellucci 9-2-99
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LLO-Gas, Inc. Date
<PAGE>
Exhibit 10.46
Customer Acct # 0883363
Facility # 82065
CONTRACT DEALER GASOLINE AGREEMENT
This Contract Dealer Gasoline Agreement (this "Agreement") is made and entered
into as of the 2 day of September, 1999, by and between ARCO Products Company, a
division of Atlantic Richfield Company which is incorporated in Delaware,
("ARCO"), and
LLO-Gas, Inc.
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(state whether a sole proprietorship, partnership, corporation or limited
liability company [LLC]; if partnership, the names a Corporation ("Buyer"). of
all partners and State of organization; if corporation, the State of
incorporation; if an LLC, the State of organization)
ARCO maintains a place of business at 4 Centerpointe Drive, in the City of La
Palma, in the State of California. Buyer's principal place of business is
located at 23805 Stuart Ranch Road, Suite 265 in the City of Malibu, in the
State of California with the ZIP code 90265. This Agreement constitutes a
"franchise" as defined in the Petroleum Marketing Practices Act, 15 U.S.C.
ss.ss. 2801-2806 ("PMPA").
Recitals
A. ARCO markets motor fuels comprising gasolines and gasoline containing
materials bearing the ARCO(R) trademark and other identifying symbols (herein
collectively, "Gasoline").
B. Buyer owns or leases from a third party real property and improvements
which Buyer would like to operate as a retail facility selling Gasoline to end
users. The property and improvements are located at 4100 California Ave., in the
city or town of Bakersfield in the State of California with the ZIP code 93309.
( The "Premises" ).
NOW, THEREFORE, the parties hereto agree as follows:
1. Term. This Agreement shall be binding upon the parties and effective on
the date first set forth above. Subject to earlier termination under Paragraph
17.1 below, the "Commencement Date" of this Agreement shall begin at 10:00 a.m.
on the _____ day of _______________, _____ and the term shall end at 10:00 a.m.
on the _____ day of _______________, _____. If no Commencement Date is set
forth, at the time this Agreement is executed, the Commencement Date shall be
established by ARCO by notice to Buyer as the date the Premises are ready to
receive Gasoline delivery, which notice shall also set forth the expiration date
which shall be ____ years after the Commencement Date.
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2. Orders. Buyer will order and make available for retail sale all grades
of Gasoline which ARCO offers to Buyer (hereinafter collectively, "Product"), in
amounts sufficient to satisfy all foreseeable retail customer demand for Product
at the Premises and will at all times have available for sale some of each grade
of Product, subject only to allocation of Product by ARCO in a manner determined
in ARCO's sole discretion in Buyer's geographic area. ARCO will use its best
efforts to fill Buyer's orders; however, ARCO may discontinue sale of any grade
of Product at any time upon fifteen (15) calendar days' prior written notice to
Buyer. ARCO reserves the right to provide automatic Gasoline ordering and
delivery and to not accept individual orders placed by Buyer.
3. No Wholesaling. Buyer will sell Product only to end users for their
personal use in volumes not exceeding the capacity of each customer's motor
vehicle fuel tank, any auxiliary fuel tank directly linked to the customer's
motor vehicle engine, and any emergency container capable of holding ten gallons
or less. The Premises shall be open for business seven (7) calendar days a week
for a minimum of eight (8) consecutive hours each day.
4. Delivery. ARCO will deliver Product into Buyer's storage facilities
described below. Title to and risk of loss of Product will pass to Buyer upon
delivery into Buyer's storage facilities. ARCO alone will select the method and
mode of shipment and delivery. ARCO expressly reserves the right to supply
Product to other retail outlets whether owned and operated by ARCO or its
subsidiary Prestige Stations, Inc. or by independent owners and operators,
regardless of how near or far such other retail outlets may be located relative
to the Premises.
5. Prices. For Product delivered hereunder, Buyer will pay the price
specified by ARCO in effect at the time and place of delivery for purchasers of
Buyer's class of trade. Price shall be subject to change at any time, at the
election of ARCO, without notice. Should ARCO elect to provide notice of price
changes, it may do so by telephone, or at ARCO's sole election, facsimile
transmission. Buyer must have the capability to notices of price changes and
invoices at the Premises by facsimile transmission. At ARCO's sole discretion,
to enable Buyer to compete more effectively with Buyer's competitors, ARCO may
from time to time grant Buyer a "temporary voluntary allowance" applicable to
Product to be sold by Buyer under this Agreement from metered dispensers on the
Premises. ARCO may condition the payment of allowances on Buyer's observance of
maximum retail selling prices determined by ARCO or maximum gross profit margins
determined by ARCO or a reduction in Buyer's retail selling price commensurate
with the amount of the allowance.
6. Payment. Unless ARCO extends credit to Buyer as provided below, Buyer
will pay for Product prior to its delivery in U.S. dollars. ARCO shall require a
product advance payment approximately equal to the current cost of an average
delivery of Product. ARCO may increase or decrease the amount of the advance
payment at any time to reflect current prices and Buyer will pay any additional
amount necessary if the advance payment is increased. Payment will be made by
U.S. Postal money order, other money order approved by ARCO, electronic funds
transfer initiated by ARCO, wire transfer, cashier's check or business check,
whichever ARCO directs, delivered by Buyer at the time and place as designated
by ARCO. Buyer's
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financial institution through which payment by electronic funds transfer
initiated by ARCO is made must be a member of NACHA (The National Automated
Clearing House Association). Payment will be deemed made when, and only when,
its receipt has been verified by ARCO. If this Agreement requires or permits
payment by check, all checks shall be made payable to "ARCO" or "Atlantic
Richfield Company," and to no other person, firm or entity. If this Agreement
requires or permits payment by wire transfer, all such payments shall be made to
"ARCO Products Company, c/o Citibank NA, For Credit to APC National Credit
#4051-4874, New York, New York 10043," and to no other bank or account number
unless so advised in writing by the Credit Manager, ARCO Products Company. If
this Agreement requires or permits payment by automated clearing house ("EFT"),
all such payments shall be made to "ARCO Products Company, c/o Citibank
Delaware, For Credit to APC National Credit - ACH #3815-2114, New Castle,
Delaware 19720," and to no other bank of account number unless so advised in
writing by the Credit Manager, ARCO Products Company. If this Agreement requires
or permits payment by electronic funds transfer ("EFT"), all such payments shall
be made in strict accord with procedures established and promulgated by the ARCO
Products Company credit department. Buyer agrees to indemnify ARCO for any loss
or expense caused by Buyer's failure to comply with this Paragraph. Upon demand,
Buyer will reimburse ARCO the amount of any temporary voluntary allowance
erroneously applied to Product other than Product sold under this Agreement from
metered dispensers on the Premises. In addition to any other remedies available
to it, ARCO may offset against any future temporary voluntary allowance or
against other amounts owed to Buyer the amount of any reimbursement to which
ARCO is entitled if Buyer fails to make any payment or reimbursement when due.
Buyer acknowledges and agrees that ARCO's receipt of payment due hereunder after
the issuance of a notice of termination or nonrenewal does not effect a waiver
of ARCO's termination or nonrenewal rights.
7. Credit. ARCO may in its sole discretion from time to time extend credit
to Buyer in whatever amounts, and on whatever terms ARCO alone selects. If ARCO
extends Buyer credit, ARCO may withdraw it at any time without notice and for
any reason. In ARCO's sole judgment, ARCO may do any or all of the following:
(i) require that Buyer pay for Product by cashier's check, money order or bank
wire transfer prior to delivery, (ii) require that Buyer post as irrevocable
letter of credit issued by a bank satisfactory to ARCO, (iii) require Buyer
present evidence of financial solvency, and (iv) declare Buyer in default of
this Agreement if Buyer fails to pay any indebtedness when due, provide evidence
of financial solvency upon request or comply with any other term of this
Agreement. Buyer agrees that regardless of whether and for how long ARCO has
extended it credit, ARCO may cease extending credit at any time and instead
require that payment be made in the manner set forth in this Paragraph or in
Paragraph 6 above.
8. Non-conformities. Buyer will notify ARCO in writing of the exact nature
of any nonconformity in the type, quantity or price of any Product delivered to
Buyer within thirty (30) calendar days after delivery. Buyer hereby waives any
claim against ARCO based on any nonconformity of which Buyer does not so notify
ARCO.
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9. Record Keeping. For each delivery of Product, Buyer shall at all times
keep a detailed record of the date and time of delivery, and the grade and
amount of Product delivered expressed in terms of gallons. To assist ARCO in
determining the necessity of any temporary voluntary allowance described in
Paragraph 5 above, Buyer will (i) sell all Product through metered dispensers
which shall indicate the grade and amount of gasoline purchased, (ii) allow ARCO
to inspect Buyer's Product dispensers, recorders and meters, and books and
records relating to delivery and Product inventory, and (iii) allow ARCO to
ascertain the volume of Product in Buyer's storage facilities.
10. Equipment.
10.A Storage and Dispensers. Buyer will maintain storage tanks or
other appropriate facilities on the Premises into which Product can be
delivered. Buyer will ensure that the storage facilities are compatible with
ARCO's delivery equipment and Product formulations; that its storage facilities
will accommodate such minimum quantities per single delivery as ARCO may select;
and that the Premises are configured in such a way that Product can be delivered
to the Premises consistent with all applicable fire laws and regulations and
other governmental requirements. Further, Buyer will ensure that all dispensing
devices and storage facilities at all times be properly permitted and completely
comply with all applicable governmental requirements and any specifications
which ARCO may issue from time to time. Buyer further agrees that Buyer's motor
fuel dispensing devices shall be equipped at all times with Product filters with
ten (10) micron filtering capacity. Without restricting any right or remedy of
ARCO, or imposing any duty or liability upon ARCO, upon ARCO's request, Buyer
will promptly furnish ARCO with written evidence that Buyer's dispensing devices
and storage facilities comply with all governmental requirements and provide
copies of underground storage tank permits and specifications, and allow ARCO
representatives to inspect the dispensing devices and storage facilities to
confirm such compliance.
10.B PIC Equipment. Unless the Premises are located in the state of
Oregon, Buyer is required by ARCO to purchase or lease the PayQuick Island
Cashier ("PIC Equipment") and install it at the Premises.
(a) Buyer agrees to use the PIC Equipment only in connection
with the operation of ARCO authorized businesses. Buyer agrees not to tamper
with, alter, change, dislodge, displace, remove or otherwise interfere with the
operational integrity of the PIC Equipment. Buyer agrees to maintain PIC
Equipment in a clean and fully operational condition at all times for the
convenience of Buyer's customers.
(b) Buyer will be responsible for all maintenance and repair
of the PIC Equipment Buyer will contract for maintenance services through ARCO
approved service providers and understands that ARCO will not provide any
maintenance and repair services.
(c) ARCO will provide training to Buyer and up to 5 employees
designated by Buyer to attend training. Training is mandatory for Buyer or
Buyer's designated
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manager. There is no tuition for such training, but all expenses in connection
with such training must be borne by Buyer. If Buyer fails to attend training
when originally scheduled, there will be a fee of $1000 to attend training.
(d) Buyer agrees to contract with an ARCO approved licensed
and bonded armored security service to do the following: make cash pick ups at
least 3 times per week, maintain possession of all keys to the outer door and
the vault of the PIC Equipment, handle all removal of cash cassettes from the
PIC Equipment and reinstall all empty cassettes into the PIC Equipment. Receipt
paper will be changed only by armored security personnel or in their presence.
(e) Buyer must be a party to the ARCO approved Video
Surveillance Equipment Program. In addition, Buyer must install, keep
operational and use one or more video surveillance cameras dedicated to
recording the customer activity at each PIC.
(f) Buyer is responsible for maintaining a supply of receipt
paper at the premises to be used in the PIC Equipment.
(g) ARCO grants to Buyer a non exclusive right and license to
use the Pay Quick Island Cashier service marks, trademarks and trade dress in
conjunction with the operation of PIC Equipment at the Premises in a form
prescribed by ARCO.
(h) All information regarding the PIC Equipment, including
written manuals, specifications, data and instructions provided to Buyer are
confidential and proprietary information of ARCO and shall remain the exclusive
property of ARCO and shall not be duplicated, in whole or in part by Buyer and
shall not be used other than as set forth herein and shall be maintained in
confidence and not disclosed to anyone without the prior written consent of
ARCO.
(i) Upon 180 days prior written notice, Buyer may be required
to upgrade the PIC Equipment in accordance with ARCO's system wide equipment
requirements at that time.
IMPORTANT NOTICE: Buyer is aware that the RE POS equipment is
necessary to operate the PIC equipment and that the PIC Equipment will interface
only with certain motor fuel dispensers. It is Buyer's responsibility to ensure
that its Point of Sale equipment and dispensers are compatible with the PIC
Equipment.
11. Leak Prevention and Detection. Buyer acknowledges and agrees that with
respect to any Product storage facilities located on the Premises, including
without limitation underground storage tanks and related equipment, Buyer is
solely responsible for taking, and will take the following leak and water
contamination prevention and detection measures:
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11.1 Stick Readings. Using a properly calibrated wooden tank
measuring device and water finding paste, Buyer will gauge product storage tanks
for inventory loss or water gain on a daily basis.
11.2 Reconciliations. Utilizing daily stick readings to the nearest
one eighth (1/8) inch and dispenser meter readings, Buyer will take and
reconcile opening and closing inventory levels by grade, including deliveries.
11.3 Record Retention. Buyer will keep daily reconciliation records
available on the Premises for at least five (5) years.
11.4 Monitoring. Buyer will ascertain and perform any and all other
monitoring procedures required by applicable laws, regulations or governmental
authorities.
11.5 Secondary Containment. Buyer will ascertain and perform any and
all construction or retrofitting necessary to satisfy or comply with the
secondary containment standards for underground storage tanks required by
applicable laws, regulations or governmental authorities.
11.6 Notification. Buyer will immediately investigate and report to
ARCO and all appropriate governmental authorities (i) any detectable loss or
suspected loss that exceeds Regulatory variation limits of any Product, (ii) the
activation or alarm of any leak detector or other continuous monitoring system,
(iii) the discovery of any broken weights and measures seals or other seals in
any Product dispenser, (iv) the discovery of any visible leak in any Product
dispenser, Product piping or submerged pumps, (v) any change in the condition of
the land or surface adjacent to fill boxes or dispensers, (vi) water is excess
of one inch (1") in any storage container, or (vii) any spills or overfills that
are not immediately and properly contained and cleaned up. In the event of the
occurrence of any of (i) through (vii) above, Buyer shall immediately
investigate in accordance with regulatory leak detection requirements. If a leak
is confirmed all Product must be removed from the storage tanks immediately and
the tanks secured. In addition, Buyer will keep fill caps tight, keep fill boxes
free of dirt, ice and snow, and immediately remove any water in excess of one
inch (1") in any Product storage tank.
12. Gasoline Regulations.
12.1 Unleaded. ARCO will ensure that upon delivery to Buyer by ARCO,
all unleaded gasoline, as defined is the regulations promulgated by the United
States Environmental Protection Agency ("EPA"), will meet the specifications for
lead and phosphorus set forth is those regulations. Buyer will ensure that no
unleaded gasoline purchased from ARCO is tampered with or contaminated in a way
that could cause the gasoline not to meet the EPA's lead and phosphorous
specifications. Buyer will immediately cease dispensing any unleaded gasoline
that is determined not to meet EPA requirements.
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12.2 Disclosures and Warnings. Buyer acknowledges that it has been
fully informed concerning the nature and existence of risks posed by
transporting, storing, using, handling and being exposed to Product. Buyer will
inform its employees, agents, contractors and customers of such risks. Buyer
will display, publish and distribute any safety warnings or disclosures as may
be requested or required by ARCO or any governmental authority from time to
time.
13. Taxes.
13.1 Payment by Buyer. Buyer will pay promptly when due and hold
ARCO harmless from all taxes, excise fees and other similar charges (including
interest, penalties and additions to tax) which ARCO is now or in the future
required to pay or collect under any federal, state or local governmental
requirement based on the manufacture, production, sale, transfer,
transportation, delivery, storage, handling, consumption or use of Product under
this Agreement, or on any payments made under this Agreement (excepting any
income tax imposed on ARCO based on income received from Buyer and any interest
or penalties thereon). ARCO may, at its sole option, add any such tax, excise
fee or similar charge to the amount to be charged for Product. Buyer will also
pay promptly when due and hold ARCO harmless from all fees and sales, use,
rental, gross receipts, inventory, excise, income and other taxes (including
interest, penalties and additions to tax but not including any income tax
imposed on ARCO based on income received from Buyer and any interest or
penalties thereon) imposed by any federal, state or local governmental authority
upon Buyer or ARCO in connection with the operation of Buyer's business.
13.2 Inapplicability of Reseller Exemption. With respect to Product
purchased hereunder, Buyer hereby waives any exemption and agues not to assert
any right of exemption from payment to ARCO of taxes regularly collected by ARCO
upon delivery of Product to purchasers within Buyer's class of trade by virtue
of any reseller or wholesale-distributor exemption to which Buyer may presently
or hereafter be entitled under any provision of federal, state or local law
regulation or order.
13.3 Tax Information. Buyer will provide ARCO with Buyer's motor
fuel seller number and use tax registration number. Further, Buyer will provide
ARCO with any information requested by ARCO relating to tax credits claimed by
Buyer for motor fuel, sales, use and other taxes paid by Buyer in connection
with the Product for the purpose of resolving any threatened or pending tax
dispute with any governmental authority or for the purpose of confirming Buyer's
compliance with the terms of this Agreement.
14. Trademarks and Trade Dress.
14.1 Compliance. Within one hundred fifty (150) calendar days after
the Commencement Date if this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises and upon the Commencement Date if this is
not the first agreement between Buyer and ARCO for the supply of Product at the
Premises, unless ARCO consents
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otherwise in writing, Buyer will have fully complied with all trademarks and
trade dress requirements set forth in Exhibit A. Thereafter, throughout the term
of this Agreement, Buyer shall fully comply with all trade dress requirements as
they may be changed from time to time. Notwithstanding the foregoing, Buyer must
have the ARCO I.D. sign, I.D. pole, price pods, and decal specifications for
pumps and dispensers as described in Exhibit A (as it may be changed from time
to time) in place as soon as Buyer is selling ARCO branded product but not later
than the fifth delivery of Product hereunder and not before Buyer is selling
ARCO branded Product under the ARCO trademarks described below. Buyer hereby
agrees that ARCO may and acknowledges that in all likelihood ARCO will change
such requirements from time to time. Buyer will conform its trade dress to all
such changed requirements within ninety (90) calendar days after receiving
written notice from ARCO of any change. In its sole discretion, ARCO may loan to
Buyer various items of trade dress such as signs, illuminated sign poles, sign
faces with a numerals kit and pump identification signs. Buyer hereby agrees
that any trade dress which ARCO provides to Buyer hereunder shall remain the
property of ARCO regardless of whether it is affixed to the Premises. Buyer
shall ensure that no such loaned trade dress is removed from the Premises by
persons other than ARCO or its representatives either during or after the term
of this Agreement without ARCO's prior written consent. Buyer shall bear the
cost of maintaining, repairing and replacing such loaned trade dress.
14.2 Licenses. During the term of this Agreement, in connection with
the resale of Product, Buyer may display the trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs and other trade indicia
adopted, used or authorized for use by ARCO in connection with Product
(collectively, "Marks"), provided that (i) Buyer operates the Premises seven (7)
calendar days a week for a minimum of eight (8) consecutive hours each day, (ii)
the Marks are only displayed or used in the manner specified by ARCO, and (iii)
all trademark rights resulting from such display or usage shall inure to ARCO's
benefit. ARCO reserves the right to withdraw or modify any of the Marks or their
manner of display without prior notice to Buyer. Upon receiving notice of any
withdrawal or modification of the Marks, Buyer will fully implement any
modification or termination within the time specified in the notice. If Buyer
fails to comply fully with any notice of withdrawal or modification, in addition
to any other remedies available to ARCO for breach of this Agreement, ARCO may
demand that Buyer immediately remove all Marks from the Premises at Buyer's sole
expense. If Buyer fails to do so, ARCO or ARCO's contractor may enter the
Premises and remove all Marks, and Buyer will reimburse ARCO for such removal.
14.3 Shared Expenses. ARCO will reimburse Buyer a portion of the
cost of acquiring, transporting and installing certain signs and other trade
dress required hereunder and set forth is Exhibit B, as specified below. The
amount of such reimbursement shall be the lesser of (i) one half of Buyer's
actual verifiable cost, or (ii) the maximum amount indicated on Exhibit B. The
reimbursement shall apply on a one-time only basis to the Premises during its
entire franchise relationship with ARCO regardless of whether this is the first
or a subsequent agreement between Buyer and ARCO for the supply of Product at
the Premises. Buyer shall be solely responsible for the cost of maintaining,
repairing and replacing all trade dress. Request for the foregoing reimbursement
shall be in writing and accompanied by all original invoices (of
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which Buyer shall keep copies). Upon receiving such a request, ARCO shall
inspect Buyer's facility to confirm that the trade dress is of the proper type
and properly installed and verify Buyer's actual cost. If ARCO confirms that the
trade dress meets ARCO's requirements and verifies Buyer's submitted cost as
accurate, then ARCO shall either reimburse Buyer the amount described above or
pay the entire cost of such trade dress directly to the third party vendor,
whichever ARCO alone chooses. If ARCO elects to pay the third party vendor
directly, then within five (5) calendar days after receiving notice from ARCO
that such payment will be or has been made, Buyer will remit to ARCO the
difference between the amount of the invoice and the amount of ARCO's
reimbursement as calculated above. Further, ARCO may arrange directly with a
third patty vendor to satisfy the requirements of this Paragraph 14.3 and
collect from Buyer in advance upon five days' notice, an amount equal to the
total maximum reimbursements to which Buyer is entitled under this Paragraph and
Exhibit B, to cover Buyer's share of the cost of trade dress expenses. Should
the amount of this advance payment exceed one half of the actual cost of
satisfying the trade dress requirements herein, ARCO will refund the excess
amount to Buyer. If the amount of the advance payment is less than the actual
cost of satisfying the trade dress requirements herein, then Buyer shall pay
ARCO the amount of the deficiency upon demand. In addition to all other remedies
available to it, ARCO may offset against any amounts owed to Buyer, the amount
of any remittance owing to ARCO hereunder. Notwithstanding this Paragraph 14.3,
Buyer may be obliged to pay ARCO for any reimbursements received and direct
vendor payments made by ARCO hereunder upon the termination or nonrenewal of
this Agreement as specified is Paragraph 17.3.
14.4 Restrictions. Buyer will not adulterate, mislabel, misbrand or
contaminate Product; add any ingredients to Product without ARCO's prior written
consent; use any Mark except in connection with genuine ARCO Product; claim any
tight, titles or interest in or to the Marks; directly or indirectly deny or
assail or assist others in denying or assailing the sole and exclusive ownership
of ARCO in and to the Marks; register, adopt as its own property, or use or
assist others in registering, adopting, or using any trademarks, trade names,
advertising, signs, devices, symbols, slogans, designs, or other trade indicia
confusingly similar to the Marks; or commit other trademark violations or acts
that could disparage the Marks or adversely affect the value of the marks or
ARCO'S goodwill and ownership rights hereto. Any rights to any Marks obtained by
Buyer contrary to the foregoing shall be held in trust for ARCO and, upon
request, Buyer will assign such rights free of charge to ARCO.
15. Compliance and Indemnification.
15.1 Compliance With Laws and Regulations. Buyer shall comply with
any and all applicable federal, state and local laws and regulations, including
those pertaining to human health, safety or the environment, and shall further
comply with any and all permits or license pertaining to the Premises. Any
references in this Paragraph 15.1 to laws or regulations shall include all such
laws and regulations pertaining to Product, or the air, or surface or subsurface
water, surface or subsurface soil, and the handling, storage and disposal of
hazardous substances, materials or wastes, or solid wastes (whether or not
defined as hazardous by such laws or regulations), and vapor recovery and vapor
recovery equipment Buyer shall comply with
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any and all operating, reporting and record keeping laws and regulations, as
well as all operating, reporting and record keeping procedures designed to
ensure that no unauthorized release of any Product occurs, and that in the event
any Product is released, all applicable reporting, record keeping and cleanup
requirements are fully complied with.
15.2 Indemnification. Buyer will indemnify and hold harmless ARCO,
its affiliates, subsidiaries, shareholders, directors, officers, employees and
other representatives (and shareholders, directors, officers, employers and
other representatives of such affiliates and subsidiaries) (collectively,
"Indemnified Parties") from and against all claims, causes of action,
liabilities, suits, demands, legal proceedings, governmental actions, losses and
expenses, including without limitation reasonable expert and attorneys fees and
costs (collectively, "Indemnified Expenses"), arising out of (i) any breach by
Buyer (or any of its officers, employees or representatives) of any provision of
this Agreement, (ii) the storage, leakage or other release of Product on, or
from the Premises, (iii) any cleanup, remediation or response activity conducted
or ordered under applicable law, (iv) Buyer's use or occupancy of the Premises,
(v) Buyer's operation of the business or use, custody or operation of ARCO-owned
equipment or any other equipment on the Premises, excepting any loss or damage
arising solely from ARCO's negligence or failure to perform its obligations
hereunder, or (vi) any intentional or unintentional violation by Buyer of any
government requirement applicable to the Premises or Buyer's storage or sale of
Product, or the disclosure or warning of risks associated with Product at the
Premises. This indemnification obligation shall survive the termination or
nonrenewal of this Agreement.
15.3 Liability for Charges or Fines. In the event that ARCO becomes
liable for payment of any charges or fines arising out of Buyer's noncompliance,
with any governmental laws or regulations or Buyer's failure to secure any
necessary licenses or permits or renewals thereof, now or hereafter necessary,
in connection with the possession and use of the equipment and other property or
the conduct of business on the Premises or Buyer's failure to pay any taxes,
imposts or charges imposed by any governmental authority, ARCO shall have the
right to charge Buyer the amount of any such charge or fine paid by ARCO.
16. Insurance. Buyer shall obtain and maintain throughout the term of this
Agreement each of the following forms of insurance from a financially sound and
reputable insurance carrier: (i) workers' compensation insurance including
occupational disease insurance in accordance with the laws of the State in which
the Premises are located, and employers' liability insurance in an amount of at
least $100,000 per person and $100,000 per accident; and (ii) garage liability
insurance or general liability insurance, including contractual liability,
insuring Buyer's indemnity obligation set forth above and with
products-completed operations coverage in amounts of at least $1,000,000
combined single limit each occurrence applicable to personal injury, sickness or
death and loss of or damage to property (with liquor law liability coverage if
Buyer will sell or dispense alcoholic beverages), on which ARCO is named as an
additional insured. Buyer will furnish ARCO with certificates of insurance
evidencing the foregoing coverage and providing that no policy of insurance may
be canceled or materially modified without at least thirty (30) calendar days'
prior written notice to ARCO.
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<PAGE>
17. Termination and Nonrenewal.
17.1 Triggering Events for Termination or Nonrenewal. In addition to
any other ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law, ARCO may terminate or nonrenew this Agreement
upon any of the following triggering events:
(a) Buyer's failure to exert good faith efforts to carry out
the provisions of this Agreement following written notice to Buyer from ARCO of
such failure and fifteen calendar days to cure such failure.
(b) Unlawful, fraudulent or deceptive acts or practices or
criminal misconduct by Buyer relevant to the operation of the Premises.
(c) Declaration of bankruptcy by Buyer or judicial
determination of insolvency of Buyer.
(d) Subject to Paragraph 18.3 hereof the death or the
prolonged severe physical or mental disability or disablement of Buyer (if Buyer
is an individual). Buyer's majority shareholder (if Buyer is a corporation) or
any of Buyer's general partners (if Buyer is a partnership) for at least three
(3) months which renders Buyer unable to provide for the continued proper
operation of the Premises.
(e) The loss of Buyer's right to possess the Premises.
(f) The condemnation or other taking, in whole or in part, of
the Premises pursuant to the power of eminent domain.
(g) The destruction of all or a substantial part of the
Premises.
(h) Buyer's failure to timely pay ARCO all sums to which ARCO
is legally entitled.
(i) Buyer's failure to operate the Premises for seven (7)
consecutive calendar days, or any lesser period which constitutes an
unreasonable period of time.
(j) The willful adulteration, commingling, mislabeling or
misbranding of Product or other violations by Buyer of the Marks.
(k) Buyer's knowing failure to comply with federal, state or
local laws or regulations relevant to the use or operation of the Premises.
(1) The conviction of any felony involving moral turpitude or
indictment for any criminal misconduct relevant to the operation of the
Premises, of Buyer (if
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<PAGE>
Buyer is an individual), Buyer's majority shareholder (if Buyer is a
corporation) or any of Buyer's general partners (if Buyer is a partnership).
(m) The determination by ARCO, made in good faith and in the
normal course of business, to withdraw from the marketing of motor fuel through
retail outlets in the relevant geographic market area in which the Premises are
located.
(n) The occurrence of any other event relevant to the
relationship between the parties which makes termination or nonrenewal
reasonable, including without limitation those set forth in Paragraph 17.2
below.
(o) The breach by Buyer of any material provision of this
Agreement, which Buyer hereby agrees includes (without limitation) (i) Buyer's
failure to order and make available for sale quantities of each grade of Product
which are sufficient to satisfy foreseeable customer demand, (ii) Buyer's
failure to keep a detailed record of each delivery of Product to Buyer or make
those records available to ARCO as provided in Paragraph 9, (iii) Buyer's
failure to take any of the leak prevention and detection measures outlined in
Paragraph 11, or (iv) any attempt by Buyer to assign any interest in this
Agreement without ARCO's prior written consent.
(p) If Buyer is a party with ARCO to a Loan Agreement or a
Loan Agreement and Security Agreement and Related Promissory Note, and Buyer
fails to cure any default under the foregoing Loan Agreement, Loan Agreement and
Security Agreement and Promissory Note as requested, ARCO may terminate this
Agreement.
17.2 Triggering Events for Nonrenewal. In addition to any other
ground ARCO may have under the PMPA, and subject only to any necessary
restrictions under applicable law. ARCO may nonrenew this Agreement upon any of
the following triggering events:
(a) Buyer's failure to agree to changes or additions to its
franchise relationship with ARCO, which ARCO requests based on ARCO's
determinations made in good faith and the normal course of business and without
the purpose of preventing the renewal of the franchise relationship.
(b) ARCO's receipt of numerous bona fide customer complaints
concerning Buyer's operation of the Premises, of which Buyer was apprised and,
to the extent they related to the condition of the Premises or conduct of Buyer
or Buyer's employees, which Buyer failed to cure promptly.
(c) Failure of Buyer to operate the Premises in a clean, safe
and healthful manner on at least two previous occasions.
(d) A good faith determination by ARCO made in its normal
course of business that renewal of the franchise relationship is likely to be
uneconomical to ARCO despite
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<PAGE>
any reasonable changes or additions to the agreements between the parties which
may be acceptable to Buyer.
17.3 Effect of Termination or Nonrenewal. After receiving notice of
termination or nonrenewal and until the effective date of the termination or
nonrenewal, Buyer will continue to operate the Premises in accordance with this
Agreement.
(a) From and after the effective date of termination or
nonrenewal, Buyer will immediately discontinue all use of trade dress and Marks
associated with ARCO, including without limitation use of such trade dress and
Marks on dispensers, pumps, containers, storage equipment, buildings, canopies,
pump islands, pole signs, advertising, stationery and invoices. From and after
the effective date of termination or nonrenewal, Buyer will not adopt or use any
trademarks trade dress or symbols in the operation of the Premises that are
confusingly similar to ARCO's, including without limitation, any four letter
name or mark starting with (i) the letter "A" or (ii) any vowel and having the
letter "R" as a second letter, and Buyer will not use or employ as a symbol,
mark or design any geometric design that is red or any colored horizontal
striping that is predominately red and blue. Further, Buyer will remove from all
trade directories and telephone book listings all reference to the Marks. Upon
the effective date of the termination or nonrenewal, Buyer will promptly return
to ARCO or destroy, whichever ARCO directs, all signs, advertising, graphics and
other materials in Buyer's possession bearing any Marks or used in any trade
dress. In addition, Buyer hereby agrees that ARCO may enter the Premises to
remove or cover up any trade dress or advertisements bearing any Marks. If Buyer
terminates or does not renew this Agreement or if ARCO terminates or does not
renew this Agreement for a reason set forth in Paragraph 17.1 or 17.2 above,
then Buyer shall pay for the removal or covering up of all trade dress and
trademarks as required hereunder. For a reasonable period following the
effective date of Buyer's termination or nonrenewal and at no charge, ARCO may
keep any ARCO property still located on the Premises in place while negotiating
for its sale or removal.
(b) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises, Buyer will repay ARCO all reimbursements
and direct payments made by ARCO under Paragraph 14.3 upon (i) the mutual
termination of this Agreement prior to or at the end of the first twelve months,
(ii) the termination of this Agreement by ARCO or Buyer during the first twelve
months or (iii) the nonrenewal of this Agreement by ARCO or Buyer at the end of
the first twelve months (if this is a trial franchise as defined under Section
2803 of the PMPA).
(c) If this is the first agreement between Buyer and ARCO for
the supply of Product at the Premises with a term of more than one year and
Buyer has been a party to an agreement regarding the Premises with ARCO for the
supply of Product for less than thirty-six months, then after the first twelve
months Buyer will pay ARCO, on a pro rata basis as described below, the amount
of all reimbursements and direct payments made by ARCO under Paragraph 14.3 upon
the mutual termination of this Agreement or termination or nonrenewal by Buyer
or by ARCO for a reason set forth in Paragraph 17.1 or 17.2 above. The pro rata
amount
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<PAGE>
which Buyer is obligated to pay shall be calculated by multiplying the total of
the reimbursements and direct payments made by ARCO under Paragraph 14.3 times
(a) two-thirds during the thirteenth through twenty-fourth month of this
Agreement or (b) one-third during the twenty-fifth through thirty-sixth month of
this Agreement.
18. Assignment, Right of First Refusal and Successors In Interest.
18.1 Assignment. Buyer will not sell, assign, give or otherwise
transfer, any interest in this Agreement, its franchise relationship with ARCO,
or its ownership or leasehold interest in the real property or improvements on
which the Premises are located, or any individual or entity other than ARCO,
without first complying with Paragraph 18.2 below and obtaining ARCO's prior
written consent to such transfer. Further, if Buyer is a corporation or
partnership, neither Buyer nor any shareholder or partner of Buyer will sell,
assign, give or otherwise transfer, or mortgage, pledge as security or otherwise
encumber any shares of stock partnership interest or other ownership interest in
Buyer to any individual or entity without ARCO's prior written consent. To
ensure that ARCO has adequate time to evaluate any assignment request, Buyer
will allow ARCO at least sixty (60) calendar days to evaluate any transfer or
encumbrance request and will not request any transfer or encumbrance consent
less than forty-five (45) calendar days before the expiration date of this
Agreement or any renewal hereof. Buyer acknowledges and agrees that any
transfer, encumbrance, attempted transfer or attempted encumbrance which does
not satisfy these prerequisites shall be void and without effect. Buyer further
acknowledges and agrees that ARCO may impose a transfer fee upon am transfer or
encumbrance of Buyer's interest in its franchise relationship with ARCO.
18.2 Right of First Refusal. In return for valuable consideration,
Buyer's receipt of which is hereby acknowledged, upon receiving or extending any
final offer to acquire any or alt of Buyer's interest in this Agreement, its
franchise relationship with ARCO, or its ownership or leasehold interest in the
real property or improvements on which the Premises are located, whether
conveyed through a business broker or directly, to any entity or person other
than Buyer's current spouse or adult child (natural or adopted). Buyer shall
offer such interest to ARCO, in writing, at the same price and on the same other
terms as those contained in the final offer. ARCO shall have thirty (30)
calendar days after its receipt of all data and documentation. required by it to
evaluate the offer and exercise its right of first refusal by notifying Buyer in
writing that it intends to exercise its right of first refusal and agreeing to
pay Buyer the purchase price less the amount of any applicable transfer fee on
the terms stated in the final offer. During the 30 day period, ARCO shall have
the right of entry upon the premises to conduct reasonable environmental
testing. ARCO may assign its right of first refusal to any third party. If ARCO
does not exercise its right of first refusal, Buyer may consummate the proposed
transfer, but not at lower price or on more favorable terms than those offered
to ARCO. If Buyer does not do so within ninety (90) calendar days from the date
ARCO received Buyer's written offer, then Buyer must recommence the foregoing
right of first refusal procedure and satisfy the requirements of this Paragraph
18.2. ARCO's exercise of its right of first refusal shall not be dependent on
its prior refusal to approve the proposed transferee. Buyer agrees to execute a
memorandum of this
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<PAGE>
Agreement to be recorded in the county where the Premises are located and take
all other action necessary to give effect to this right of first refusal.
18.3 Successors In Interest. Notwithstanding Paragraphs 18.1 and
18.2, if upon the death or incapacitation for more than ninety (90) consecutive
calendar days of Buyer (if Buyer is a natural person), a general partner of
Buyer (if Buyer, is a partnership) or a majority shareholder of Buyer (if Buyer
is a corporation), the interest in this Agreement of such deceased or
incapacitated person passes directly to an eligible person or persons whom the
deceased or incapacitated has designated as his successor in interest, in
writing in a form prescribed by and filed with ARCO, and who notifies ARCO
within twenty-one (21) calendar days after the death or incapacitation of his
intention to succeed to such interest, then this Agreement shall continue for
the remaining term hereof, prodded that such successor in interest agrees in
writing to assume all of the obligations under this Agreement of the deceased or
incapacitated and satires ARCO's then current criteria for similar franchisees.
A person who is eligible to be designated a successor in interest is one who is
(i) the adult spouse or adult child (natural or adopted) or parent of the
deceased or incapacitated, (ii) a general partner of the deceased or
incapacitated, or (iii) a fellow shareholder of the deceased or incapacitated.
Only the most recently properly designated successor in interest wilt be
recognized as such.
18.4 ARCO's Right to Assign. ARCO shall have the unrestricted right
to transfer or assign all or any parts of its rights or obligations under this
Agreement to any person or legal entity.
19. Miscellaneous
19.1 Right of Entry. Buyer hereby gives ARCO the right to enter the
Premises at all reasonable times and without prior notice, to determine Buyer's
compliance with the provisions of this Agreement. ARCO may determine Buyer's
compliance by any means ARCO selects, including without limitation, the sampling
and laboratory testing of Product.
19.2 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that Buyer shall have no right to assign this
Agreement, either voluntarily or by operation of law, except as provided in
Paragraph 18 above.
19.3 Force Majeure. In the event that either party hereto shall be
delayed or unable to perform any act required hereunder by reason of Act of
Nature, strikes, lockouts, riots, insurrection, war, governmental act or order,
or other reason of alike nature not the fault of or in the control of the party
delayed in performing work or doing acts required under the terms of this
Agreement, then performance of such act shall be excused for the period of the
delay. The provisions of this Section shall not operate to excuse Operator from
prompt payment of all fees or any other payments required by the terms of this
Agreement.
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<PAGE>
19.4 Notices. Except as limited by applicable law or as otherwise
stated in this Agreement, any and all notices and other communications hereunder
shall be deemed to have been duly given when delivered personally or forty-eight
(48) hours after being mailed, certified or registered mail or overnight mail,
return receipt requested, postage prepaid, in the English language, to the
Premises if to Buyer and to the address set forth on the first page of this
Agreement if to ARCO.
19.5 Relationship of the Parties. Buyer agrees that nothing in this
Agreement creates a joint venture, agency, employment partnership or similar
relationship between it and ARCO, and Buyer shall have no authority to bind ARCO
in any way. Buyer will not assert otherwise. Buyer shall undertake all
obligations as an independent contractor and shall exercise and be responsible
for the exclusive control of the Premises and all activities conducted there.
19.6 Waiver. No purported waiver by either party hereto of any
provision of this Agreement or of any breach thereof shall be deemed to be a
waiver of such provision or breach unless such waiver is in writing signed by
the party making such waiver. No such waiver shall be deemed to be a subsequent
waiver of such provision or a waiver of any subsequent breach of the same or any
other provision hereof.
19.7 Compliance. Buyer shall at all times comply with all applicable
government requirements and obtain and maintain all necessary licenses and
permits for the performance of its obligations hereunder.
19.8 Authority. Buyer hereby represents that as of the date hereof,
Buyer has the authority to enter into this Agreement and that no consents of
third parties other than those which have been obtained and are attached hereto
are necessary to enable Buyer to perform its obligations hereunder. Buyer
represents that as of the date of this Agreement, Buyer is in compliance with
all leases, contracts and agreements affecting the Premises and Buyer's use and
possession of the Premises.
19.9 Prior Course of Dealing. ARCO and Buyer acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Buyer and ARCO by their authorized representatives.
19.10 Further Assurances. Buyer agrees to executes and deliver such
other documents and take such other action as may be necessary to more
effectively consummate the purposes and subject matter of this Agreement.
19.11 Non-exclusivity. Buyer has no exclusive territory. ARCO may
establish additional ARCO or other brand or no brand Gasoline facilities in any
location and proximity to the Premises.
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<PAGE>
19.12 Applicable Law. Except where this Agreement would otherwise be
governed by federal law, this Agreement shall in all respects be interpreted,
enforced and, governed under the laws of the state where the Premises are
located. If any provision of this Agreement should be determined to be invalid
or unenforceable, such provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining provisions of this Agreement
enforceable, and the Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
19.13 Headings and Gender. The paragraph headings in this Agreement
are intended solely for convenience of reference and shall not in any way or
manner amplify, limit, modify or otherwise affect the interpretation of any
provision of this Agreement, and the neuter gender and the singular or plural
number shall be deemed to include the other genders or numbers whenever the
context so indicates or requires.
19.14 Entire Agreement. This Agreement and the exhibits attached
hereto set forth the entire agreement between the parties and fully supersede
any and all prior agreements or understandings between the parties, pertaining
to the subject matter hereof, and, except as otherwise expressly provided
herein, no change in, deletion from or addition to this Agreement shall be valid
unless set forth in writing and signed and dated by the parties hereto.
Buyer hereby acknowledges having read this Agreement in its entirety and fully
understands and agrees to its contents.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ARCO Products Company,
a division of AtlanticRichfield Company
"ARCO" "Buyer"
/s/ Connie Carroll /s/ John Castellucci
- ----------------------------------- -------------------------------------
Name Name
Title: Manager Title: Pres.
---------------------------- ------------------------------
Witness: /s/ Denise Newton Witness:
-------------------------- ----------------------------
Each of the undersigned, as owner, part owner, mortgagee or lien holder, for
himself and his legal representatives, successors and assignees, hereby consents
to the foregoing agreement, including without limitation, to the installations,
maintenance, repair, replacement and removal of all required trade dress and
trademarks. Each of the undersigned further waives any interest in, right to
levy upon, mortgage or otherwise make any claim against any such trade dress or
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<PAGE>
trademarks and confirms ARCO's title to and right of removal of am property
provided or loaned by ARCO.
- ------------------------------ ------------------------------------
Name Name
Title: Title:
------------------------ ------------------------------
Witness: Witness:
---------------------- ----------------------------
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<PAGE>
Exhibit A
Trade Dress Requirements
See Attached booklet entitled "Minimum Trademark Standards, Trade Dress
Requirements and Trade Dress Options for Selling ARCO Branded Motor Fuels at
Retail Outlets".
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<PAGE>
Exhibit B
Shared Trade Dress Costs
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Island luminaire for each island without 50/50
a canopy
Column Cladding/ATM Cladding Signs 50/50
All Exterior Decals 100% ARCO
Interior Decal Kit 100% ARCO
Fascia - Illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - Non-illuminated Building 100% ARCO Max.100 Feet, 50/50 thereafter
Fascia - New Look Facia - Canopy 50/50
Fascia Film - Non-illuminated Canopy 100% ARCO
ID Sign - #200 Freeway - Sign Only 100% ARCO
ID Sign - #200 Fwy. - Pole and Foundation 100% Dealer
ID Sign (#33, #42, #96, etc.) 100% ARCO
ID Sign Foundation and Architectural Veneer 100% Dealer
ID Sign - Building - 3 x 10 ARCO Logo Sign 100% ARCO
SOFFIT Storage System 100% Dealer
Non-ID Sign - 24 Hour Signs 100% Dealer
Non-ID Sign - Metal Info Signs -
Bumper Post, PPF, Tax 50/50
Paint - Labor not included 50/50 (Max. Limit $2,500)
Permits for Signage 100% ARCO
</TABLE>
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<PAGE>
Exhibit B (Continued)
<TABLE>
<CAPTION>
Cost - % Share
Trade Dress Item ARCO/Dealer Restrictions
- ---------------- ----------- ------------
<S> <C> <C>
Pump Toppers 50/50
Quick Crete Cement Trash Container 100% Dealer
Tank Tags 100% ARCO
Channel Letter 100% ARCO
Canopy Sparks 100% ARCO (Max. 4 Sparks)
VSAT Equipment: (1) Hughes Satellite Dish 100% Dealer
and (2) Hughes Indoor Unit - Satellite
Receiver (3) Deicer (if required for
colder climate)
</TABLE>
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<PAGE>
Exhibit 10.47
AMENDMENT TO CONTRACT
DEALER GASOLINE AGREEMENT
(Branded Diesel Fuel)
Facility: 82065
Customer Account: 0883363
THIS AMENDMENT, dated as of Sept. 2, 1999, amends the Contract Dealer Gasoline
Agreement ("Agreement") dated Sept. 2, 1999, between ARCO Products Company (a
division of Atlantic Richfield Company, incorporated in Delaware) ("ARCO") and
LLO-Gas, Inc. ("Buyer") with delivery premises at 4100 California Ave.,
Bakersfield, California 93309 ("Premises").
It is hereby agreed by and between the parties that effective on the date
written above or the Commencement Date of the Agreement, whichever is later, the
Agreement is hereby amended to provide that except as set forthbelow, any
references to "motor fuels comprising gasolines and gasoline-containing
materials bearing the ARCO trademark and other identifying symbols," "gasoline"
and "product" shall be construed to include such motor fuels comprising diesel
fuel and diesel fuel-containing materials bearing the ARCO trademark and other
identifying symbols ("ARCO branded diesel fuels and diesel fuel-containing
materials") as Buyer may purchase and receive from ARCO and ARCO may sell and
deliver to Buyer at the Premises during the term hereof.
It is understood and agreed by and between the parties that Temporary Voluntary
Allowances ("TVA's") are not applicable to diesel fuel or diesel fuel-containing
materials and, therefore, the terms and conditions relating to TVA's set forth
in the Prices provisions, Paragraph 5 of the Agreement, are not amended and
supplemented by this Amendment. It is further understood and agreed by and
between the parties that, except as herein specifically amended and
supplemented, all other terms and conditions of the Agreement, as previously
amended and supplemented, shall be and remain in full force and effect.
This Amendment automatically supercedes and terminates, as of the Effective Date
hereof, any and all other contracts, agreements or understandings between the
parties covering the sale and delivery of ARCO branded fuels and diesel
fuel-containing materials to Buyer at the Premises for resale therefrom.
BUYER ACKNOWLEDGES THAT BUYER HAS READ THIS AMENDMENT AND FULLY UNDERSTANDS ALL
OF THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
This Amendment is not binding until executed by Buyer and by an authorized
officer or manager of ARCO.
IN WITNESS WHEREOF, the parties have executed this Amendment.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/ John D. Castellucci 9-2-99
- ------------------------------------- ------------------------------------
Date Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
- ------------------------------------- ------------------------------------
Date Date
<PAGE>
Exhibit 10.48
Recording Requested By:
When Recorded Mail To:
Name: ARCO Products Company
Attn: Denise Newton
Street: 4 Centerpointe Drive
City: La Palma
State: California 90623-1066
- --------------------------------------------------------------------------------
MEMORANDUM OF CONTRACT DEALER GASOLINE AGREEMENT
Facility: 82065
THIS MEMORANDUM OF CONTRACT. DEALER GASOLINE AGREEMENT, dated Sept. 2,
1999, is executed by and between LLO-Gas, Inc. ("Franchisee") located at 4100
California Ave.. Bakersfield, California 93309, and ARCO Products Company, a
division of Atlantic Richfield Company, a Delaware corporation, with offices at
1055 West Seventh Street (P.O. Box 2570) in Los Angeles, California 90051-0570
("ARCO).
In return for valuable consideration, Franchisee has granted to ARCO a
right of first refusal to all of Franchisee's interest, whether fee or
leasehold, in the land situated at the street address of 4100 California Ave..,
in the city of Bakersfield, in the state of California, and more specifically
described in Exhibit "A" attached, and all improvements thereon.
The terms of ARCO's right of first refusal are more fully set forth in
that certain Contract Dealer Gasoline Agreement between the parties hereto,
dated, Sept. 2, 1999, and this Memorandum of Contract Dealer Gasoline Agreement
is subject to all the covenants, conditions and terms set forth in that
Agreement, which is hereby adopted herein and made a part hereof as if all the
covenants, conditions and terms thereof were included in full herein.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Contract Dealer Gasoline Agreement as of the date first written above.
Franchisee: LLO-Gas, lnc.
-------------
By: /s/ John Castellucci
-------------------------------------
ARCO PRODUCTS COMPANY
a division of Atlantic Richfield Company
By: /s/ Connie Carroll
-------------------------------------
Connie Carroll, Manager
Franchise Administration
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
- --------------------------------------------------------------------------------
State of California
County of Orange
On 9/2/99 before me, Hollie Johnson, Notary Public
------- --------------------------------------------------------
Date Name, Title of Officer - E.G., "JANE DOE, NOTARY PUBLIC
personally appeared John Castellucci and Connie Carroll
------------------------------------------------------------
|X| personally known to me - OR - proved to me on the basis of satisfactory
evidence to be the person(s) whose names)
[S E A L] are subscribed to the within instrument
and acknowledged to me that they executed
the same in their authorized
capacity(ies), and that by their
signatures(s) on the instrument the
person(s), or the entity upon behalf of
which the person(s) acted, executed the
instruments.
WITNESS my hand and official seal.
/s/ Hollie Johnson
-----------------------------------------
SIGNATURE OF NOTARY
OPTIONAL
- --------------------------------------------------------------------------------
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent fraudulent reattachment of this form
|_| INDIVIDUAL
|X| CORPORATE OFFICER
President/Manager Memorandum of CDGA #820
- ------------------------------------ --------------------------------------
TITLE OR TYPE OF DOCUMENTS
|_| PARTNERS |_| LIMITED
|_| GENERAL 1
--------------------------------------
NUMBER OF PAGES
|_| ATTORNEY-IN-FACT
|_| TRUSTEE(S)
|_| GUARDIAN/CONSERVATOR
|_| OTHER: 9/2/99
--------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
LLO-Gas, Inc. None
- ------------------------------------ --------------------------------------
SIGNER(S) OTHER THAN NAMED ABOVE
ARCO PRODUCTS CO.
- ------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.49
Facility Number: 82065
ADDENDUM TO CONTRACT DEALER GASOLINE AGREEMENT
(PAYPOINT NETWORK NON-LESSEE RETAILER)*
This ADDENDUM, effective _____________ ("Effective Date") is attached to
incorporated in and made a part of the Contract Dealer Gasoline Agreement,
dated Sept. 2, 1999, by and between ARCO Products Company, a division of
Atlantic Richfield Company ("Franchisor") and LLO-Gas, Inc.
("Franchisee"), the operator of an ARCO location located at 4100
California Ave., Bakersfield, California 93309 ("Facility").
1. Agreement
Franchisor shall provide PayPoint(R) Network Service ("PayPoint Network")
to Franchisee. Franchisee shall perform as provided herein.
2. Definitions
(a) The term "PayPoint Network" shall mean those services more fully
described in Paragraph 3 below.
(b) The term "Approval" shall mean that, for a Transaction entered into
the PayPoint Network, Financial Institution or the PayPoint Network has
caused a response to be transmitted to Franchisee through the PayPoint
Network which indicates that the Transaction is approved or, for
preauthorized transactions, e.g., gasoline purchases, that certain
products or services may be purchased or performed, e.g. that gasoline may
be pumped.
(c) The term "Denial" shall mean that Financial Institution has caused a
response to a Transaction to be transmitted through the PayPoint Network
which indicates that the Transaction is not approved.
(d) The term "Working Day" shall mean any day except Saturdays, Sundays
and any other days on which financial institutions are regularly closed.
(e) The term "access card" shall mean an access card issued, directly or
indirectly, by a participating Financial. Institution to a Cardholder of
such Financial Institution. An access card shall have the name of the
Cardholder encoded and/or embossed thereon and/or a name, number or code
which identifies such access card as being issued by a Financial
Institution.
(f) The term "Cardholder" shall mean a natural person or entity doing
banking business with a participating Financial Institution and to whom
such Financial
<PAGE>
Institution has issued or proposes to issue an access card. The term
"Cardholder" includes a natural person or entity purporting to be such
Cardholder.
(g) The term "Transaction" shall mean each use of an access card by a
Cardholder for the purpose of paying for a purchase of a product or
service or receiving cash or a refund from Franchisee through use of the
PayPoint Network to which a participating Financial Institution responds
with an approval or denial code.
(h) The term "deposit account" shall mean the checking, savings and/or
other account of Cardholder at a participating Financial Institution that
is accessible via an access card.
(i) The term "PayPoint Account(s)" shall mean the accounts at
participating Financial Institutions or participating networks to which
funds from Cardholders' deposit accounts shall be transferred. These funds
so transferred shall be used to credit Retailer's Accounts.
(j) The term "Retailer's Account" shall mean the account maintained by
Franchisee at a financial institution that is a member of the Cal-Western
Automated Clearing House Association or the National Automated Clearing
House Association and named by Franchisee on Exhibit C, attached hereto,
incorporated herein and made a part hereof, as the account into which
deposits resulting from Cardholder Transactions at Franchisee's location
are made.
(k) The term "POS Terminal," "POS System," or "POS Equipment" shall mean
the point-of-sale devices) or system used by Franchisee, which must meet
the communications protocol and criteria of the PayPoint Network.
(l) The term "Settlement Day" shall mean any day excluding weekends and
the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day as well as
any other days on which the Settlement Banks) are closed.
(m) The term "participating Financial Institution," "Financial
Institution," or "Network" shall mean the financial institutions, networks
or Members or Affiliates of participating networks which execute
agreements with Franchisor to participate in or provide services through
the PayPoint Network.
3. PayPoint Network Description
The PayPoint Network shall enable Cardholders to receive cash or to pay
for purchases of products and services by means other than cash, money
order or check. Each Cardholder shall use an access card to initiate a
Transaction. Franchisee shall promptly honor all valid access cards when
presented by Cardholders and shall treat Cardholders from all
participating Financial Institutions
<PAGE>
equally. Franchisee shall use a POS Terminal and may also use one or more
Island Card Reader devices ("ICR Device") that are in communication with
the PayPoint Network computer facility(ies).
When the Cardholder's access card is inserted in the POS Terminal or ICR
Device, information encoded on the magnetic stripe on the reverse of the
access card shall be read by a magnetic stripe reader. The Cardholder
shall enter his or her Personal Identification Number ("PIN") on a key
pad. The encoded information, the encrypted PIN, the purchase amount or
preauthorization request, and such other data regarding the Transaction as
Franchisor may reasonably require, shall be transmitted from the POS
Equipment to the Pay Point Network computer facility(ies) and from the
PayPoint Network computer facility(ies) to a participating Financial
Institution. Financial Institution shall respond with either an approval
or denial for the requested Transaction.
With certain types of POS equipment, certain purchases, e.g. gasoline, may
be preauthorized by the participating Financial Institution before any
product or service is purchased or performed; the actual purchase amount
shall be transmitted to the
Financial Institution after the Cardholder has obtained such product or
service. It is understood and agreed that the actual purchase amount shall
be no more than the amount preauthorized.
The final purchase amount shall subsequently be debited form the
Cardholder's deposit account and credited to the Retailer's Account via
the PayPoint Account(s). Franchisee shall not permit anyone to complete a
.Transaction unless Franchisee has received approval through the PayPoint
Network.
4. Rent
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor, or the Commencement Date, as
defined below, if this is the initial PayPoint Agreement between
Franchisee and Franchisor or, where applicable, the first day of the
thirteenth month following the Commencement Date, Franchisee shall pay to
Franchisor, for participation in the PayPoint Network, transaction fees in
the amount set forth on Exhibit A, which is incorporated herein, made a
part hereof and attached hereto. Such fees shall be due and payable to
Franchisor on or before the tenth day of the month following the month in
which such fees were incurred during the term of this Addendum. Provided,
however, that if Franchisee installs and ICR device at the Facility prior
to the Commencement Date and operates it thereafter, Franchisee shall pay
no fees for participation in the PayPoint Network for the first twelve
months following the Commencement Date and 50% of the applicable fees for
the balance of the term of this Agreement. The term "Commencement Date"
shall mean the date on which
<PAGE>
the first "live" Transaction, that is, a Transaction involving a
Cardholder at the Facility, is provided to Franchisee through the PayPoint
Network.
Commencing on the Effective Date, if this is a subsequent PayPoint
Agreement between Franchisee and Franchisor or, if this is the initial
PayPoint Agreement between Franchisee and Franchisor, on the Commencement
Date, and thereafter on or before the first day of each month during the
term of this Addendum, Franchisee shall also pay Franchisor telephone line
charges set forth on Exhibit A. It is understood that if Franchisee's
product agreements) with Franchisor expires within the first twelve months
following the Commencement Date and Franchisee and Franchisor execute a
new Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee ARCO Retailer) and Franchisee has installed and is operating an
ICR Device and is therefore eligible for the waiver of transaction fees as
set forth above, Franchisee shall pay no transaction fees for
participation in the PayPoint Network for the number of months remaining
of the original twelve month waiver period following the original
Commencement Date referred to in this Addendum.
If Franchisor terminates this Addendum at any time during the term of this
Addendum for cause or because Franchisee has been designated a Special
Retailer as described in Paragraph 14, or if Franchisee elects to
terminate this Addendum at the end of the thirteenth month following the
Commencement Date, as provided below for Franchisees on their initial
PayPoint agreement, Franchisee shall pay Franchisor as set forth on
Exhibit D, attached hereto, incorporated herein and made a part hereof,
for disconnection and removal of telephone lines. Franchisee agrees to pay
promptly when due and to hold Franchisor harmless from all fees, and
sales, use, rental, gross receipts, inventory, excise, income and any
other taxes (including interest, penalties, and additions to tax) imposed
by any federal, state or local governmental authority upon Franchisee or
Franchisor (except those taxes based upon or measured by the net income of
Franchisor) in connection with any payments made pursuant to this
Addendum. Franchisee agrees to pay promptly when due and to hold
Franchisor harmless from all sales or use taxes and other similar taxes
(including interest, penalties and additions to tax) imposed upon or with
respect to charges or the use of any loaned property. Franchisee shall
furnish to Franchisor, promptly upon request, any documentation, which in
Franchisor's discretion is required to evidence the payment of any tax,
including, but not limited to, official receipts of the appropriate taxing
authorities, copies of tax returns and canceled checks.
If this is the initial PayPoint agreement between Franchisee and
Franchisor, on the first day of the thirteenth month following the
Commencement Date, Franchisee shall have the option, upon giving
Franchisor at least 30 days prior written notice, to terminate this
Addendum; to downgrade the number of PayPoint Electronic Cashiers (Island
CardReaders), if applicable; to downgrade to the Paypoint Cashier
<PAGE>
only (ARCOmatic terminal), if applicable; or the downgrade to the PayPoint
Authorization Terminal (low end terminal device). Any downgrading of
equipment is at Franchisee's sole cost and expense.
5. Security
Franchisee shall require each Cardholder to enter his or her PIN on the
POS Equipment at the Facility in order to initiate a Transaction, except
to complete Preauthorized Transactions. All Cardholder PINs transmitted to
Franchisor must be encrypted at the POS Terminal or ICR Device where the
PIN is entered and must remain encrypted from such point of entry
throughout the PayPoint Network. After completion of the Transaction, no
PINS shall be retained by Franchisee. Franchisee agrees to take all
precautions Franchisor may reasonably require to ensure security of data
transmitted between the Franchisee location and participating Financial
Institutions and in no event shall Franchisee permit PINS to be
transmitted "in the clear."
6. Transaction Approval or Denial
It is understood that participating Financial Institutions have sole
discretion to give approval or denial to Transactions requested by
Franchisee and a Cardholder. Franchisee agrees to draw no positive or
negative inference about a Cardholder from a participating Financial
Institution's approval or denial.
7. Access to Franchisee Location; Promotion and Evaluation of PayPoint
Network
Franchisee agrees to provide reasonable access to the Franchisee location
to Franchisor's employees, agents and contractors and, if accompanied by
Franchisor's employees, agents or contractors, to participating Financial
Institutions. Franchisee acknowledges that Franchisor and participating
Financial Institutions, shall require access to install and test the
PayPoint Network Service and equipment, to demonstrate PayPoint Network
Services to Cardholders, to study Cardholder use of the PayPoint Network
and to ensure Franchisee's compliance with this Addendum.
To the extent permitted by law, Franchisee agrees to place, at the
Franchisee location, promotional and other materials provided by
Franchisor. Franchisee agrees further to cooperate with Franchisor in it
efforts to promote and evaluate the PayPoint Network.
8. Interruption of Service
Franchisor and Franchisee shall cooperate to resolve any system
malfunction or problem that interrupts normal operation of the PayPoint
Network. Franchisor shall provide instructions and procedures for the
handling of Transactions that are initiated when communications between
Franchisor, the participating Financial Institutions and the Franchisee
location are interrupted. Franchisee shall
<PAGE>
immediately notify Franchisor's Maintenance Department if there is an
interruption of the PayPoint Network.
9. Cardholder Refund or Reversal/Void Transactions
Cardholder refund transactions shall not be processed electronically, ,
but shall be processed by refunding cash or otherwise reimbursing the
Cardholders. Receipts shall be made available to Cardholders in accordance
with Paragraph 10 of this Addendum for all such Transactions.
10. Receipts
For each Transaction approved through the PayPoint Network, Franchisee
shall make a receipt available to the Cardholder. The receipt shall
contain all information required by Federal Reserve Board Regulation E or
other applicable laws and regulations. Receipts shall include the
following information: Cardholder's access card number, name and location
of the Facility, date, time, amount of Transaction, type of Transaction
(payment), type of account to or from which funds are transferred (unless
only one type of account may be accessed), Franchisor assigned transaction
or trace number and/or Financial Institution assigned reference number if
the Transaction has been transmitted to Financial Institution, and, if
applicable, any Transaction Fee.
Franchisee understands and agrees that portions of this Addendum are for
the benefit of participating Financial Institutions and therefore, if
Franchisee breaches some of the terms and conditions of this Addendum,
including but not limited to:
(a) breaches of the Receipt provisions of this Paragraph 10;
(b) breaches of the Cardholder Dispute provisions of Paragraph 11 of this
Addendum;
(c) initiation or attempt to initiate by Franchisee or its agents or
employees unauthorized transactions;
(d) uses of any participating Financial Institution's name or marks or
references to any participating Financial Institution in any advertising,
point of purchase material, news release or trade publication without
Franchisor's prior written consent or the sublicense or attempt to
sublicense Franchisee's right to use such name or marks after receiving
such consent;
(e) failure to display, to the extent permitted by law, promotional and
other materials as required by Paragraph 7 of this Addendum or failure to
cease using and return any such materials should any participating
Financial Institution withdraw from PayPoint Network participation:
<PAGE>
(f) drawing a positive or negative inference about a Cardholder from a
participating Financial Institution's approval or denial in breach of the
provisions of Paragraph 6 of this Addendum;
(h) failure to follow the PayPoint Network procedures set forth in
Paragraph 3 of this Addendum;
(i) breaches of the Confidentiality/Non-Disclosure provisions of Paragraph
16 of this Addendum;
(j) breaches of the Security provisions of Paragraph 5 of this Addendum;
or
(k) breaches of the indemnification provisions of Paragraph 15 of this
Addendum.
Franchisor or participating Financial institution(s) shall have the right
to name Franchisee a "Special Retailer" and to recover from Franchisee for
the amount of all claims, liability, losses and expenses, notwithstanding
any limits contained in Paragraph 15 of this Addendum, and (including,
without limitation, attorneys fees) asserted against or incurred by
Franchisor or such Financial Institutions) as a result of such breach.
Such right to recover an the part of Franchisor or participating Financial
Institutions shall include the right to debit the Franchisee's Trade
Statement or electronically debit Retailer's Account, if Franchisee has
not forwarded such amount to Franchisor within a period of time specified
in a notice to the Franchisee. Such third party beneficiary rights shall
be enforceable against Franchisee despite any defenses Franchisee may have
against Franchisor.
Furthermore, Franchisee understands and agrees that a breach of this
Addendum may be grounds for termination/non-renewal of the Contract Dealer
Gasoline Agreement.
11. Resolution of Disputes
(a) Cardholder Disputes
Franchisee acknowledges that participating Financial Institutions are
required by Federal law to resolve errors asserted by Cardholders, and to
provide documentation requested by Cardholders, within certain time
limits. Franchisee agrees to cooperate with Franchisor and participating
Financial Institutions to resolve Cardholder disputes or inquiries about
PayPoint Network Transactions. To facilitate resolution of Cardholder
disputes, Franchisee shall retain, for a period of at least one hundred
eighty (180) days, copies of receipts issued to Cardholders pursuant to
Paragraph 10 of this Addendum, or reports from which Transaction
information can be retrieved. In response to an oral request by Franchisor
or a participating Financial Institution, to be confirmed in writing,
Franchisee shall, within three (3) Working Days of the oral request, send
documentation to Franchisor or to
<PAGE>
such Financial Institution, as instructed by Franchisor, showing requested
receipt information for any Transaction that occurred within the previous
one hundred eighty (180) days. If Franchisee fails to provide the
requested information within three (3) Working Days, Franchisor shall, at
the request of the participating Financial Institution, debit Franchisee's
Trade Statement or electronically debit the Retailer's Account, for the
amount disputed by the Cardholder and credit, through the participating
Financial Institution, the Cardholder's deposit account for the amount
disputed. The obligations of this Paragraph 11 shall survive termination
of this Addendum. Detailed procedures for customer dispute resolutions are
incorporated herein, made a part hereof and attached hereto as Exhibit B.
(b) Franchisee Disputes
Franchisee agrees to review all Franchisee Account Statements and
Management Reports (including journal tapes, daily sales reports and
Management Report Printer tapes) and, within 60 days of a Transaction, to
notify the PayPoint Network computer facility(ies) by telephone, to be
confirmed immediately in writing, of any errors, discrepancies or disputes
that Franchisee has concerning such Transaction. Neither Franchisor nor
participating Financial Institutions shall be liable for errors,
discrepancies or disputes of which Franchisee fails to notify Franchisor
within such 60 day period. If the resolution of the error, discrepancy or
dispute by Franchisor or a participating Financial Institution involves a
credit to Franchisee, Franchisor shall pay Franchisee such credit by
check.
(c) Disputes Over-Merchandise or Service
Franchisee shall handle all disputes over quality of merchandise or
services purchased from Franchisee by Cardholders directly with
Cardholders and shall indemnify and hold Franchisor and participating
Financial Institutions harmless from any claim, action, damage or expense,
including strict liability in tort, arising out of such disputes or the
sale of goods or services by Franchisee; provided, however, to the extent
Franchisee's petroleum or non-petroleum franchise agreements, if any, are
contrary to this provision as to Franchisor, such petroleum or
non-petroleum franchise agreement shall be controlling as to Franchisor.
12. Transaction Error Resolution
In certain unusual circumstances, Retailer's Account may be erroneously
credited with an amount for a Transaction that did not occur at the
Franchisee location or with a duplicate of an amount of a Transaction or
fees for which Retailer's Account was previously credited. In such
circumstances, Franchisee shall, within three (3) Working Days of receipt
of an oral request, provide Franchisor with the amount of such erroneously
credited or duplicate amount. If Franchisee fails to provide Franchisor
with such amount, Franchisee agrees that Franchisor shall have the right
to debit Franchisee's Trade Statement or electronically debit Retailer's
Account for the amount of such erroneously credited or duplicate amount so
that Franchisor may properly credit the Cardholder or other retailer's
account.
<PAGE>
13. Settlement: Settlement Reporting
Franchisor shall process all approved Transactions captured each
Settlement Day and any preceding non-Settlement Day and make arrangements
for the funds to which Franchisee is entitled to be deposited into his or
her Retailer's Account.
Deposit and Transaction totals shall be made available to Franchisee by
way of the POS Terminal, if possible; otherwise, by way of, written
reports. Franchisor shall also mail to Franchisee, on request, summary
reports of PayPoint Network Transactions at the Facility.
14. Term: Termination
Except as otherwise provided in this Addendum, PayPoint Network Service
shall be provided from the Effective Date or, where applicable, the
Commencement Date until the termination or expiration of Franchisee's
Contract Dealer Gasoline Agreement with Franchisor. The Commencement Date
shall be set forth in a notice from Franchisor to Franchisee.
Franchisor may terminate this Addendum for any reason upon at least ninety
(90) days advance written notice to Franchisee. For cause, Franchisor may
terminate this Addendum immediately upon giving written notice to
Franchisee. In addition, Franchisor may, at its sole option, terminate
Franchisee's ability to accept access cards from certain participating
Financial Institutions or terminate this Addendum or the Contract Dealer
Gasoline Agreement immediately if a Financial Institution notifies
Franchisor that it has designated Franchisee as a "Special Retailer,"
i.e., a Franchisee that Financial Institution has reason to believe has
originated unauthorized Transactions to a Cardholder's deposit accounts or
a Franchisee from whom an excessive number of Transactions are ultimately
subject to chargeback, that is, debit of Franchisee's Trade Statement as
more fully described in Paragraph 10 of this Addendum or a Franchisee who
violated or failed to comply with the Security provisions referred to in
Paragraph 5 of this Addendum. On the first day of the thirteenth month
following the Commencement Date, Franchisee may terminate this Addendum
for any reason upon at least thirty (30) days advance written notice to
Franchisor. In the event of termination, Franchisee shall return to
Franchisor all instructional and promotional material Franchisor has
provided for use with the PayPoint Network and shall cease to use and
display the "Marks" as defined in Paragraph 17a and participating
Financial Institutions' trademarks, trade names and trade indicia and
shall remove all decals and signs indicating Franchisee's participation in
the PayPoint Network and, if Franchisee is terminated for cause or because
he/she has been designated a Special Franchisee, Franchisee shall pay the
applicable amount set forth on Exhibit D.
In the event Franchisee refuses to, or is unable to return the material
and/or to cease use and display, then Franchisor shall have the right to
enter Franchisee's
<PAGE>
Facility and remove all such material, decals, and signs, and Franchisee
agrees to pay the costs therefor.
15. Indemnification
Each party shall indemnify the other and hold it harmless and Franchisee
shall indemnify participating Financial Institutions from any claim,
action, damage or expense of any kind arising solely from fault or neglect
of the indemnifying party, including but not limited to claims of
infringement of any patent, copyright, trade secret or other proprietary
right in the operation of the PayPoint Network. Neither party shall be
liable to the other for any special, indirect or consequential damages,
including but not limited to lost profits, even if the parties have
knowledge of the possibility of such damages.
Franchisee shall indemnify, hold harmless and defend Franchisor and
participating Financial Institutions from and against all claims, losses,
costs, damages, liabilities, and expenses (including reasonable attorneys'
fees) which are suffered as a result of any Transaction or attempted
Transaction and arise out of:
(a) Personal injury or tangible property damage suffered or incurred by
any person on Franchisee's premises;
(b) Negligence or fraudulent conduct of Franchisee, Franchisee's agents
and employees and independent contractors;
(c) Unauthorized entry of data into the PayPoint Network or any Financial
Institution's debit card system/network by Franchisee from any point in
the PayPoint Network including the data communication link connecting the
PayPoint data processing facility(ies) and any Financial Institution's
debit card system/network, and POS equipment;
(d) Unauthorized receipt of data from any Financial Institution's debit
card system/network by Franchisee from any point in the PayPoint Network
including the data communication link connecting the PayPoint data
processing facility(ies) and any Financial Institution and POS Equipment;
(e) Disputes over Franchisee's sale or lease of goods or services; or
(f) Failure of Franchisee, its employees, agents and its independent
contractors to comply with this Addendum, or with applicable federal,
state, or local laws, rules or regulations.
However, Franchisee shall not be liable for the failure by any Financial
Institution to discover a Technical Error, originated by Franchisee.
<PAGE>
16. Confidentiality: Nondisclosure
Franchisee acknowledges that all information that is disclosed to, or
comes to the attention of Franchisee for purposes of the development or
operation of any aspect of the PayPoint Network (herein "Information") is
strictly confidential. Franchisee agrees that Franchisee shall not use for
any purpose other than Franchisee's use of the PayPoint Network or
disclose said Information or knowingly permit Franchisee's employees or
contractors to disclose said Information to any person outside Franchisor
and Franchisee, or to any employee or contractor of Franchisor or
Franchisee who does not have a specific need to know in performance of
work hereunder.
Franchisee acknowledges that participating Financial Institutions have a
responsibility to their Cardholders to keep all records pertaining to
Cardholders' banking transactions (herein "Cardholder Information")
strictly confidential. Franchisee shall maintain the confidentiality of
Cardholder Information.
This paragraph shall not prevent the participating Financial Institutions
from disclosing to their Cardholders information about such Cardholders'
individual transactions.
Franchisor agrees to use reasonable care to avoid disclosure of
information relating to sales by Franchisee (herein "Sales Information")
other than to Financial Institutions and other third parties who require
access to Sales Information for purposes relating to Franchisee's use of
or Franchisor's operation of the PayPoint Network. Franchisor's obligation
of non-disclosure shall not apply to any Sales Information which is or
becomes available to the public other than through breach of this Addendum
by Franchisor. It is presently Franchisor's policy (which may be changed
at any time by Franchisor at its sole option without notice) to destroy
all records of Sales Information after two (2) years. Franchisor's
obligation of non-disclosure with respect to Sales Information shall
terminate upon destruction of such Sales Information.
The obligations of this Paragraph 16 shall survive termination of this
Addendum.
17. Service Mark License
(a) PayPoint, PayPoint Electronic Cashier, PayPoint Cashier, PayPoint
Network, PayPoint and "Triangle" design, Electronic PayPoint, and the
"Triangle" Design (hereinafter called "Marks") are service marks of
Franchisor.
(b) During the term of this Addendum, Franchisor grants to Franchisee for
use at Franchisee's Facility a non-exclusive license and right to use the
marks in connection with the PayPoint Network as defined in Paragraph 3,
but only so long as such services are performed using equipment approved
by Franchisor and such equipment is maintained in good operating order and
is operated in accordance with
<PAGE>
Franchisor's training program and guidelines as promulgated from time to
time by Franchisor.
(c) Franchisor shall have the right at all time to enter Franchisee's
Facility for the purpose of inspecting the equipment used with the
PayPoint Network, and to satisfy itself that services are being provided
to the public according to Franchisor's standards.
(d) During the term of this Addendum, Franchisee shall be permitted to use
and display the marks and other names and trade indicia used or authorized
for use by Franchisor in connection with the PayPoint Network, but only in
accordance with standards as set forth from time to time by Franchisor for
the type of facility Franchisee is operating. Franchisee shall only be
permitted to use or display names, marks, symbols, or trade indicia
belonging to participating Financial Institutions in conjunction with
PayPoint equipment or on advertising upon Franchisor's prior approval, and
such use and display is subject to whatever restrictions Franchisor or
such institutions may prescribe.
(e) Franchisor expressly reserves the right to change, alter, modify, or
withdraw the Marks, or any of them including the PayPoint name, at any
time by giving Franchisee not less than thirty (30) days prior written
notice thereof. In the event of such change, alteration or modification,
Franchisee agrees that it shall henceforth not use the mark or name which
has been changed, altered, modified, or withdrawn. In the event the
PayPoint name is changed, altered, modified, or withdrawn by Franchisor,
it is agreed that the new name or Mark shall be substituted for "PayPoint
Network" as it appears in this Addendum.
(f) Franchisee recognizes Franchisor's ownership and title to the Marks
and shall not claim adversely to Franchisor any right, title, or interest
thereto. Particularly, Franchisee agrees, during and after the term of
this Addendum, not to use, register or attempt to register as a trademark
or as a trade or corporate name, or aid any third party in registering or
attempting to register, any of the Marks or any marks, names, or symbols
confusingly similar thereto, or incorporating one or more of the words in
such marks or names as trademarks or service marks, or as trade or
corporate names.
(g) All use of the Marks by Franchisee shall inure exclusively to the
benefit of Franchisor and Franchisor may utilize such use in registering
or defending such Marks. Franchisee agrees to cooperate with Franchisor in
providing evidence or testimony relative to or supporting Franchisee's use
of said Marks. Any registrations obtained by Franchisee contrary to
Section (f) shall be held in trust for Franchisor and assigned by
Franchisee to Franchisor upon Franchisor's request.
<PAGE>
(h) Upon termination of this Addendum or the Contract Dealer Gasoline
Agreement, the undertakings and duties of Franchisee in Sections (f) and
(g) shall survive and Franchisee shall cease using and remove the Marks
and any names, marks, symbols, or trade indicia of participating Financial
Institutions as set forth in Paragraph 14 of this Addendum.
18. Force Majeure
No failure, delay or default in performing any obligation hereunder shall
constitute default or breach of this Addendum to the extent that it arises
from causes beyond the control and without fault or neglect of the party
otherwise chargeable with failure, delay or default, including but not
limited to: action or inaction of governmental, civil or military
authority; strike, lockout or other labor dispute; war, riot or civil
commotion; theft, fire, flood, earthquake, natural disaster; or default of
a common carrier.
The party wishing to rely on this paragraph to excuse failure, delay or
default shall, when the cause arises, give the other party prompt written
notice of the facts constituting same, and when the cause ceases to exist,
give prompt notice to the other party.
19. Assignment
Franchisee shall not assign any of its rights or delegate any of its
obligations pertaining to the PayPoint Network without the prior written
consent of Franchisor. Any assignment or delegation made without such
prior written consent shall be void and any assignment or delegation to
which Franchisor consents must be in conjunction with an assignment of the
Contract Dealer Gasoline Agreement.
20. Prices Goods and Services
No provision of this Addendum shall be construed as an agreement by
Franchisor or participating Financial Institutions to the retail prices
charged or the quantity or quality of goods sold or services rendered by
Franchisee to Cardholders or to customers of Franchisee.
21. Independent Contractor
Franchisor and Franchisee are independent contractors with respect to the
subject matter of this Addendum and neither party nor its employees shall
be deemed for any purpose to be the agent, employee, servant or
representative of the other with respect to the subject matter of this
Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum, or caused it to be
executed on their behalf on the dates indicated below.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany
/s/ Connie Carroll 9/2/99 /s/ John D. Castellucci 9-2-99
- ------------------------------------- ------------------------------------
Date LLO-Gas, Inc. Date
/s/ Denise Newton 9/2/99 /s/ Denise Newton 9/2/99
- ------------------------------------- ------------------------------------
Witness Date Witness Date
<PAGE>
ARCO Contract Dealer/Distributor
- --------------------------------------------------------------------------------
PayPoint Network Fees
Transactions per Month Fee per Transaction
0 to 1,000 $.10
1,001 to 2,000 .08
2,001 to 3,000 .06
3,001 to 4,000 .04
Over 4,000 .02
Minimum Monthly Charge = $60.00
There will be no transaction fee during the first 12 months following the
Commencement Date if Retailer installs a PayPoint Electronic Cashier(R),
purchased through ARCO, at the pump island.
Phone Line Fee Options:
Leased Line -- $100 per month plus any phone company pass-through costs
including installation for each dedicated line or Dial Line --
installation costs plus monthly phone charge including per item phone
calls.
Billing and Payment Terms:
Unless Retailer is entitled to 12-month waiver of the fee as set forth above, a
fee will be charged for each Transaction. By the twentieth day of the following
month, Retailer will be issued an invoice for: the total transaction times the
fee per transaction for the tier achieved; the monthly phone line fee; and any
portion of the monthly minimum not achieved. Invoices are payable upon receipt.
If Retailer's Contract Dealer or Distributor Agreement expires and is not
renewed or is canceled prior to the expiration of the PayPoint Retailer
Agreement, the PayPoint Agreement will be canceled or, at ARCO's option, can be
converted to a Non-ARCO PayPoint Retailer Agreement.
Transaction Definition:
A "Transaction" means each use of an access card by a Cardholder for the purpose
of paying for a purchase of a product or service or receiving cash, scrip, a
refund or a reversal/void from Retailer's Facility through use of the PayPoint
Network to which a participating Financial Institution responds with an Approval
or Denial code.
<PAGE>
EXHIBIT B
Retailer Resolution of Cardholder Disputes
PayPoint Network
A cardholder dispute is initiated when a financial institution is notified
of its cardholders complaint. If a cardholder informs a Franchisee that a
problem exists with a transaction made at the retail facility prior to the date
of the complaint, the Franchisee should inform the cardholder that the complaint
should be taken to the cardholder's financial institution. All resolutions must
originate at the cardholder's financial institution.
Examples of complaints:
a) Cardholder was charged twice for a purchase.
b) Cardholder never made the purchase, he/she was billed far by his/her
financial institution.
Procedure for resolution of cardholder complaints by the PayPoint Network:
1) Cardholder disputes a transaction and notifies financial
institution.
2) Financial institution then notifies the Franchisor switch of the
problem.
3) The switch researches its records and makes every effort to find the
disputed transaction in order to resolve the problem.
4) However, if the switch is unable to find the disputed transaction in
the records maintained at the switch, the Franchisee will be
notified via telephone. The switch contact person will provide the
Franchisee with the data furnished by the financial institution and
request a copy of the cardholder receipt and/or a copy of the
Management Report Printer (MRP) report showing the disputed
transaction information.
5) This telephone request will be immediately followed by a written
request - a copy of the PayPoint Network Retailer Transaction
Information Request form containing all the required transaction
information. This form will be mailed to the Franchisee within one
(1) working day of the telephone call. A copy of this form is
attached.
6) The Franchisee will have only three (3) working days after receipt
of the request to research the transaction and send the requested
information to the financial institution listed on the form.
<PAGE>
7) The Franchisee is subject to chargeback of the transaction amount in
question if the requested information is not sent within three (3)
working days.
8) The Franchisee must send a copy of the completed PayPoint Network
Retailer transaction Information Request form along with a copy of
the customer receipt and/or MRP report (the same information
furnished to the financial institution) to the Franchisor switch
within one (1) working day of sending the information to the
financial institution.
<PAGE>
EXHIBIT C
PayPoint Network Retailer Account Designation*
RETAILER:_______________________________________________________________________
ADDRESS:________________________________________________________________________
CITY:___________________________________________________________________________
STATE/ZIP CODE:_________________________________________________________________
I HEREBY AUTHORIZE ARCO PRODUCTS COMPANY, A DIVISION OF ATLANTIC RICHFIELD
COMPANY, TO CREDIT THE ACCOUNT** DESCRIBED BELOW FOR SETTLEMENT PURPOSES FOR
SERVICES PROVIDED THROUGH THE ARCO PAYPOINT NETWORK.
THE ACCOUNT TO WHICH SUCH CREDITS SHOULD BE APPLIED IS
ACCOUNT NO._____________________________________________________________________
AT _____________________________________________________________________________
BRANCH NO.______________________________________________________________________
PAYPOINT NETWORK RETAILER
BY:__________________________________
TITLE:_______________________________
DATE:________________________________
* If Retailer has different Retailer's Accounts for its Retailer's Facilities,
an Exhibit C must be completed for each different Facility.
**FINANCIAL INSTITUTION MUST BE A MEMBER OF NACHA.
<PAGE>
PAYPOINT NETWORK
Retailer Transaction Information Request
CLAIM NO.:______________________________________________________________________
DATE CLAIM RECEIVED:____________________________________________________________
TODAY'S DATE:___________________________________________________________________
A dispute has been filed by a cardholder regarding the following transaction:
FI CARD NO.:____________________________________________________________________
TRANSACTION AMOUNT: ______________ TRANSACTION DATE: __________________________
TRANSACTION TIME: ___________________________ REFERENCE NO. ____________________
Please return a copy of cardholder receipt or management report printer (MRP)
report showing requested financial data within three (3) working days to:
FINANCIAL INSTITUTION:__________________________________________________________
ADDRESS:________________________________________________________________________
CONTACT PERSON:_________________________________________________________________
YOU ARE SUBJECT TO CHARGEBACK OF TRANSACTION AMOUNT IN QUESTION
IF "REQUESTED INFORMATION" IS NOT SENT WITHIN THREE (3) WORKING DAYS
Franchisee:
Return a copy of this form along with copy of cardholder receipt and/or MRP
report to:
NAME:___________________________________________________________________________
ADDRESS:________________________________________________________________________
________________________________________________________________________________
DATE INFORMATION SENT TO FINANCIAL INSTITUTION:_________________________________
<PAGE>
EXHIBIT D
POS and Remote Equipment
Disconnection and Removal
Fee Schedule
Telephone Line Disconnection $200.00
Each Inside Terminal Disconnection and Removal $200.00
Each Outside Terminal Disconnection and Removal $400.00
<PAGE>
Exhibit 10.50
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement") is made as of the 25th
day of October, 1999, by and between CAPSTONE CAPITAL, LLC, a Delaware limited
liability company, having its principal place of business at 515 Madison Avenue,
21st Floor, New York, New York 10022 ("Subordinate Lender"), and CONVENIENCE
STORE FINANCE COMPANY, LLC, a Delaware limited liability company, having an
address at 10880 Wilshire Boulevard, 21st Floor, Los Angeles, California 90024
("Senior Lender").
RECITALS:
A. Pursuant to that certain Loan and Security Agreement dated October
25, 1999 by and between LLO-Gas, Inc., a Delaware corporation ("Borrower") and
Senior Lender (the "Senior Loan Agreement"), Senior Lender is about to make a
loan to Borrower in the amount of SEVEN MILLION EIGHT HUNDRED THOUSAND DOLLARS
($7,800,000) (the "Senior Loan"). The Senior Loan is secured by, among other
things, the "Collateral" (as defined in the Senior Loan Agreement, and as
described on Exhibit A attached hereto and incorporated herein by reference)
located at each of the properties listed on Exhibit B attached hereto (each a
"Property).
The Collateral given by Borrower as security for the Senior Loan
includes without limitation, all inventory of refined petroleum products and the
proceeds thereof of Borrower located at each Property (the "Petroleum
Inventory").
B. Pursuant to that certain Security Agreement dated October 20, 1999
by and between Borrower and Subordinate Lender (the "Subordinate Loan
Agreement"), Subordinate Lender has or may provide certain loans to Borrower in
the principal amount of $450,000.00 (the "Subordinate Loan").
C. Subject to the terms and conditions of this Agreement, Senior
Lender will allow Subordinate Lender to take a senior security interest only in
the Petroleum Inventory.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Senior Lender and Subordinate
Lender agree as follows:
1. Priority of Interests in Petroleum Inventory. Subject to the
--------------------------------------------
terms and conditions of this Agreement, Subordinate Lender and Senior Lender
agree that the interest of Senior Lender in and to the Petroleum Inventory only
shall be subordinate to the security interest of Subordinate Lender in and to
such Petroleum Inventory pursuant to Subordinate Loan Agreement, in an amount
not to exceed $450,000.00, plus any accrued and unpaid interest (including at
the default interest rate set forth in the Subordinate Loan Agreement) and
reasonable costs and fees by Subordinate Lender incurred reasonably in
collection of such amounts. Notwithstanding the foregoing or anything contained
herein to the contrary, Subordinate Lender acknowledges and agrees that except
as expressly provided above any security or other interest of Subordinate Lender
in and to any Collateral other than the Petroleum Inventory shall be subject and
subordinate in all respects to the rights and interests of
<PAGE>
Senior Lender, including, without limitation, Senior Lender's rights and
remedies with respect to the Collateral upon any default under the Senior Loan.
Subordinate Lender further acknowledges and agrees that notwithstanding anything
contained in the Subordinate Loan Agreement or any documents and financing
statements executed in connection therewith (including, without limitation,
those certain UCC-1 Financing Statements executed by Borrower in favor of
Subordinate Lender filed with the California Secretary of State on August 26,
1999 as File Nos. 9924360720, 9924360732, 9924360711 and 9924360717) or in this
Agreement to the contrary, Subordinate Lender shall be deemed to possess a
security interest in the Petroleum Inventory only, notwithstanding any broader
definition of the "collateral" pledged as security by Borrower under the
Subordinate Loan Agreement and/or such other documents and financing statements.
Subordinate Lender further agrees to release or modify any financing statements
which may exist within five (5) business days after the date of this Agreement
to effectuate the foregoing sentence.
2. Exercise of Remedies by Subordinate Lender. Notwithstanding
------------------------------------------
anything in Section 1 or elsewhere in this Agreement to the contrary,
Subordinate Lender hereby agrees to subordinate, and does hereby subordinate,
payment of any and all Subordinated Debt (as defined below) to payment to Senior
Lender of any and all of Senior Lender's Debt (as defined below). Without
limitation to the foregoing, Subordinate Lender hereby agrees that it shall not
(i) demand, sue for or commence any legal proceeding to collect any of the
Subordinated Debt, accelerate the payment of the Subordinated Debt or commence,
vote or take any action in respect of any Bankruptcy Action (as defined below)
or exercise any of its rights under the Subordinate Loan Agreement, the
California Uniform Commercial Code, or otherwise with respect to any of the
Collateral (including, without limitation, the Petroleum Inventory) without
Senior Lender's prior written consent unless and until Senior Lender's Debt
shall have been paid in full, (ii) receive or be entitled to receive any portion
of the Subordinated Debt at any time during which a default shall exist with
respect to Senior Lender's Debt or Subordinate Lender shall be in breach of its
obligations hereunder, or (iii) accept or obtain any lien, pledge or security
interest as security for the Subordinated Debt other than as expressly permitted
pursuant to Section 1 hereof. Subordinate Lender shall, however, be entitled to
retain and to distribute to its partners, shareholders, members or other
beneficial owners (as applicable) any payments made by Borrower strictly in
accordance with the terms of the payment of the Subordinated Debt at any time
prior to the events described in clause (ii) above.
"Senior Lender's Debt" means all indebtedness, liabilities and
other obligations of Borrower to Senior Lender, direct or indirect, absolute or
contingent due or to become due, now existing or hereafter incurred, including
without limitation, all indebtedness evidenced by the Senior Loan Agreement and
any extensions or renewals thereof.
"Subordinated Debt" means all indebtedness, liabilities and other
obligations of Borrower to Subordinate Lender, direct or indirect, absolute or
contingent, due or to become due.
3. Events of Bankruptcy. Subordinate Lender and Senior Lender agree
--------------------
that upon any distribution of the assets or readjustment of the indebtedness of
Borrower, whether by reason of liquidation, composition, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding involving the readjustment of all or any of Senior Lender's
Debt or the Subordinated Debt, or the application of the assets of Borrower to
-2-
<PAGE>
the payment or liquidation thereof (each of the foregoing being referred to
herein as a "Bankruptcy Action"), (a) proceeds from the liquidation or other
disposition of the Petroleum Inventory only during the pendency or in connection
with such Bankruptcy Action may be applied to the Subordinated Debt (in a total
amount not to exceed $450,000.00, plus any accrued and unpaid interest
(including at the default interest rate set forth in the Subordinate Loan
Agreement) and reasonable costs and fees by Subordinate Lender incurred
reasonably in collection of such amounts) before application of such proceeds
may be applied to the payment of the Senior Lender's Debt, and (b) except as
expressly provided in subparagraph (a), Senior Lender shall be entitled to
receive payment in full of any and all Senior Lender's Debt prior to the payment
of all or any part of the Subordinated Debt, and in order to enable Senior
Lender to enforce Senior Lender's rights hereunder in any such action or
proceeding, Senior Lender is hereby irrevocably authorized and empowered in its
discretion (in Senior Lender's name or in the name of Subordinate Lender) to
make and to present for and on behalf, of Subordinate Lender such proofs of
claim against Borrower on account of the Subordinated Debt as Senior Lender may
deem expedient or proper and to receive and collect any and all dividends,
distributions or other payments or disbursements made thereon in whatever form
the same may be paid or issued and to apply the same to the Senior Lender's Debt
(or, if applicable pursuant to subparagraph (a), to the Subordinated Debt).
Subordinate Lender further agrees to execute and deliver to Senior Lender such
assignments or other instruments as may be required by Senior Lender in order to
enable Senior Lender to enforce any and all claims, and to collect any and all
payments or disbursements which may be made, on account of all or any of the
Subordinated Debt.
Without limitation to the rights provided to Senior Lender in the
preceding paragraph, and subject to the rights of Subordinate Lender pursuant to
subparagraph (a) above. Subordinate Lender hereby irrevocably (i) grants Senior
Lender the right (in Senior Lender's name or in the name of Subordinate Lender)
to exercise any and all rights of Subordinate Lender in any Bankruptcy Action to
make elections with respect to the Subordinated Debt including, without
limitation, elections with respect to any proposed plan of reorganization, (ii)
agrees to consent to any motion made by or on behalf of Senior Lender in any
Bankruptcy Action for relief against any stay or injunction therein against
collection of Senior Lender's Debt, including, but not limited to, any motion
made by or on behalf of Senior Lender therein to lift such stay or injunction
for the purposes of any foreclosure proceeding, and (iii) makes, constitutes and
appoints Senior Lender its attorney-in-fact with full power to appoint
substitutes or a trustee to accomplish the purposes of this Section 3 (which
power of attorney shall be deemed to be coupled with an interest, shall survive
the voluntary or involuntary dissolution of Subordinate Lender, and shall not be
affected by any disabilities or incapacity suffered by Borrower subsequent to
the date hereof).
4. Receipt of Payments. Subordinate Lender agrees that any payments
-------------------
or proceeds received by Subordinate Lender in contravention of the terms and
provisions of this Agreement will be deemed to be held in trust for Senior
Lender and promptly delivered to Senior Lender.
5. No Assignment, Modification or Participation. So long as any of
--------------------------------------------
Senior Lender's Debt remains outstanding, Subordinate Lender hereby agrees not
to assign, transfer, pledge or grant participations in any rights, claims or
interests of any kind in or to the
-3-
<PAGE>
Subordinated Debt without first obtaining Senior Lender's prior written consent.
Any such transfer, assignment or pledge without Senior Lender's consent shall be
void.
6. Subordination Continuing. This is a continuing agreement of
------------------------
subordination, and Senior Lender may continue, without notice to holders of the
Subordinated Debt, to extend credit or other accommodations or benefits and loan
money to or for the account of Borrower on the faith hereof until the Senior
Lender's Debt has been paid in full. It is further understood and agreed that
Senior Lender may at any time, in Senior Lender's discretion, amend or otherwise
modify any of the terms or provisions of the Senior Loan Agreement and any other
documents evidencing, securing and/or guarantying the Senior Loan, renew or
extend the time of payment of all or any portion of Senior Lender's Debt, waive
or release any collateral which may be held therefor or release any party
directly or indirectly liable for payment of any portion of Senior Lender's Debt
at any time, and in furtherance thereof make and enter into any agreements
Senior Lender deems proper or desirable, without notice to or further assent
from the Subordinate Lender, without in any manner impairing or affecting this
Agreement or Senior Lender's rights hereunder.
7. Governing Law. This Agreement shall be deemed to be governed,
-------------
construed, applied and enforced in accordance with the laws of the State of
California and the applicable laws of the United States of America.
8. No Oral Change. This Agreement, and any provisions hereof, may
--------------
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Subordinate Lender or
Senior Lender, but only by an agreement in writing signed by the party against
whom enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.
9. Liability. If Subordinate Lender consists of more than one
---------
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Agreement shall be binding upon an inure to the benefit
of Subordinate Lender and Senior Lender and their respective successors an
assigns forever.
10. Inapplicable Provisions. If any term, covenant or condition of
-----------------------
this Agreement is held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such provision.
11. Headings, etc. The headings and captions of various paragraphs
-------------
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting in any way the scope or intent of the
provisions hereof.
12. Duplicate Originals; Counterparts. This Agreement may be
---------------------------------
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which shall be deemed an original instrument and all of
which together shall constitute a single Agreement. The failure of any party
hereto to execute this Agreement, or any counterpart hereof, shall not relieve
the other signatories from their obligations hereunder.
-4-
<PAGE>
13. Number and Gender. Whenever the context may require, any
-----------------
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
14. Miscellaneous. Whenever pursuant to this Agreement (a) Senior
-------------
Lender exercises any right given to it to approve or disapprove, (b) any
arrangement or term is to be satisfactory to Senior Lender, or (c) any other
decision or determination is to be made by Senior Lender, the decision of Senior
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations made
by Senior Lender, shall be exercised by Senior Lender in its sole discretion and
shall be final and conclusive.
IN WITNESS WHEREOF Subordinate Lender and Senior Lender have executed
this Agreement as of the date and year first written above.
SUBORDINATE LENDER:
CAPSTONE CAPITAL, LLC,
a Delaware limited liability company
By:
-------------------------------------
Joseph F. Ingrassia
Managing Member
SENIOR LENDER:
CONVENIENCE STORE FINANCE COMPANY, LLC
a Delaware limited liability company
By: /s/ Eric J. [illegible]
-------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED TO THIS
2 DAY OF OCTOBER, 1999
- -
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-----------------------------------
Name: John D. Castelluci
Title: President
-5-
<PAGE>
IN WITNESS WHEREOF Subordinate Lender and Senior Lender have executed
this Agreement as of the date and year first written above.
SUBORDINATE LENDER:
CAPSTONE CAPITAL, LLC,
a Delaware limited liability company
By: /s/ Joseph Ingrassia
-------------------------------------
Joseph F. Ingrassia
Managing Member
SENIOR LENDER:
CONVENIENCE STORE FINANCE COMPANY, LLC
a Delaware limited liability company
By:
--------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED TO THIS
DAY OF OCTOBER, 1999
- ---
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By:____________________________
Name:
Title:
-6-
<PAGE>
EXHIBIT A
---------
Description of Collateral
(to be attached)
-7-
<PAGE>
EXHIBIT B
---------
3817 W. Third Street, Los Angeles, CA
366 N. San Gabriel Blvd., Rosemead, CA
702 W. Broadway Road, Phoenix, AZ
4100 California Avenue, Bakersfield, CA
13001 Stockdale Hwy., Bakersfield, CA
64200 20th Street/P.O. Box 938 N. Palms Springs, CA
240 Commerce Drive, Mammoth Lakes, CA
16096 Slover Avenue, Fontana, CA
-8-
<PAGE>
Exhibit 10.51
Loan # 250
LOAN AND SECURITY AGREEMENT
made by
LLO-GAS, INC.,
a Delaware corporation,
as Borrower
in favor of
CONVENIENCE STORE FINANCE COMPANY, LLC,
its successors and assigns, as Secured Party
Dated: October 26, 1999
<PAGE>
LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
INDEX ITEM Page
- ---------- ----
<S> <C>
Preliminary Statement
1. GRANT
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 Borrower's Name
2.2 Location of Borrower, Business and Collateral; Inspection
2.3 Organization; Chief Executive Office; Affiliates
2.4 No Change in Name, Location or Corporate Structure
2.5 Power and Authority
2.6 Due Execution and Delivery, Enforceability
2.7 Operating Experience
2.8 Financial Coverages
2.9 Limitation on Indebtedness and Lease Obligations
2.10 Title; No Liens, Claims or Encumbrances
2.11 No Further Disposition or Encumbrances
2.12 Principal Agreements
2.13 Encumbrance of Principal Agreements
2.14 Financing Statements; Perfected Security Interest
2.15 No Conflict
2.16 No Consent Required
2.17 Purpose for Loans
2.18 Compliance Certificates; Reports; Communications.
2.19 Accuracy of Information
2.20 Maintenance of Collateral and Business; Casualty and Condemnation
2.21 Insurance
2.22 Compliance with Laws; No Violation; Indemnity
2.23 Subsidiaries
2.24 Tax Returns
2.25 Litigation
2.26 Credit Card Agreements
</TABLE>
<PAGE>
2.27 Purchase Agreement; Bring Down of Representations; Survival of
Warranties; Cumulative
2.28 Capitalization; Solvency
2.29 Maintenance of Existence
2.30 Notice of Material Adverse Changes
2.31 Sale of Assets, Consolidation, Merger, Dissolution, Etc
2.32 Encumbrances
2.33 Indebtedness
2.34 Loans, Investments, Guarantees, Etc.
2.35 Distributions and Redemptions
2.36 Transactions with Affiliates
2.37 INTENTIONALLY OMITTED.
2.38 Deposit Accounts
2.39 Payments
2.40 Costs and Expenses
3. SPECIAL PROVISIONS ON COLLATERAL
3.1 New Collateral Locations; Right of First Refusal
3.2 Accounts
3.3 Inventory Covenants
3.4 Equipment Covenants
3.5 Power of Attorney
3.6 Right to Cure
3.7 Access to Premises
4. SPECIAL PROVISIONS CONCERNING COLLATERAL REVENUES
5. SPECIAL PROVISIONS CONCERNING RIGHTS AND DUTIES WHILE IN POSSESSION OF
COLLATERAL
5.1 Borrower's Possession
5.2 Secured Party's Possession
6. EVENTS OF DEFAULT
6.1 Nonpayment, default, breach, etc.
6.1.3 Other defaults of Borrower and other liable parties
7. REMEDIES
7.1 Cumulative Rights and Remedies
7.2 Acceleration of Obligations
<PAGE>
7.3 Additional Rights of Secured Party
7.4 Application of Proceeds; Deficiency
7.5 Required Notice of Sale
8. POST-DEFAULT POWER OF ATTORNEY
9. HEIRS, SUCCESSORS AND ASSIGNS
10. INDEMNIFICATION
11. OBLIGATIONS AND SECURITY INTEREST ABSOLUTE
12. ASSIGNMENT
13. FURTHER ASSURANCES
14. TERM
15. MISCELLANEOUS
15.1 Entire Agreement.
15.2 Notices
15.3 Reasonableness
15.4 Recovery of Sums Required To Be Paid
15.5 WAIVERS
15.6 WAIVER OF TRIAL BY JURY
15.7 Waiver of Notices
15.8 Relationship
15.9 Waiver of Counterclaims
15.10 No Conflict with Principal Agreements
15.11 Time is of the Essence
15.12 Limitation on Interest
15.13 Governing Law; Binding Effect
15.14 Severability
15.15 Counterparts; Captions; Construction
SIGNATURE PAGE
Schedules List
Exhibits List
<PAGE>
SCHEDULES LIST
--------------
DEFINITIONS SCHEDULE
INFORMATION SCHEDULE
SPECIFIED MARKET SCHEDULE
SCHEDULE 2.3 AFFILIATES
SCHEDULE 2.14 FILING OFFICES
SCHEDULE 2.23 SUBSIDIARIES
SCHEDULE 2.26 CREDIT CARD AGREEMENTS
SCHEDULE 2.31 SALE OF ASSETS
SCHEDULE 2.38 LOCAL BANKS
<PAGE>
EXHIBITS LIST
-------------
EXHIBIT A Secured Promissory Note (Preliminary Statement)
EXHIBIT B Schedule of Notes and Properties (Preliminary Statement)
EXHIBIT C Current Filings (? 2.10)
EXHIBIT D Principal Agreements (? 2.12)
EXHIBIT E Compliance Certificate (? 2.18)
EXHIBIT F Local Bank Direction Letters (? 2.38)
EXHIBIT H Financing Statements (on Form UCC-1)
<PAGE>
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURITY AGREEMENT
- --------------------------------------------------------------------------------
Date of Loan Agreement: October 26, 1999
- --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- --------------------------------------------------------------------------------
Property: 3817 W. Third Street, Los Angeles, CA
3366 N. San Gabriel Blvd., Rosemead, CA
702 W. Broadway Road, Phoenix, AZ
4100 California Avenue, Bakersfield, CA
13001 Stockdale Hwy., Bakersfield, CA
64200 20/th/ Street/P.O. Box 938 N. Palms Springs, CA
240 Commerce Drive, Mammoth Lakes, CA
16096 Slover Avenue, Fontana, CA
- --------------------------------------------------------------------------------
Secured Party: CONVENIENCE STORE FINANCE COMPANY, LLC, together with
its successor and assigns
- --------------------------------------------------------------------------------
<PAGE>
CSFC Loan # 250
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Loan Agreement"), dated as of
October __, 1999, made by LLO-GAS, INC., a Delaware corporation, as borrower
("Borrower"), in favor of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware
limited liability company, as secured party (together with its successors and
assigns, "Secured Party").
Preliminary Statement
---------------------
Borrower has requested that Secured Party make one or more loans to
Borrower in the aggregate principal amount of SEVEN MILLION EIGHT HUNDRED
THOUSAND DOLLARS ($7,800,000.00) (collectively, the "Loan") and Borrower has
agreed to evidence such Loan by executing and delivering to Secured Party one or
more Secured Promissory Notes in the form of EXHIBIT A attached hereto, and in
---------
the original principal amounts set forth on EXHIBIT B attached hereto (each a
---------
"Note", and collectively, the "Notes") made payable to Secured Party in said
original principal amounts and for the term and on the terms and conditions set
forth therein. The Notes shall be secured by one or more deeds of trust,
mortgages and/or deeds to secure debt on the commercial properties (each a
"Property" and collectively, the "Properties") with the addresses and in the
counties and states set forth on EXHIBIT B and on the INFORMATION SCHEDULE
---------
annexed hereto. In addition, and as a condition to the making of the Loan,
Secured Party has requested, and Borrower has agreed, among other things, to
grant to Secured Party a security interest in the Collateral (as defined below).
The terms used herein (whether or not capitalized) have the meanings accorded
such terms in the text hereof and in the DEFINITIONS SCHEDULE attached hereto
and made a part hereof and, to the extent not inconsistent therewith, the UCC.
Pursuant to that certain Security Agreement (the "Subordinate Loan
Agreement") dated as of October ___, 1999 by and between Borrower and Capstone
Capital, LLC, a Delaware limited liability company ("Subordinate Lender"),
Subordinate Lender has or may provide certain loans to Borrower in the principal
amount of $________________ (the "Subordinate Loan").
Pursuant to that certain Intercreditor Agreement (the "Intercreditor
Agreement") dated as of October ___, 1999 by and between Subordinate Lender and
Secured Party, Secured Party will allow Subordinate Lender to take a senior
security interest only in the Petroleum Inventory (as defined in the
Intercreditor Agreement).
In consideration of the foregoing, the benefits accruing to Borrower and
for other good and valuable consideration, the receipt and sufficiency of which
Borrower hereby acknowledges,
<PAGE>
Borrower hereby makes the following representations and warranties to Secured
Party and covenants and agrees with Secured Party as follows:
1. GRANT. To secure the Obligations, Borrower hereby pledges, assigns,
-----
transfers and grants to Secured Party a continuing security interest in and Lien
on and right of set off with respect to the following property and assets,
whether now owned and existing or hereafter acquired or arising (collectively
"Collateral"): all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of credit,
bankers' acceptances, guaranties, credits, claims, choses in action, demands,
and all present and future Liens, security interests, rights, insurance,
remedies, title and interest in, to and in respect of Accounts and other
property of every kind and description and all other personal property, now or
hereafter owned, acquired, existing, arising, held, used, sold or consumed in
connection with Borrower's Business or Property and any other property, rights
and interests of Borrower which at any time relate to, arise out of or in
connection with the foregoing or which shall come into the possession or custody
or under the control of Secured Party or any of its agents or representatives,
for any purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements and
improvements of or to any or all of the foregoing, all interest, income,
dividends, distributions and earnings thereon or other monies or revenues
derived therefrom, and all moneys which may become payable under any policy
insuring any of the foregoing or otherwise required to be maintained hereunder
(including the return of unearned premiums) ("Collateral Revenues"); and all
products and proceeds of the foregoing. In the event and to the extent that at
the request of the Secured Party under Section 2.13 hereof, Borrower shall
pledge and grant a security interest in its right, title and interest in and to
the Principal Agreements (as hereinafter defined), then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest in
and to the Principal Agreements, and all proceeds thereof. Without limiting the
generality of the foregoing, this Loan Agreement also secures the payment of all
amounts which constitute part of the Obligations and would be owed by the
Borrower to the Secured Party but for the fact they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.
The Borrower hereby acknowledges and agrees that, in applying the law of
any jurisdiction that has now or hereinafter enacted all or substantially all of
the uniform revision of Article 8 of the Uniform Commercial Code, with new
provisions added to Article 9 contemplated by such revision, all as approved in
1994 by the American Law Institute and the National Conference of Commissioners
on Uniform State Laws, the foregoing collateral description shall be deemed to
include "investment property" as defined in such new provision of Article 9, it
being the intention of the Borrower that such collateral be included in the
foregoing collateral description, whether prior to or after the effectiveness of
such revision in such jurisdiction.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower hereby
-----------------------------------------
represents, warrants and covenants that:
2
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2.1 Borrower's Name. Each of Borrower's legal name, trade name(s),
---------------
if any, federal taxpayer identification number, and mailing address is
accurately set forth on the INFORMATION SCHEDULE annexed hereto and made a part
hereof. Except as disclosed on such INFORMATION SCHEDULE, Borrower has not
merged with or into, otherwise consolidated with, or acquired all or
substantially all of the assets of, any Person or used any other name (whether
in connection with the Business or the Collateral or for business, obtaining
credit or financing or otherwise) in the last twelve years.
2.2 Location of Borrower, Business and Collateral; Inspection.
---------------------------------------------------------
Under its legal name, Borrower is and shall continue to be engaged in the
business of operating convenience stores and/or gasoline stations (the
"Business") at each of the Properties with the addresses, in the Counties and
States set forth on the INFORMATION SCHEDULE annexed hereto, and, under its
legal name (or trade name(s), if any, referenced on such INFORMATION SCHEDULE).
The INFORMATION SCHEDULE annexed hereto correctly discloses either that Borrower
(i) is the sole record owner of a Property or (ii) leases (or subleases) a
Property and the record owner of each Property is the person disclosed on such
INFORMATION SCHEDULE. Borrower has provided to Secured Party a true, correct
and complete copy of every Lease and the terms of such Lease or Lease(s) are
accurately summarized in the INFORMATION SCHEDULE annexed hereto. All personal
property of Borrower owned, acquired, held, used, sold or consumed in the
Business, including the Collateral, and all writings relating thereto and
Records, employees, business, offices and operations, are located at and
conducted out of such Properties or at its chief executive office. Borrower
shall allow Secured Party, its agents and representatives, from time to time, to
inspect during normal business hours the Collateral, the Properties and
Borrower's Records pertaining thereto or otherwise to the Business, and Borrower
will assist (and permit abstracts and photocopies of Borrower's Records to be
taken and retained by) Secured Party, its agents and representatives in making
any such inspection. Secured Party shall have the right to review, monitor and,
upon reasonable notice, inspect Borrower's operations with respect to compliance
with Environmental Laws and conformity to sound environmental management
practices and to make recommendations to Borrower with respect thereto.
2.3 Organization; Chief Executive Office; Affiliates. Borrower is
------------------------------------------------
and will continue to be duly organized, validly existing and in good standing
under the laws of the state of its organization. Borrower is and will continue
to be duly qualified to do business and is in good standing in each jurisdiction
where it conducts its Business or where any Property is located. Borrower has
not failed and shall not fail to qualify to do business and be and remain in
good standing in any jurisdiction where such qualification or standing is
necessary, required or proper in connection with Borrower's ownership or use of
the Collateral or the Properties or the conduct of its Business. Borrower's
chief executive office address is accurately set forth on the INFORMATION
SCHEDULE annexed hereto. SCHEDULE 2.3 hereto contains and will continue to
contain a complete and accurate list of all of Borrower's Affiliates who have
executed and delivered any note, security agreement, guarantee or other loan
document to Secured Party.
2.4 No Change in Name, Location or Corporate Structure. Without
--------------------------------------------------
the prior written consent of Secured Party, Borrower will not change its name,
federal taxpayer identification number, or its chief executive office, nor the
location of any of its Business,
3
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Properties or Collateral, nor assume a different name, nor conduct its business
or affairs under any other name or in any other location, nor merge,
consolidate, or change its structure (whether by equity sale, issuance, purchase
or otherwise), nor change its use of any item of Collateral during the term
hereof.
2.5 Power and Authority. Borrower has full power, authority and the
-------------------
legal right and all necessary permits, consents, licenses and authorizations to
own the Collateral, conduct its Business (including, without limitation, the
sale of nationally and/or regionally branded petroleum products pursuant to one
or more Principal Agreements) and own or lease the Properties. Borrower has full
power, authority and the legal right and all necessary permits, consents,
licenses and authorizations to execute, deliver and perform its obligations
under this Loan Agreement, each Note and the other Loan Documents.
2.6 Due Execution and Delivery, Enforceability. This Loan Agreement,
------------------------------------------
each Note and the other Loan Documents have been duly and validly executed and
delivered by Borrower. Each of this Loan Agreement, the Notes and other Loan
Documents constitutes Borrower's legal, valid and binding obligation,
enforceable against Borrower in accordance with its terms.
2.7 Operating Experience. The individuals with primary responsibility
--------------------
for on-site management at each Property have and shall have, in the aggregate,
an average of not less than three (3) years experience operating the Business or
a business substantially similar to the Business and no individual with primary
responsibility for on-site management at any Property has or shall have less
than three (3) years experience operating the Business or a business
substantially similar to the Business. In addition, (i) Borrower's Businesses at
the Properties have each been operating for not less than twelve (12) months,
and (ii) the operating statements for the Business at all Properties, in the
aggregate, demonstrate that the per store average operating cash flow is
sufficient to make the per store average monthly payment on the Obligations,
Principal Agreements, Leases and projected operating expenses.
2.8 Financial Coverages. During the term of this Loan Agreement,
--------------------
Borrower shall maintain (i) with respect to each Property securing a Loan, (x)
FCCR at not less than 1.10:1.00 ("Minimum Unit Level FCCR") and (y) DSCR at not
less than 1.10:1.00 ("Minimum Unit Level DSCR"), (ii) with respect to all
Properties securing Loans on a consolidated basis, (x) FCCR at not less than
1.30:1.00 ("Minimum Consolidated FCCR") and (y) DSCR at not less than 1.30:1.00
("Minimum Consolidated DSCR"), and (iii) with respect to all of the Borrower's
operations including, without limitation, all of the Properties securing Loans
and the Business (collectively, "Borrower's Corporate Operations"), (x) FCCR at
not less than 1.20:1.00 ("Minimum Corporate FCCR") and (y) DSCR at not less than
1.20:1.00 ("Minimum Corporate DSCR"). On the Date of the Note, after giving
effect to the Obligations, (i) FCCR and DSCR with respect to each Property
securing a Loan are not less than the Minimum Unit Level FCCR and Minimum Unit
Level DSCR, respectively, (ii) FCCR and DSCR with respect to all Properties
securing Loans are not less than the Minimum Consolidated FCCR and Minimum
Consolidated DSCR, respectively, and (iii) FCCR and DSCR with respect to
Borrower's Corporate Operations are not less than the Minimum Corporate FCCR and
4
<PAGE>
Minimum Corporate DSCR, respectively. All calculations of FCCR and DSCR shall
be based upon the financial information furnished by Borrower hereunder (see
Sections 2.18 and 2.19 hereof) for the most recent twelve (12) month period.
2.9 Limitation on Indebtedness and Lease Obligations. Borrower shall
------------------------------------------------
not, directly or indirectly, incur any Indebtedness or Lease Obligations or
become obligated to make any payments (including any Payments to Affiliates) if,
after giving effect to such incurrence or payments, FCCR or DSCR would be less
than any of Minimum Unit Level FCCR, Minimum Unit Level DSCR, Minimum
Consolidated FCCR, Minimum Consolidated DSCR, Minimum Corporate FCCR or Minimum
Corporate DSCR.
2.10 Title; No Liens, Claims or Encumbrances. Borrower has maintained
---------------------------------------
and will at all times maintain good and marketable title to the Collateral free
of all Liens, claims, encumbrances or rights of others (other than the security
interest granted to Secured Party hereunder and to the extent of the Permitted
Encumbrances) and such Collateral is sufficient to enable Borrower to operate
the Business at each Property in accordance with each of the Principal
Agreements. Except as reflected on the UCC Search attached hereto as EXHIBIT C
---------
("Current Filings"), there is no financing statement (or similar statement,
agreement, pledge, mortgage, notice or registration), Lien (including any
federal or state tax lien), suit (including any action, proceeding, or other
litigation pending, or to Borrower's knowledge, threatened) or judgment
(including any award, injunction or order) filed with, registered, indexed or
recorded in any public office, court, arbitration panel, administrative agency
or regulatory authority (or intended so to be), directly or indirectly,
identifying or encumbering or covering or involving the Collateral or any of the
Principal Agreements or which could materially affect Borrower, its Business,
any of the Properties or its ability to perform its Obligations. Prior to or
concurrently with the funding of the Loan, Borrower shall take all actions
necessary to terminate all Current Filings other than those consented to by
Secured Party and relating solely to Permitted Encumbrances, if any.
2.11 No Further Disposition or Encumbrances. Other than with respect
--------------------------------------
to the interest granted in favor of Secured Party, the Permitted Encumbrances,
and except as provided in Section 3 hereof, Borrower has not and will not enter
into any agreement or understanding or take, permit or suffer to exist any
action (including the filing of a financing statement, agreement, pledge,
mortgage, notice or registration) or event (whether by operation of law or
otherwise) for the purpose of, or that may have the effect of, directly or
indirectly, granting a security interest in or Lien on (including any state or
federal tax lien except to the extent permitted by Section 2.24 hereof),
pledging, transferring, assigning, selling, disposing of, or encumbering any
Collateral, any interest therein or rights pertaining thereto or involving the
Business, or which otherwise would constitute a "Transfer", as defined in the
Mortgages.
2.12 Principal Agreements. The (i) agreements attached as EXHIBIT D
-------------------- ---------
hereto between Borrower and the other parties specified therein (together with
all replacements therefor in accordance with this Section 2.12, each a
"Principal Agreement"), and (ii) Leases are each in full force and effect in
accordance with their respective terms and neither Borrower or the other parties
thereto have breached or are otherwise in default thereunder. Until such time as
the
5
<PAGE>
Obligations have been paid in full in cash and otherwise fully satisfied,
Borrower agrees to make one or more timely elections to renew the term of each
of the Principal Agreements and each of the Leases in accordance with its terms
and shall use its best efforts to satisfy any and all conditions to any such
renewal, and to obtain, procure, execute and deliver, file and affix such
further agreements, instruments, documents, notices, statements, writings,
powers and information, and to do or cause to be done all such further acts and
things as Secured Party may reasonably request, from time to time, in its
discretion, in connection with the Obligations. In addition to the foregoing,
Borrower shall not terminate, breach or be in default under, or suffer any of
the foregoing to exist under or with respect to, any of the Principal Agreements
or any Lease and Borrower has no knowledge of any claim of (or basis for any
claim of) any such termination, nonrenewal, breach or default. However,
notwithstanding the foregoing, Borrower shall be permitted to replace each of
the Principal Agreements with a substantially similar agreement or agreement
with terms and conditions more advantageous in all material respects to
Borrower, so long as (i) Borrower shall provide Secured Party with at least
thirty (30) days' prior written notice of such replacement, (ii) such
replacement shall be in form and substance reasonably satisfactory to Secured
Party, (iii) in any event, under all circumstances and at all times, Borrower
shall have in effect one or more Principal Agreements which provide for the sale
by Borrower at each Property of nationally or regionally branded petroleum
products acceptable to Secured Party and (iv) Borrower shall provide Secured
Party with such other information as Secured Party shall request; provided,
--------
however, that the replacement of any of the foregoing agreements with a new
- -------
agreement shall not itself be deemed to cure a breach under Section 6.1.1(iii)
hereof. Borrower agrees to comply fully, at Borrower's own cost and expense,
with the terms of the each of the Principal Agreements and to notify promptly
Secured Party of any adverse development of which Borrower becomes aware with
regard to any Principal Agreement, including any claim of breach of or default
under, or threat of nonrenewal or termination of, or litigation involving any
Principal Agreement.
2.13 Encumbrance of Principal Agreements. Borrower agrees that if
-----------------------------------
Borrower is permitted by the terms thereof to grant a security interest in any
Principal Agreement to Secured Party to secure the Obligations, then at Secured
Party's request, Borrower shall grant such security interest in favor of Secured
Party and shall promptly obtain, procure, execute and deliver, file and affix
such further agreements (including modification of this Loan Agreement),
assignments, instruments, documents, notices, statements, writings (including
financing statements), powers (including stock and bond powers, and powers of
attorney), tax stamps and information, and shall do or cause to be done all such
further acts and things (including the execution, delivery and filing of
financing statements on Form UCC-1) as Secured Party may reasonably request,
from time to time, in its discretion, to evidence and perfect such security
interest or otherwise in connection with such security interest and the
perfection thereof. Without limiting the foregoing, Borrower authorizes Secured
Party, to the extent permitted by law, to execute and file or file without
Borrower's signature, any and all financing statements (including a copy of this
Loan Agreement which shall be sufficient as a financing statement), amendments
thereto and continuations thereof as Secured Party deems necessary or
appropriate in connection therewith.
6
<PAGE>
2.14 Financing Statements; Perfected Security Interest. The execution
-------------------------------------------------
and filing of the Financing Statements has been duly authorized by all
appropriate action on the part of Borrower (and any other Person named as debtor
therein) and Borrower (and any other Person named as debtor therein) has duly
executed the Financing Statements. The execution and delivery of this Loan
Agreement and the grant hereunder creates a valid security interest in the
Collateral which has attached and is enforceable. The filing offices set forth
on SCHEDULE 2.14 hereto ("Filing Offices") and made a part hereof are the only
offices where financing statements are required to be filed in order to perfect
such security interest in all Goods (including Inventory and Equipment), General
Intangibles, Accounts, fixtures, investment property, chattel paper and other
personal property included in the Collateral in which a security interest can be
perfected under the UCC by the filing of a financing statement ("Filing
Collateral"). The Secured Party's security interest in all Collateral is a first
priority security interest, and upon the filing of the financing statements with
respect to the Filing Collateral, and upon delivery into Secured Party's
possession of other Collateral in which a security interest can be perfected
under the UCC by obtaining possession, Secured Party's security interest therein
will be a perfected first priority security interest subject to no other
security interest, Liens or encumbrances other than and only then to the extent
of the Permitted Encumbrances.
2.15 No Conflict. Borrower's execution, delivery and consummation of
-----------
the transactions contemplated by this Loan Agreement, the Note and other Loan
Documents do not and will not (with the passage of time or otherwise) (i)
conflict with, violate or constitute a default under any law, rule, regulation,
order, decree, contract, agreement (including the Principal Agreements), note,
mortgage, bond, indenture, lease, license, organizational documents, or
obligation of or applicable to Borrower or the Collateral or (ii) grant, create
or result in any Lien, claim, encumbrance or right in favor of any Person (other
than Secured Party as contemplated hereby) on or to Borrower's Business,
Properties or other assets (including the Collateral and the Principal
Agreements).
2.16 No Consent Required. Except for the filing of the Financing
-------------------
Statements with the Filing Offices (and the recording of the Mortgages, if any),
no consent, authorization, approval, license, permit, registration, exemption,
filing, notice or declaration of, from, with or to any other Person or any
court, government, agency or regulatory authority is required prior to or
otherwise in connection with (x) Borrower's execution, delivery and performance
of this Loan Agreement, the Notes and other Loan Documents, (y) the grant of the
security interest hereunder, or (z) the validity, perfection and maintenance of
the security interest created hereby.
2.17 Purpose for Loans. Borrower does not intend to (and will not) use
-----------------
all or any portion of the Loan to purchase or carry any securities, including,
without limitation, Margin Stock. None of the proceeds of the Loan will be used,
directly or indirectly, for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any Margin Stock
or other security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulations G, U, T or X
of the Board of Governors of the Federal Reserve System, as amended. Borrower
intends to and agrees to use the proceeds of the Loan solely for the lawful,
proper business or commercial purposes set forth in its application for the
Loan. Borrower shall use the proceeds of the Loans provided by
7
<PAGE>
Secured Party to Borrower only for payments to each of the Persons listed in the
disbursement direction letter furnished by Borrower to Secured Party on or about
the date hereof including, without limitation, payments of the costs, expenses
and fees in connection with the preparation, negotiation, execution and delivery
of this Loan Agreement and the other Loan Documents, and for general operating,
working capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof.
2.18 Compliance Certificates; Reports; Communications.
------------------------------------------------
2.18.1 Borrower agrees to provide the following to Secured Party:
(i) within ten (10) days after the end of each month during the twelve (12)
month period after the Date of Note (as defined in the Notes), sales reports
(including year-to-date amount and any reports required under the Principal
Agreements) and Borrower's operating statements for each Property; (ii) within
thirty (30) days of March 31, June 30, September 30 and December 31 of each
calendar year during the term of this Loan Agreement, a Compliance Certificate
(in the form attached hereto as EXHIBIT E) and quarterly financial statements of
---------
Borrower certified by Borrower's chief financial officer which fairly present in
all material respects Borrower's financial condition and results of operations
for such period; and (iii) within seventy-five (75) days of December 31 of each
calendar year during the term of this Loan Agreement, a Compliance Certificate
and audited financial statements of Borrower together with the report thereon by
Borrower's Independent Accountants. Borrower further agrees to provide to
Secured Party (i) promptly following receipt by Borrower, complete copies of any
communications that are or may be materially adverse to, or which reflect
information which is or may be materially adverse to Borrower, its Business or
the Collateral and (ii) copies of such other reports and information, estoppels
and authorizations as Secured Party may from time to time reasonably request
promptly following any such request. The financial statements furnished to
Secured Party hereunder shall be prepared in accordance with GAAP applied on a
consistent basis and shall be sufficiently detailed to allow Secured Party to
calculate FCCR and DSCR and determine compliance with other financial covenants.
2.18.2 Borrower shall furnish or cause to be furnished to Secured
Party such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower (including the Business) as Secured
Party may, from time to time, reasonably request. Secured Party is hereby
authorized to deliver, from time to time, a copy of any financial statement or
any other information relating to the business of Borrower (including the
Business) to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Secured Party,
at Borrower's expense, copies of the financial statements of Borrower and any
reports or management letters prepared by such accountants or auditors on behalf
of Borrower and to disclose to Secured Party such information as they may have
regarding the business of Borrower (including the Business). Any documents,
schedules, invoices or other papers delivered to Secured Party may (but shall
not be required to) be destroyed or otherwise disposed of by Secured Party at
any time after the same are delivered to Secured Party, except as otherwise
designated by Borrower to Secured Party in writing.
8
<PAGE>
2.18.3 Borrower shall on or before the date of execution of this
Loan Agreement have delivered to Secured Party financial statements of Borrower
for the twelve (12) month period preceding the date hereof in form consistent
with that required for annual financial statements as set forth in Section
2.18.1 hereof. In addition, if requested by Secured Party, Borrower shall
deliver, or cause to be delivered, to Secured Party, within thirty (30) days
after the date of this Loan Agreement, a balance sheet of Borrower, prepared by
Borrower's Independent Accountant in accordance with GAAP, which shall present
fairly in all material respects the financial condition of Borrower as of the
Date of Note after giving effect to the Loan and all other transactions
contemplated hereby and thereby.
2.19 Accuracy of Information. All information, reports, statements
-----------------------
and financial and other data furnished (or hereafter furnished) by Borrower, its
Affiliates or their respective agents or representatives to Secured Party, its
agents or representatives hereunder or in connection with the Loan and the
Obligations, are (and shall be on the date so furnished) true, complete and
correct in all material respects, shall not contain any untrue statement of
material fact and shall not omit to state any fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which such statements are made. All financial projections
that have been or are hereafter prepared by or on behalf of Borrower, its
Affiliates or their respective agents or representatives have been and shall be
prepared in good faith and based upon reasonable assumptions. Borrower shall
promptly advise Secured Party when Borrower becomes aware that any assumptions
made in connection with any projections previously provided to Secured Party
prove to be incorrect or untrue in any material respect. No Event of Default (or
event which with the passage of time or the giving of notice or both would be an
Event of Default) has occurred and is continuing. To Borrower's knowledge, no
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse effect on the business, assets or prospects of
Borrower (including the Business) which has not been fully and accurately
disclosed to Secured Party in writing and reflected in the Borrower's financial
information and projections and in the Appraisal.
2.20 Maintenance of Collateral and Business; Casualty and
----------------------------------------------------
Condemnation. At Borrower's sole cost and expense, Borrower shall (i) keep, use,
- ------------
operate and maintain the Collateral, the Business and the Properties in
accordance with applicable laws, rules and regulations and in accordance with
the standards, if any, established by any of the Principal Agreements, (ii)
operate the Business at the Properties in accordance with each of the Principal
Agreements and customary, prudent business practices, (iii) at all times fully
comply with terms and provisions of each of the Principal Agreements and (iv)
not do or suffer to be done any act whereby the value of the Collateral, the
Properties or the Business or any part or interest therein may be lessened in
any material respect. Borrower shall notify Secured Party promptly of any actual
or threatened destruction or material damage or impairment of the Business, or
any of the Collateral or the Properties.
2.20.1 (i) In the event of any casualty or condemnation
proceedings or action with respect to any Property (a "Loss"), Borrower shall
give prompt written notice thereof to Secured Party. Any insurance proceeds or
awards with respect to such Loss in an amount
9
<PAGE>
greater than Ten Thousand Dollars ($10,000) (the "Loss Proceeds") shall be
payable to Secured Party. Borrower shall have no right to settle or compromise,
and shall not settle or compromise, any claim or proceeding relating to such
Loss or Loss Proceeds without Secured Party's consent. Borrower shall proceed
promptly and diligently to prosecute in good faith the settlement or compromise
of any and all claims or proceedings relating to such Loss or Loss Proceeds;
provided, however, any such settlement or compromise shall be subject to Secured
- -------- -------
Party's consent. Borrower hereby authorizes and directs any affected insurance
company and any affected governmental body responsible for a condemnation to
make payment of the Loss Proceeds directly to Secured Party. If Borrower
receives any Loss Proceeds, Borrower shall promptly pay over such Loss Proceeds
to Secured Party. Borrower hereby covenants that until such Loss Proceeds are so
paid over to Secured Party, Borrower shall hold such Loss Proceeds in trust for
the benefit of Lender and shall not commingle such Loss Proceeds with any other
funds or assets of Borrower or any other party.
(ii) Borrower hereby irrevocably assigns to Secured Party all
Loss Proceeds to which Borrower may become entitled if a Loss occurs (regardless
of whether Borrower was obligated hereunder to obtain the insurance policy or
policies from which such Loss Proceeds are derived). All Loss Proceeds shall be
paid to Secured Party and applied pursuant to this Section 2.20.1. Subject to
the last sentence of this Section 2.20.1(ii), Borrower shall take all
appropriate action in connection with each such proceeding, settlement and
adjustment and shall pay all expenses thereof, including, if Secured Party shall
elect to participate therein, the cost of Secured Party's participation;
provided, however, that any final settlement or adjustment shall be subject to
- -------- -------
the prior written consent of Secured Party unless the Loss Proceeds are
sufficient to prepay the Obligations in full in cash. So long as an Event of
Default shall have occurred and be continuing, Secured Party may, at its option
and with respect to its interests as set forth herein, commence, appear in and
prosecute, in its own name, any such action or proceeding or make any compromise
or settlement in connection with such damage, destruction or taking and obtain
directly all Loss Proceeds.
(iii) So long as no Event of Default shall have occurred and be
continuing, if Borrower suffers a Loss, Borrower shall restore the Property (or,
in the case of a taking, the remaining Property) to the same condition, as
nearly as possible, as existed immediately prior to such casualty or taking,
whether or not the Loss Proceeds are sufficient therefor. If the cost of any
restoration made by Borrower pursuant to this Section 2.20.1 shall exceed the
amount of the Loss Proceeds, such deficiency shall be paid by Borrower. The
Loss Proceeds shall be held by Secured Party or its agent or representatives and
shall be disbursed to Borrower as hereinafter set forth, provided that if the
estimated cost of such restoration exceeds the amount of the Loss Proceeds,
Borrower shall deliver to Secured Party or its agent or representative the
estimated deficiency before commencing work. Secured Party or its agent or
representative shall release such Loss Proceeds to Borrower, subject to such
reasonable procedural requirements as Secured Party or its agent or
representative may prescribe, from time to time, and provided that such amounts
shall be disbursed not more often than once monthly, as the restoration
progresses, upon Borrower's written request, accompanied by a certificate of the
architect or engineer in charge of the restoration or by an authorized officer
or managing partner of Borrower, stating that the sum then requested either has
been paid by Borrower or is justly due to the named persons (whose
10
<PAGE>
addresses shall also be stated) who have rendered services or furnished
materials for certain portions of the restoration. The certificate shall give a
brief description of such services and materials, shall list the amounts so paid
or owing to each of such persons, shall state the estimated cost of the balance
of the work yet to be performed, and shall state that no part of such
expenditures has been or is being made the basis for any other request for
payment. Upon compliance with the foregoing, Secured Party or its agent shall
pay out of the Loss Proceeds to the extent available to the persons named in the
certificate the respective amounts stated to be due to them or shall pay to
Borrower the amount stated to have been paid by Borrower to such persons.
(iv) So long as an Event of Default shall have occurred and be
continuing, then such Loss Proceeds shall be applied at the option and direction
of Secured Party either to the restoration of the Property as set forth above or
to the prepayment of the outstanding Loan, together with all accrued and unpaid
interest.
2.21 Insurance. At Borrower's sole cost and expense, Borrower shall
---------
do the following:
(i) (a) keep the Collateral (which for purposes of this Section 2.21
shall be deemed to include the Properties) insured against loss or damage by
fire, theft, collision and other hazards (including flood, if no certification
or other evidence satisfactory to Secured Party is delivered to Secured Party to
the effect that the Property is not located within a federally designated
special flood hazard area) as may be required by the Principal Agreements and
Secured Party and by policies of fire, extended coverage and other insurance
with such company or companies, in such amounts and form (and, with respect to
policies required for property, fire and flood insurance in an amount not less
than the lesser of (A) the replacement value thereof and (B) the Maximum Loan
Amount), as may be required by the Principal Agreements or required by or
acceptable to Secured Party, but in no event less than the minimum amount
required to prevent the imposition of any coinsurance requirement on the
insured, (b) maintain liability insurance of not less than an amount reasonably
satisfactory to Secured Party, (c) maintain business interruption insurance with
scope and coverage reasonably satisfactory to Secured Party, and (d) maintain
such other insurance (including certain minimum levels of acceptable workers'
compensation, property damage, earthquake insurance and general public liability
insurance) as may be required by the Secured Party and Principal Agreements;
(ii) cause all insurance policies required hereunder (a) to be
maintained by providers either (A) having ratings of not less than A-VI from
A.M. Best Company Inc. (or comparable ratings from a comparable rating agency)
or (B) who, if not so rated, have been approved by Secured Party and (b) to
contain a standard non-contributory lender's loss payable endorsement or
mortgagee's endorsement in form and substance satisfactory to Secured Party
providing for payment directly to Secured Party and/or its designees and
providing for a minimum of 30-days notice to Secured Party prior to cancellation
or modification or nonrenewal and providing that Secured Party may act as
attorney for Borrower in obtaining, and at any time an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling
such insurance. Such lender's loss payable endorsements shall specify that the
11
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proceeds of such insurance shall be payable to Secured Party as its interests
may appear and further specify that Secured Party shall be paid regardless of
any act or omission by Borrower or any of its Affiliates;
(iii) timely pay all premiums, fees and charges required in connection
with all of its insurance policies and otherwise continue to maintain such
policies in full force and effect;
(iv) promptly deliver the insurance policies, certificates (and
renewals) thereof or other evidence of compliance herewith to Secured Party; and
(v) promptly notify Secured Party of any loss covered by or claim
under or notice made in connection with any such insurance policies. Borrower
shall allow Secured Party to join Borrower in adjusting any loss or claim in
excess of the Loss Proceeds. At its option, Secured Party may apply any
insurance proceeds received by Secured Party at any time to the cost of repairs
or replacement of Collateral and/or to payment of the Obligations, whether or
not then due, in any order and in such manner as Secured Party may determine or
hold such proceeds as cash collateral for the Obligations.
2.22 Compliance with Laws; No Violation; Indemnity.
---------------------------------------------
(i) Borrower is and shall continue to be in compliance in all
material respects with the requirements of all applicable laws, rules,
regulations, licenses, permits, approvals and orders of any governmental
authority relating to its business, including, without limitation, those set
forth in or promulgated pursuant to the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, the Internal
Revenue Code of 1986, as amended, and the rules and regulations thereunder, all
federal, state and local statutes, regulations, rules and orders relating to
consumer credit, all federal, state and local statutes, regulations, rules and
orders pertaining to sales of consumer goods (including, without limitation, the
Consumer Products Safety Act of 1972, as amended, and the Federal Trade
Commission Act of 1914, as amended and all regulations, rules and orders
promulgated thereunder). Borrower has obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any governmental
agency required for the lawful conduct of its business and is in compliance in
all material respects with the requirements of all applicable laws, rules,
regulations, orders, permits, approvals and stipulations of any governmental
agency (including, but not limited to, the Department of State, the Department
of Commerce, the Bureau of Alcohol, Tobacco and Firearms, and the Environmental
Protection Agency) relating to its business (including, without limitation,
those set forth in or promulgated pursuant to ERISA and those related to
environmental pollution and employee health and safety (including the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, the Code, and the Environmental Laws).
(ii) (a) Neither the Borrower nor any ERISA Affiliate (as
hereinafter defined) currently maintains or is obligated to contribute to an
employee benefit plan subject to ERISA (an "ERISA Plan"). Within the five-year
period ending on the date hereof, no ERISA Affiliate has incurred any material
liability to the U.S. Pension Benefit Guaranty Corporation (the
12
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"PBGC"), the U.S. Internal Revenue Service (the "IRS") or an ERISA Plan on
account of any failure to meet the contribution requirements or minimum funding
standards of, or prohibited transactions with respect to, any ERISA Plan, the
administration or termination of any single employer pension plan which is an
ERISA Plan, or any partial or complete withdrawal from, or the insolvency,
reorganization or termination of, a multiemployer plan which is an ERISA Plan,
and no event has occurred and no condition exists which presents a material risk
that the Borrower or any of its Affiliates will incur liabilities on account of
the foregoing circumstances which are material in aggregate. As used in this
Loan Agreement, the term "ERISA Affiliate" means the Borrower and every
---------------
Affiliate and any other trade or business, whether or not incorporated, which is
subject to ERISA and which is from time to time a member of a controlled group
or a group under common control with the Borrower (within the meaning of Section
414(b) or Section 414(c) of the Code or Section 4001(b)(1) of ERISA), and other
terms used in this Section 2.22 shall have the meanings assigned thereto in the
applicable provisions of ERISA and the Code.
(b) Solely for the purposes of making the representation in the next
sentence and only to the extent that the accuracy of the representation made by
this sentence affects the accuracy of the representation in the next sentence,
neither the Borrower nor any of its Affiliates is a "party in interest" (within
-----------------
the meaning of Section 3(14) of ERISA) with respect to any ERISA Plan, and none
of their securities are "employer securities" (within the meaning of Section
-------------------
407(d) of ERISA) with respect to any ERISA Plan. The acquisition of the Notes
by Secured Party does not and will not constitute a "prohibited transaction"
----------------------
(within the meaning of Section 4975 of the Code or Section 406 of ERISA).
(iii) Borrower has not and shall not acquire, obtain, make,
manufacture, produce, operate, hold, possess, maintain, use, sell, transfer,
grant, pledge, or dispose of (for purposes of this Section, collectively
"Borrower's Use") any of its business (including the Business), securities,
property or assets (including any proceeds of the Loan, any Collateral and the
Properties) in violation of any statute, law, rule, ordinance, regulation,
policy, procedure, injunction, award, decree, judgment, contract, agreement
(including the Principal Agreements), understanding, or right or interest of any
other Person (for purposes of this Section, collectively "Violation"), and to
Borrower's knowledge no such Violation has been made by any other Person and no
basis for a claim of any such violation exists. Borrower shall indemnify and
hold Secured Party harmless from and against any such Violation or any breach of
this Section 2.22, and any other loss, liability, damage, cost or expense
whatsoever (including attorneys fees and disbursements) arising out of or in
connection with Borrower's Use of any of its business (including the Business),
securities, property or assets (including any proceeds of the Loan, any
Collateral and the Properties). The indemnification provisions of this Section
2.22 shall survive the payment of the Obligations and the termination of this
Loan Agreement.
2.23 Subsidiaries. Borrower does not have any subsidiaries on the
------------
date hereof other than those listed on SCHEDULE 2.23 hereto and shall not,
during the term hereof, create or own any other subsidiaries without prior
notice to and written consent of Secured Party.
13
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2.24 Tax Returns. Borrower and each of its Affiliates and each
-----------
Person which might have tax liabilities for which Borrower or any Affiliates is
or may be liable (each, a "Tax Party") has filed, or caused to be filed, and
will continue to file in a timely manner all tax returns, reports and
declarations which are required to be filed by it (without requests for
extension). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each Tax Party has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, and has collected, deposited and remitted in
accordance with all applicable laws all sales and/or use taxes applicable to the
conduct of its business, except taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower and with respect to which adequate reserves have been set aside on its
books. No extensions of the time for the assessment of deficiencies have been
granted by any Tax Party. There are no material Liens on any properties or
assets of the Borrower or any of its Affiliates imposed or arising as a result
of the delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge. The income tax returns of the Borrower and its Affiliates
have been examined and reported upon by the relevant tax authorities, or closed
by applicable statutes of limitations, for all fiscal years through the fiscal
year ended immediately prior to the date of the Note, and neither the Borrower
nor any of its Affiliates nor any such entity has given or consented to any
waiver of the statute of limitations with respect to its tax liabilities for any
such year. Adequate provision has been made for the payment of all other
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed. Borrower has
collected and deposited in a segregated subaccount or remitted to the
appropriate tax authority all sales and/or use taxes applicable to its business
required to be collected under the laws of the United States and each possession
or territory thereof, and each State or political subdivision thereof, including
any State in which Borrower owns any Inventory or owns or leases any other
property, and Borrower knows of no transaction or matter which might or could
result in additional tax assessments to any Tax Party in the ordinary course.
There are no applicable taxes, fees or other governmental charges payable by any
Tax Party in connection with the execution and delivery of this Loan Agreement,
and the other Loan Documents by Borrower or any of its Affiliates or the offer,
issuance, sale and delivery of the Notes by Borrower. Borrower shall be liable
for any tax or penalties imposed on Secured Party as a result of the financing
arrangements provided for herein and Borrower agrees to indemnify and hold
Secured Party harmless with respect to the foregoing, and to repay to Secured
Party on demand the amount thereof, and until paid by Borrower such amount shall
be added to and deemed part of the Obligations, provided, that, nothing
-------- ----
contained herein shall be construed to require Borrower to pay any income or
franchise taxes attributable to the income of Secured Party from any amounts
charged or paid hereunder to Secured Party. The foregoing indemnity shall
survive the payment of the Obligations and the termination of this Loan
Agreement.
2.25 Litigation. Except as set forth on the INFORMATION SCHEDULE
----------
annexed hereto, there is no present investigation by any governmental agency
pending, or to the best of Borrower's knowledge threatened against or affecting
Borrower, its assets or Business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or Business, or against or affecting any
transactions contemplated by this Loan Agreement.
14
<PAGE>
2.26 Credit Card Agreements.
----------------------
2.26.1 Set forth in SCHEDULE 2.26 hereto is a correct and complete
list of (a) all of the Credit Card Agreements and all other agreements,
documents and instruments existing as of the date hereof between or among
Borrower, the Credit Card Issuers, the Credit Card Processors and any of their
affiliates, (b) the percentage of each sale payable to the Credit Card Issuer or
Credit Card Processor under the terms of the Credit Card Agreements, (c) all
other fees and charges payable by Borrower under or in connection with the
Credit Card Agreements and (d) the term of such Credit Card Agreements. The
Credit Card Agreements constitute all of such agreements necessary for Borrower
to operate its business as presently conducted with respect to credit cards and
debit cards and no Accounts of Borrower arise from purchases by customers of
Inventory with credit cards or debit cards, other than those which are issued by
Credit Card Issuers with whom Borrower has entered into one of the Credit Card
Agreements set forth on SCHEDULE 2.26 hereto. Each of the Credit Card
Agreements constitutes the legal, valid and binding obligation of Borrower and,
to the best of Borrower's knowledge, the other parties thereto, enforceable in
accordance with its terms and is in full force and effect. No default or event
of default, or act, condition or event which after notice or passage of time or
both, would constitute a default or an event of default under any of the Credit
Card Agreements, exists or has occurred. Borrower and, to Borrower's knowledge,
the other parties thereto have complied with all of the terms and conditions of
the Credit Card Agreements to the extent necessary for Borrower to be entitled
to receive all payments thereunder. Borrower has delivered, or caused to be
delivered, to Secured Party true, correct and complete copies of all of the
Credit Card Agreements.
2.26.2 Borrower shall: (a) observe and perform all material terms,
covenants, conditions and provisions of the Credit Card Agreements to be
observed and performed by it at the times set forth therein; (b) not do, permit,
suffer or refrain from doing anything, as a result of which there could be a
default under or breach of any of the terms of any of the Credit Card
Agreements; (c) at all times maintain in full force and effect the Credit Card
Agreements and not terminate, cancel, surrender, modify, amend, waive or release
any of the Credit Card Agreements, or consent to or permit to occur any of the
foregoing; except, that, Borrower may terminate or cancel any of the Credit Card
Agreements in the ordinary course of the business of Borrower provided that
Borrower shall give Secured Party not less than thirty (30) days' prior written
notice of its intention to so terminate or cancel any of the Credit Card
Agreements; (d) not enter into any new Credit Card Agreements with any new
Credit Card Issuer unless (i) Secured Party shall have received not less than
thirty (30) days prior written notice of the intention of Borrower to enter into
such agreement (together with such other information with respect thereto as
Secured Party may request) and (ii) if requested by Secured Party, Borrower
delivers, or causes to be delivered to Secured Party, a Credit Card
Acknowledgment in favor of Secured Party concurrently with entering into such
Credit Card Agreement; (e) give Secured Party immediate written notice of any
Credit Card Agreement entered into by Borrower after the date hereof, together
with a true, correct and complete copy thereof and such other information with
respect thereto as Secured Party may request; and (f) furnish to Secured Party,
promptly upon the request of Secured Party, such information and evidence as
Secured Party may
15
<PAGE>
reasonably require from time to time concerning the observance, performance and
compliance by Borrower or the other party or parties thereto with the terms,
covenants or provisions of the Credit Card Agreements. Borrower shall notify
Secured Party promptly of: (i) any material default by Borrower under any of the
Credit Card Agreements or of any default which might result in the Credit Card
Issuer or Credit Card Processor ceasing to make payments or suspending payments
to Borrower; (ii) any notice from any Credit Card Issuer or Credit Card
Processor that such Person is ceasing or suspending, or will cease or suspend,
any present or future payments due or to become due to Borrower from such
Person, or that such Person is terminating or will terminate any of the Credit
Card Agreements; and (iii) the failure of Borrower to comply with any material
terms of the Credit Card Agreements or any terms thereof which might result in
the Credit Card Issuer or Credit Card Processor ceasing or suspending payments
to Borrower.
2.27 Purchase Agreement; Bring Down of Representations; Survival of
--------------------------------------------------------------
Warranties; Cumulative. Borrower will cooperate with Secured Party in connection
- ----------------------
with any sale or other disposition of the Loan by Secured Party and the
provisions of the Commitment with respect thereto are hereby incorporated by
reference as if set forth herein in their entirety. In this regard, Borrower
hereby covenants and agrees to execute and deliver in connection with the sale
or other disposition of the Loan, or any interest therein, at such time and from
time to time, as required by Secured Party, a purchase agreement and such other
agreements, documents, estoppels, consents or instruments as Secured Party may,
from time to time, reasonably request in connection with any such disposition,
including certificates reaffirming the representations and covenants of Borrower
hereunder as if made on the date of any such reaffirmation. All representations
and warranties contained in this Loan Agreement or any of the other Loan
Documents shall survive the execution and delivery of this Loan Agreement and
shall be deemed to have been made again to Secured Party on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Secured Party regardless of any
investigation made or information possessed by Secured Party. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Secured Party.
2.28 Capitalization; Solvency.
------------------------
2.28.1 All of the issued and outstanding capital stock of Borrower
is directly and beneficially owned and held by the Person identified on the
INFORMATION SCHEDULE annexed hereto and all of such capital stock has been duly
authorized and is fully paid and non-assessable and free and clear of all
claims, Liens, pledges and encumbrances of any kind; provided, however, that to
-------- -------
the extent no Event of Default has occurred and is continuing, such Person
identified on the INFORMATION SCHEDULE annexed hereto may transfer its capital
stock of Borrower to Permitted Transferees if such Person retains voting control
through proxy or otherwise over the capital stock transferred to such Permitted
Transferees.
2.28.2 Borrower (a) is solvent and will continue to be solvent
after giving effect to the Obligations, the security interests of Secured Party
and the other transactions
16
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contemplated hereunder, and (b) is able to pay its debts as they mature and has
(and has reason to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business and all businesses in which
it is about to engage. Based upon the Appraisal, the assets and properties of
Borrower at a fair valuation and at their present fair salable value are, and
will be, greater than the indebtedness of Borrower, and including any
subordinated and contingent liabilities computed at the amount which, to the
best of Borrower's knowledge, represents an amount which can reasonably be
expected to become an actual or matured liability.
2.29 Maintenance of Existence. Borrower shall at all times preserve,
------------------------
renew and keep in full force and effect its existence and rights and franchises
with respect thereto and maintain in full force and effect all permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the Business as presently or proposed to be
conducted.
2.30 Notice of Material Adverse Changes. Borrower promptly shall
----------------------------------
notify Secured Party in writing of the details of any material loss, damage,
investigation, action, suit, proceeding or claim relating to the Collateral, the
Properties or any other property which is security for the Obligations or which
would result in any material adverse change in Borrower's Business, Properties,
Collateral (including goodwill) or condition, financial or otherwise, and the
occurrence of any Event of Default or act, condition or event which, with the
passage of time or giving of notice or both, would constitute an Event of
Default.
2.31 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
--------------------------------------------------------
Borrower shall not, directly or indirectly do or agree to do any of the
following:
2.31.1 merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it unless
Borrower shall be the survivor of any such merger or consolidation; or
2.31.2 (a) take or permit to be taken any action which could impair
the rights of the Secured Party in the Properties or the Collateral, (b) sell,
assign, lease, transfer, abandon or otherwise dispose of any stock or
indebtedness or any assets other than Collateral if after giving effect thereto
there would be a breach of Section 2.8 hereof , (c) take or permit to be taken
any action which would constitute a Transfer under the Mortgages, or (d) sell,
assign, lease, transfer, abandon or otherwise dispose of any Properties or the
Collateral except for the following in the ordinary course of business and
consistent with present business practice and the requirements of the Principal
Agreements:
(i) sales of Inventory;
(ii) the disposition of worn-out or obsolete Equipment so long as if
an Event of Default exists or has occurred and is continuing, any proceeds are
paid to Secured Party and such sales do not involve Equipment having an
aggregate fair market value in excess of Ten Thousand Dollars ($10,000) for all
such Equipment disposed of in any fiscal year of Borrower; and
17
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(iii) the sale or disposition of the property set forth on SCHEDULE
2.31 hereto in accordance with commercially reasonable business practices;
provided, however, that notwithstanding the foregoing, provided that no Event of
- -------- -------
Default shall have occurred and be continuing or would occur (including, without
limitation, under Section 2.8 hereof) under any other Section of this Agreement
or any other Loan Document after giving effect to the following, the Borrower
shall be permitted to sell or otherwise dispose of Collateral and will not be
required to elect the Defeasance Option under the Note as a result solely of
such disposition of Collateral, so long as (i) Borrower shall provide Secured
-- ---- --
Party with not less than sixty (60) days prior written notice of the proposed
disposition, (ii) Borrower shall grant Secured Party a first priority security
interest in and lien on additional assets of Borrower (the "Replacement
Collateral") which shall be have an Appraised Value equal to or greater than
that of the Collateral being replaced and shall be otherwise acceptable in all
respects to Secured Party and (iii) Borrower shall execute and deliver to
Secured Party such agreements, documents and instruments as Secured Party may
deem necessary or desirable to perfect Secured Party's first priority security
interest in the Replacement Collateral which shall be deemed Collateral for all
purposes under this Agreement and the other Loan Documents.
2.32 Encumbrances. Borrower shall not create, incur, assume or suffer
------------
to exist any security interest, mortgage, pledge, Lien, charge or other
encumbrance of any nature whatsoever on any of the Collateral, Properties and
Principal Agreements, except the following permitted encumbrances ("Permitted
------
Encumbrances"):
2.32.1 Liens and security interests of Secured Party;
2.32.2 Liens securing the payment of taxes, either not yet overdue
or the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect to
which adequate reserves have been set aside on its books;
2.32.3 non-consensual statutory Liens (other than Liens securing the
payment of taxes) arising in the ordinary course of Borrower's business to the
extent such Liens secure indebtedness which is not overdue or such Liens secure
indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of foreclosure or
other similar proceedings and with respect to which adequate reserves have been
set aside on its books;
2.32.4 zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair the
value of the Real Property which may be subject thereto;
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2.32.5 purchase money security interests in Equipment (including
capital leases) not to exceed Ten Thousand Dollars ($10,000) in the aggregate in
any year and in no event in excess of a maximum of Twenty Five Thousand Dollars
($25,000) in the aggregate at any time outstanding so long as such security
interests do not apply to any property of Borrower other than the Equipment so
acquired, and the indebtedness secured thereby does not exceed the cost of the
Equipment so acquired, as the case may be;
2.32.6 Liens or rights of setoff or credit balances of Borrower with
Credit Card Issuers, but not Liens on or rights of setoff against any other
property or assets of Borrower pursuant to the Credit Card Agreements (as in
effect on the date hereof) to secure the obligations of Borrower to the Credit
Card Issuers as a result of fees and chargebacks;
2.32.7 deposits of cash with the owner or lessor of premises leased
and operated by Borrower in the ordinary course of the business of Borrower to
secure the performance by Borrower of its obligations under the terms of the
lease for such premises;
2.32.8 Liens in favor of lessors that are expressly subordinate to
the security interest of Secured Party; and
2.32.9 Liens representing the interest of any Ground Lessor under
any Ground Lease, as defined in the applicable Mortgage.
2.33 Indebtedness. Borrower shall not incur, create, assume, become
------------
or be liable in any manner with respect to, or permit to exist, any obligations
or indebtedness except the following permitted indebtedness ("Permitted
Indebtedness"):
2.33.1 the Obligations;
2.33.2 trade obligations and normal accruals in the ordinary course
of business not yet due and payable;
2.33.3 purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) on Collateral
in violation of any other provision of this Loan Agreement including Sections
2.8, 2.9 and 2.32, and all such purchase money indebtedness shall not in the
aggregate at any time exceed Twenty Five Thousand Dollars ($25,000);
2.33.4 other Indebtedness of the Borrower so long as the incurrence
thereof, and payments thereunder, do not cause a breach of Section 2.8 hereof;
and
2.33.5 The Subordinate Loan.
2.34 Loans, Investments, Guarantees, Etc. Borrower shall not,
-----------------------------------
directly or indirectly, make any loans or advance money or property to any
Person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the equity securities or
19
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indebtedness or all or a substantial part of the assets or property of any
Person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the indebtedness, performance, obligations or dividends
of any Person or agree to do any of the foregoing, except:
------
2.34.1 the endorsement of instruments for collection or deposit in
the ordinary course of business; and
2.34.2 investments in: short-term (ninety (90) day) direct
obligations of the United States Government; negotiable certificates of deposit
issued by any bank satisfactory to Secured Party, payable to the order of the
Borrower or to bearer and delivered to Secured Party; and commercial paper rated
A1 or P1; provided, that, as to any of the foregoing, Borrower shall take such
-------- ----
actions as are deemed necessary by Secured Party to perfect the security
interest of Secured Party in such investments.
2.35 Distributions and Redemptions. Upon the occurrence and during
-----------------------------
the continuance of an Event of Default, Borrower shall not, directly or
indirectly, declare, or pay or make any dividends or any other distributions,
whether in cash, property, securities or any combination thereof, with respect
to any shares of its or any Affiliate's or any other Person's capital stock,
partnership interests or membership interests, as the case may be, now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums for
such purpose, or redeem, retire, defease, purchase or otherwise acquire any of
the foregoing (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any of the
foregoing or agree to do any of the foregoing.
2.36 Transactions with Affiliates. Borrower shall not directly or
----------------------------
indirectly, (a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any Affiliate or any officer, employee, member,
manager, director, or agent of any Affiliate or (b) make any payments of
management, consulting or other fees for management or similar services, or of
any indebtedness owing to any Affiliate or any officer, employee, member,
manager, director, agent or any Affiliate or Borrower or make any other Payments
to Affiliates except in the ordinary course of business and pursuant to
agreements in writing on terms no less favorable to Borrower than would be
available in agreements with Persons other than those referenced in (a) or (b).
2.37 INTENTIONALLY OMITTED.
---------------------
2.38 Deposit Accounts. The banks set forth on SCHEDULE 2.38 hereto
----------------
constitute all of the banks with whom Borrower has deposit account arrangements
with respect to the Property as of the date hereof and identifies each of the
deposit accounts at such banks to a Property location of Borrower. At all times
during the term hereof, the banks listed on SCHEDULE 2.38 hereto shall
constitute all of the banks with whom Borrower has deposit account arrangements
with respect to the Properties and the deposit accounts identified therein shall
constitute all deposit accounts of Borrower with respect thereto; provided,
--------
however, that
- -------
20
<PAGE>
with the prior written consent of Secured Party, Borrower may substitute any
bank listed on SCHEDULE 2.38 hereto with another federally-insured bank.
2.38.1 Borrower shall deposit or cause to be deposited all proceeds
from sales of Inventory and other receipts, in every form, including, without
limitation, cash, checks, credit card sales drafts, credit card sales or charge
slips or receipts and other forms of daily restaurant receipts, from each
Property location of Borrower on each business day into the deposit accounts of
Borrower used solely for such purpose and identified to each Property location
as set forth on SCHEDULE 2.38 hereto. All such funds deposited into such deposit
accounts shall be remitted by intrabank account debit and credit, wire transfer
or otherwise (e.g., by ACH transfer) in immediately available funds on the
eleventh (11th) day of each month to the extent required to make payments on the
Obligations, including payments of Stated Payment Amount (as defined in the
Note) on the Note, to such account(s) as the Secured Party shall direct.
Borrower shall irrevocably authorize and direct in writing, in the form attached
as EXHIBIT F hereto, each of the banks required to be listed on SCHEDULE 2.38
---------
hereto to follow and comply with the instructions of the Secured Party with
respect to all matters concerning the accounts, including any directions by
Secured Party with respect to the disposition of funds in any account, in each
case without notice to or consent of Borrower. Such authorization and direction
shall not be rescinded, revoked or modified during the term hereof.
2.39 Payments. In accordance with Section 2.38.1 hereof, Borrower
--------
shall pay, or cause to be paid, and hereby authorizes Secured Party to cause to
be paid, all Obligations as and when due from all amounts in any bank required
to be listed on SCHEDULE 2.38 hereto. Borrower shall make, or cause to be made,
all payments to Secured Party on the Obligations in cash and free and clear of,
and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of the Properties or the Collateral applied to the
payment of, any of the Obligations, Secured Party is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and Borrower shall be and remain liable to Secured Party
hereunder and under other Loan Documents and this Loan Agreement and other Loan
Documents shall continue in full force and effect as if such payment or proceeds
had not been received by Secured Party. Borrower shall be liable to pay all
Obligations to Secured Party in cash, and does hereby indemnify and hold Secured
Party harmless for the amount of any payments or proceeds surrendered or
returned. This Section 2.39 shall remain effective notwithstanding any contrary
action which may be taken by Secured Party in reliance upon such payment or
proceeds. This Section 2.39 shall survive the payment of the Obligations and the
termination of this Loan Agreement.
2.40 Costs and Expenses. Borrower shall pay to Secured Party on
------------------
demand all costs, expenses, filing fees and taxes (other than income and
franchise taxes of Secured Party) paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Secured
Party's rights in the Properties or the Collateral, this Loan Agreement, the
Notes, the Mortgages, the other Loan Documents and all other documents related
hereto or thereto, including any
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amendments, supplements, restatements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) all title insurance and other insurance premiums,
appraisal fees and search fees; (c) costs and expenses of remitting loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining any account with any bank required to be listed on SCHEDULE 2.38
hereto, together with Secured Party's customary charges and fees with respect
thereto; (d) costs and expenses of preserving and protecting the Properties or
the Collateral; (e) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and liens
of Secured Party, selling or otherwise realizing upon the Properties or the
Collateral, and otherwise enforcing the provisions of this Loan Agreement and
the other Loan Documents or defending any claims made or threatened against
Secured Party arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any such matters); (g) all out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Secured Party during the course of periodic
field examinations of the Properties or the Collateral and Borrower's
operations, plus a customary per diem charge at the rate of $500 per person per
day for Secured Party's examiners in the field and office; and (h) the actual
and reasonable fees and disbursements of counsel (including legal assistants) to
Secured Party in connection with any of the foregoing.
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2.41 Single Purpose Entity. Borrower has not and shall not: (a)
---------------------
engage in any business or activity other than the ownership, operation and
maintenance of the Business, the Properties and the Collateral, and activities
incidental thereto; (b) acquire or own any material assets other than (i) the
Business, the Properties and the Collateral, and (ii) such incidental Personal
Property as may be necessary for the operation of the Business, the Properties
and the Collateral, (c) notwithstanding anything contained herein to the
contrary, merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, without in
each case Secured Party's consent; (d) fail to preserve its existence as an
entity duly organized, validly existing and in good standing (if applicable)
under the laws of the jurisdiction of its organization or formation, or without
the prior written consent of Secured Party, amend, modify, terminate or fail to
comply with the provisions of Borrower's partnership agreement, articles or
certificate of incorporation , articles of organization, operating agreement, or
similar organizational documents, as the case may be, as same may be further
amended or supplemented, if such amendment, modification, termination or failure
to comply would adversely affect the ability of Borrower to perform its
obligations hereunder, under the Notes or under the other Loan Documents; (e)
notwithstanding anything contained herein to the contrary, own any subsidiary or
make any investment in, any person or entity without the consent of Secured
Party; (f) commingle its assets with the assets of any of its general partners,
managing members, shareholders, affiliates, principals or of any other person or
entity; (g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Obligations, except as
may expressly be permitted in Section 2.33 (h) notwithstanding anything
contained herein to the contrary, fail to maintain its records, books of account
and bank accounts separate and apart from those of the general partners,
managing members, shareholders, principals and affiliates of Borrower, the
affiliates of a general partner or managing member of Borrower, and any other
person or entity; (i) enter into any contract or agreement with any general
partner, managing member, shareholder, principal or affiliate of Borrower, or
any general partner, managing member, shareholder, principal or affiliate
thereof, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties other than any general partner, managing member, shareholder,
principal or affiliate of Borrower, or any general partner, managing member,
shareholder, principal or affiliate thereof; (j) seek the dissolution or winding
up in whole, or in part, of Borrower; (k) maintain its assets in such a manner
that it will be costly or difficult to segregate, ascertain or identify its
individual assets from those of any general partner, managing member,
shareholder, principal or affiliate of Borrower, or any general partner,
managing member, shareholder, principal or affiliate thereof or any other
person; (l) hold itself out to be responsible for the debts of another person;
(m) make any loans to any third party, except as may expressly be permitted in
Section 2.34; (n) fail either to hold itself out to the public as a legal entity
separate and distinct from any other entity or person or to conduct its business
solely in its own name in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that
Borrower is responsible for the debts of any third party (including any general
partner, managing member, shareholder, principal or affiliate of Borrower, or
any general partner, managing member, shareholder, principal or affiliate
thereof); (o) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations; or (p) file
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or consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
3. SPECIAL PROVISIONS ON COLLATERAL.
--------------------------------
3.1 New Collateral Locations; Right of First Refusal. Borrower
------------------------------------------------
shall provide Secured Party with not less than 120 days written notice of
Borrower's proposal, or the proposal of any of Borrower's Affiliates, to own or
operate any new business location within the Specified Market. If Borrower
desires to finance such new location, Borrower hereby agrees that prior to
attempting to obtain financing from any Person (other than an Affiliate of
Borrower), it shall advise Secured Party of its requirements and Secured Party
shall have the right, but not the obligation, to offer to finance such new
location on terms and conditions mutually acceptable to Secured Party and
Borrower. In addition, if Secured Party and Borrower shall fail to reach
agreement on the terms of a financing after compliance with the prior sentence,
and Borrower shall thereafter obtain a firm, written commitment from a Person to
provide such financing, Secured Party shall have the right, but not the
obligation, to match the terms of such offer and if it shall so match the offer,
Borrower and Secured Party shall enter into such documents and instruments as
shall be required to complete such financing.
3.2 Accounts.
--------
3.2.1 With respect to each Account (including, without limitation,
each Credit Card Receivable), there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto,
other than with respect solely to Credit Card Receivables, those occurring in
the ordinary course of business, and none of the transactions giving rise
thereto will violate any applicable State or Federal Laws or regulations, and
all documentation relating to Credit Card Receivables will comply with such laws
and regulations and will be legally enforceable in accordance with its terms.
3.2.2 Secured Party may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all account
debtors, Credit Card Issuers and Credit Card Processors that the Accounts have
been assigned to Secured Party and that Secured Party has a security interest
therein and Secured Party may direct any or all account debtors, Credit Card
Issuers and Credit Card Processors to make payments of Accounts directly to
Secured Party, (ii) extend the time of payment of, compromise, settle or adjust
for cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Accounts or other obligations included in the Collateral
and thereby discharge or release the account debtor or any other party or
parties in any way liable for payment thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Accounts or such
other obligations, but without any duty to do so, and Secured Party shall not be
liable for its failure to collect or enforce the payment thereof or for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Secured Party may reasonably deem necessary or desirable
for the protection of its interests. At any time that an Event of Default
exists or has occurred and is continuing, at Secured Party's request, all
invoices and statements sent to any account debtor,
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Credit Card Issuer or Credit Card Processor shall state that the Accounts due
from such account debtor, Credit Card Issuer or Credit Card Processor and such
other obligations have been assigned to Secured Party and are payable directly
and only to Secured Party and Borrower shall deliver to Secured Party such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Secured Party may
require.
3.2.3 Secured Party shall have the right at any time or times, in the
name of a nominee of Secured Party and after occurrence and during the
continuance of an Event of Default, in Secured Party's name, to verify the
validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
3.2.4 Borrower shall deliver or cause to be delivered to Secured
Party, with appropriate endorsement and assignment, with full recourse to
Borrower, all chattel paper and instruments which Borrower now owns or may at
any time acquire immediately upon Borrower's receipt thereof, except as Secured
Party may otherwise agree.
3.3 Inventory Covenants. With respect to the Inventory:
-------------------
3.3.1 Borrower shall at all times maintain inventory records
satisfactory to Secured Party, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory, Borrower's
cost therefor and daily withdrawals therefrom and additions thereto;
3.3.2 Borrower shall conduct, from time to time, a physical count of
the Inventory in accordance with the requirements of the Principal Agreements
and otherwise prudent business practice, and at any time or times as Secured
Party may request on or after an Event of Default. Promptly following the
request of Secured Party from time to time, Borrower shall supply Secured Party
with a report in the form and with such specificity as may be reasonably
satisfactory to Secured Party concerning any such physical count;
3.3.3 Borrower shall not remove any Inventory from the locations set
forth or permitted herein, except for sales of Inventory in the ordinary course
of Borrower's business;
3.3.4 Borrower shall produce, use, store and maintain the Inventory,
with all reasonable care and caution and in accordance with applicable standards
of the Principal Agreements and any insurance and in conformity with applicable
laws (including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto);
3.3.5 Borrower assumes all responsibility and liability arising from
or relating to the production, use, sale or other disposition of the Inventory
except if such liability results solely from Secured Party's gross negligence or
willful misconduct;
3.3.6 Borrower shall keep the Inventory in good and marketable
condition; and
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<PAGE>
3.3.7 Borrower shall not, without prior written notice to Secured
Party, acquire or accept any Inventory on consignment or approval.
3.4 Equipment Covenants. With respect to the Equipment:
-------------------
3.4.1 Borrower shall, at its expense, at any time or times as Secured
Party may request on or after an Event of Default, deliver or cause to be
delivered to Secured Party written reports or appraisals as to the Equipment in
form, scope and methodology acceptable to Secured Party by an appraiser
acceptable to Secured Party;
3.4.2 Borrower shall keep the Equipment in good order, repair,
running and marketable condition (ordinary wear and tear excepted);
3.4.3 Borrower shall use the Equipment with all reasonable care and
caution and in accordance with applicable standards of the Principal Agreements
and any insurance and in conformity with all applicable laws;
3.4.4 The Equipment is and shall be used in Borrower's business and
not for personal, family, household or farming use;
3.4.5 Borrower shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of Borrower;
3.4.6 The Equipment is now and shall remain personal property and
Borrower shall use its best efforts to ensure that none of the Equipment is or
becomes a part of or affixed to real property; and
3.4.7 Borrower assumes all responsibility and liability arising from
the use of the Equipment, except if such liability results solely from Secured
Party's gross negligence or willful misconduct.
3.5 Power of Attorney. Borrower hereby irrevocably designates and
-----------------
appoints Secured Party (and all persons designated by Secured Party) as
Borrower's true and lawful attorney-in-fact, and authorizes Secured Party, in
Borrower's or Secured Party's name, to: (a) at any time an Event of Default has
occurred and is continuing, demand payment on Accounts or other proceeds of
Inventory or other Collateral, enforce payment of Accounts by legal proceedings
or otherwise, exercise all of Borrower's rights and remedies to collect any
Account or other Collateral, sell or assign any Account upon such terms, for
such amount and at such time or times as the Secured Party deems advisable,
settle, adjust, compromise, extend or renew an Account, discharge and release
any Account, prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or other similar document against an account debtor, notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Secured Party, and open and dispose of all mail addressed
to Borrower, and do all acts and things which are necessary, in Secured Party's
determination, to fulfill Borrower's obligations
26
<PAGE>
under this Loan Agreement and the other Loan Documents; and (b) at any time (i)
take control in any manner of any item of payment or proceeds thereof, (ii) have
access to any lockbox or postal box into which Borrower's mail is deposited,
(iii) endorse Borrower's name upon any items of payment or proceeds thereof and
deposit the same in the accounts at banks listed on SCHEDULE 2.38 hereto, (iv)
endorse Borrower's name upon any chattel paper, document, instrument, invoice,
or similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral or Properties, (v) sign Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi) execute
in Borrower's name and file any UCC financing statements or amendments thereto.
Borrower hereby releases Secured Party and its officers, employees and designees
from any liabilities arising from any act or acts under this power of attorney
and in furtherance thereof, whether of omission or commission, except as a
result of Secured Party's own gross negligence or willful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction;
3.6 Right to Cure. Secured Party may, at its option but without any
-------------
obligation:
3.6.1 After an Event of Default that is continuing, cure any default
by Borrower under any agreement with a third party, including the Principal
Agreements and Leases, or pay or bond on appeal any judgment entered against
Borrower;
3.6.2 Discharge taxes, Liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral;
and
3.6.3 Pay any amount, incur any expense or perform any act which, in
Secured Party's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Properties or the Collateral and the rights of Secured
Party with respect thereto. Secured Party may add any amounts so expended to the
Obligations, such amounts to be repayable by Borrower on demand. Secured Party
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Borrower. Any payment made or other action taken by Secured Party under this
Section shall be without prejudice to any right to assert an Event of Default
hereunder and to proceed accordingly.
3.7 Access to Premises. From time to time as reasonably requested
------------------
by Secured Party, at the cost and expense of Borrower:
3.7.1 Secured Party or its designee shall have complete access to all
of Borrower's premises during normal business hours and after notice to
Borrower, or at any time and without notice to Borrower if an Event of Default
exists or has occurred and is continuing, for the purposes of inspecting,
verifying and auditing the Collateral and all of Borrower's Records;
3.7.2 Borrower shall promptly furnish to Secured Party such copies of
such Records or extracts therefrom as Secured Party may request in good faith;
and
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<PAGE>
3.7.3 Secured Party or its designee shall have use during normal
business hours of such of Borrower's personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing, provided that such use does
not materially interfere with Borrower's ordinary business operations, and, if
an Event of Default exists or has occurred and is continuing, for the collection
of Accounts and realization of other Collateral, and Borrower assumes all
responsibility and liability arising from or relating to such use except if such
liability results solely from Secured Party's gross negligence or willful
misconduct.
4. SPECIAL PROVISIONS CONCERNING COLLATERAL REVENUES. Borrower shall take
-------------------------------------------------
such actions as shall be necessary and/or requested by Secured Party to direct
any and all transferors, distributors or payors (including insurance companies
with whom Borrower maintains insurance) to make payment of all Collateral
Revenues directly to Secured Party and authorizes Secured Party, in its sole
discretion, to hold the same in its possession as Collateral, to apply the same
to repayment of the Obligations, to deposit the same into any of the accounts
with the banks listed on SCHEDULE 2.38 hereto, or to apply the same toward
replacement of the Collateral. All Collateral Revenues and proceeds whether
received by Secured Party or by Borrower, or by any other Person will be
included in the Collateral and be subject to the security interest granted to
Secured Party hereunder. Borrower shall identify, earmark, segregate and keep
separate all Collateral Revenues and proceeds received by it, upon Secured
Party's request, promptly account to Secured Party for all Collateral Revenues
and proceeds, and hold all Collateral Revenues and proceeds received by Borrower
in trust for the benefit of Secured Party and shall promptly (and in any event
not later than the fifth (5th) day after receipt) deliver (or cause to be
delivered) the same to Secured Party and into its possession in the form
received by Borrower (with any necessary endorsements) and at a time and in a
manner satisfactory to Secured Party.
5. SPECIAL PROVISIONS CONCERNING RIGHTS AND DUTIES WHILE IN
--------------------------------------------------------
POSSESSION OF COLLATERAL.
- ------------------------
5.1 Borrower's Possession. Borrower will be deemed at all times to
---------------------
hold all securities, investment property, instruments, chattel paper, documents,
certificates and money and other writings evidencing or relating to the
Collateral in trust for Secured Party and, upon and during the continuation of
an Event of Default, to the extent the same shall, from time to time, be in
Borrower's possession, upon request or as otherwise provided herein, Borrower
shall promptly deliver the same to Secured Party in the form received (with any
necessary endorsements) and at a time and in a manner satisfactory to Secured
Party. With respect to the Collateral in Borrower's possession, Borrower shall
at Secured Party's request take such action as Secured Party in its discretion
deems necessary or desirable to create, perfect and protect Secured Party's
security interest in any of the Collateral.
5.2 Secured Party's Possession. With respect to all of the
--------------------------
Collateral delivered or transferred to, or otherwise in the custody or control
of (including any items in transit to or set apart for) Secured Party or any of
its agents or representatives in accordance with this Loan Agreement, Borrower
agrees that: (i) such Collateral will be and be deemed to be in the sole
possession of Secured Party; (ii) Borrower has no right to withdraw or
substitute any
28
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such Collateral; and (iii) Borrower shall not take or permit any action, or
exercise any voting and other rights, powers and privileges in respect of the
Collateral, inconsistent with Secured Party's interest therein and sole
possession thereof and Secured Party may in its sole discretion and without
notice, without obligation or liability except to account for property actually
received by it, and without affecting or discharging the Obligations: (a)
further transfer and segregate the Collateral in its possession; (b) receive
Collateral Revenues or proceeds and hold the same as a part of the Collateral
and/or apply the same as hereinafter provided; and (c) exchange any of the
Collateral for other property upon reorganization, recapitalization or other
readjustment. Following the occurrence of an Event of Default, Secured Party is
authorized (i) to exercise or cause its nominee to exercise all or any rights,
powers and privileges (including to vote) on or with respect to the Collateral
with the same force and effect as an absolute owner thereof; (ii) whether any of
the Obligations be due, in its name or in Borrower's name or otherwise, to
demand, sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
settlement Secured Party deems desirable with respect to, any of the Collateral;
and (iii) to extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, or release, any of the Collateral.
Notwithstanding the rights accorded Secured Party with respect to the Collateral
and except to the extent provided below or required by the UCC or other
applicable law (if such requirement cannot be modified, waived or excused),
Secured Party's sole duty with respect to the Collateral in its possession (with
respect to custody, preservation, safekeeping or otherwise and whether under
Section 9-207 of the UCC or otherwise) will be to deal with it in the same
manner that Secured Party deals with similar property owned and possessed by it.
Without limiting the foregoing, Secured Party, and any of its officers,
directors, members, partners, trustees, owners, employees, representatives and
agents, to the extent permitted by law, will: (A) have no duty with respect to
the Collateral or the rights granted hereunder; (B) not be required to sell,
invest, substitute, replace or otherwise dispose of the Collateral; (C) not be
required to take any steps necessary to preserve any rights against prior
parties to any of the Collateral; (D) not be liable for (or deemed to have made
an election of or exercised any right or remedy on account of) any delay or
failure to demand, collect or realize upon any of the Collateral; and (E) have
no obligation or liability in connection with the Collateral or arising under
this Loan Agreement, except as specifically set forth in this Agreement.
Borrower agrees that such standard of care is reasonable and appropriate.
6. EVENTS OF DEFAULT. The happening of any one or more of the following
-----------------
events shall constitute an "Event of Default" hereunder:
6.1 Nonpayment, Default, Breach
---------------------------
6.1.1 (i) Borrower fails to make any payment when due under this Loan
Agreement, the Subordinate Loan Agreement, the Notes, the Mortgages, any other
Loan Document or on any other Obligation or Borrower disclaims liability under
or the enforceability of any Loan Document, or any Loan Document shall for any
reason cease to be, or shall be asserted by Borrower not to be, a legal, valid
and binding obligation of Borrower, or the security interest or Lien granted
hereunder and under any other Loan Document shall for any reason cease to be, or
be asserted by Borrower not to be, a valid first priority perfected security
interest in any
29
<PAGE>
Property or Collateral; (ii) any Principal Agreement shall cease to be in full
force and effect for any reason except as provided in Section 2.12 hereof; (iii)
other than as set forth in clause (i) above, Borrower is in default under, fails
to perform or observe any covenant or condition of or agreement in, or is in
breach of, or makes a material inaccuracy in or omission from any representation
or warranty under or in, this Loan Agreement, the Subordinate Loan Agreement,
the Notes, the Mortgages, any other Loan Document, the Principal Agreements, or
any financial or other statement delivered to Secured Party, or any agreement,
instrument or obligation in connection with any Permitted Encumbrance or any
other Indebtedness, and such default, failure, breach, inaccuracy or omission
shall continue unremedied for the earliest of (a) five (5) days following the
date that notice of such default, failure, breach, inaccuracy or omission is
given to Borrower by Secured Party, (b) five (5) days following the date that
Borrower first obtains knowledge of such default, failure, breach, inaccuracy or
omission or (c) in the case of any Permitted Encumbrance, Indebtedness or Lease,
the occurrence of such event; provided, however, that, there shall be no cure
-------- -------
period in the case of: (x) any failure to observe any such term, covenant,
condition or provision which is not capable of being cured at all or within such
five (5) day period or which has been the subject of a prior failure within a
six (6) month period or an intentional breach by Borrower of any such term,
covenant, condition or provision, or (y) the failure to observe or perform any
of the covenants or provisions contained in Sections 2.8, 2.9, 2.10, 2.11, 2.12,
2.13, 2.17, 2.20, 2.21, 2.24, 2.26, 2.31, 2.32, 2.33, 2.34 and 2.35 and 2.41 of
this Loan Agreement; or (iv) the Persons who own stock of Borrower on the date
of this Loan Agreement entitling such Persons to cast the votes required to
elect a majority of members of the board of directors or other applicable
governing body of Borrower, or a Permitted Transferee shall cease for any reason
to own such stock; or
6.1.2 Any of Borrower's Affiliates listed on SCHEDULE 2.3 hereto (as
amended from time to time) fails to make any payment when due under, or defaults
under, fails to perform or observe any covenant of or condition or agreement in
breach of, or makes any material inaccuracy in or omission from any
representation and warranty under, any security agreement with Secured Party or
note held by Secured Party or any other loan document with Secured Party or in
any other agreement, instrument, document or certificate, or financial or other
statement delivered to Secured Party, and such failure, default or breach
continues beyond any applicable grace period provided therein; or
6.1.3 Other defaults of Borrower and other liable parties: If
---------------------------------------------------
Borrower or any of Borrower's Affiliates who is a maker, drawer, acceptor,
endorser, guarantor, surety, accommodation party for, or is otherwise liable
for, any of the Obligations, Properties or Collateral, or any partnership or
limited liability company in which Borrower is a partner or member (each
hereinafter called an "Other Liable Party") shall die, dissolve, merge or
consolidate, suspend the transaction of business, attempt to terminate (except
strictly in accordance with its terms), revoke or disclaim any obligation to
Secured Party, or incur any material adverse change in its financial condition
or prospects; or if Borrower or any Other Liable Party shall be expelled from or
suspended by any stock or securities exchange or other exchange, or any
proceeding, procedure or remedy supplementary to or in enforcement of judgment
(involving an amount in excess of $10,000 in the aggregate) shall be resorted to
or commenced against, or with respect to any property of, Borrower or any Other
Liable Party; or if
30
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Borrower or any Other Liable Party shall make an assignment for the benefit of,
or composition with, creditors, or shall be or become insolvent or unable, or
generally fail, to pay its debts when due, or shall be or become a party or
subject to any bankruptcy, reorganization, insolvency or other similar
proceeding, or a receiver or liquidator, custodian or trustee shall be appointed
for Borrower or any Other Liable Party, or a substantial portion of any of
Borrower's or their respective assets and, if any of the foregoing shall occur
involuntarily as to Borrower and any Other Liable Party, it shall not be
dismissed with prejudice, stayed or discharged within thirty (30) days; or if
Borrower or any Other Liable Party shall take any action to effect, or which
indicates its acquiescence in, any of the foregoing.
7. REMEDIES.
--------
7.1 Cumulative Rights and Remedies. Secured Party has been granted
------------------------------
hereunder, and upon the occurrence of an Event of Default may exercise, the
rights, powers and remedies of: (i) secured parties under the UCC or other
applicable Uniform Commercial Code; (ii) secured parties under any other
applicable statute, law, rule or regulation; and (iii) Secured Party under this
Loan Agreement, the Notes, the Mortgages and any other Loan Document and other
agreement between Borrower and Secured Party. In addition, all such rights,
powers and remedies shall be cumulative and not alternative and enforceable, in
Secured Party's discretion, alternatively, successively, or concurrently on any
one or more occasions, and shall include, without limitation, the right to apply
to a court of equity for an injunction to restrain a breach or threatened breach
by Borrower of this Loan Agreement or any of the other Loan Documents. Any
single or partial exercise of, or forbearance, failure or delay in exercising
any right, power or remedy shall not be, nor shall any such single or partial
exercise of, or forbearance, failure or delay be deemed to be a limitation,
modification or waiver of any right, power or remedy and shall not preclude the
further exercise thereof; and every right, power and remedy of Secured Party
shall continue in full force and effect until such right, power and remedy is
specifically waived by an instrument in writing executed and delivered with
respect to each such waiver by Secured Party.
7.2 Acceleration of Obligations. Upon the occurrence of an Event of
---------------------------
Default, and at any time thereafter if any Event of Default shall then be
continuing, Secured Party may, from time to time in its discretion, by written
notice to Borrower declare any or all of the Notes (including, without
limitation, an amount equal to that required to be paid if the Loan were prepaid
as described in Paragraph 5, "Acceleration; Expenses" of the Note) and any other
----------------------
Obligations to be immediately due and payable whereupon (and, ipso facto,
----------
automatically without any notice, demand or other action by any Person, upon the
occurrence of any Event of Default of the type referred to in Section 6.1.3
hereof) such principal, interest and other Obligations shall be immediately due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by Borrower to the maximum extent permitted by
law and such amounts, to the extent not paid on the date of acceleration, shall
thereafter bear interest until paid at the Default Rate.
7.3 Additional Rights of Secured Party. Upon the occurrence of an
----------------------------------
Event of Default, Secured Party may, from time to time, in its discretion, and
without Borrower's assent,
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<PAGE>
without advertisements or notices of any kind (except for the notice specified
in Section 7.5 hereof regarding notice required in connection with a public or
private sale), or demand of performance or other demand, or obligation or
liability (except to account for amounts actually received) to or upon Borrower
or any other person (all such advertisements, notices and demands, obligation
and liabilities, if any, hereby being expressly waived and discharged to the
extent permitted by law), forthwith, directly or through its agents or
representatives: (i) disclose such default and other matters (including the name
of Borrower) in connection therewith in Secured Party's reasonable discretion to
any other Person; (ii) to the extent permitted by applicable law enter any
premises, with or without the assistance of other persons or legal process;
(iii) require Borrower to account for (including accounting for any products and
proceeds of any Collateral), segregate, assemble, make available and deliver to
Secured Party, its agents or representatives, the Collateral, at any place and
time designated by Secured Party; (iv) take possession of, operate, render
unusable, remove from any location, collect, transfer and receive, recover,
appropriate, foreclose, extend payment of, adjust, compromise, settle, release
any claims included in, and do all other acts or things necessary or, in Secured
Party's sole discretion appropriate, to protect, maintain, preserve and realize
upon, the Collateral and any products and proceeds thereof, in whole or in part;
and (v) exercise all rights, powers and interests with respect to any and all
Properties and Collateral, and sell, assign, lease, license, pledge, transfer,
negotiate (including endorse checks, drafts, orders, or instruments), deliver or
otherwise dispose (by contract, option(s) or otherwise) of the Properties, the
Collateral or any part thereof. Any such disposition may be in one or more
public or private sales, at or upon an exchange, board or system or in the
County, in the State or elsewhere, at such price, for cash or credit (or for
future delivery without credit risk) and upon such other terms and conditions as
it deems appropriate, with the right of Secured Party to the extent permitted by
law upon any such sale or sales, public or private, to purchase the whole or any
part of said Collateral, free of any right, claim or equity of redemption of or
in Borrower (such rights, claims and equity of redemption, if any, hereby being
expressly waived). If any of the Properties or Collateral is sold or leased by
Secured Party upon credit terms or for future delivery, the Obligations shall
not be reduced as a result thereof until payment therefore is finally collected
by Secured Party. In the event Secured Party institutes an action to recover any
Properties or Collateral or seeks recovery of any Properties or Collateral by
way of prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required. Notwithstanding that Secured Party, whether in its own
behalf and/or on behalf of another or others, may continue to hold the
Properties or Collateral and regardless of the value thereof, or any delay or
failure to dispose thereof, unless and then only to the extent that Secured
Party proposes to retain the Properties or Collateral in satisfaction of the
Obligations by written notice in accordance with the UCC, Borrower shall be and
remain liable for the payment in full of any balance of the Obligations and
expenses at any time unpaid. Without limiting the foregoing, upon Borrower's
failure to abide by and comply with its obligations hereunder, in addition to
its other rights and remedies, Secured Party may (but is not required to), in
its sole discretion and to the extent it deems necessary, advisable or
appropriate, take or cause to be taken such actions or things to be done
(including, without limitation, (x) the payment or advancement of funds, or
requiring advancement of funds to be held by Secured Party to fund such
obligations, including taxes or insurance, and (y) taking, or causing to be
taken, remediation actions with respect to environmental problems on any
Property as may be required hereby (or necessary or desirable in connection
herewith) to correct such
32
<PAGE>
failure (including causing the Collateral to be maintained or insurance
protection required hereby to be procured and maintained) and any and all costs
and expenses incurred (including reasonable attorneys' fees and disbursements)
in connection therewith shall be included in Borrower's Obligations and shall be
immediately due and payable and bear interest at the Default Rate.
7.4 Application of Proceeds; Deficiency. Secured Party may apply the
-----------------------------------
net proceeds, if any, of any collection, receipt, recovery, appropriation,
foreclosure or realization, or from any use, operation, sale, assignment, lease,
pledge, transfer, delivery or disposition of all or any of the Collateral and
the Properties, after deducting all reasonable costs and expenses (including
attorneys' fees, court costs and legal expenses) incurred in connection
therewith or with respect to the care, safekeeping, custody, maintenance,
protection, administration or otherwise of any and all of said Collateral or in
any way relating to the rights of Secured Party under this Loan Agreement:
first, to the satisfaction of the Obligations, in whole or in part (whether or
not due) in such order as Secured Party may, in its discretion, elect; second,
to the payment, satisfaction or discharge of any other Indebtedness or
obligation (including any reimbursement, subrogation, contribution or other
obligation to any Person), or otherwise as may be permitted or as required by
any law, rule or regulation (including Section 9-504(1)(c) of the UCC); and
lastly, the surplus, if any, to Borrower. In connection with any disposition of
the Collateral or Properties, Borrower shall remain liable to Secured Party for
the payment of any deficiency with interest at the highest rate provided for
herein (to the extent permitted by applicable law) and all costs and expenses of
collection or enforcement, including reasonable attorneys' fees and legal
expenses. In applying any proceeds to any obligation secured by purchase money
security interest, the Secured Party shall use the "first-in-first-out" method
of allocation.
7.5 Required Notice of Sale. In exercising its rights, powers and
-----------------------
remedies as a secured party, Secured Party agrees to give Borrower ten (10)
days' notice of the time and place of any public sale of Collateral or of the
time after which any private sale of Properties or Collateral may take place,
unless such Collateral is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market. Borrower agrees that
such period and notice is commercially reasonable under the circumstances.
8. POST-DEFAULT POWER OF ATTORNEY. Borrower hereby irrevocably
------------------------------
constitutes and appoints Secured Party, acting through any officer or agent
thereof, with full power of substitution, as Borrower's true and lawful
attorney-in-fact with full irrevocable power and authority in Borrower's place
and stead and in Borrower's name or in its own name, from time to time in
Secured Party's discretion on and after the occurrence of an Event of Default,
to receive, open and dispose of mail addressed to Borrower, to take any and all
action, to do all things, to execute, endorse, deliver and file any and all
writings, documents, instruments, notices, statements (including financing
statements, and writings to correct any error or ambiguity in any Loan
Document), applications and registrations (including registrations and licenses
for securities, Copyrights, Patents, and Trademarks), checks, drafts,
acceptances, money orders, or other evidence of payment or proceeds, which may
be or become necessary or desirable in the sole discretion of Secured Party to
accomplish the terms, purposes and intent of this Loan
33
<PAGE>
Agreement and the other Loan Documents, including the right to appear in and
defend any action or proceeding brought with respect to the Collateral or
Properties, and to bring any action or proceeding, in the name and on behalf of
Borrower, which Secured Party, in its discretion, deems necessary or desirable
to protect its interest in the Collateral or Property. Said attorney or designee
shall not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law, unless and then only to the extent that the
same constitutes its gross negligence or willful misconduct. This power is
coupled with an interest and is irrevocable.
9. HEIRS, SUCCESSORS AND ASSIGNS. The terms of this Loan Agreement, the
-----------------------------
Notes, the Mortgages and of the other Loan Documents shall bind and inure to the
benefit of the heirs, successors and assigns of the parties. The foregoing
sentence shall not be construed to permit Borrower to assign the Loan except as
otherwise permitted under the Loan Documents. Secured Party and any successor
may, at any time, sell, transfer, or assign the Loan Agreement, the Notes, the
Mortgages and the other Loan Documents, and any or all servicing rights with
respect thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). Secured Party
----------
may forward to each purchaser, transferee, assignee, servicer, participant,
investor in such Securities or any rating agency (a "Rating Agency") rating such
-------------
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
--------
information which Secured Party now has or may hereafter acquire relating to (a)
the Loan; (b) the Properties and their operation (including, without limitation,
copies of all leases, subleases or any other agreements concerning the use and
occupancy of the Properties); and/or (c) any party connected with the Loan
(including, without limitation, Borrower, any partner or member of Borrower, any
constituent partner or member of Borrower, and any guarantor). In connection
with such Securities, Borrower further agrees that the Loan Documents shall be
sufficient evidence of the obligations of Borrower to each Investor, and
Borrower shall, within fifteen (15) days after request by Secured Party, deliver
an estoppel certificate verifying for the benefit of Secured Party and any other
party designated by Secured Party the status and the terms and provisions of the
Loan in form and substance acceptable to Secured Party, and enter into such
amendments or modifications to the Loan Documents as may be reasonably required
in order to facilitate the Securities without impairing Borrower's rights or
increasing Borrower's obligations. The representations, warranties,
obligations, covenants, and indemnity obligations of Borrower under the Loan
Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, servicer, participant or investor.
10. INDEMNIFICATION. Borrower hereby saves, indemnifies and holds Secured
---------------
Party, its agents, representatives, directors, employees and counsel
(collectively, "Indemnified Party") harmless from and against all expenses,
actions, judgments, suits, costs, liabilities, obligations, losses, penalties or
damages of any kind or nature, including attorneys' fees and expenses, imposed
on, asserted against, suffered or incurred by an Indemnified Party in any way
relating to, or arising out of or in connection with this Loan Agreement, the
Notes, the Mortgages, the Loan Documents, the Obligations or the transactions
contemplated hereby or thereby. Without limiting the foregoing, Borrower will
pay to Indemnified Party all expenses
34
<PAGE>
(including reasonable expenses for legal services of every kind) of, or
incidental to, the negotiation of, entering into and enforcement of any of the
provisions hereof and of any of the Obligations, and any actual or attempted
sale, lease or other disposition of, and any exchange, enforcement, collection,
compromise or settlement of any of the Collateral and receipt of the proceeds
thereof, and for the care of the Properties and Collateral and defending or
asserting the rights and claims of Indemnified Party in respect thereof, by
litigation or otherwise, including expense of insurance, and all such expenses
shall constitute Obligations. Borrower shall indemnify and hold Indemnified
Party harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses imposed on, incurred by or asserted against any
of them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Loan Agreement, the
Notes, the Mortgages, any other Loan Documents, any other Obligation or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
reasonable fees and expenses of counsel, but excluding any such losses, claims,
damages, liabilities, costs and expenses directly caused to be incurred by
reason of the gross negligence or willful misconduct of the person otherwise to
be indemnified and held harmless under this Section, as determined by a final,
non-appealable judgment of a court of competent jurisdiction. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in this Section
may be unenforceable because it violates any law or public policy, Borrower
shall pay the maximum portion which it is permitted to pay under applicable law
to Indemnified Party in satisfaction of indemnified matters under this Section.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Loan Agreement.
11. OBLIGATIONS AND SECURITY INTEREST ABSOLUTE. The Obligations are
------------------------------------------
absolute, unconditional and irrevocable and will be paid or satisfied strictly
in accordance with their respective terms under all circumstances whatsoever,
including: the invalidity or unenforceability of all or any of, or any part of,
this Loan Agreement, the Notes or any other Loan Document, or any consent,
waiver, amendment or modification thereof; the existence of any claim, setoff,
defense or other right which Borrower may have at any time against Secured
Party, or any other Person, whether in connection with this Loan Agreement, any
other Loan Documents, the transactions contemplated hereby, thereby or otherwise
all of which Borrower hereby waives to the maximum extent permitted by law; or
the loss, theft, damage, destruction or unavailability of the Collateral to
Borrower for any reason whatsoever, it being understood and agreed that Borrower
retains all liability and responsibility with respect to the Collateral. All
rights of the Secured Party and the security interests hereunder shall be
absolute and unconditional irrespective of: (a) any change in the time, manner,
amount or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Notes or any other Loan Document; (b) any exchange, release or
nonperfection of all or any part of the Collateral or any other collateral, or
any release from, amendment to, waiver of or consent to departure from any
guaranty, for all or any of the Obligations; or (c) to the fullest extent
permitted by law, any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a third party pledgor.
35
<PAGE>
12. ASSIGNMENT. Secured Party's assignee shall, to the extent of the
----------
assignment, be vested with all the powers and rights of Secured Party hereunder
(including those granted under Sections 7 and 8 hereof or otherwise with respect
to the Collateral), and to the extent of such assignment the assignee may fully
enforce such rights and powers as a secured party and all references to Secured
Party shall mean and refer to such assignee. Secured Party shall retain all
rights and powers hereby given not so assigned, transferred and/or delivered.
Without limiting the foregoing, Borrower understands and agrees that Secured
Party may, from time to time, sell, pledge, grant a security interest in and
collaterally assign, transfer and deliver or otherwise encumber or dispose of
the Notes, this Loan Agreement and the other Loan Documents and its rights and
powers hereunder and thereunder, in whole or in part, in connection with the
Securitization or any other assignment or other disposition of the Notes.
Borrower may not, in whole or in part, directly or indirectly, assign this Loan
Agreement or any other Loan Document or its rights hereunder or thereunder or
delegate its duties hereunder or thereunder without, in each instance, the
specific prior written consent of Secured Party, which consent may be withheld
or delayed in Secured Party's sole discretion, and payment of the amounts
required under and compliance with the terms of the Notes and other Loan
Documents; if Secured Party shall in its sole discretion consent to such
assignment, Borrower shall pay to Secured Party an assignment fee in an amount
equal to one percent (1%) of all outstanding Obligations, plus all of Secured
Party's costs and expenses (including the reasonable fees of Secured Party's
attorneys) in connection with such assignment. For purposes of this Loan
Agreement, a Transfer (as defined in the Mortgages) shall constitute an
assignment hereof and shall be an Event of Default under Section 6.1.1 hereof.
13. FURTHER ASSURANCES. Borrower agrees, at any time and from time to
------------------
time, at Borrower's sole cost and expense, to obtain, procure, execute and
deliver, file and affix or cause to be obtained, procured, executed, delivered,
filed and affixed such further agreements, bills of sale and assignments,
instruments, documents, warehouse receipts, bills of lading, vouchers, invoices,
notices, statements, writings (including financing statements, and writings to
correct any error or ambiguity in any Loan Document), powers (including stock
and bond powers, and powers of attorney), tax stamps and information, and to do
or cause to be done all such further acts and things (including the execution,
delivery and filing of financing statements, payment of filing fees and
transfer, gains and recording taxes) and do and cause to be done all such other
acts as Secured Party may reasonably request, from time to time, in its
discretion. Without limiting the foregoing, Borrower authorizes Secured Party to
the extent permitted under the UCC to file this Loan Agreement or a copy hereof,
and the same shall be sufficient as a financing statement, and to execute and
file, or file without Borrower's signature, any and all financing statements,
amendments thereto and continuations thereof as Secured Party deems necessary or
appropriate and Borrower shall pay and indemnify Secured Party for and hold
Secured Party harmless from any and all costs and expenses in connection
therewith. Borrower further agrees that it will promptly notify Secured Party of
and, subject to Section 15.1 hereof, agree to correct any defect, error or
omission in the contents of any of the Loan Documents or in the execution,
delivery or acknowledgment thereof. The Borrower further agrees to execute, from
time to time, prior to or within three (3) months of the date hereof, and
otherwise promptly
36
<PAGE>
following Secured Party's request, a Form 4506 Request for Copy of Transcript of
Tax Form or its successor form.
14. TERM.
----
This Loan Agreement shall be immediately in full force and effect as a
security agreement under the UCC upon Borrower's execution below, whether or not
it is signed by Secured Party. Upon indefeasible payment in full of the
Obligations in cash in accordance with the terms hereof, this Loan Agreement and
the security interested granted hereunder shall terminate and Secured Party, at
Borrower's expense, shall within a reasonable time following Borrower's request
execute and deliver to Borrower the proper instruments (including UCC
termination statements) acknowledging the termination of the security interest,
and will transfer (without recourse, representation or warranty) such Collateral
as may be in Secured Party's possession, and which is not to be retained, sold,
or otherwise applied or released pursuant to this Loan Agreement, to Borrower,
except that the provisions of Sections 2.22, 2.24, 2.39 and 10 hereof shall
survive indefinitely. No termination of this Loan Agreement or the other Loan
Documents shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Loan Agreement or the other Loan Documents
until all Obligations have been fully and finally discharged and paid in full in
cash, and Secured Party's continuing security interest in the Collateral and the
rights and remedies of Secured Party hereunder, under the other Loan Documents
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid in cash.
15. MISCELLANEOUS.
-------------
15.1 Entire Agreement. THIS LOAN AGREEMENT REPRESENTS THE FINAL
----------------
AGREEMENT BETWEEN BORROWER AND SECURED PARTY AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF BORROWER AND
SECURED PARTY. BORROWER UNDERSTANDS AND AGREES THAT ORAL AGREEMENTS AND ORAL
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE. BORROWER ACKNOWLEDGES AND AGREES THERE ARE NO
ORAL AGREEMENTS BETWEEN BORROWER AND SECURED PARTY. This Loan Agreement and the
Loan Documents represent the entire understanding of Secured Party and Borrower
with respect to the transactions contemplated hereby and thereby. None of the
terms or provisions of this Loan Agreement or any other Loan Document may be
waived, altered, modified, or amended except in each instance by a specific
written instrument duly executed by Secured Party. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Secured Party of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Secured Party would otherwise have on any future occasion, whether similar in
kind or otherwise. Without limiting the foregoing, no action or omission to act
shall be deemed to be a consent, authorization, representation or agreement of
Secured Party, under the UCC or otherwise, unless, in each instance, the same is
in a specific writing signed by Secured Party. The inclusion of Collateral
Revenues and Proceeds in the
37
<PAGE>
Collateral does not and shall not be deemed to authorize Borrower to sell,
exchange of dispose the Collateral or the Principal Agreements or otherwise use
the Collateral in any manner not otherwise specifically authorized herein.
15.2 Notices. All notices and other communications given pursuant to
-------
or in connection with this Loan Agreement shall be in duly executed writing
delivered to the parties at the addresses set forth below (or such other address
as may be provided by one party in a notice to the other):
If to Secured Party:
Convenience Store Finance Company, LLC
10880 Wilshire Boulevard
21/st/ Floor
Los Angeles, California 90024
Attention: Steve M. Wheelon
Facsimile No.: (310) 481-2899
With a Copy To:
Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, New York 10010
Attention: Malini Majumdar and Edmund Taylor
Facsimile No.: (212) 325-8218 and (212) 325-8106
and: Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
If to Borrower, to Borrower's chief executive office,
as represented to by Borrower herein, with a copy to:
The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
Woodland Hills, California 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
with a copy to:
Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
38
<PAGE>
La Palma, California 90623-1066
Attention: Manager, Real Estate and Dealer Acquisitions
Facsimile No.: (714) 670-5439
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) one (1) day after being delivered in the United
States (properly addressed and all fees paid) for overnight delivery service to
a courier (such as Federal Express) which regularly provides such service and
regularly obtains executed receipts evidencing delivery or (iii) five (5) days
after being sent by registered or certified mail, postage prepaid, return
receipt requested.
15.3 Sole Discretion of Secured Party; Reasonableness. Except as may
------------------------------------------------
otherwise be expressly provided to the contrary, wherever pursuant to the Notes,
the Mortgage, this Loan Agreement, or any other document or instrument now or
hereafter executed and delivered in connection therewith or otherwise with
respect to the Loan secured hereby, Secured Party exercises any right given to
Secured Party to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Secured Party, the decision of
Secured Party to consent or not consent, or to approve or disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory, shall be
in the sole and absolute discretion of Secured Party, as applicable, and shall
be final and conclusive. If at any time Borrower believes that Secured Party has
not acted reasonably in granting or withholding any approval or consent under
the Notes, the Mortgages, this Loan Agreement, or any other Loan Document or
otherwise with respect to the Obligations, as to which approval or consent
either Secured Party has expressly agreed to act reasonably, or absent such
agreement, a court of law having jurisdiction over the subject matter would
require Secured Party to act reasonably, then Borrower's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Borrower against Secured Party. Secured Party shall not have any
liability to Borrower (whether in tort, contract, equity or otherwise) for
losses suffered by Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Loan
Agreement, or any act, omission or event occurring in connection herewith,
unless and only to the extent that it is determined by a final and non-
appealable judgment or court order binding on Secured Party, that the losses
were the result of acts or omissions by Secured Party constituting gross
negligence or willful misconduct. In any such litigation, Secured Party shall be
entitled to the benefit of the rebuttable presumption that it acted in good
faith and with the exercise of ordinary care in the performance by it of the
terms of this Loan Agreement.
15.4 Recovery of Sums Required To Be Paid. Secured Party shall have
------------------------------------
the right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Secured Party thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing
at the time such earlier action was commenced.
39
<PAGE>
15.5 WAIVERS. BORROWER HEREBY MAKES AND ACKNOWLEDGES THAT IT MAKES ALL
-------
OF THE WAIVERS SET FORTH IN THIS LOAN AGREEMENT, THE NOTES, THE MORTGAGES AND
THE OTHER LOAN DOCUMENTS KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT SUCH WAIVERS ARE A MATERIAL
INDUCEMENT TO SECURED PARTY TO MAKE THE LOAN TO BORROWER AND THAT SECURED PARTY
WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH WAIVERS; AND BORROWER HEREBY MAKES AND
ACKNOWLEDGES THAT IT MAKES SUCH WAIVERS WITH RESPECT TO EACH OTHER LOAN
DOCUMENT.
15.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND SECURED PARTY BY ITS ACCEPTANCE OF THE NOTES AND
THIS LOAN AGREEMENT AND OTHER LOAN DOCUMENTS IRREVOCABLY AND UNCONDITIONALLY
WAIVES, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM
ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THE NOTE, THIS
SECURITY AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE OBLIGATIONS.
15.7 Waiver of Notices. Borrower hereby expressly waives demand,
-----------------
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations, the Properties or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Properties, the Collateral and this Loan Agreement and any Loan
Documents, except such as are expressly provided for herein. No notice to or
demand on Borrower which Secured Party may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances. Without limiting the generality of the foregoing, Borrower
waives notice prior to Secured Party's taking possession or control of any of
the Properties or the Collateral or any bond or security which might be required
by any court prior to allowing Secured Party to exercise any of Secured Party's
remedies, including the issuance of an immediate writ of possession and the
benefit of all valuation, appraisement and exemption laws.
15.8 Relationship. The relationship of Secured Party to Borrower
------------
hereunder is strictly and solely that of secured commercial lender on the one
hand and commercial borrower on the other in a commercial transaction and
nothing contained in the Notes, the Mortgages, this Loan Agreement or any other
Loan Document or otherwise in connection with the Obligations is intended to
create, or shall in any event or under any circumstance be construed as
creating, a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between Secured Party and Borrower
other than as secured commercial lender on the one hand and commercial borrower
on the other in a commercial transaction.
40
<PAGE>
15.9 Waiver of Counterclaims. Borrower waives all rights to interpose
-----------------------
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding brought by Secured Party
with respect to this Loan Agreement, any other Loan Documents, the Obligations,
the Collateral or any matter arising therefrom or relating hereto or thereto.
15.10 No Conflict with Principal Agreements. This Loan Agreement and
-------------------------------------
the rights (including the remedies) granted and the duties imposed hereunder are
not intended to conflict with or contravene the Principal Agreements.
15.11 Time is of the Essence. For all payments to be made and all
----------------------
obligations to be performed under the Loan Documents, time is of the essence.
15.12 Limitation on Interest. NOTWITHSTANDING ANY OTHER PROVISION
----------------------
HEREOF, IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE
EXTENT APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THE NOTES OR ANY
OTHER LOAN DOCUMENT, FROM TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE
MAXIMUM RATE OR AMOUNT, IF ANY, SPECIFIED BY APPLICABLE LAW. If from any
circumstance whatsoever, fulfillment of any provision hereof or of such other
Loan Documents or other documents or obligations at the time performance of such
provision shall be due, shall involve transcending the limit of validity
proscribed by law, then, ipso facto, the obligation to be fulfilled shall be
---- -----
reduced to the limit of such validity, and if from any such circumstance Secured
Party shall ever receive an amount deemed interest by applicable law which shall
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal amount owing Thereunder or on
account of any other principal indebtedness of the Borrower to Secured Party,
and not to payment of interest or if such excessive interest exceeds the unpaid
balance of such principal amount and such other indebtedness, or if Secured
Party is prohibited by applicable law from applying such excessive interest to
the reduction of such principal amount or on account of any other indebtedness,
the excess shall be refunded to Borrower. All sums paid or agreed to be paid by
the Borrower for the use, forbearance or detention of the indebtedness of the
Borrower to Secured Party shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform though the term hereof. The terms and
provisions of this paragraph shall control and supersede every other provision
of all agreements between the Borrower and Secured Party and all obligations of
Borrower to Secured Party.
15.13 Governing Law; Binding Effect. THIS SECURITY AGREEMENT SHALL BE
-----------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK;
provided, however, the parties agree that the states listed on SCHEDULE 2.14
- -------- -------
hereto are the proper places to file financing statements with respect to the
Collateral and the laws of such states govern the perfection and the effect of
perfection or non-perfection of security interests in all collateral in which a
security interest is perfected by
41
<PAGE>
filing a financial statement under the Uniform Commercial Code. This Loan
Agreement shall be binding upon Borrower, and the heirs, devisees,
administrators, executives, personal representatives, successors, receivers,
trustees, and (without limiting Section 12 hereof) assigns, including all
successors in interest of Borrower in and to all or any part of the Collateral,
and shall inure to the benefit of Secured Party, and the successors and assigns
of Secured Party. Borrower and Secured Party irrevocably consent and submit to
the non-exclusive jurisdiction of (a) any state or federal court sitting in the
state of New York, over any suit, action or proceeding, arising out of or
relating to this Loan Agreement, the Mortgage, the Notes or the Loan; and (b)
any state court sitting in the county of the state where the Premises are
located with respect to any suit, proceeding or action instituted therein
arising under this Loan Agreement or any of the other Loan Documents or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Loan Agreement, the Notes, the Mortgages or any of the
other Loan Documents or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort, equity
or otherwise, and agree that any dispute with respect to any such matters shall
be heard only in the courts described above (except that Secured Party shall
have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Secured Party deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Borrower or its property). Borrower irrevocably
waives, to the fullest extent permitted by law, any objection that Borrower may
now or hereafter have to the laying of venue of any such suit, action, or
proceeding brought in any such court and any claim that any such suit, action,
or proceeding brought in any such court has been brought in an inconvenient
forum. Borrower hereby waives personal service of any and all process upon it
and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth on the signature
pages hereof and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, properly
addressed and postage prepaid, or, at Secured Party's option, by service upon
Borrower in any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, Borrower shall appear in answer to such
process, failing which Borrower shall be deemed in default and judgment may be
entered by Secured Party against Borrower for the amount of the claim and other
relief requested.
15.14 Severability. Whenever possible this Loan Agreement, the Notes,
------------
the Mortgages and each other Loan Document and each provision hereof and thereof
shall be interpreted in such manner as to be effective, valid and enforceable
under applicable law. If and to the extent that any such provision shall be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof or
thereof, and any determination that the application of any provision hereof or
thereof to any person or under any circumstance is illegal and unenforceable
shall not affect the legality, validity and enforceability of such provision as
it may be applied to any other person or in any other circumstance.
15.15 Counterparts; Captions; Construction. This Loan Agreement and
------------------------------------
each other Loan Document may be executed in counterpart, each of which shall be
an original and all of which taken together shall be and be deemed to be one and
the same instrument. The
42
<PAGE>
headings, titles and captions used herein are for convenience only and shall not
affect the construction of this Loan Agreement or any term or provision hereof.
The inclusion of an example by way of illustration such as a parenthetical
("including . . .") shall not be construed as or deemed a limitation on the
generality of the general text to which it refers. The terms Borrower and
Secured Party shall include heirs, devisees, executors, administrators, personal
representatives, successors, receivers, trustees and assigns. The liability of
all Persons comprising or constituting Borrower under this Loan Agreement and
each other Loan Document shall be joint and several.
43
<PAGE>
IN WITNESS WHEREOF, Secured Party and Borrower have caused these
presents to be duly executed as of the day and year first above written.
SECURED PARTY BORROWER
- ------------- --------
CONVENIENCE STORE FINANCE COMPANY, LLC, LLO-GAS, INC.,
a Delaware limited liability company a Delaware corporation
By: /s/ [illegible]
------------------------------------
Name: By: /s/ John Castellucci
Title: -------------------------------
Name:
Title:
Address: Chief Executive Office:
- ------- ----------------------
10880 Wilshire Boulevard
21/st/ Floor 23805 Stuart Ranch Road, Suite 265
Los Angeles, California 90024 Malibu, CA 90265
44
<PAGE>
DEFINITIONS SCHEDULE
--------------------
"Accounts" shall have the meaning accorded to such term in the UCC and
--------
shall include all present and future rights of Borrower to payment for goods
sold or leased or for services rendered, which are not evidenced by instruments
or chattel paper, and whether or not earned by performance, including, without
limitation, Credit Card Receivables.
"Affiliate", when used with any specified Person, means (i) any Person who
---------
controls, is controlled by, or is under common control with, such Person, (ii)
any Person who is a director or officer of, partner in, trustee of, or blood or
legal relative, guardian or representative of the specified Person, or any
Person who acts or serves in a similar capacity with respect to the specified
Person, (iii) any Person of which or whom the specified Person is a director or
officer, partner, trustee, or blood or legal relative, guardian or
representative, or with respect to which or whom, the specified Person acts or
serves in a similar capacity; (iv) any Person, who, directly or indirectly, is
the legal or beneficial owner of or controls 5% or more of any class of equity
securities of the specified Person, and (v) any Person who is an Affiliate as
defined in clauses (i), (ii), (iii) or (iv) of an Affiliate of the specified
Person.
"Appraisal" shall mean the appraisal of Borrower's Business and Collateral
---------
prepared by the Appraisers.
"Appraised Value" shall mean an amount equal to the value of Borrower's
---------------
Business and Collateral as set forth in the Appraisal obtained in connection
with the origination of the Loan.
"Appraisers" shall mean Deloitte & Touche LLP or PriceWaterhouseCoopers,
----------
LLP.
"Borrower's Corporate Operations" shall have the meaning accorded such term
-------------------------------
in Section 2.8 of the Loan and Security Agreement.
"Business" shall have the meaning accorded to such term in Section 2.2 of
--------
the Loan and Security Agreement.
"Collateral" shall have the meaning accorded to such term in Section 1 of
----------
the Loan and Security Agreement.
"Collateral Revenues" shall have the meaning accorded to such term in
-------------------
Section 1 of the Loan and Security Agreement.
"Commitment" shall mean the commitment letter and term sheet with respect
----------
to the Loan signed by Borrower and Secured Party.
"Copyrights" shall mean all United States or other registered and
----------
unregistered copyrights, all licenses thereto, and all applications therefor,
and all reissues, divisions, continuations,
45
<PAGE>
renewals, extensions, modifications, supplements thereto or to any part thereof,
and the right to sue for past, present and future infringements of the
foregoing, and all rights corresponding to the foregoing throughout the world.
"County" shall mean the county, parish, city or recording district where
------
financing statements are filed under the UCC with respect to security interests
in personal property (including fixtures).
"Credit Card Acknowledgments" shall mean, individually and collectively,
---------------------------
the agreements by Credit Card Issuers or Credit Card Processors who are parties
to Credit Card Agreements in favor of Secured Party acknowledging Secured
Party's first priority security interest in the monies due and to become due to
Borrower (including, without limitation, credits and reserves) under the Credit
Card Agreements, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
"Credit Card Agreements" shall mean all agreements now or hereafter entered
----------------------
into by Borrower with any Credit Card Issuer or any Credit Card Processor, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
"Credit Card Issuer" shall mean any person (other than Borrower) who issues
------------------
or whose members issue credit cards, including, without limitation, MasterCard
or VISA bank credit or debit cards or other bank credit or debit cards, and
American Express, Discover, Diners Club, Carte Blanche and other non-bank credit
or debit cards.
"Credit Card Processor" shall mean any servicing or processing agent or any
---------------------
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any of Borrower's sales transactions involving credit card or debit
card purchases by customers using credit cards or debit cards issued by any
Credit Card Issuer.
"Credit Card Receivables" shall mean all Accounts consisting of the present
-----------------------
and future rights of Borrower to payment for Inventory sold and delivered to
customers who have purchased such goods using a credit card or a debit card
issued by a Credit Card Issuer.
"Current Filings" shall have the meaning accorded to such term in Section
---------------
2.10 of the Loan and Security Agreement.
"Defeasance Option" shall have the meaning accorded such term in the Note.
-----------------
"DSCR" shall mean with respect to any Person, as of the date of
----
determination for any period, the quotient of (x) Cash Flow of such Person for
such period divided by (y) the aggregate of all regularly scheduled principal
payments on all Indebtedness made or to be made by such Person for such period
in accordance with GAAP. For purposes of this definition, "Cash Flow"
46
<PAGE>
shall mean for any period for any Person an amount equal to the difference of
(1) the sum of (a) net income, plus (b) depreciation, plus (c) amortization,
plus (d) interest expense, plus (e) taxes, plus (f) Non-Recurring Expenses plus
(g) Discretionary Expenses, minus (2) the sum of (a) Non-Recurring Income, plus
(b) Discretionary Income, all as reflected on the financial statement for such
Person in accordance with GAAP.
"Default Rate" shall have the meaning accorded to such term in the Note.
------------
"Discretionary Expenses and Discretionary Income" shall mean for any
-----------------------------------------------
period, the expenses or income, as the case may be, that are at the discretion
of a Person and are generally not required in any period or reasonably
anticipated in any subsequent period in order to maintain then-current levels of
Cash Flow in each case as determined by the Secured Party in its sole
discretion.
"Environmental Laws" shall mean all federal, state, district, local and
------------------
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrower's business and
facilities (whether or not owned by it), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes.
"Equipment" shall have the meaning accorded to such term in the UCC and
---------
shall include all goods used or bought for use primarily in the Business and not
included within the Inventory, including machines, computers, fixtures,
furnishings, furniture, appliances, vehicles, tools, and supplies, and the like
employed in connection with the Business, together with all present and future
additions, attachments, accessions thereto, all replacements, improvements and
betterments thereof and all substitutions therefor.
"ERISA" shall mean Employee Retirement Income Security Act of 1974, as
-----
amended.
"Event of Default" shall have the meaning accorded to such term in Section
----------------
6 of the Loan and Security Agreement.
"FCCR" shall mean, with respect to any Person, as of the date of
----
determination for any period, the quotient of (x) Cash Flow of such Person for
such period divided by (y) the sum of the aggregate of all (i) regularly
scheduled principal payments on all Indebtedness and (ii) regularly scheduled
payments of Lease Obligations, made or to be made by such Person for such period
in accordance with GAAP. As used in this definition, "Cash Flow" shall mean for
any period for any Person an amount equal to the difference of (1) the sum of
(a) net income, plus (b)
47
<PAGE>
depreciation, plus (c) amortization, plus (d) interest expense, plus (e) taxes,
plus (f) regularly scheduled payments of Lease Obligations, plus (g) Non-
Recurring Expenses, plus (h) Discretionary Expenses, minus (2) the sum of (a)
Non-Recurring Income plus (b) Discretionary Income, all as reflected on the
financial statement for such Person in accordance with GAAP.
"Financing Statements" shall mean the financing statements on Form UCC-1,
--------------------
copies of which are attached as EXHIBIT H to the Loan and Security Agreement.
---------
"GAAP" shall mean generally accepted accounting principles in the United
----
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied on and after the date
hereof.
"General Intangibles" shall have the meaning accorded to such term in the
-------------------
UCC and shall include agreements, contracts, writings, memoranda, confirmations,
passbooks, signature cards, acknowledgments, understandings, contract rights,
licenses, leases, permits, filings, consents, and approvals, and all puts,
calls, options, warrants, and securities, and all tax and duty refunds, and all
security interests, Patents, inventions, processes, lists (including customer
and suppliers lists), methods, and information (including proprietary
information, member lists and information concerning members, sales, business,
financial, accounting, forecasts, projections, media, and other information),
know-how, software, programs, plans, data, blueprints, designs, drawings,
surveys, notices, Copyrights, Trademarks, trade names, trade secrets, service
marks, service names, logos and goodwill, going concern value, and market share
value and all recordings and registrations thereof, applications for recording
or registration, renewals, modifications, supplements, reissues, continuations,
extensions, divisions thereof and rights corresponding thereto, and all manuals,
standards, practices, mail, advertisements, files, reports, books, catalogs,
records, journals, invoices, and bills, and all rights (including voting rights,
rights to receive notice or to consent, rights to payment, interest, dividends,
distributions or earnings, rights to sue and enforce), powers (including powers
of attorney), privileges, benefits, and remedies relating thereto or arising in
connection therewith.
"Goods" shall have the meaning accorded to such term in the UCC and shall
-----
include (i) all Inventory and (ii) all Equipment.
"Indebtedness" shall mean all indebtedness (including reimbursement,
------------
subrogation, or contribution obligations and any other indebtedness assumed or
guaranteed) in respect of money borrowed, whether evidenced by a note (including
the Note) or other like written obligation to pay money, or deferred purchase
price or constituting capitalized lease obligation or otherwise and will include
all obligations and accruals to the extent due and payable or incurred outside
the ordinary course of business).
48
<PAGE>
"Independent Accountant" shall mean a "Big 6" firm of independent
----------------------
accountants.
"Inventory" shall have the meaning accorded to such term in the UCC and
---------
shall include all goods held by Borrower for sale or lease or to be furnished
under contracts of service, all goods so furnished by Borrower, all raw
materials and work in process, and all materials used or consumed in Borrower's
Business and all documents of title covering any inventory.
"Leases" shall mean the Leases included on the INFORMATION SCHEDULE to the
------
Loan and Security Agreement and any Master Lease, as defined in the Mortgage.
"Lease Obligations" shall mean Personal Property Lease Obligations having
-----------------
an original term of in excess of twelve (12) months and Real Property Lease
Obligations.
"Lien" shall mean with respect to any asset, (i) any mortgage, lien,
----
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to have such creditor's claim satisfied out of such assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"Local Banks" shall mean the banks at which Borrower maintains deposit-only
-----------
accounts for each of its Properties.
"Loan" shall have the meaning accorded to such term in the Preliminary
----
Statement to the Loan and Security Agreement.
"Loan Documents" shall mean the Note, this Loan and Security Agreement and
--------------
any Mortgage, assignment of lease or other instrument, agreement, guaranty
document, certificate or other writing (including the Master Term Loan
Application submitted by Borrower to Secured Party and any commitment issued in
connection therewith), now or hereafter executed and delivered in connection
with the Obligations, as the same may be modified, amended, consolidated,
continued or extended, from time to time.
"Margin Stock" shall have the meaning accorded to such term in Regulation G
------------
of the Federal Reserve Board.
"Maximum Loan Amount" shall mean an amount equal to seventy (70%) percent
-------------------
of the Appraised Value.
"Minimum Consolidated FCCR" and "Minimum Consolidated DSCR" shall each have
------------------------- -------------------------
the meaning accorded to such term in Section 2.8 of the Loan and Security
Agreement.
49
<PAGE>
"Minimum Corporate FCCR" and "Minimum Corporate DSCR" shall each have the
---------------------- ----------------------
meaning accorded such term in Section 2.8 of the Loan and Security Agreement.
"Minimum Unit Level FCCR" and "Minimum Unit Level DSCR" shall each have the
----------------------- -----------------------
meaning accorded to such term in Section 2.8 of the Loan and Security Agreement.
"Mortgages" shall mean real property and leasehold mortgages and/or deeds
---------
of trust executed and delivered from time to time by Borrower to Secured Party
with respect to the Real Property and related assets of Borrower now owned or
hereafter acquired, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
--------
"1933 Act" shall mean the Securities Act of 1933, as amended.
--------
"Non-Recurring Expenses and Non-Recurring Income" shall mean for any
-----------------------------------------------
period, expenses or income, as the case may be, that are extraordinary and
generally not reflected in any prior period or reasonably anticipated to be
incurred or received in any subsequent period, in each case as determined by the
Secured Party in its sole discretion.
"Note" shall have the meaning accorded to such term in the Preliminary
----
Statement to the Loan and Security Agreement.
"Obligations" shall mean all of Borrower's Indebtedness, obligations and
-----------
liabilities of every kind, nature and description now or hereafter owing by
Borrower to Secured Party, including those evidenced by, arising under or in
connection with the Note including, without limitation, indebtedness,
obligations and liabilities in respect of principal, interest, this Loan and
Security Agreement, or any other Loan Document, and any future advances thereon,
renewals, extensions, modifications, amendments, substitutions and
consolidations thereof, or any other agreement with Secured Party, including
Borrower's obligations to pay (or reimburse Secured Party for) all costs and
expenses (including attorneys' fees and disbursements) incurred by Secured Party
in obtaining, maintaining, protecting and preserving its interest in the
Collateral or its security interest therein, foreclosing, retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral or in exercising its rights hereunder or as secured party under
the UCC, any other applicable law, regulation or rule or this Loan and Security
Agreement and all other indebtedness, obligations and liabilities of any kind of
Borrower to Secured Party, now or hereafter existing (including future advances
whether or not pursuant to commitment), arising directly between Borrower and
Secured Party or acquired outright, conditionally or as collateral security from
another, absolute or contingent, joint and/or several, secured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, or direct or indirect, including Borrower's liabilities to Secured
Party as a member of any partnership, syndicate, association or other group, and
whether
50
<PAGE>
incurred by Borrower as principal, surety, endorser, guarantor, accommodation
party or otherwise.
"Patents" shall mean all United States or other registered and unregistered
-------
patents, all licenses thereto, and all applications therefor, and all reissues,
divisions, continuations, renewals, extensions, modifications, supplements
thereto or to any part thereof, and the right to sue for past, present and
future infringements of the foregoing, and all rights corresponding to the
foregoing throughout the world.
"Payments to Affiliates" shall mean all dividends or distributions, all
----------------------
salaries, fees and other compensation, and all reimbursement or indemnification,
directly or indirectly, paid or payable to (or for the benefit of) any Affiliate
of Borrower, other than a Person who is an officer of Borrower and is not
otherwise an Affiliate of Borrower. Payment to Affiliates shall include any
payment or reimbursement of travel and entertainment expenses, automobiles
expenses, and premiums or expenses associated with any insurance policy other
than those expressly required to be maintained pursuant to Section 2.21 of the
Loan and Security Agreement.
"Permitted Encumbrances" shall have the meaning accorded to such term in
----------------------
Section 2.32 of the Loan and Security Agreement.
"Permitted Indebtedness" shall have the meaning accorded to such term in
----------------------
Section 2.33 of the Loan and Security Agreement.
"Permitted Transferee" shall mean any surviving ancestor, living descendent
--------------------
(adopted or natural), brother, sister, spouse, sister-in-law or brother-in-law
of the Person identified on the INFORMATION SCHEDULE annexed to this Loan and
Security Agreement.
"Person" shall mean any natural person, corporation, partnership,
------
association, firm, trust, limited liability company, or other entity or any
government, governmental agency or regulatory authority or instrumentality or
any subdivision thereof.
"Personal Property Lease Obligation" shall mean any obligations of a Person
----------------------------------
in connection with any leases for personal property, including Equipment, not
included in Indebtedness.
"Preliminary Statement" shall mean the paragraphs of this Loan and Security
---------------------
Agreement preceding Section 1 of the Loan and Security Agreement and captioned
"Preliminary Statement" of the Loan and Security Agreement.
"Principal Agreement" shall mean the meaning accorded to such term in
-------------------
Section 2.12 of the Loan and Security Agreement.
51
<PAGE>
"Property" shall mean the meaning accorded to such term in Section 2.2 of
--------
the Loan and Security Agreement.
"Real Property" shall mean all now owned and hereafter acquired real
-------------
property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, and related assets as more
particularly described in the Mortgages.
"Real Property Lease Obligation" shall mean any obligations of a Person in
------------------------------
connection with any leases for real property not included in Indebtedness.
"Records" shall mean all of Borrower's present and future books of account
-------
and records of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
(in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
"Replacement Collateral" shall have the meaning accorded to such term in
----------------------
Section 2.31.2 of the Loan and Security Agreement.
"Servicer" shall mean the Servicer referred to in the Servicing Agreement
--------
and any successors, assigns and replacements therefor.
"Servicer Collection Account" shall mean the Collection Account established
---------------------------
pursuant to the Servicing Agreement, by and among the Secured Party, the
Servicer and certain other parties thereto, as amended, modified, supplemented
or replaced from time to time.
"Servicing Agreement" shall mean the Servicing Agreement, by and among the
-------------------
Secured Party, the Servicer and certain other parties thereto, as amended,
modified, supplemented or replaced from time to time.
"Securitization" shall mean the sale, pledge, grant of a security interest,
--------------
collateral assignment, transfer and delivery or other encumbrance or disposition
of all or any portion of the Loan (or Secured Party's rights and powers
therein), from time to time, to one or more of Secured Party's Affiliates or to
other Persons, including the sale of the Loan by Secured Party to one or more
Persons who will issue debt instruments or equity certificates backed by the
Loan and the servicing of such Loan by the Person appointed as servicer in
connection therewith.
"Specified Market" shall mean the market area described in the SPECIFIED
----------------
MARKET SCHEDULE to the Loan and Security Agreement.
52
<PAGE>
"State" shall mean each state of location of any Property from which
-----
Borrower operates the Business.
"Trademarks" shall mean all United States or other registered or
----------
unregistered trademarks together with the goodwill of the business connected
with the use thereof, and symbolized thereby, all licenses thereto, and all
applications therefor, and all reissues, divisions, continuations, renewals,
extensions, modifications, supplements thereto or to any part thereof, and the
right to sue for past, present and future infringements of the foregoing, and
all rights corresponding to the foregoing throughout the world.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
---
Texas.
"UCC Search" shall mean the security interest, tax lien, suit and judgment
----------
search of Borrower conducted in any State and County.
53
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
LLO Fee "F" Convenience Loan
Unit Address City County State Zip Lease "L" Gas Store Amount
- ---- ------- ---- ------ ----- --- --------- --- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
609 3817 W. Third St. Los Angeles Los Angeles CA 90020 F Arco AM/PM $ 975,000
- ---------------------------------------------------------------------------------------------------------------------------------
712 3366 N. San Gabriel Bl. Rosemead Los Angeles CA 91770 F Arco Arco $ 700,000
- ---------------------------------------------------------------------------------------------------------------------------------
5045 702 W. Broadway Rd. Phoenix Maricopa AZ 85032 F Arco AM/PM $1,230,000
- ---------------------------------------------------------------------------------------------------------------------------------
5191 4100 California Ave. Bakersfield Kern CA 93309 F Arco AM/PM $ 760,000
- ---------------------------------------------------------------------------------------------------------------------------------
5234 13001 Stockdale Hwy Bakersfield Kern CA 93312 F Arco AM/PM $ 585,000
- ---------------------------------------------------------------------------------------------------------------------------------
5972 64200 20/th/ St./PO Box 938 N. Palm Springs Riverside CA 92258 F Arco AM/PM $ 750,000
- ---------------------------------------------------------------------------------------------------------------------------------
999 240 Commerce Dr. Mammoth Lakes Mono CA 93546 F Arco AM/PM $ 300,000
- ---------------------------------------------------------------------------------------------------------------------------------
81633 16096 Slover Ave. Fontana San Bernardino CA 92335 F Arco AM/PM $2,500,000
- ---------------------------------------------------------------------------------------------------------------------------------
Total $7,800,000
==========
</TABLE>
54
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
LLO Borrower Borrower Borrower Principal Chief Executive
Unit: Legal Name: Trade Name(s): Taxpaper I.D. No.: Agreement: Office Street:
- ----- ----------- -------------- ------------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
609 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
712 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5045 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5191 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5234 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5972 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
999 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Independent 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
81633 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO Chief Executive Chief Executive Chief Executive
Unit: Office City: Office County: Office State:
- ------ ------------ -------------- -------------
<S> <C> <C> <C>
- ---------------------------------------------------------------
609 Malibu Los Angeles California
- ---------------------------------------------------------------
712 Malibu Los Angeles California
- ---------------------------------------------------------------
5045 Malibu Los Angeles California
- ---------------------------------------------------------------
5191 Malibu Los Angeles California
- ---------------------------------------------------------------
5234 Malibu Los Angeles California
- ---------------------------------------------------------------
5972 Malibu Los Angeles California
- ---------------------------------------------------------------
999 Malibu Los Angeles California
- ---------------------------------------------------------------
81633 Malibu Los Angeles California
- ---------------------------------------------------------------
</TABLE>
55
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
Lease
LLO Chief Executive Account No. Type Lease Lease Remaining
Unit Office Zip: Local Bank: Deposit: Acquisitions: "L, GL, SL": Payment Expiration: Lease Term:
- ---- ----------- ----------- -------- ------------- ------------ ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
609 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
712 90265 Bank of America Arco 1099 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
5045 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
5191 90265 Bank of America Arco 1099 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
5234 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
5972 0265 Bank of America Arco 1099 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
999 265 Bank of America n/a n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
81633 90265 Bank of America Time Out, LLC 10-99 n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO
Unit Record Owner:
- ---- ------------
<S> <C>
- ------------------------------------------------
609 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
712 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5045 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5191 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5234 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5972 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
999 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
81633 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
</TABLE>
56
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
[Cost before depreciation - [illegible]
<TABLE>
<CAPTION>
Hazard
LLO Principle Insurance Liability Workers" Comp BU
Unit Shareholder Litigation Permitted Transferees (D&T Cost) Insurance Insurance Insurance
- ---- ---------- ---------- --------------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
609 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
712 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
5045 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
5191 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
5234 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
5972 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
999 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
81633 John Castellucci None None $1,000,000 State Requirements 6 months
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO UST
Unit Insurance
- ---- ---------
<S> <C>
- ----------------------------
609 Private Insurance
- ----------------------------
712 Private Insurance
- ----------------------------
5045 Private Insurance
- ----------------------------
5191 Private Insurance
- ----------------------------
5234 Private Insurance
- ----------------------------
5972 Private Insurance
- ----------------------------
999 Private Insurance
- ----------------------------
81633 Private Insurance
- ----------------------------
</TABLE>
57
<PAGE>
Specified Market Schedule
Los Angeles County, California
Maricopa County, Arizona
Kern County, California
Riverside County, California
Mono County, California
San Bernardino County, California
58
<PAGE>
SCHEDULE 2.3 - Affiliates
-------------------------
John D. Castellucci
59
<PAGE>
SCHEDULE 2.14
-------------
U.C.C.-1 Recordings
Property Locations Recorded at:
- ------------------ -----------
ARCO Facility No. 01860 California Secretary of State
3817 W. Third Street UCC Division
Los Angeles, California 90020 P.O. Box 942835
Sacramento, CA 94235-0001
Los Angeles County Recorder
12400 Imperial Highway
Norwalk, CA 90650
ARCO Facility No. 05502 Arizona Secretary of State
702 West Broadway Attn: UCC Division
Phoenix, Arizona 95032 State Capital Building
1700 W. Washington
7/th/ Floor
Phoenix, AZ 95007-2888
Maricopa County Recorder's Office
111 South 3/rd/ Avenue
Phoenix, AZ 95003
ARCO Facility No. 05212 California Secretary of State
3366 N. San Gabriel Boulevard UCC Division
Rosemead, California 91770 P.O. Box 942835
Sacramento, CA 94235-0001
Los Angeles County Recorder
12400 Imperial Highway
Norwalk, CA 90650
60
<PAGE>
ARCO Facility No. 05513 California Secretary of State
13001 Stockdale Highway UCC Division
Bakersfield, California 93312 P.O. Box 942835
Sacramento, CA 94235-0001
Kern County Recorders Office
1655 Chester Avenue
Bakersfield, CA 93301
ARCO Facility No. 05972 California Secretary of State
64200 20th Street UCC Division
North Palm Springs, California 92258 P.O. Box 942835
Sacramento, CA 94235-0001
Riverside County Recorders Office
4080 Lemon Street, Rm. 102
Riverside, CA 92501
ARCO Facility No. 06202 California Secretary of State
13001 Stockdale Highway UCC Division
Bakersfield, California 93312 P.O. Box 942835
Sacramento, CA 94235-0001
Kern County Recorders Office
1655 Chester Avenue
Bakersfield, CA 93301
16096 Slover Avenue California Secretary of State
Fontana, CA 92335 UCC Division
P.O. Box 942835
Sacramento, CA 94235-0001
San Bernardino County Recorders Office
222 W. Hospitality Lane
San Bernardino, CA 92415-0018
61
<PAGE>
420 Commerce Drive California Secretary of State
Mammoth Lakes, CA 93546 UCC Division
P.O. Box 942835
Sacramento, CA 94235-0001
Mono County Recorders Office
P.O. Box 237
Bridgeport, CA 93517
62
<PAGE>
SCHEDULE 2.23 - Subsidiaries
----------------------------
None
63
<PAGE>
SCHEDULE 2.26 - Credit Card Agreements
--------------------------------------
None
64
<PAGE>
SCHEDULE 2.31 - Sale of Assets
None
65
<PAGE>
SCHEDULE 2.38 - Listing of Local Banks
--------------------------------------
1. Bank of America
5959 Canoga Avenue
Woodland Hills, California 91367
Account No. 1201501636
Account Name: Llo-Gas, Inc., a Delaware Corporation
2. Washington Mutual Bank
29211 Heathercliff Road
Malibu, California 90265
Account No. 1790953369
Account Name: Llo-Gas, Inc., a Delaware Corporation
3. Sterling National Bank
425 Park Avenue
New York, New York 10022
Account No. 033028560
Account Name: Capstone Capital/Llo-Gas, Inc.
66
<PAGE>
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # _________________
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement") by and between LLO-GAS, INC., a Delaware corporation (the
Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
Date of Note: October ___, 1999
Borrower: LLO-GAS, INC.,
a Delaware corporation
Principal Amount: $______________________
First Payment Date: December 11, 1999
Interest Rate: ______% per annum
Funding Date Payment: $______________________
Stated Payment Amount: $______________________
Lockout Period: A period commencing on the Date of
Note and ending on the third anniversary
of the first Payment Date
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the Date
of Note (or on the Date of Note if such date
is the eleventh day of a month).
Maturity Date: November 11, 2014
Defeasance Period A period (i) commencing on the earlier of (x)
the third anniversary of the first Payment
Date and (y) two years after the
securitization of the Loan by CSFC, and (ii)
ending on the Maturity Date
67
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal
--------
Amount outstanding, from time to time (i) except as provided in clause (ii), at
the Interest Rate, and (ii) upon and during the continuation of an Event of
Default, at a rate per annum equal to the sum of (x) the Interest Rate plus (y)
500 basis points ("Default Rate"). Borrower promises to pay interest to the
order of CSFC in arrears on each Payment Date (as defined below) except as
provided in Section 3.a.ii hereof. All calculations of interest shall be
computed on the basis of a 360-day year and charged on the basis of actual days
elapsed for any whole or partial month in which interest is being calculated
("Actual/360"). Borrower acknowledges that interest calculated on an Actual/360
basis exceeds interest which is calculated on a basis of a 360-day year
consisting of 12 months of 30 days each ("30/360") and, therefore, a greater
portion of each monthly installment of principal and interest will be applied to
interest using the Actual/360 basis than would be the case if interest accrued
on a 30/360 basis. In no event shall Borrower's interest payment obligations or
the amounts of interest payable, contracted for, charged or received under or in
connection with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule: Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month thereafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
68
<PAGE>
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due
under this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient to
purchase direct, non-callable obligations of the United States
of America (the "Defeasance Collateral") that provide for
payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or greater
than the amount of the corresponding installment of principal
and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly satisfactory
to CSFC (including, without limitation, such instruments as may
be required by the depository institution holding such
securities to effectuate book-entry transfers and pledges
through the book-entry facilities of such institution) in order
to create a first priority security interest therein in favor of
CSFC in conformity with all applicable state and federal laws
governing granting of such security interests;
69
<PAGE>
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole discretion
stating, among other things, that CFSC has a perfected first
priority security interest in the Defeasance Deposit and the
Defeasance Collateral purchased on behalf of Borrower and that
the Defeasance Loan Agreement is enforceable against Borrower in
accordance with its terms;
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal
of any rating in effect immediately prior to such defeasance for
any Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC
may reasonably request.
II. Upon compliance with the requirements of this Section 4 and with
the requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory to
CSFC in its sole discretion) in form and substance satisfactory to CSFC in its
sole discretion with respect to, among other things, the enforceability of the
assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
70
<PAGE>
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above, Borrower hereby appoints
CSFC as its agent and attorney-in-fact for the purpose of purchasing the
Defeasance Collateral with funds provided by the Borrower. Borrower shall pay
any and all expenses incurred in the purchase of the Defeasance Collateral and
any revenue, documentary stamp or intangible taxes or any other tax or charge
due in connection with the transfer of this Note or otherwise required to
accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the entire
----------------------
Principal Amount may be accelerated by CSFC and CSFC may pursue it remedies
against Borrower and the personal and real property that secures Borrower's
Obligations, including Borrower's obligation to pay the Principal Amount
evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date:
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each such yield being based
on the bid price for such issue as published in The Wall Street Journal on the
date that is 14 days prior to the Repayment Date (or, if such bid price is not
published on that date, the next preceding date on which such bid price is so
published) and converted to a monthly compounded nominal yield. The term
"Payment Differential" as used herein shall be equal to (x) the Interest Rate
minus the Reinvestment Yield, divided by (y) 12 and multiplied by (z) the
principal sum being repaid on such Repayment Date after application of the
Monthly Payment (if any) due on the date of the Default Repayment, provided that
the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
71
<PAGE>
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND ACKNOWLEDGES
------------------------------
THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS") SET FORTH IN
THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS, AND ONLY AFTER
EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEY;
BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS BEING WAIVED
AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE LOAN TO
BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT CSFC
WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower and
any and all obligors, sureties, guarantors and endorsers of this Note and all
other parties now or hereafter liable hereon jointly and severally ("Obligors"):
(i) acknowledge that the transaction of which this Note is a part is part of a
commercial transaction; (ii) waive any and all (from time to time) (a) rights to
notice and hearing under any state or federal law with respect to any
prejudgment remedy which the CSFC may desire to use, from time to time, and (b)
grace. diligence, demand, presentment for payment, protest, notice of any kind
(including notice to sureties, disclosure of facts which materially increase
risks, notice of protest, acceptance, liability suit, demand, or action,
dishonor, payment or nonpayment, protest. intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more substitutions, exchanges or
releases of any or all security, now or hereafter given for any obligation, (c)
to any and all releases, from time to time, of any and all parties primarily,
secondarily or otherwise liable for any obligation or guaranteed obligation, (d)
that it is not (and at no time will be) necessary for CSFC, or any other holder,
transferee, obligee or beneficiary of any note or obligation or guaranteed
obligation (or any interest therein) (collectively, "Obligee"), in order to
enforce such note or obligation, to first institute or exhaust such Person's
remedies against any borrower or other Person or against any collateral or other
security for such note or obligation, and (e) any delay in exercising, failure
to exercise, or non-exercise (or partial exercise), from time to time, by CSFC
or any other Obligee of any obligation or guaranteed obligation of any rights or
remedies (or to insist upon strict performance) in any one or more instances
shall not constitute a waiver thereof (or preclude full exercise or insistence
upon strict performance thereof) in that or any other instance, and any single
exercise of any such Person's right or remedies in any one or more instances
shall not preclude full exercise in any other instance; and (iv) waives and
agrees not to assert any right of set off and any claim (as defined in U.S.C.
Section 101), including, without limitation, any claim of subrogation,
reimbursement, exoneration, contribution or indemnification that Borrower or any
other Obligor may now or hereafter have against Borrower or any other Obligor or
any security held by or available to CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
72
<PAGE>
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, IN
----------------------
NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and such other indebtedness,
or if CSFC is prohibited by applicable law from applying such excessive interest
to the reduction of the Principal Amount or on account of any other
indebtedness, the excess shall be refunded to Borrower. All sums paid or agreed
to be paid by the Borrower for the use, forbearance or detention of the
indebtedness of the Borrower to CSFC shall, to the extent permitted by
applicable law, be amortized prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the actual rate of
interest on account of such indebtedness is uniform though the term hereof. The
terms and provisions of this Section shall control and supersede every other
provision of all agreements between the Borrower and CSFC and all obligations of
Borrower to CSFC.
9. Applications: Calculations of Amounts Due. Timely payments of the
-----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant. investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, service or investor.
73
<PAGE>
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as provided in the Mortgage. This Note shall be
binding upon Borrower, its successors and, without limiting the preceding
sentence, assigns. For all payments to be made and obligations to be performed
under this Note, Borrower agrees to perform strictly in accordance with the
terms of this Note and time is of the essence. Whenever possible, this Note and
each provision hereof, shall be interpreted in such manner as to be effective,
valid and enforceable under applicable law. If and to the extent that any such
provision shall be held invalid and unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provisions hereof, and any determination that the application of any
provision hereof to any person or under any circumstance is illegal and
unenforceable shall not affect the legality, validity and enforceability of such
provision as it may be applied to any other person or in any other circumstance.
All rights and remedies provided in this Note, the Loan Agreement, the
Mortgages, and any other Loan Document or any law shall be available to CSFC and
shall be cumulative. THIS NOTE CONTAINS WAIVERS OF VARIOUS RIGHTS AND DEFENSES,
INCLUDING (WITHOUT LIMITATION) WAIVERS OF RIGHTS OF JURY TRIAL AND APPRAISAL AS
SET FORTH IN SECTION 7 HEREOF. THIS DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New York
over any suit, action, or proceeding arising out of or relating to this Note or
the Loan evidenced hereby; and (b) any state court sitting in the county of the
state where the applicable Property is located over any suit, action, or
proceeding, brought by CSFC to exercise its rights to foreclose under the
Mortgages or any action brought by CSFC to enforce its rights with respect to
the Collateral. Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum.
74
<PAGE>
SCHEDULE 3.a.i.
SECURED PROMISSORY NOTES
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
75
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
LLO Fee "F" Convenience Loan
Unit Address City County State Zip Lease "L" Gas Store Amount
- ---- ------- ---- ------ ----- --- --------- --- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
609 3817 W. Third St. Los Angeles Los Angeles CA 90020 F Arco AM/PM $ 975,000
- ----------------------------------------------------------------------------------------------------------------------------------
712 3366 N. San Gabriel Bl. Rosemead Los Angeles CA 91770 F Arco Arco $ 700,000
- ----------------------------------------------------------------------------------------------------------------------------------
5045 702 W. Broadway Rd. Phoenix Maricopa AZ 85032 F Arco AM/PM $1,230,000
- ---------------------------------------------------------------------------------------------------------------------------------
5191 4100 California Ave. Bakersfield Kern CA 93309 F Arco AM/PM $ 760,000
- ----------------------------------------------------------------------------------------------------------------------------------
5234 13001 Stockdale Hwy Bakersfield Kern CA 93312 F Arco AM/PM $ 585,000
- ----------------------------------------------------------------------------------------------------------------------------------
5972 64200 20/th/ St./PO Box 938 N. Palm Springs Riverside CA 92258 F Arco AM/PM $ 750,000
- ----------------------------------------------------------------------------------------------------------------------------------
999 240 Commerce Dr. Mammoth Lakes Mono CA 93546 F Arco AM/PM $ 300,000
- ----------------------------------------------------------------------------------------------------------------------------------
81633 16096 Slover Ave. Fontana San Bernardino CA 92335 F Arco AM/PM $2,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
Total $7,800,000
==========
</TABLE>
76
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
LLO Borrower Borrower Borrower Principal Chief Executive
Unit: Legal Name: Trade Name(s): Taxpaper I.D. No.: Agreement: Office Street:
- ----- ----------- -------------- ------------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
609 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
712 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5045 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5191 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5234 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
5972 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
999 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Independent 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
81633 LLO Gas, Inc., a Delaware Corporation None 77-0489023 Arco 23805 Stuart Ranch Road, Suite 265
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO Chief Executive Chief Executive Chief Executive
Unit: Office County: Office County: Office State:
- ----- ------------ ------------ -------------
<S> <C> <C> <C>
- -----------------------------------------------------------
609 Malibu Los Angeles California
- -----------------------------------------------------------
712 Malibu Los Angeles California
- -----------------------------------------------------------
5045 Malibu Los Angeles California
- -----------------------------------------------------------
5191 Malibu Los Angeles California
- -----------------------------------------------------------
5234 Malibu Los Angeles California
- -----------------------------------------------------------
5972 Malibu Los Angeles California
- -----------------------------------------------------------
999 Malibu Los Angeles California
- -----------------------------------------------------------
81633 Malibu Los Angeles California
- -----------------------------------------------------------
</TABLE>
77
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
<TABLE>
<CAPTION>
Lease
LLO Chief Executive Account No. Type Lease Lease Remaining
Unit Office Zip: Local Bank: Deposit: Acquisitions: "L, GL, SL": Payment Expiration: Lease Term:
- ---- ----------- ----------- -------- ------------- ------------ ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
609 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
712 90265 Bank of America Arco 1099 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
5045 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
5191 90265 Bank of America Arco 1099 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
5234 90265 Bank of America Arco 10/99 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
5972 0265 Bank of America Arco 1099 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
999 265 Bank of America n/a n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
81633 90265 Bank of America Time Out, LLC 10-99 n/a n/a n/a n/a
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO
Unit Record Owner:
- ---- ------------
<S> <C>
- ------------------------------------------------
609 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
712 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5045 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5191 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5234 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
5972 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
999 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
81633 LLO-GAS, INC., a Delaware Corporation
- ------------------------------------------------
</TABLE>
78
<PAGE>
LLO-GAS, INC.
INFORMATION SCHEDULE
[Cost before depreciation -
<TABLE>
<CAPTION>
Hazard
LLO Principle Insurance Liability Workers" Comp BU
Unit Shareholder Limitation Permitted Transferees (D&T Cost) Insurance Insurance Insurance
- ---- ----------- ---------- --------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
609 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
712 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
5045 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
5191 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
5234 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
5972 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
999 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
81633 John Castellucci None None $1,000,000 State Requirements 6 months
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LLO UST
Unit Insurance
- ---- ---------
<S> <C>
- ---------------------------
609 Private Insurance
- ---------------------------
712 Private Insurance
- ---------------------------
5045 Private Insurance
- ---------------------------
5191 Private Insurance
- ---------------------------
5234 Private Insurance
- ---------------------------
5972 Private Insurance
- ---------------------------
999 Private Insurance
- ---------------------------
81633 Private Insurance
- ---------------------------
</TABLE>
79
<PAGE>
EXHIBIT C
---------
Please see attached
80
<PAGE>
[STATE OF CALIFORNIA]
[SEAL OF STATE OF CALIFORNIA]
BILL JONES
SECRETARY OF STATE
SACRAMENTO
CERTIFICATE REQUESTED ON: October 13, 1999
LLO-GAS, INC., A DELAWARE CORPORATION
@ANY ADDRESS
FINANCING STATEMENT FILED ON AUG 26, 1999 AT 1548 FILE NO. 9924360711
DEBTOR: LLO-GAS, INC., A DELAWARE CORPORATION
###-##-####
LAWS BULK PLANT, 108 DEHY-LAWS
BISHOP, CA 93514
SECURED PARTY: CAPSTONE CAPITAL, LLC
515 MADISON, 21ST FL
NEW YORK, NY 10022
FINANCING STATEMENT FILED ON AUG 26, 1999 AT 1548 FILE NO. 992248360717
DEBTOR: LLO GAS, INC., A DELAWARE CORPORATION
###-##-####
695 ATWATER BLVD
ATWATER, CA 95301
SECURED PARTY: CAPSTONE CAPITAL, LLC
515 MADISON, 21ST FL
NEW YORK, NY 10022
FINANCING STATEMENT FILED ON AUGUST 26, 1999 AT 1548 FILE No. 9924360720
DEBTOR: LLO GAS, INC., A DELAWARE CORPORATION
###-##-####
695 ATWATER BLVD
ATWATER, CA 95301
CERTIFICATE: 99291-R-0351
81
<PAGE>
[STATE OF CALIFORNIA]
[SEAL OF STATE OF CALIFORNIA]
BILL JONES
SECRETARY OF STATE
SACRAMENTO
<TABLE>
<CAPTION>
(CONTINUED) AUGUST 26, 1999 AT 1548 FILE No.9924360720
<S> <C> <C>
SECURED PARTY: CAPSTONE CAPITAL, LLC
515 MADISON, 21ST FL
NEW YORK, NY 10022
FINANCING STATEMENT FILED ON AUG 26, 1999 AT 1548 FILE NO.9924360732
</TABLE>
DEBTOR: LLO-GAS, INC., A DELAWARE CORPORATION
###-##-####
LAWS BULK PLANT, 108 DEHY-LAWS
BISHOP, CA 93514
SECURED PARTY: CAPSTONE CAPITAL, LLC
515 MADISON, 21ST FL
NEW YORK, NY 10022
THE UNDERSIGNED FILING OFFICER HEREBY CERTIFIES THAT THE ABOVE LISTING IS A
RECORD OF ALL PRESENTLY EFFECTIVE FINANCING STATEMENTS, TAX LIENS, ATTACHMENT
LIENS AND JUDGMENT LIENS, INCLUDING ANY CHANGE DOCUMENTS RELATING TO THEM, WHICH
NAME THE ABOVE DEBTOR AND ARE ON FILE IN MY OFFICE AS OF OCTOBER 06, 1999 AT
1700 HOURS.
/s/ Bill Jones
-------------------------
BILL JONES
SECRETARY OF STATE
CERTIFICATE: 99291-R-0351
82
<PAGE>
EXHIBIT D - Principal Agreements
--------------------------------
Property Description Agreements
- -------------------- ----------
ARCO Facility No. 01860 (1) am/pm MINI MARKET AGREEMENT
3817 W. Third Street (2) CONTRACT DEALER AGREEMENT
Los Angeles, California 90020
ARCO Facility No. 05502 (1) am/pm MINI MARKET AGREEMENT
702 West Broadway (2) CONTRACT DEALER AGREEMENT
Phoenix, Arizona 85032
ARCO Facility No. 05212 (1) am/pm MINI MARKET AGREEMENT
3366 N. San Gabriel Boulevard (2) CONTRACT DEALER AGREEMENT
Rosemead, California 91770
ARCO Facility No. 05513 (1) am/pm MINI MARKET AGREEMENT
13001 Stockdale Highway (2) CONTRACT DEALER AGREEMENT
Bakersfield, California 93312
ARCO Facility No. 05972 (1) am/pm MINI MARKET AGREEMENT
64200 20th Street (2) CONTRACT DEALER AGREEMENT
North Palm Springs, California 92258
ARCO Facility No. 06202 (1) am/pm MINI MARKET AGREEMENT
4100 California Avenue (2) CONTRACT DEALER AGREEMENT
Bakersfield, California 93309
ARCO Facility (1) am/pm MINI PARKET AGREEMENT
16096 Slover Avenue (2) CONTRACT DEALER AGREEMENT
Fontana, California 92335
83
<PAGE>
EXHIBIT E
COMPLIANCE CERTIFICATE
----------------------
Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, California 90024
Attention: Mr. Steven M. Wheelon
Re: Loan and Security Agreement, dated as of October __, 1999, by and
between CONVENIENCE STORE FINANCE COMPANY, LLC and LLO-GAS, INC.,
a Delaware corporation (the "Loan Agreement") Section 2.18 -
COMPLIANCE CERTIFICATE
The undersigned ("Borrower") hereby certifies to Secured Party (as
defined in the Loan Agreement) that except to the extent set forth on Schedule I
attached hereto, (i) all representations and warranties made by Borrower in the
captioned Loan Agreement, as of the date hereof, are true in all material
respects and correct in all material respects as if made on the date hereof;
Borrower has performed all of its material covenants and other Obligations (as
defined in the Loan Agreement) required to be performed under the Loan Documents
(as defined in the Loan Agreement) as of the date hereof and is in compliance
with the financial covenants set forth in Section 2.8 of the Loan Agreement; no
Event of Default (as defined in the Loan Agreement) has occurred and Borrower
has no reason to believe that an Event of Default will occur any time in the
six-month period following the date hereof; and (ii) all written information,
written reports, written statements and financial and other written data
furnished by Borrower to Secured Party, its agents or representatives since
_______________, _____ in connection with Borrower's Loan and the secured
Obligations were, on the date so furnished, and are true, complete and correct
in all material respects.
IN WITNESS WHEREOF, the undersigned has caused this Compliance
Certificate to be executed and delivered for and on behalf of Borrower, this
_____ day of _______________.
LLO-GAS, INC.,
a Delaware corporation
By:_______________________________________
Name:
Title:
84
<PAGE>
LLO-GAS INC.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Telephone: (310) 456-8494
October 26, 1999
Washington Mutual Bank
29211 Heathercliff Road,
Malibu, California 90265
Gentlemen:
Llo-Gas, Inc., a Delaware corporation, ("Borrower"), hereby notifies
you that it has entered into financing arrangements with Convenience Store
Finance Company, LLC ("Lender"), pursuant to which Lender may from time to time
make loans and advances and provide other financial accommodations to Borrower,
and Borrower has granted to Lender a security interest in that certain deposit
account ("Deposit Account") maintained by Borrower with you and described below:
Account Number Depositor's Name
-------------- ----------------
179093369 Llo-Gas, Inc., a Delaware corporation
You are hereby irrevocably authorized and directed, without any
additional consent or authorization of Borrower, to deliver the Deposit Account
and all funds held therein to Lender, its successors or assigns, upon the
written request of Lender, or any successor or assign.
Lender is relying upon this letter agreement in providing financing to
us, and this letter agreement shall be binding upon you and your successors and
assigns and inure to the benefit of Lender and its successors and assigns. This
letter agreement cannot be changed, modified or terminated, except by written
agreement signed by Lender.
Please acknowledge your receipt of, and agreement to, the foregoing by
signing in the space provided below.
Very truly yours,
Llo-Gas, Inc., a Delaware corporation
By:_______________________________________
John D. Castellucci, President
Acknowledged and Agreed:
Washington Mutual Bank
By:___________________________
Its:__________________________
85
<PAGE>
Llo-Gas, Inc.
23805 Stuart Ranch Road
Suite 265
Malibu, California 90265
Telephone: (310) 456-8494
Facsimile: (310) 456-6094
October 22, 1999
VIA FEDERAL EXPRESS
- -------------------
The Company Corporation
1013 Centre Road
Wilmington, Delaware 19805
Re: Amendment to Certificate of Incorporation
Dear Sir or Madam:
Enclosed for filing on Monday, October 25, 1999, is an original and
three copies of the Amendment to Certificate of Incorporation of Llo-Gas, Inc.
Please file the attached Amendment and return a conformed copy to me via
facsimile and U. S. Mail.
Because we were unable to reach you before your close of business, we
were unable to determine the exact filing fee for the Amendment. Accordingly,
following is my Bank of America Visa number for use in this regard:
4024-0060-0001-6437; Expiration 07/01.
If you have any questions or encounter any problems filing the
Amendment, please telephone me at the above number, or telephone my attorney,
Ken Roberts, at (818) 888-3553.
Thank you for your assistance.
Very truly yours,
John D. Castellucci
President
JDC:cIh
Enclosures
86
<PAGE>
LLO-GAS INC.
23805 Stuart Ranch Road, Suite 265
Malibu, California 90265
Telephone: (310) 456-8494
October 26, 1999
Bank of America
5959 Canoga Avenue
Woodland Hills, California 91367
Gentlemen:
Llo-Gas, Inc., a Delaware corporation, ("Borrower"), hereby notifies
you that it has entered into financing arrangements with Convenience Store
Finance Company, LLC ("Lender"), pursuant to which Lender may from time to time
make loans and advances and provide other financial accommodations to Borrower,
and Borrower has granted to Lender a security interest in that certain deposit
account ("Deposit Account") maintained by Borrower with you and described below:
Account Number Depositor's Name
-------------- ----------------
1201501636 Llo-Gas, Inc., a Delaware corporation
You are hereby irrevocably authorized and directed, without any
additional consent or authorization of Borrower, to deliver the Deposit Account
and all funds held therein to Lender, its successors or assigns, upon the
written request of Lender, or any successor or assign.
Lender is relying upon this letter agreement in providing financing to
us, and this letter agreement shall be binding upon you and your successors and
assigns and inure to the benefit of Lender and its successors and assigns. This
letter agreement cannot be changed, modified or terminated, except by written
agreement signed by Lender.
Please acknowledge your receipt of and agreement to, the foregoing by
signing in the space provided below.
Very truly yours,
Llo-Gas, Inc., a Delaware corporation
By:_______________________________________
John D. Castellucci, President
Acknowledged and Agreed:
Bank of America
By:___________________________
Its:___________________________
87
<PAGE>
NATIONAL FINANCING STATEMENT (FORM UCC1) TRANS
THIS SPACE FOR USE OF FILING OFFICER
FINANCING STATEMENT - FOLLOW INSTRUCTIONS CAREFULLY
This Financing Statement is presented for filing pursuant to the Uniform
Commercial Code and will remain effective, with certain exceptions, for 5 years
from the date of filing
A NAME & TEL # OF CONTACT FILER (optional) B FILING OFFICE ACCOUNT #
(optional)
C RETURN COPY TO (Name and Mailing Address)
[ ]
Stroock & Stroock & Lavan LLP
2049 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
[ ]
<TABLE>
<CAPTION>
D OPTIONAL DESIGNATION (if applicable). |_| LESSOR/LESSEE |_|CONSIGNOR/CONSIGNEE|_| NON-UCC FILING
- ------------------------------------------------------------------------------------------------------------------------------------
1 DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor (1a or 1b)
<S> <C> <C> <C> <C>
1a. ENTITY'S NAME
LLO-GAS, INC., a Delaware corporation
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CITY: STATE COUNTRY POSTAL CODE
23805 Stuart Ranch Road Malibu CA USA 90265
1d. S.S. OR TAX ID # OPTIONAL 1e. TYPE OF ENTITY 1f. ENTITY 1g. ENTITY'S ORG I.D.#, if any
ADDN'L INFO RE OR COUNTY OF
ENTITY DEBTOR ORGANIZATION |X| NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b)
2a. ENTITY'S NAME
2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY: STATE COUNTRY POSTAL CODE
2d. S.S. OR TAX ID # OPTIONAL 2e. TYPE OF ENTITY 2f.ENTITY'S STATE 2g. ENTITY'S ORG I.D.#, if any
ADDN'L INFO RE OR COUNTY OF
ENTITY DEBTOR ORGANIZATION |_| NONE
3. SECURED PARTY'S (ORIGINAL S/P or ITS TOTAL ASSIGNED) EXACT FULL LEGAL NAME - insert only one debtor name (3a or 3b)
3a ENTITY'S NAME CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited liability company
3b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY: STATE COUNTRY POSTAL CODE
10880 Wilshire Boulevard, 21st Floor Los Angeles CA USA 90024
4. This FINANCING STATEMENT covers the following types or items of property
Con'td.-See Attached Schedule A.
- -----------------------------------------------------------------------------------------------------------------------------------
5 CHECK [_] THIS FINANCING STATEMENT is signed by the Secured 7 If file in Florida (check one)
Party instead of the Debtor to perfect a security [_] Documentary [_] Documentary
interest (a) in collateral already subject to a security Stamp stamp tax paid tax not
interest in another jurisdiction when it was brought into applicable
this state, or when the debtor's location was state, or
(b) in accordance with other statutory provisions (additional
data may be required)
REQUIRED SIGNATURE(S) 8 This FINANCING STATEMENT is to be filed (for record)
Cont'd.-See Attached Schedule B. |_| (or recorded) in the REAL ESTATE RECORDS
Attach Addendum (If applicable)
- -----------------------------------------------------------------------------------------------------------------------------------
9 Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
(ADDITIONAL FEE)
(Optional) |_| all Debtors |_| Debtor 1 |_| Debtor 2
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NATIONAL FINANCING STATEMENT (FORM UCC1)
88
<PAGE>
Schedule "A" to UCC-1 Financing Statement
-----------------------------------------
DEBTOR: LLO-GAS, INC.
23805 Stuart Ranch Road. Suite 265
Malibu, California 90265
SECURED PARTY: CONVENIENCE STORE FINANCE COMPANY, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, California 90024
This financing statement covers all the Debtor's right, title and interest
in, to and under the following property, whether now owned or hereafter
acquired, now existing or hereafter arising and wherever located (collectively,
the "Collateral
(a) all Goods (including Inventory and Equipment), General Intangibles.
Accounts, certificates of title, fixtures, money, instruments, securities,
investment property, documents, chattel paper, credit balances, deposits,
deposit accounts, letters of credit, bankers' acceptances, guaranties, credits,
claims, choses in action, demands, and all present and future liens, security
interests, rights, insurance, remedies, title and interest in, to and in respect
of Accounts and other property of every kind and description, and all other
personal property, now or hereafter owned, acquired, held, used, sold or
consumed in connection with Debtor's business or property and any other
property, rights and interests of Debtor which at any time relate to, arise out
of or in connection with the foregoing or which shall come into the possession
or custody or under the control of the Secured Party or any of its agents,
representatives, associates or correspondents, for any purpose, including
without limitation, any Replacement Collateral; all additions and accessions
thereto, substitutions therefor and replacements and improvements of or to any
of the foregoing; all interest, income, dividends, distributions and earnings
thereon or other monies or revenues derived therefrom, including any such
property received in connection with any disposition thereof and all moneys
which may become payable under any policy insuring the foregoing or otherwise
required to be maintained hereunder (including return of unearned premium)
("Collateral Revenues"); and
(d) all products and proceeds of all or any of the foregoing.
As used herein, the following terms have the meanings set forth below:
"Accounts" shall have the meaning accorded to such term in the UCC
and shall include all present and future rights of Debtor to payment for goods
sold or leased or for services rendered, which are not evidenced by instruments
or chattel paper, and whether or not earned by performance, including, without
limitation, Credit Card Receivables.
89
<PAGE>
"Credit Card Issuer" shall mean any person (other than Debtor) who
issues or whose members issue credit cards, including, without limitation.
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards, and American Express. Discover, Diners Club. Carte Blanche and other non-
bank credit or debit cards.
"Credit Card Receivables" shall mean all Accounts consisting of the
present and future rights of Debtor to payment for Inventory sold and delivered
to customers who have purchased such goods using a credit card or a debit card
issued by a Credit Card Issuer.
"Equipment" shall have the meaning accorded to such term in the UCC
and shall include all goods used or bought for use primarily in the business and
not included within the Inventory, including machines, computers, fixtures,
furnishings, furniture, appliances, vehicles, tools, and supplies, and the like
employed in connection with the business, together with all present and future
additions, attachments, accessions thereto, all replacements, improvements and
betterments thereof and all substitutions therefor.
"General Intangibles" shall have the meaning accorded to such term in
the UCC and shall include agreements, contracts, writings, memoranda,
confirmations, passbooks, signature cards, acknowledgments, understandings,
contract rights, licenses, leases, permits, filings, consents, and approvals,
and all puts, calls, options, warrants, and securities, and all tax and duty
refunds, and all security interests, patents, inventions, processes, lists
(including customer and suppliers lists), methods, and information (including
proprietary information, member lists and information concerning members, sales,
business, financial, accounting, forecasts, projections, media, and other
information), know how, software, programs, plans, data, blueprints, designs,
drawings, surveys, notices, copyrights, trademarks, trade names, trade secrets,
service marks, service names, logos and goodwill, going concern value, and
market share value and all recordings and registrations thereof, applications
for recording or registration, renewals, modifications, supplements, reissues,
continuations, extensions, divisions thereof and rights corresponding thereto,
and all manuals, standards, practices, mail, advertisements, files, reports,
books, catalogs, records, journals, invoices, and bills, and all rights
(including voting rights, rights to receive notice or to consent, rights to
payment, interest, dividends, distributions or earnings, rights to sue and
enforce), powers (including powers of attorney), privileges, benefits, and
remedies. relating thereto or arising in connection therewith.
"Goods" shall have the meaning accorded to such term in the UCC and
shall include (i) all Inventory and (ii) all Equipment.
"Inventory" shall have the meaning accorded to such term in the UCC
and shall include all goods held by Debtor for sale or lease or to be furnished
under contracts of service, all goods so furnished by Debtor, all raw materials
and work in process, and all materials used or consumed in Debtor's business and
all documents of title covering any inventory.
"Replacement Collateral" shall mean those assets of the Debtor-which
replace certain Collateral and which have an appraised value equal to or greater
than that of the
90
<PAGE>
Collateral which such assets replace and which shall be otherwise acceptable in
all respects to the Secured Party.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York.
91
<PAGE>
Schedule "B" to UCC-1 Financing Statement
-----------------------------------------
DEBTOR: LLO-GAS, INC.
2380 Stuart Ranch Road. Suite 26
Malibu, California 9026
SECURED PARTY: CONVENIENCE STORE FINANCE COMPANY. LLC
10880 Wilshire Boulevard, 21 st Floor
Los Angeles, California 90024
ITEM 6. CONTINUED
SIGNATURE OF DEBTOR: LLO-GAS, INC.,
a Delaware corporation
By:_____________________________
Name:___________________________
92
<PAGE>
Exhibit 10.60
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Phoenix, AZ
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
-2-
<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
-3-
<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
-4-
<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
-6-
<PAGE>
shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
-7-
<PAGE>
4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
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5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
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Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
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(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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<PAGE>
or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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<PAGE>
Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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<PAGE>
(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
-----------------------------------------------
(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
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demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
--------------
enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
-------------------------------------------------
this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
-------- -------
period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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<PAGE>
inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
-------------------
Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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<PAGE>
this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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<PAGE>
Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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<PAGE>
but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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<PAGE>
receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
-29-
<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
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<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
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<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
--------------------
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
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<PAGE>
Escrow No.: 02-950.079
EXHIBIT "A"
LEGAL DESCRIPTION
That part of Lots 8 and 9, BROADWAY GARDENS, according to Book 29 of Maps, Page
43, records of Maricopa County, Arizona, more particularly described as follows:
BEGINNING at the Southeast comer of Section 19, Township 1 North, Range 3 East
of the Gila and Salt River Base and Meridian, Maricopa County, Arizona; thence
West along the South line of the Southeast quarter of said Section 19, a
distance of 233.00 feet to a point on the Southerly prolongation of the West
line of said Lot 8; thence North 00 degrees 19 minutes 30 seconds West along
said West line a distance of 40.00 feet to a point on the North line of the
South 40 feet of said Southeast quarter, said point also lying on the North line
of the South 7 feet of said Lot 8 and also being the true point of beginning;
thence continuing North 00 degrees 19 minutes 30 seconds West along the West
line of said Lot 8 a distance of 234.48 feet to the Northwest corner of said Lot
8; thence North 89 degrees 27 minutes 24 seconds East along the North line of
said Lots 8 and 9 a distance of 193.00 feet to a point on the West line of the
East 7 feet of said Lot 9, said point also lying on the West line of the East 40
feet of said Southeast quarter; thence South 00 degrees 19 minutes 30 seconds
East along the said West line a distance of 216.31 feet to the intersection of
said West line with the North line of the South 27 feet of said Lot 9;
thence South 44 degrees 50 minutes 15 seconds West a distance of 28.20 feet to a
point on the North line of the South 7 feet of said Lot 9, said point also lying
on the West line of the East 27 feet of said Lot 9; thence West along said North
line a distance of 173.00 feet to the TRUE POINT OF BEGINNING;
EXCEPT that portion described as follows:
BEGINNING at the Southeast corner of the Southeast quarter of Section 19,
Township 1 North, Range 3 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona; thence North 0 degrees 19 minutes 30 seconds West
along the East line of said Southeast quarter a distance of 60.23 feet; thence
South 89 degrees 40 minutes 30 seconds West a distance 40.00 feet to the TRUE
POINT OF BEGINNING;
thence North 0 degrees 19 minutes 30 seconds West along the West right of way
line of 7th Avenue a distance of 216.31 feet; thence South 89 degrees 27 minutes
24 seconds West a distance of 2.00 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 209.29 feet;
thence South 44 degrees 50 minutes 15 seconds West a distance of 21.15 feet;
<PAGE>
thence South 90 degrees 00 minutes 00 seconds West a distance of 84.53 feet;
thence North 0 degrees 00 minutes 00 seconds West a distance of 6.00 feet;
thence South 90 degrees 00 minutes 00 seconds West 23.00 feet;
thence South 76 degrees 31 minutes 29 seconds West a distance of 68.66 feet;
thence South 90 degrees 00 minutes 00 seconds West a distance of 1.64 feet;
thence South 0 degrees 19 minutes 30 seconds East a distance of 2.00 feet;
thence North 90 degrees 00 minutes 00 seconds East a distance of 173.00 feet;
thence North 44 degrees 50 minutes 15 seconds East a distance of 28.20 feet to
the TRUE POINT OF BEGINNING.
<PAGE>
Exhibit 10.61
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Mammoth Lakes, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
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<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
-4-
<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
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shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
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4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
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5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
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Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
------------------------
(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
-----------------------------------------------
(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
----------------------------------------
demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
--------------
enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
-------------------------------------------------
this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
-------------------
Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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<PAGE>
this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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<PAGE>
Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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<PAGE>
but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
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<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
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<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
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<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
____________________
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
PARCEL 3 OF MAP NO. 36-157 IN THE TOWN OF MAMMOTH LAKES, COUNTY OF MONO STATE OF
CALIFORNIA, AS PER PARCEL MAP RECORDED IN BOOK 4 PAGE 58 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THE NORTH 5.00 FEET
THEREOF.
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<PAGE>
Exhibit 10.62
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067 [Recorder's Stamp]
Attention: Chauncey M. Swalwell, Esq.
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Bakersfield, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
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<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
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<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
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<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
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make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
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shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
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4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
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5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
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water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
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Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
------------------------
(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
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(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
----------------------------------
the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
----------------------------------------
demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
--------------
enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
-------------------------------------------------
this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
-------------------
Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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<PAGE>
but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
-27-
<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
-28-
<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
-29-
<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
-30-
<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
-31-
<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
____________________
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
---------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
--------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
-35-
<PAGE>
Order No. 118305
EXHIBIT "A"
All that portion of Lot 3 of Tract No. 3202, in the City of Bakersfield, County
of Kern, State of California, and is described as follows:
Beginning at the Southwest corner of said Lot 3; thence along the South line of
said Lot 3 and the North line of California Avenue, and along a curve concave
Southeasterly, having a radius of 2155.00 feet and a central angle of
12 (Degrees) 19'28", a distance of 463.545 feet to the end of said curve; thence
North 89 (Degrees) 14'00" East 141.768 feet to the true point of beginning of
this description, said point of beginning also being the beginning of a curve
concave Northwesterly, having a radius of 20 feet and a central angle of
89 (Degrees) 25'19", thence along said curve 31.214 feet to the end of said
curve and to a point on the East line of said Lot 3; thence North 0 (Degree)
11'19" West, along said East line, said East line also being the West line of
Chester Lane, 130.201 feet to a point; thence South 89 (Degrees) 14'00" West,
175.00 feet to a point; thence South 0 (Degree) 11'19" East, 150.00 feet, more
or less, to a point on the South line of said Lot 3, thence Easterly along said
South line to the true point of beginning.
EXCEPT all oil, gas and other minerals contained within the property hereinabove
described, whether now known to exist or hereafter discovered all oil, gas and
other mineral rights belonging or appertaining to said property, the exclusive
right to prospect for, drill for, produce, mine, extract and remove oil, gas
and other minerals upon and from said property, the exclusive right to drill
upon, to drill through and otherwise to use said property to produce, mine,
extract and remove oil, gas and other minerals from adjacent or neighboring
lands and the exclusive right to inject in, store under, and thereafter
withdraw from said property, oil, gas and other minerals and products thereof,
whether produced from said property or elsewhere, but unless the Grantee
therein or its successors or assigns, shall give written consent to the drilling
of wells upon the surface of said lands, all of the foregoing rights shall be
exercised only by the drilling of wells from locations on adjacent or
neighboring lands into or without entering upon or using any portion of said
property lying above said depth, as reserved by Kern County Land Company, in
deed recorded December 29, 1967 in Book 4116, Page 612 of Official Records.
ALSO EXCEPT all water and water rights in and under said land.
<PAGE>
Exhibit 10.63
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Bakersfield, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
-3-
<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
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(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
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relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
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shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
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4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
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5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
-----------
Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
------------------------
(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
-----------------------------------------------
(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
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demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
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Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
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all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
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state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
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enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
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each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
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this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
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acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
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only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
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payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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<PAGE>
inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
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Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
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foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
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rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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<PAGE>
receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
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<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
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<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
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<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
--------------------
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
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<PAGE>
Order No. 118306
EXHIBIT "A"
Parcel A of Parcel Map No. 9105, in the City of Bakersfield, County of Kern,
State of California, as per Map recorded February 27, 1990 in Book 40, Page 8 of
Maps, in the Office of the County Recorder of said County.
Together with a non-exclusive easement, as recorded concurrently herewith in
Book 6357, Page 1885 of Official Records, for driveway, ingress and egress
purposes in common with other over, upon, through, and across that certain
portion of the NE 1/4 of Section 2, Township 30 South, Range 26 East, M.D.M.,
in the City of Bakersfield, County of Kern, State of California, and also being
a portion of Parcel "B" of Parcel Map No. 9105, recorded in Book 40, Page 8 of
Parcel Maps, in the Office of the County Recorder of said County, more
particularly described as follows:
Commencing at the Northeast corner of said Section 2; thence North 89 (Degrees)
22' 08" West along the North line of said Section 2, a distance of 265.00 feet;
thence South 00 (Degree) 31' 36" West parallel with the East line of said
Section 2, a distance of 110.00 feet to a point on the Southerly right-of-way
line of Stockdale Highway; thence North 89 (Degrees) 22' 08" West along said
Southerly right-of-way line, a distance of 20.00 feet, said point being the true
point of beginning for this description; thence South 00 (Degree) 31' 36" West
parallel with the West line of Parcel "A" of said Parcel Map 9105, a distance of
33.00 feet; thence South 89 (Degrees) 22' 08" East parallel with the North line
of said Section 2, a distance of 20.00 feet to a point on the West line of said
Parcel "A"; thence South 00 (Degree) 31' 36" West along the West line of said
Parcel "A", a distance of 40.00 feet; thence North 89 (Degrees) 22' 08" West
parallel with the North line of said Section 2, a distance of 20.00 feet; thence
South 00 (Degree) 31' 36" West parallel with the West line of said Parcel "A", a
distance of 82.00 feet to the Westerly prolongation of the South line of said
Parcel "A" thence South 89 (Degrees) 22' 08" East along said prolongation a
distance of 20.00 feet to the Southwest corner of said Parcel "A"; thence South
89 (Degrees) 22' 08" East along the South line of said Parcel "A" a distance of
210.00 feet to a point on the Westerly right-of-way line of South Allen Road;
thence South 00 (Degree) 31' 36" West along said right-of-way line, a distance
of 28.00 feet; thence North 89 (Degrees) 22' 08" West parallel with the South
line of said Parcel "A", a distance of 260.00 feet; thence North 00 (Degree)
31' 36" East parallel with the West line of said Parcel "A", a distance of
183.00 feet to a point on the Southerly right-of-way line of Stockdale Highway;
thence South 89 (Degrees) 22' 08" East along said Southerly right-of-way line, a
distance of 30.00 feet to the true point of beginning.
EXCEPTING from Parcel A of Parcel Map No. 9105, all oil, gas and minerals,
together with all rights incident to the discovery, development and production
of all oil and gas and minerals underlying the lands herein conveyed together
with so much surface thereof as will be necessary for the discovery, development
and production of all or any part of the oil and gas and minerals underlying
said land, and the transportation thereof,
<PAGE>
from, through or into the lands herein conveyed, as reserved in the Deed from
Spencer Brittain, Trustee, recorded October 7, 1948 in Book 1570, Page 11 of
Official Records.
Parcel "A" is more particularly described as follows:
Beginning at the Southeast comer of Parcel A of Parcel Map No. 9105, in the City
of Bakersfield, County of Kern, State of California, as per Map recorded
February 27, 1990 in Book 40, Page 8 of Maps, in the Office of the County
Recorder of said County; thence North 89 (Degrees) 22' 08" West 210.00 feet;
thence North 00 (Degree) 31' 36" East 155.00 feet to a point on the Southerly
Right of Way line of Stockdale Highway, thence along said Southerly Right of Way
line, 190.04 feet; thence South 44 (Degrees) 25' 16" West 28.26 feet to a point
on the Westerly right of way line of South Allen Road; thence along said
Westerly right of way line, South 00 (Degree) 31' 36" West 135.04 feet to the
point of beginning.
<PAGE>
Exhibit 10.64
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Los Angeles, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
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<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
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<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
-6-
<PAGE>
shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
-7-
<PAGE>
4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
-8-
<PAGE>
5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
-----------
Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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<PAGE>
Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
------------------------
(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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<PAGE>
or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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<PAGE>
Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
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Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
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(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
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demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
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Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
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state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
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enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
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each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
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this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
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only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
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Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
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<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
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7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
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7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
____________________
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
LOT 43 AND THE SOUTH 25 FEET OF LOT 44 OF TRACT NO. 200, IN THE CITY OF LOS
ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN
BOOK 13 PAGE(S) 152 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
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<PAGE>
Exhibit 10.65
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
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<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
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<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
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<PAGE>
shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
-7-
<PAGE>
4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
-8-
<PAGE>
5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
-----------
Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
-9-
<PAGE>
Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
------------------------
(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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<PAGE>
or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
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(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
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demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
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state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
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enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
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this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
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Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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<PAGE>
Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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<PAGE>
but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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<PAGE>
receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
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<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
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<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
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<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
--------------------
INITIALED BY TRUSTOR
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<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
------------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
The land referred to in this report is situated in the County of SAN BERNARDINO,
State of California and described as follows:
Legal Description:
THE SOUTH ONE-HALF OF THE EAST ONE-HALF OF THE EAST ONE-HALF OF FARM LOT 840, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO MAP SHOWING
SUBDIVISION OF LANDS BELONG TO SEMI-TROPIC LAND AND WATER COMPANY, AS PER MAP
RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
EXCEPT THE NORTH 75 FEET OF THE EAST 180 FEET THEREOF.
ALSO EXCEPTING THAT PORTION CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED
FEBRUARY 6, 1958 IN BOOK 4430 OF OFFICIAL RECORDS, PAGE 391, RECORDS OF SAID
COUNTY.
AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER
LINE OF ALL ADJOINING STREETS AND ROADS.
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<PAGE>
Exhibit 10.66
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq. [Recorder's Stamp]
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: No. Palm Springs, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
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<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
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<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
-4-
<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
-6-
<PAGE>
shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
-7-
<PAGE>
4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
-8-
<PAGE>
5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
-----------
Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
-9-
<PAGE>
Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
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(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
-----------------------------------------------
(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
----------------------------------------
demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
--------------
enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
-------------------------------------------------
this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
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period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
-------------------
Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
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<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
-30-
<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
-31-
<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
--------------------
INITIALED BY TRUSTOR
-32-
<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
-33-
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
------------------------------
-34-
<PAGE>
EXHIBIT A
(Description of Premises)
-35-
<PAGE>
Order No. : 119601-13
EXHIBIT "A"
The land referred to is situated in the State of California, County of
Riverside, in the unincorporated area, and is described as follows:
That portion of the West half of Section 14, Township 3 South, Range 4 East, San
Bernardino Meridian, in the County of Riverside, State of California, according
to the official plat thereof, described as follows:
Beginning at the most Southerly corner of that property described in deed to
Shell Oil Company recorded August 25, 1964 as Instrument No. 104165, Official
Records, said corner being on the East line of that property as Parcel A in Deed
to the State of California, recorded October 18, 1955 as Instrument No. 66635,
Official Records;
thence South 00 (Degree) 14'00" West on the East line of the parcel conveyed to
the State of California above referred to 4.49 feet to a point on the
Northeasterly line of that certain parcel conveyed to the State of California by
Deed recorded January 12, 1966 as Instrument No. 3948, official Records;
thence South 45 (Degrees) 12'51" East on the Northeasterly line of said parcel,
384.19 feet;
thence North 00 (Degree) 14'00" East parallel with the East line of the Shell
Oil Company property 471.54 feet;
thence North 89 (Degrees) 46'00" West, 273.78 feet to the East line of the Shell
Oil Company property;
thence 00 (Degree) 14'00" West on the East line of said Shell Oil Company
property, 197.52 feet to the point of beginning.
<PAGE>
Exhibit 10.67
PREPARED BY AND RETURN TO:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067 [Recorder's Stamp]
Attention: Chauncey M. Swalwell, Esq.
_____________________________________________________________________________
_____________________________________________________________________________
LLO-GAS, INC.,
a Delaware corporation
its successors and assigns,
as Trustor,
to
OLD REPUBLIC TITLE COMPANY
as Trustee,
for the benefit of
CONVENIENCE STORE FINANCE COMPANY, LLC,
a Delaware limited liability company,
its successors and assigns,
as Beneficiary
__________________________
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING
__________________________
Dated: October 26, 1999
Location: Rosemead, CA
<PAGE>
DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING (this "Deed of Trust") is made as of October 26, 1999, by LLO-GAS, INC.,
a Delaware corporation, having an office at 23805 Stuart Ranch Road, Suite 265,
Malibu, California 90265 ("Trustor"), to OLD REPUBLIC TITLE COMPANY, having an
office at 101 East Glenoaks Blvd., Glendale, California 91209 ("Trustee"), for
the benefit of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company, having an office at 10880 Wilshire Boulevard, 21/st/ Floor,
Los Angeles, California 90024 ("Beneficiary"), its successors and assigns.
RECITALS:
- --------
A. Reference is hereby made to that certain Loan and Security Agreement
(the "Loan Agreement"), of even date herewith, by and between Trustor, as
borrower, and Beneficiary, as secured party. Pursuant to the terms of the Loan
Agreement, Beneficiary has agreed to extend to Trustor certain term loans
(collectively, the "Loan"). The Loan is evidenced by those certain promissory
notes (each, a "Note," and collectively the "Notes") executed by Trustor, of
even date herewith, payable to the order of Beneficiary, each representing a
portion of and together representing the total principal amount of the Loan.
B. The loan documents include this Deed of Trust, the Notes, the Loan
Agreement, other mortgages, security deeds or deeds of trust encumbering
properties located within the states of California and Arizona, and the other
documents described in the Loan Agreement (hereinafter collectively referred to
as the "Loan Documents"). Unless otherwise specifically defined or used in this
Deed of Trust to the contrary, capitalized terms shall have the meanings as set
forth in the Loan Agreement or the schedule of definitions attached thereto.
ARTICLE I. DEED OF TRUST
1.1 Grant. For the purposes of and upon the terms and conditions in this
-----
Deed of Trust, Trustor does hereby grant, convey, mortgage, transfer, bargain,
and assign to Trustee, and successors and assigns of Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession,
all of Trustor's right, title and interest, whether now owned or hereafter
acquired, in or to all of the following property, rights and interests listed in
subsections (a) through (i) below (hereinafter collectively referred to as the
"Secured Property"):
(a) the real property described in Exhibit A attached hereto and
---------
incorporated herein by reference (the "Premises");
-2-
<PAGE>
(b) all buildings and improvements now or hereafter located on the
Premises (the "Improvements");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Premises and the Improvements or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, liberties,
tenements, hereditaments, and appurtenances of any nature whatsoever, in
any way belonging, relating or pertaining to the Premises and Improvements
(including, without limitation, any and all development rights, air rights
or similar or comparable rights of any nature whatsoever now or hereafter
appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center
line thereof;
(e) all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever owned by Trustor, or in which
Trustor has or shall have an interest, now or hereafter located upon the
Premises or Improvements, or appurtenances thereto, or usable in connection
with the present or future operation and occupancy of the Premises or
Improvements and all building equipment, materials and supplies of any
nature whatsoever owned by Trustor, or in which Trustor has or shall have
an interest, now or hereafter located upon the Premises or Improvements
(collectively, the "Equipment"), and the right, title and interest of
Trustor in and to any of the Equipment which may be subject to any security
agreements (as defined in the Uniform Commercial Code of the State in which
the Premises are located), superior in lien to the lien of this Deed of
Trust;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Premises or
Improvements whether from the exercise of the right of eminent domain
(including any transfer made in lieu of the exercise of said right), or for
any other injury to or decrease in the value of the Premises or
Improvements;
(g) all proceeds of and any unearned premiums on any insurance
policies covering the Premises, Improvements or Equipment (regardless of
whether such proceeds or premiums are derived from insurance policies which
Trustor is required to obtain hereunder or otherwise), including, without
limitation, the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the Premises,
Improvements or Equipment;
-3-
<PAGE>
(h) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Premises,
Improvements or Equipment and to commence any action or proceeding to
protect the interest of Beneficiary in the Premises, Improvements or
Equipment; and
(i) all proceeds of each of the foregoing.
TO HAVE AND TO HOLD the above granted and described Secured Property
unto Trustee, and its successors and assigns, forever.
ARTICLE II. OBLIGATIONS SECURED
2.1. Obligations Secured. Trustor makes this grant and assignment for the
-------------------
purpose of securing the following obligations (the "Obligations"):
(a) Full and punctual payment to Beneficiary of all sums at any time
owing under the Notes; and
(b) Full and punctual payment and performance of all covenants and
obligations of Trustor under this Deed of Trust including, without
limitation, indemnification obligations, and advances made to protect the
Secured Property; and
(c) Full and punctual payment, performance and observance by Trustor
of each other term, covenant, agreement, requirement, condition and other
provision to be performed or observed by Trustor under the Loan Agreement
or under any other Loan Document; and
(d) Full and punctual payment and performance of all future advances
and other obligations that the then record owner of all or part of the
Secured Property may agree to pay and/or perform (whether as principal,
surety or guarantor) for the benefit of Beneficiary, when such future
advance or obligation is evidenced by a writing which recites that it is
secured by this Deed of Trust; and
(e) All interest and charges on all Obligations secured hereby,
including, without limitation, prepayment charges, late charges and loan
fees; and
(f) All modifications, extensions and renewals of any of the
Obligations, however evidenced, including, without limitation: (i)
modifications of the required principal payment dates or interest payment
dates or both, as the case may be, deferring or accelerating payment dates
wholly or partly; or (ii) amendments, modifications, extensions or renewals
at a different rate of interest, whether or not any such amendment,
modification, extension or renewal is evidenced by a new or additional
promissory note or notes; and
-4-
<PAGE>
(g) The principal amount of the Obligations that this Deed of Trust
secures as of the date hereof is SEVEN MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($7,800,000).
2.2 Obligations. The term "obligations" is used herein in its broadest
-----------
and most comprehensive sense and shall be deemed to include, without limitation,
all interest and charges, prepayment charges, late charges and loan fees at any
time accruing or assessed on any of the Obligations.
2.3 Incorporation. All terms and conditions of the Loan Documents which
-------------
evidence any of the Obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Secured Property shall be
deemed to have notice of the terms of the Obligations.
ARTICLE III. ABSOLUTE ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment. Trustor irrevocably assigns to Beneficiary all of
----------
Trustor's right, title and interest in, to and under: (a) all present and future
leases of the Secured Property or any portion thereof, all licenses and
agreements relating to the management, leasing or operation of the Secured
Property or any portion thereof, and all other agreements of any kind relating
to the use and occupancy of the Secured Property or any portion thereof, whether
such leases, licenses and agreements are now existing or entered into after the
date hereof (the "Leases"); and (b) the rents, issues, deposits and profits of
the Secured Property, including, without limitation, all amounts payable and all
rights and benefits accruing to Trustor under the Leases (the "Rents"). The
term "Leases" shall also include all guaranties of and security for the tenants'
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary's right to the Leases and Rents is not contingent upon, and may be
exercised without, possession of the Secured Property.
3.2 Grant of License. Beneficiary confers upon Trustor a revocable
----------------
license (the "License") to collect and retain the Rents as they become due and
payable, until the occurrence of an Event of Default (as hereinafter defined).
Upon an Event of Default, the License shall be automatically revoked and
Beneficiary may collect and apply the Rents pursuant to the terms hereof without
notice and without taking possession of the Secured Property. All Rents
thereafter collected by Trustor shall be held by Trustor as trustee under a
constructive trust for the benefit of Beneficiary. Trustor hereby irrevocably
authorizes and directs the tenants under the Leases to rely upon and comply with
any notice or demand by Beneficiary for the payment to Beneficiary of any rental
or other sums which may at any time become due under the Leases, or for the
performance of any of the tenants' undertakings under the Leases, and the
tenants shall have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing. Trustor hereby relieves the
tenants from any liability to Trustor by reason of
-5-
<PAGE>
relying upon and complying with any such notice or demand by Beneficiary.
Beneficiary may apply, in its sole discretion, any Rents so collected by
Beneficiary against any Obligation or any other obligation of Trustor or any
other person or entity, under any document or instrument related to or executed
in connection with the Loan Documents, whether existing on the date hereof, or
hereafter arising. Collection of any Rents by Beneficiary shall not cure or
waive any Event of Default or notice of default or invalidate any acts done
pursuant to such notice.
3.3 Effect of Assignment. The foregoing irrevocable assignment shall not
--------------------
cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible for or
liable for the control, care, management or repair of the Secured Property or
for performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for (1) any waste committed on the Secured Property by the
tenants under any of the Leases or by any other parties; (2) any dangerous or
defective condition of the Secured Property; or (3) any negligence in the
management, upkeep, repair or control of the Secured Property resulting in a
loss or injury or death to any tenant, licensee, employee, invitee or other
person; or (d) responsible for or obliged by any duty to produce rents or
profits. Beneficiary shall not directly or indirectly be liable to Trustor or
any other person as a consequence of: (i) the exercise or failure to exercise
any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation,
duty or liability of Trustor arising under the Leases.
3.4 Covenants. Trustor shall not, without the consent of Beneficiary,
---------
make, or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of the Rents for a period of more than one (1) month in advance or
further assign the whole or any part of the Rents. Trustor shall (a) fulfill or
perform each and every provision of the Leases on the part of Trustor to be
fulfilled or performed, (b) promptly send copies of all notices of default which
Trustor shall send or receive under the Leases to Beneficiary, and (c) enforce,
short of termination of the Leases, the performance or observance of the
provisions thereof by the tenants thereunder. In addition to the rights which
Beneficiary may have herein, in an Event of Default under this Deed of Trust,
Beneficiary, at its option, may require Trustor to pay monthly in advance to
Beneficiary or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the Secured
Property as may be in possession of Trustor. Upon default in any such payment,
Trustor will vacate and surrender possession of the Secured Property to
Beneficiary or to such receiver, and, if in default thereof, Trustor may be
evicted by summary proceedings or otherwise. Nothing contained in this Section
shall be construed as imposing on Beneficiary any of the obligations of the
lessor under the Leases.
ARTICLE IV. FIXTURE FILING
4.1 Fixture Filing. Pursuant to the Uniform Commercial Code ("UCC"), as
--------------
amended and recodified from time to time, this Deed of Trust shall constitute a
Fixture Filing recorded in the real estate records. Unless otherwise defined,
all capitalized terms used in this Article IV
-6-
<PAGE>
shall have the respective meanings specified in the Loan Agreement. For purposes
of this Article IV, Trustor is sometimes referred to as "Borrower," and
Beneficiary is sometimes referred to as "Secured Party."
4.2 Description of Collateral. The Collateral, as defined in the Loan
-------------------------
Agreement, includes, without limitation, the following items and types of
collateral as well as certain other items and types of collateral in which
Trustor now or at any time hereafter has any interest (the "Collateral"):
all Goods (including Inventory and Equipment), General
Intangibles (except as provided below), Accounts, certificates of title,
fixtures, money, instruments, securities, investment property, documents,
chattel paper, credit balances, deposits, deposit accounts, letters of
credit, bankers' acceptances, guaranties, credits, claims, choses in
action, demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in respect of
Accounts and other property of every kind and description and all other
personal property, now or hereafter owned, acquired, existing, arising,
held, used, sold or consumed in connection with Borrower's Business or
Secured Property and any other property, rights and interests of Borrower
which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of Secured Party or any of its agents or representatives, for any
purpose (including, without limitation, any Replacement Collateral); all
additions and accessions thereto, substitutions therefor and replacements
and improvements of or to any or all of the foregoing, all interest,
income, dividends, distributions and earnings thereon or other monies or
revenues derived therefrom, and all moneys which may become payable under
any policy insuring any of the foregoing or otherwise required to be
maintained hereunder (including the return of unearned premiums); and all
products and proceeds of the foregoing. In the event and to the extent
requested by the Secured Party under Section 2.13 of the Loan Agreement,
Borrower shall pledge and grant a security interest in its right, title and
interest in and to the Principal Agreements, then Borrower shall be deemed
to hereby grant a security interest in all of its right, title and interest
in and to the Principal Agreements, and all proceeds thereof.
4.3 Relation of Fixture Filing to Deed of Trust. Some or all of the
-------------------------------------------
Collateral described in Section 4.2 above may be or become a "fixture" in which
Beneficiary has a security interest under the Loan Agreement. However, nothing
in this Article IV shall be deemed to create any lien or interest in favor of
Beneficiary in any such Collateral which is not a fixture, and the purpose of
this Article IV is to create a fixture filing under the UCC, as amended or
recodified from time to time. The rights, remedies and interests of Beneficiary
under this Deed of Trust and the Loan Agreement are independent and cumulative,
and there shall be no merger of any lien hereunder with any security interest
created by the Loan Agreement. Beneficiary may elect to exercise or enforce any
of its rights, remedies or interests under either or both this Deed of Trust or
the Loan Agreement as Beneficiary may from time to time deem appropriate.
-7-
<PAGE>
4.4 Limitations. Except as otherwise clearly and expressly provided in
-----------
the Loan Agreement: (i) Beneficiary has not consented to any other security
interest of any other person in any fixtures and has not disclaimed any interest
in such fixtures; and (ii) Beneficiary has not agreed or consented to the
removal of any fixtures from the Premises or the Improvements, and any such
consent by Trustor shall not be binding upon Beneficiary.
4.5 Possession and Use of Collateral. Notwithstanding the provisions of
--------------------------------
this Article IV, so long as no Event of Default exists under this Deed of Trust
or under any of the other Loan Documents, Trustor may possess, use, move,
transfer, or dispose of any of the Collateral in the ordinary course of
Trustor's business and in accordance with the provisions of the Loan Agreement.
ARTICLE V. RIGHTS AND DUTIES OF THE PARTIES
5.1 Warranty of Title. Trustor represents and warrants that it has fee
-----------------
simple title to the Premises and Improvements, and good and marketable title to
the Equipment and the balance of the Secured Property, and that this Deed of
Trust is a first and prior lien on the Secured Property free and clear of all
encumbrances and liens having priority over the first lien of this Deed of
Trust, except for (a) liens for real estate taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public records as of the date of recording
which are specifically referred to in the title policy issued to Beneficiary in
connection with the closing of the Loan, and (c) other matters to which like
properties are commonly subject and which do not materially interfere with the
benefits of the security intended to be provided by this Deed of Trust or the
use, enjoyment, value or marketability of the related Secured Property. In
addition, Trustor represents and warrants that Trustor has full power, authority
and right to deliver and perform this Deed of Trust and convey and encumber
Trustor's interest in the Secured Property. Trustor also represents and warrants
that (i) Trustor is now, and after giving effect to this Deed of Trust will be
in, a solvent condition, (ii) the execution and delivery of this Deed of Trust
by Trustor does not constitute a "fraudulent conveyance" within the meaning of
Title 11 of the United States Code as now constituted or under any other
applicable statute, and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or against Trustor.
5.2 Insurance. Trustor shall keep the Secured Property insured in
---------
accordance with the provisions of the Loan Agreement. Sums paid to Beneficiary
by any insurer may be retained and applied by Beneficiary toward payment of the
Obligations whether or not then due and payable in such order, priority and
proportions as Beneficiary in its discretion shall deem proper or, at the
discretion of Beneficiary, the same may be paid, either in whole or in part, to
Trustor for such purposes as Beneficiary shall designate. If Beneficiary shall
receive and retain such insurance proceeds, the lien of this Deed of Trust shall
be reduced only by the amount thereof actually received and retained by
Beneficiary and actually applied by Beneficiary towards the reduction of the
Obligations.
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5.3 Taxes and Assessments. Trustor shall pay all taxes, assessments,
---------------------
water rates, sewer rents, utility charges and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the Secured
Property (the "Taxes") prior to the date upon which any fine, penalty, interest
or cost may be added thereto or imposed by law for the nonpayment thereof.
Trustor shall deliver to Beneficiary, upon request, receipted bills, cancelled
checks and other evidence satisfactory to Beneficiary evidencing the payment of
the Taxes prior to the date upon which any fine, penalty, interest or cost may
be added thereto or imposed by law for the nonpayment thereof.
5.4 Escrow Fund. Trustor will, at the option of Beneficiary, pay to
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Beneficiary on each Payment Date (as defined in the Notes) one-twelfth of an
amount (hereinafter referred to as the "Escrow Fund") which would be sufficient
to pay the Taxes payable, or estimated by Beneficiary to be payable, during the
ensuing twelve (12) months. Beneficiary will apply the Escrow Fund to the
payment of Taxes which are required to be paid by Trustor pursuant to the
provisions of this Deed of Trust. If the amount of the Escrow Fund shall exceed
the amount of the Taxes payable by Trustor pursuant to the provisions of this
Deed of Trust, Beneficiary shall, in its discretion, (a) return any excess to
Trustor, or (b) credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Beneficiary may deal with the person
shown on the records of Beneficiary to be the owner of the Secured Property. If
the Escrow Fund is not sufficient to pay the Taxes, as the same become payable,
Trustor shall pay to Beneficiary, upon request, an amount which Beneficiary
shall estimate as sufficient to make up the deficiency. Until expended or
applied as above provided, any amounts in the Escrow Fund may be commingled with
the general funds of Beneficiary and shall constitute additional security for
the Obligations and shall not bear interest.
5.5 Condemnation. Trustor shall give prompt written notice to Beneficiary
------------
of any condemnation and shall deliver to Beneficiary copies of any and all
papers served in connection with such proceedings. Notwithstanding any taking
by any public or quasi-public authority through eminent domain or otherwise,
Trustor shall continue to pay the Obligations at the time and in the manner
provided for its payment in the Notes, the Loan Agreement and this Deed of Trust
and the Obligations shall not be reduced until any award or payment therefor
shall have been actually received and applied by Beneficiary to the discharge of
the Obligations. Beneficiary may apply the entire amount of any such award or
payment to the discharge of the Obligations whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper. If the Secured Property is sold, through foreclosure or otherwise,
prior to the receipt by Beneficiary of such award or payment, Beneficiary shall
have the right, whether or not a deficiency judgment on the Notes shall have
been sought, recovered or denied, to receive such award or payment, or a portion
thereof sufficient to pay the Obligations, whichever is less. Trustor shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Beneficiary. Trustor hereby irrevocably authorizes and empowers
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Beneficiary, in the name of Trustor or otherwise, to collect and receipt for any
such award or payment and to file and prosecute such claim or claims. Although
it is hereby expressly agreed that the same shall not be necessary in any event,
Trustor shall, upon demand of Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to Beneficiary, free and clear of any encumbrances of any
kind or nature whatsoever.
5.6 Maintenance of the Secured Property. Trustor shall cause the Secured
-----------------------------------
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Secured Property. The Improvements and
the Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment), without the consent of Beneficiary.
Trustor shall promptly comply with all existing and future governmental laws,
orders, ordinances, rules and regulations affecting the Secured Property, or any
portion thereof or the use thereof. Trustor shall give prompt written notice to
Beneficiary of any damage or destruction by fire or other property hazard or
casualty and shall deliver to Beneficiary copies of any and all papers sent or
received by Trustor in connection with the foregoing. Trustor shall promptly
repair, replace or rebuild all or any part of the Secured Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or quasi-
public authority through eminent domain or otherwise, and shall complete and pay
for, within a reasonable time, any structure at any time in the process of
construction or repair on the Premises. If such fire or other property hazard
or casualty shall be covered by the insurance policies which Trustor is required
to obtain pursuant to the provisions of the Loan Agreement ("Policies"),
Trustor's obligation to repair, replace or rebuild such portion of the Secured
Property shall be contingent upon Beneficiary paying Trustor the proceeds of the
Policies, or such portion thereof as shall be sufficient to complete such
repair, replacement or rebuilding, whichever is less. Trustor will not, without
obtaining the prior consent of Beneficiary, initiate, join in or consent to any
private restrictive covenant, zoning ordinance, or other public or private
restrictions, limiting or affecting the uses which may be made of the Secured
Property or any part thereof.
5.7 Environmental Provisions.
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(a) For the purposes of this Section 5.7 the following terms shall
have the following meanings: (i) the term "Hazardous Material" shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined as a hazardous waste, hazardous substance, pollutant or contaminant
subject to regulation under any Environmental Requirements, (ii) the term
"Environmental Requirements" shall collectively mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.),
and the Clean Air Act (42 U.S.C. (S) 7401 et seq.), all as presently in effect
and as the same may hereafter be amended, any regulation pursuant thereto, or
any other present or future law, ordinance, rule, regulation, order
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<PAGE>
or directive addressing environmental, health or safety issues of or by any
Governmental Authority, (iii) the term "Governmental Authority" shall mean the
Federal government, or any state or other political subdivision thereof, or any
agency, court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions, and (iv) the term "diligent inquiry" shall mean a
level of inquiry at least equal to an environmental site assessment of the
Secured Property conducted in accordance with Beneficiary's environmental
policies and procedures.
(b) Trustor hereby represents and warrants to Beneficiary that to the
best of Trustor's knowledge after diligent inquiry (i) no Hazardous Material is
currently located at, on, in, under or about the Secured Property, other than
products of the types and in the quantity commonly stocked by petroleum
retailing facilities similar to the facility located at the Premises, provided
the storage and/or existence of such products located at, on, in, under or about
the Secured Property is in compliance with all Environmental Requirements, (ii)
no Hazardous Material has been or is currently located at, in, on, under or
about the Secured Property in a manner which violates any Environmental
Requirements, or which requires cleanup or corrective action of any kind under
any Environmental Requirements, (iii) no releasing, emitting, discharging,
leaching, dumping or disposing of any Hazardous Material from the Secured
Property onto or into any other property or from any other property onto or into
the Secured Property has occurred or is occurring in violation of any
Environmental Requirements, and (iv) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Secured Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Secured Property into full compliance with all Environmental Requirements.
(c) Trustor shall comply, and shall cause all tenants or other
occupants of the Secured Property to comply, in all material respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Secured Property to generate, store, handle, process, dispose of or
otherwise use, Hazardous Materials at, in, on, under or about the Secured
Property in a manner which violates any Environmental Requirements or that could
lead or potentially lead to the imposition on Trustor, Beneficiary or the
Secured Property of any liability or lien of any nature whatsoever under any
Environmental Requirements. Trustor shall notify Beneficiary promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Secured Property which is required to be reported to a Governmental
Authority under any Environmental Requirements, will promptly forward to
Beneficiary copies of any notices received by Trustor relating to alleged
violations of any Environmental Requirements and will promptly pay when due any
fine or assessment against Beneficiary, Trustor or the Secured Property relating
to any Environmental Requirements.
(d) If at any time it is determined that the operation or use of the
Secured Property violates any applicable Environmental Requirements or that
there are Hazardous Materials located at, in, on, under or about the Secured
Property which, under any Environmental
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<PAGE>
Requirements, require special handling in collection, storage, treatment or
disposal, or any other form of cleanup or corrective action, Trustor shall,
within the earlier of (i) thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Beneficiary, or (ii) the time period
specified by any Environmental Requirements, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period (unless otherwise
sooner required by applicable Environmental Requirements), Trustor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Trustor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do so. All sums so advanced or
paid by Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from Trustor and shall bear
interest at the Default Rate (as defined in the Notes) from the date any such
sums are so advanced or paid by Beneficiary until the date any such sums are
repaid by Trustor to Beneficiary. Trustor will execute and deliver, promptly
upon request, such instruments as Beneficiary may deem useful or necessary to
permit Beneficiary to take any such action, and such additional notes and
mortgages, as Beneficiary may require to secure all sums so advanced or paid by
Beneficiary.
(e) If a lien is filed against the Secured Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Trustor or for which Trustor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the state where the Secured Property is located, then Trustor will,
within thirty (30) days from the date that Trustor is first given notice that
such lien has been placed against the Secured Property (or within such shorter
period of time as may be specified by Beneficiary if such Governmental Authority
has commenced steps to cause the Secured Property to be sold pursuant to such
lien) either (i) pay the claim and remove the lien, or (ii) furnish a cash
deposit, bond or such other security with respect thereto as is satisfactory in
all respects to Beneficiary and is sufficient to effect a complete discharge of
such lien on the Secured Property. Beneficiary may, at its option, at intervals
of not less than one year, or more frequently if Beneficiary reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirements, cause an environmental audit of the
Secured Property or portions thereof to be conducted to confirm Trustor's
compliance with the provisions of this paragraph, and Trustor shall cooperate in
all reasonable ways with Beneficiary in connection with any such audit and shall
pay all costs and expenses incurred in connection therewith.
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<PAGE>
(f) Trustor will defend, indemnify and hold harmless Beneficiary, its
employees, agents, officers and directors, from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of, or in any way related to,
(i) any breach by Trustor of any of the provisions of this Section 5.7, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Secured Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or affecting the
Secured Property or the soil, water, air, vegetation, buildings, personal
property, persons or animals located on the Secured Property or on any other
property or otherwise, (iii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened, settlement reached,
or order or directive of or by any Governmental Authority relating to such
Hazardous Material, or (v) any violation of any Environmental Requirements or
any policy or requirement of Beneficiary hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Notes, this Deed of Trust, or any other document
or instrument now or hereafter executed and delivered in connection with the
Loan, constitute the personal recourse undertakings, obligations and liabilities
of Trustor. If this Deed of Trust is foreclosed or Trustor tenders a deed or
assignment in lieu of foreclosure, Trustor shall deliver the Secured Property to
the purchaser at foreclosure or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements.
(g) The obligations and liabilities of Trustor under this Section 5.7
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the
Obligations have been paid in full and irrespective of any foreclosure of this
Deed of Trust or acceptance by Beneficiary, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure and irrespective of
any other fact or circumstance of any nature whatsoever.
5.8 Estoppel Certificates. Trustor, within ten (10) days after request by
---------------------
Beneficiary and at Trustor's expense, will furnish Beneficiary with a statement,
duly acknowledged and certified, setting forth the amount of the Obligations and
any claimed offsets or defenses thereto, if any.
5.9 Transfer or Encumbrance of the Secured Property.
-----------------------------------------------
(a) Trustor acknowledges that Beneficiary has examined and relied on
the experience of Trustor and its managing members, general partners, principals
and (if Borrower is a trust) beneficial owners, as the case may be, in owning
and operating properties such as the Secured Property in agreeing to make the
Loan secured hereby, and will continue to rely on
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Trustor's ownership of the Secured Property as a means of maintaining the value
of the Secured Property as security for repayment of the Obligations. Trustor
acknowledges that Beneficiary has a valid interest in maintaining the value of
the Secured Property so as to ensure that, should Trustor default in the
repayment and performance of the Obligations, Beneficiary can recover the
Obligations by a sale of the Secured Property.
(b) No part of the Secured Property nor any interest of any nature
whatsoever therein nor any interest of any nature whatsoever in Trustor (whether
partnership, stock, equity, beneficial, profit, loss or otherwise) shall in any
manner be further encumbered, granted, bargained, sold, transferred, assigned or
conveyed, or permitted to be further encumbered, granted, bargained, sold,
transferred, assigned or conveyed (any such event constituting a "Transfer")
without the prior consent of Beneficiary, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this Section 5.9 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
(c) A Transfer within the meaning of this Section 5.9 shall be deemed
to include, but not be limited to, (i) an installment sales agreement wherein
Trustor agrees to sell the Secured Property or any part thereof for a price to
be paid in installments; (ii) an agreement by Trustor leasing all or a
substantial part of the Secured Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant
of a security interest in, Trustor's right, title and interest in and to any
Leases or any Rents; (iii) if Trustor or any general partner of Trustor is a
corporation, the voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation's stock or the creation or issuance of new stock by which an
aggregate of more than 49% of the ownership of such corporation's stock shall be
vested in or pledged to a party or parties who are not now stockholders; (iv) if
Trustor or any general partner of Trustor is a limited liability company, the
voluntary or involuntary sale, conveyance, transfer or pledge of membership
interests in the capital or profits of such company or the creation or issuance
of new membership interests by which an aggregate of more than 49% of the
ownership of such company's membership interests shall be vested in or pledged
to a party or parties who do not now hold membership interests in such company;
(v) if Trustor or any general partner of Trustor is a limited or general
partnership or joint venture, (1) the change, removal or resignation of a
general partner or managing partner, (2) the transfer or pledge of the
partnership interest of any general partner or managing partner or any profits
or proceeds relating to such partnership interest, (3) the transfer or pledge of
more than 49% of the capital or profits of the partnership or (4) the creation
or issuance of new partnership interests by Trustor or its general partner in
which an aggregate of more than 49% of the ownership of partnership interests in
such partnership shall be vested in a party or parties who do not now hold
partnership interests in such partnership or joint venture; and (vi) without
limitation to the foregoing, any voluntary or
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involuntary sale, transfer, conveyance or pledge by any person or entity which
directly or indirectly controls Trustor (by operation or law or otherwise) (a
"Principal") of its direct or indirect controlling interest in Trustor.
Notwithstanding the foregoing, the following transfers shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or
transfer within the meaning of this Section 5.9: (A) transfer by devise or
descent or by operation of law upon the death of a partner, member or
stockholder of Trustor or any general partner thereof, and (B) a sale, transfer
or hypothecation of a partnership, shareholder or membership interest in
Trustor, whichever the case may be, by the current partner(s), shareholder(s) or
member(s), as applicable, to a Permitted Transferee (as defined in the Loan
Agreement). Notwithstanding anything to the contrary contained herein
(including, without limitation, the terms of the immediately preceding
sentence), any sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment or transfer permitted or consented to which shall result in any party
not now owning more than 49% of the ownership interests in Trustor acquiring
more than 49% of the ownership interests in Trustor shall require the receipt by
Beneficiary of a substantive non-consolidation opinion acceptable to
Beneficiary.
(d) Beneficiary reserves the right to condition the consent to any
Transfer required hereunder upon a modification of the terms hereof and on
assumption of the Notes, the Loan Agreement, this Deed of Trust and the other
Loan Documents as so modified by the proposed transferee, on payment of a
transfer fee of one percent (1%) of the principal balance of the Loan and all of
Beneficiary's expenses incurred in connection with such transfer, the approval
by a Rating Agency (as defined in the Loan Agreement) of the proposed
transferee, and such other conditions as Beneficiary shall determine in its sole
discretion to be in the interest of Beneficiary. Beneficiary shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Obligations immediately due
and payable upon any Transfer of the Secured Property without Beneficiary's
consent. This provision shall apply to every Transfer of the Secured Property
regardless of whether voluntary or not, or whether or not Beneficiary has
consented to any previous Transfer of the Secured Property.
5.10 Notice. All notices and other communications given pursuant to or in
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connection with this Deed of Trust shall be in duly executed writing delivered
to the parties at the addresses set forth below (or such other address as may be
provided by a party in a written notice to the other):
If to Trustor: LLO-GAS, Inc.
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Attention: Mr. John D. Castellucci
Facsimile No.: (310) 456-6094
With a copy to: The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
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Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
With a copy to: Atlantic Richfield Company
4 Centerpointe Drive, LPR 6-184
La Palma, CA 90623-1066
Attention: Manager, Real Estate and Dealer
Acquisitions
Facsimile No.: (714) 670-5439
If to Beneficiary: Convenience Store Finance Company, LLC
10880 Wilshire Boulevard, 21st Floor
Los Angeles, CA 90024
Attention: Steven Wheelon
Facsimile No.: (310) 481-2899
With a copy to: Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, NY 10010
Attention: Malini Majumdar and
Edmund Taylor
Facsimile No.: (212) 325 8218 and (212) 325-8106
With a copy to: Stroock & Stroock & Lavan LLP
2029 Century Park East, 18th Floor
Los Angeles, California 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by receipted-for telex, telecopier or
facsimile transmission, (ii) on the next business day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being sent by registered or certified mail, postage paid,
return receipt requested.
5.11 Changes in Laws Regarding Taxation. In the event of the passage after
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the date of this Deed of Trust of any law of the state in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Deed of Trust, the Notes or the Obligations, Trustor
shall, if permitted by law,
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pay any tax imposed as a result of any such law within the statutory period or
within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Trustor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Obligations due and payable on a date
specified in a prior notice to Trustor of not less than thirty (30) days.
5.12 No Credits on Account of the Obligations. Trustor will not claim or
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demand or be entitled to any credit or credits on account of the Obligations for
any part of the Taxes assessed against the Secured Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Secured Property, or any part thereof, by reason of this Deed of Trust or
the Obligations.
5.13 Offsets, Counterclaims and Defenses. Any assignee of this Deed of
-----------------------------------
Trust and the Notes shall take the same free and clear of all offsets,
counterclaims or defenses of any nature whatsoever which Trustor may have
against any assignor of this Deed of Trust and the Notes, and no such offset,
counterclaim or defense shall be interposed or asserted by Trustor in any action
or proceeding brought by any such assignee upon this Deed of Trust or the Notes
and any such right to interpose or assert any such offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Trustor.
5.14 Other Security for the Obligations. Trustor shall observe and perform
----------------------------------
all of the terms, covenants and provisions contained in the Notes and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Obligations, in whole or in part, or otherwise
executed and delivered in connection with the Notes, this Deed of Trust or the
Loan evidenced and secured thereby.
5.15 Documentary Stamps. If at any time the United States of America, any
------------------
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Notes or this Deed of Trust,
Trustor will pay for the same, with interest and penalties thereon, if any.
5.16 Right of Entry. Beneficiary and its agents shall have the right to
--------------
enter and inspect the Secured Property at all reasonable times.
5.17 Performance of Other Agreements. Trustor shall observe and perform
-------------------------------
each and every term to be observed or performed by Trustor pursuant to the terms
of any agreement or recorded instrument affecting or pertaining to the Secured
Property.
5.18 Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
-------------------------------------------------
this trust when this Deed of Trust is recorded. From time to time upon written
request of Beneficiary and presentation of this Deed of Trust, or a certified
copy thereof, for endorsement, and without affecting the personal liability, if
any, of any person for payment of any indebtedness or performance of any
Obligation, Trustee may, without liability therefor and without notice:
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(a) reconvey all or any part of the Secured Property; (b) consent to the making
of any map or plat thereof; (c) join in granting any easement thereon; (d) join
in any declaration of covenants and restrictions; or (e) join in any extension
agreement or any agreement subordinating the lien or charge hereof. Except as
may otherwise be required by applicable law, Trustee or Beneficiary may from
time to time apply to any court of competent jurisdiction for aid and direction
in the execution of the trusts hereunder and the enforcement of the rights and
remedies available hereunder, and Trustee or Beneficiary may obtain orders or
decrees directing or confirming or approving acts in the execution of said
trusts and the enforcement of said remedies. Trustee has no obligation to notify
any party of any pending sale or any action or proceeding (including, without
limitation, actions in which Trustor, Beneficiary or Trustee shall be a party)
unless held or commenced and maintained by Trustee under this Deed of Trust.
Trustee shall not be obligated to perform any act required of it hereunder
unless the performance of the act is requested in writing and Trustee is
reasonably indemnified and held harmless against loss, cost, liability and
expense.
5.19 Compensation of Trustee; Exculpation. Trustor shall pay to Trustee
------------------------------------
reasonable compensation and reimbursement for services and expenses in the
administration of this trust, including, without limitation, reasonable
attorneys' fees. Beneficiary shall not directly or indirectly be liable to
Trustor or any other person as a consequence of: (i) the exercise of the
rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii)
the failure or refusal of Beneficiary to perform or discharge any obligation or
liability of Trustor under any agreement related to the Secured Property or
under this Deed of Trust; or (iii) any loss sustained by Trustor or any third
party resulting from Beneficiary's failure to lease the Secured Property after
an Event of Default or from any other act or omission of Beneficiary in managing
the Secured Property after an Event of Default unless the loss is caused by the
willful misconduct or gross negligence of Beneficiary and no such liability, in
the absence of Beneficiary's willful misconduct or gross negligence, shall be
asserted or enforced against Beneficiary, all such liability being expressly
waived and released by Trustor.
5.20 Substitution of Trustee. From time to time, by a writing signed and
-----------------------
acknowledged by Beneficiary and recorded in the Office of the Recorder of the
County in which the Secured Property is situated, Beneficiary may appoint
another trustee to act in the place and stead of Trustee or any successor. Such
writing shall set forth any information required by applicable law. The
recordation of such instrument of substitution shall discharge Trustee herein
named and shall appoint the new trustee as the trustee hereunder with the same
effect as if originally named trustee herein. A writing recorded pursuant to
the provisions of this paragraph shall be conclusive proof of the proper
substitution of such new trustee.
5.21 Prepayment. To the extent permitted, the Obligations may be prepaid
----------
only in strict accordance with the express terms and conditions of the Notes,
including the payment of any prepayment consideration or premium due under the
Notes. Provided no Event of Default exists under the Notes, this Deed of Trust
or the other Loan Documents, in the event of any prepayment of the Obligations
pursuant to the terms of Section 5.5 hereof, no prepayment
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consideration or premium shall be due in connection therewith, but Trustor shall
be responsible for all other amounts due under the Notes, this Deed of Trust and
the other Loan Documents. Following an Event of Default and acceleration of the
Obligations, if Trustor or anyone on Trustor's behalf makes a tender of payment
of the amount necessary to satisfy the Obligations at any time prior to
foreclosure sale (including, but not limited to, sale under power of sale under
this Deed of Trust), or during any redemption period after foreclosure, the
tender of payment shall constitute an attempt to evade Trustor's obligation to
pay any prepayment consideration or premium due under the Notes and such payment
shall, therefore, to the maximum extent permitted by law, include all amounts
payable by Trustor under the Notes, including without limitation the Default
Repayment Amount (as defined in the Notes).
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The Obligations shall become immediately due and
-----------------
payable at the option of Beneficiary upon the occurrence of any one or more of
the following events (herein collectively referred to as "Events of Default")
(a) if an Event of Default, as defined in the Loan Agreement, shall
occur; or
(b) (i) the failure of Trustor to perform or cause to be performed
any non-monetary obligation, term of condition under this Deed of Trust and
any such failure shall remain unremedied for thirty (30) calendar days
after written notice thereof shall have been given to Trustor by
Beneficiary, provided, however, if such default cannot be cured within such
-------- -------
period, Trustor shall have such longer period of time to cure such default
provided, in Beneficiary's sole reasonable discretion, Trustor is
proceeding with due diligence, but in not event shall such period of time
exceed ninety (90) calendar days; or (ii) the failure to be truthful of any
representation or warranty of Trustor contained in this Deed of Trust and
the continuance of such failure during any grace period, if any, allowed in
the Loan Agreement for such failure; or
(b) if Trustor shall fail to pay any installment of any assessment
against the Secured Property for local improvements heretofore or hereafter
laid, which assessment is or may become payable in annual or periodic
installments and is or may become a lien on the Secured Property,
notwithstanding the fact that such installment may not be due and payable
at the time of such notice and demand; or
(c) if without the consent of Beneficiary any Leases are made,
cancelled or modified or if any portion of the Rents is paid for a period
of more than one (1) month in advance or if any of the Rents are further
assigned; or
(d) if Trustor or other person shall be in default under any deed of
trust, security deed or mortgage covering any part of the Secured Property
whether superior or
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<PAGE>
inferior in lien to this Deed of Trust, and including, without limitation,
any such deed of trust or mortgage now or hereafter held by Beneficiary; or
(e) if the Secured Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same
shall not either be discharged of record or in the alternative insured or
bonded over to the satisfaction of Beneficiary within a period of thirty
(30) days after the same is filed or recorded, and irrespective of whether
the same is superior or subordinate in lien or other priority to the lien
of this Deed of Trust and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbrance on the Secured Property or is
only a matter of record or notice; or
(f) if an Event of Default shall occur under any deed of trust,
security deed or mortgage now or hereafter entered into by Trustor or an
affiliate of Trustor in favor of Beneficiary.
6.2 Rights and Remedies. At any time during the continuance of an Event of
-------------------
Default, Beneficiary and/or Trustee shall have all of the following rights and
remedies:
(a) To declare all Obligations immediately due and payable;
(b) With or without notice, and without releasing Trustor from any
Obligation, and without becoming a mortgagee in possession, to cure any
breach or default of Trustor and, in connection therewith, to enter upon
the Secured Property and to do such acts and things as Beneficiary and/or
Trustee deem necessary or desirable to inspect, investigate, assess and
protect the security hereof, including, without limitation: (i) to appear
in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of Beneficiary and/or Trustee hereunder;
(ii) to pay, purchase, contest or compromise any encumbrance, charge, lien
or claim of lien which, in the sole judgment of either Beneficiary or
Trustee, is or may be senior in priority hereto, the judgment of either
Beneficiary or Trustee being conclusive as between the parties hereto;
(iii) to obtain insurance; (iv) to pay any premiums or charges with respect
to insurance required to be carried hereunder; (v) to obtain a court order
to enforce Beneficiary's right to enter and inspect the Secured Property;
and/or (vi) to employ counsel, accountants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to
obtain specific enforcement of the covenants of Trustor hereunder, and
Trustor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that
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for the purposes of any suit brought under this subparagraph, Trustor
waives the defense of laches and any applicable statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Secured Property as a matter of strict
right upon ex parte application and without notice to Trustor and without
regard to: (i) the adequacy of the security for the repayment of the
Obligations; (ii) the existence of a declaration that the Obligations are
immediately due and payable; or (iii) the filing of a notice of default;
and Trustor hereby consents to such appointment, waives any and all notices
of and defenses to such appointment, agrees that it will not oppose any
such appointment, and hereby expressly agrees that such appointment shall
be made as a matter of absolute right to Beneficiary; such appointment may
be made either before or after sale, without notice, without regard to the
solvency or insolvency of Trustor at the time of application for such
receiver, and without regard to the then value of the Secured Property or
whether the same shall be then occupied as a homestead or not; and
Beneficiary hereunder or any employee or agent thereof may be appointed as
such receiver. Such receiver shall have all powers and duties prescribed
by law in order to preserve the value, marketability or rentability of the
Secured Property or increase the income therefrom or protect the security
hereof, including, but not limited to, the power to make all necessary and
needful repairs, and to pay all taxes, assessments and charges against the
Secured Property and all premiums for insurance thereon, and the power to
make leases to be binding upon all parties, including Trustor, the
purchaser at a sale pursuant to a judgment of foreclosure and any person
acquiring an interest in the Secured Property after entry of a judgment of
foreclosure. In addition, such receiver shall also have the power to sue
for or otherwise collect the Rents, including those past due and unpaid,
and to extend or modify any then existing Leases, which extensions and
modifications may provide for terms to expire, or for options to tenants to
extend or renew terms to expire, beyond the maturity date of the Loan and
beyond the date the issuance of a deed or deeds to a purchaser or
purchasers at a foreclosure sale, it being understood and agreed that any
such Leases, and the options or other provisions to be contained therein,
shall be binding upon Trustor and all the persons whose interest in the
Secured Property are subject to the lien hereof and upon the purchaser or
purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any
foreclosure judgment, or issuance of any certificate of sale or deed to any
purchaser. In addition, such receiver shall have the power to collect the
Rents during the pendency of such foreclosure suit and, in case of a sale
and deficiency, during the full statutory period of redemption, if any,
whether there be a redemption or not, as well as during any further times
when Trustor, except for the intervention of such receiver, would be
entitled to collection of such Rents, and such receiver shall have all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Secured
Property during the whole of said period. The court may, from time to
time, authorize the receiver to apply the net income from the Secured
Property in payment in whole or in part of the Obligations or the
indebtedness secured by a decree foreclosing
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<PAGE>
this Deed of Trust, or any taxes or liens which may become superior to the
lien hereof or of such decree, or to any loan deficiency owed by Trustor to
Beneficiary in case of a sale and deficiency.
(e) To enter upon, possess, manage and operate the Secured Property or
any part thereof; to take and possess all documents, books, records, papers
and accounts of Trustor or the then owner of the Secured Property; to make,
terminate, enforce or modify leases of the Secured Property upon such terms
and conditions as Beneficiary deems proper; to elect to disaffirm any Lease
made subsequent to this Deed of Trust without Beneficiary's prior written
consent; to make repairs, alterations and improvements to the Secured
Property necessary, in Beneficiary's sole judgment, to protect or enhance
the security hereof; to conduct a marketing or leasing program with respect
to the Secured Property, or employ a marketing or leasing agent or agents
to do so, directed to the leasing or sale of the Secured Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; to employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers,
marketing agents, or other employees, agents, independent contractors or
professionals, as Beneficiary may in its sole discretion deem appropriate
or desirable to implement and effectuate the rights and powers herein
granted; to maintain actions in forcible entry and detainer, ejectment for
possession and actions in distress for rent; to delegate or assign any and
all rights and powers given to Beneficiary or Trustee by this Deed of
Trust; and to do any acts which Beneficiary or Trustee in their sole
discretion deems appropriate or desirable to protect the security hereof
and use such measures, legal or equitable, as Beneficiary or Trustee may in
their sole discretion deem appropriate or desirable to implement and
effectuate the provisions of this Deed of Trust. In such event,
Beneficiary shall have, and Trustor hereby gives and grants to Beneficiary,
the right, power and authority to make and enter into Leases, licenses and
occupancy agreements with respect to the Secured Property or portions
thereof for such Rents and for such periods of occupancy and upon
conditions and provisions as Beneficiary may deem desirable in its sole
discretion, and Trustor expressly acknowledges and agrees that the term of
such Lease, license or occupancy agreement may extend beyond the date of
any foreclosure sale of the Security Property; it being the intention of
Trustor that in such event Beneficiary shall be deemed to be and shall be
the attorney-in-fact of Trustor for the purpose of making and entering into
Leases, licenses or occupancy agreements of parts or portions of the
Secured Property for the Rents and upon the terms, conditions and
provisions deemed desirable to Beneficiary in its sole discretion and with
like effect as if such Leases, licenses or occupancy agreements had been
made by Trustor as the owner in fee simple of the Secured Property free and
clear of any conditions or limitations established by this Deed of Trust.
Beneficiary shall have the right to apply the net income generated from the
Secured Property, after allowing a reasonable fee for the collection
thereof and for the management and leasing of the Secured Property, to the
payment of operating expenses, taxes, insurance premiums and other charges
applicable to the Secured Property, or in reduction of the Obligations in
such order and manner as
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<PAGE>
Beneficiary shall select. The power and authority hereby given and granted
by Trustor to Beneficiary shall be deemed to be coupled with an interest,
shall not be revocable by Trustor so long as any of the Obligations remains
outstanding, shall survive the voluntary or involuntary dissolution of
Trustor and shall not be affected by any disability or incapacity suffered
by Trustor subsequent to the date hereof. In connection with any action
taken by Beneficiary pursuant to this Section, Beneficiary shall not be
liable for any loss sustained by Trustor resulting from any failure to let
the Secured Property, or any part thereof, or from any other act or
omission of Beneficiary in managing the Secured Property, nor shall
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any Lease, license or occupancy agreement covering the
Secured Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Nothing in this
Section shall impose on Beneficiary any duty, obligation or responsibility
for the control, care, management or repair of the Secured Property, or for
the carrying out of any of the terms and conditions of any such Lease,
license or occupancy agreement, nor shall it operate to make Beneficiary
responsible or liable for any waste committed on the Secured Property by
the tenants or by any other parties or for any dangerous or defective
condition of the Secured Property, or for any negligence in the management,
upkeep, repair or control of the Secured Property, unless any such loss or
damage arises from the gross negligence or willful misconduct of
Beneficiary. Trustor hereby assents to, ratifies and confirms any and all
actions of Beneficiary with respect to the Secured Property taken under
this Section.
(f) To execute a written notice of such default and of the election to
cause the Secured Property to be sold to satisfy the Obligations. Trustee
shall give and record such notice as the law then requires as a condition
precedent to a foreclosure sale. When the minimum period of time required
by law after such notice has elapsed, Trustee, without notice to or demand
upon Trustor except as required by law, shall sell the Secured Property at
the time and place of sale fixed by it in the notice of sale, at one or
several sales, either as a whole or in separate parcels and in such manner
and order, all as Beneficiary in its sole discretion may determine, at
public auction to the highest bidder for cash, in lawful money of the
United States, payable at time of sale. Neither Trustor nor any other
person or entity other than Beneficiary shall have the right to direct the
order in which the Secured Property is sold. Subject to requirements and
limits imposed by law, Trustee may from time to time postpone sale of all
or any portion of the Secured Property by public announcement at such time
and place of sale, and from time to time may postpone the sale by public
announcement at the time and place fixed by the preceding postponement.
The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the
Secured Property remaining unsold, but shall continue unimpaired until all
of the Secured Property has been sold by exercise of the power of sale in
this Deed of Trust and all Secured Obligations have been paid and
discharged in full. Trustee shall deliver to the purchaser at such sale a
deed conveying the Secured Property or portion thereof so sold,
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<PAGE>
but without any covenant or warranty, express or implied. The recitals in
the deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustee, Trustor or
Beneficiary, may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or hereafter held by Beneficiary concurrently or successively
and in one or several consolidated or independent judicial actions or
lawfully taken non-judicial proceedings, or both, and to apply the proceeds
received upon the Obligations all in such order and manner as Trustee and
Beneficiary or either of them determine in their sole discretion;
(h) To exercise such other rights Trustee or Beneficiary may have with
respect to the Secured Property under this Deed of Trust, the UCC or
otherwise at law;
(i) To exercise such other rights as Trustee or Beneficiary may have
at law or equity or pursuant to the terms and conditions of this Deed of
Trust.
Upon sale of the Secured Property at any judicial or non-judicial
foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its
sole and absolute discretion) all or any portion of the Obligations.
In connection with any sale or sales hereunder, Beneficiary may elect to
treat any of the Secured Property which consists of a right in action or which
is property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.
6.3 Application of Foreclosure Sale Proceeds. In the event of any
----------------------------------------
foreclosure sale, Trustee shall apply the proceeds of such sale in the following
order of priority: First, to the costs, fees and expenses of exercising its
-----
rights to cause such sale, including, without limitation, the payment of
Trustee's fees and attorneys' fees; Second, to the payment of the Obligations
------
which are secured by this Deed of Trust, in such order as Beneficiary shall
determine in its sole discretion; Third, to satisfy the outstanding balance of
-----
obligations secured by any junior liens or encumbrances in the order of their
priority; and Fourth, to the Trustor or the Trustor's successor in interest, or
------
in the event the Secured Property has been sold or transferred to another, to
the vested owner of record at the time of the Trustee's sale.
6.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
-----------------
receiver's entry upon and taking possession of all or any part of the Secured
Property, nor any collection of rents, issues, profits, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Obligation, nor
the exercise of any other right or remedy by Trustee or Beneficiary or any
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<PAGE>
receiver shall cure or waive any default or notice of default under this Deed of
Trust, or nullify the effect of any notice of default or sale (unless all
Obligations then due have been paid or performed and Trustor has cured all other
defaults hereunder), or impair the status of the security, or prejudice Trustee
or Beneficiary in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination of
the lien of this Deed of Trust.
6.5 Payment of Costs, Expenses and Attorneys' Fees. Trustor agrees to pay
----------------------------------------------
to Beneficiary upon demand all costs and expenses incurred by Trustee or
Beneficiary in the enforcement of the terms and conditions of this Deed of Trust
(including, without limitation, statutory trustee's fees, court costs and
attorneys' fees, whether incurred in litigation or not) with interest from the
date of expenditure until said sums have been paid at the Default Rate as set
forth in the Notes.
6.6 Power to File Notices and Cure Defaults. Trustor hereby irrevocably
---------------------------------------
appoints Beneficiary and its successors and assigns as its attorney-in-fact,
which agency is coupled with an interest, to: (a) execute and/or record any
notices of completion, cessation of labor, or any other notices that Beneficiary
deems appropriate to protect Beneficiary's interest; and (b) upon the occurrence
of an Event of Default, perform any obligation of Trustor hereunder; provided,
--------
however, that: (i) Beneficiary as such attorney-in-fact shall only be
- -------
accountable for such funds as are actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or any other person or entity for any
failure to act under this Section.
6.7 Rights Cumulative, No Waiver. All rights, powers and remedies of
----------------------------
Trustee and/or Beneficiary provided in this Deed of Trust and in the other Loan
Documents, may be exercised at any time by Beneficiary and from time to time
after the occurrence of any such Event of Default, are cumulative and not
exclusive, may be pursued singularly, successively, or together at the sole
discretion of Trustee and/or Beneficiary, and shall be in addition to any other
rights, powers or remedies provided by law or equity. The failure to exercise
any such right or remedy shall in no event be construed as a waiver or a release
thereof. Trustee's or Beneficiary's exercise of any right or remedy shall not
constitute a cure of any Event of Default unless all sums then due and payable
to Beneficiary under the Loan Documents are repaid and Trustor has cured all
other defaults. No waiver shall be implied from any failure of Beneficiary to
take, or any delay by Beneficiary in taking, action concerning any Event of
Default or failure of condition under the Loan Documents, or from any previous
waiver of any similar or unrelated Event of Default or failure of condition.
Any waiver or approval under any of the Loan Documents must be in writing and
shall be limited to its specific terms.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Governing Law. The Notes, this Deed of Trust, the Loan Agreement, and
-------------
any other Loan Documents were accepted by Beneficiary in the state of New York
and the proceeds of the Notes secured hereby were disbursed from the state of
New York, which state the
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<PAGE>
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limitation, matters of construction, validity, enforceability and
performance, this Deed of Trust, the Notes and other Loan Documents and the
obligations arising hereunder and thereunder shall be governed by, and construed
in accordance with, the laws of the state of New York applicable to contracts
made and performed in such state, and any applicable law of the United States of
America, except that at all times the provisions for enforcement of its rights
to foreclose granted hereunder and the creation, perfection and enforcement of
the security interests created pursuant thereto and pursuant to the other Loan
Documents shall be governed by and construed according to the laws of the state
where the Premises are located. Except as provided in the immediately preceding
sentence, Trustor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction
other than New York governs this Deed of Trust, the Notes and the other Loan
Documents.
7.2 Consent to Jurisdiction. Trustor irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the state of New
York, over any suit, action or proceeding, arising out of or relating to this
Deed of Trust, the Notes or the Loan; and (b) any state court sitting in the
county of the state where the Premises are located over any suit, action or
proceeding, brought by Trustee or Beneficiary related to the exercise of its
rights to foreclose under this Deed of Trust or any action brought by
Beneficiary to enforce its rights with respect to the Secured Property. Trustor
irrevocably waives, to the fullest extent permitted by law, any objection that
Trustor may now or hereafter have to the laying of venue of any such suit,
action, or proceeding brought in any such court and any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
inconvenient forum.
7.3 Further Acts. Trustor will, at the cost of Trustor, and without
------------
expense to Trustee or Beneficiary do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Trustee or Beneficiary shall, from time
to time, require for the better assuring, conveying, assigning, transferring and
confirming unto Trustee or Beneficiary of the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Trustor may be or may
hereafter become bound to convey or assign to Trustee or Beneficiary or for
carrying out the intention or facilitating the performance of the terms of this
Deed of Trust or for filing, registering or recording this Deed of Trust and, on
demand, will execute and deliver and hereby authorizes Beneficiary to execute in
the name of Trustor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Secured Property.
7.4 Headings. The headings, titles and captions of various sections of
--------
this Deed of Trust are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
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<PAGE>
7.5 Filing of Deed of Trust. Trustor forthwith upon the execution and
-----------------------
delivery of this Deed of Trust and thereafter, from time to time, will cause
this Deed of Trust, and any security instrument creating a lien or evidencing
the lien hereof upon the Secured Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Beneficiary in, the Secured Property. Trustor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Secured Property or any
instrument of further assurance. Trustor shall hold harmless and indemnify
Beneficiary, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this Deed of
Trust.
7.6 Limitation of Interest. This Deed of Trust and the Notes are subject
----------------------
to the express condition that at no time shall Trustor be obligated or required
to pay interest on the principal balance due under the Notes at a rate which
could subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Trustor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Trustor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.
7.7 Sole Discretion of Beneficiary. Except as may otherwise be expressly
------------------------------
provided to the contrary, wherever pursuant to the Notes, this Deed of Trust,
the Loan Agreement or any other document or instrument now or hereafter executed
and delivered in connection therewith or otherwise with respect to the Loan
secured hereby, Beneficiary or Trustee exercises any right given to Beneficiary
or Trustee to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Beneficiary or Trustee the decision
of Beneficiary or Trustee to consent or not consent, or to approve or disapprove
or to decide that arrangements or terms are satisfactory or not satisfactory,
shall be in the sole and absolute discretion of Beneficiary or Trustee, as
applicable, and shall be final and conclusive.
7.8 Reasonableness. If at any time Trustor believes that Beneficiary has
--------------
not acted reasonably in granting or withholding any approval or consent under
the Notes, this Deed of Trust, the Loan Agreement, or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise with respect to the Loan secured hereby, as to which approval or
consent either Beneficiary has expressly agreed to act reasonably, or absent
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<PAGE>
such agreement, a court of law having jurisdiction over the subject matter would
require Beneficiary to act reasonably, then Trustor's sole remedy shall be to
seek injunctive relief or specific performance and no action for monetary
damages or punitive damages shall in any event or under any circumstance be
maintained by Trustor against Beneficiary.
7.9 Recovery of Sums Required To Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
7.10 Authority. Trustor (and the undersigned representative of Trustor, if
---------
any) has full power, authority and legal right to execute this Deed of Trust,
and to mortgage, give, grant, bargain, sell, convey, confirm and assign the
Secured Property pursuant to the terms hereof and to keep and observe all of the
terms of this Deed of Trust on Trustor's part to be performed.
7.11 Actions and Proceedings. Beneficiary shall have the right to appear
-----------------------
in and defend any action or proceeding brought with respect to the Secured
Property and to bring any action or proceeding, in the name and on behalf of
Trustor, which Beneficiary, in its discretion, feels should be brought to
protect its interest in the Secured Property.
7.12 Severability. If any term, covenant or condition of this Deed of
------------
Trust shall be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, this Deed of Trust shall be construed without
such provision.
7.13 Counterparts. This Deed of Trust may be executed in any number of
------------
counterpart originals and each such counterpart original shall be deemed to
constitute but one and the same instrument.
7.14 Certain Definitions. Unless the context clearly indicates a contrary
-------------------
intent or unless otherwise specifically provided herein, words used in this Deed
of Trust shall be used interchangeably in singular or plural form and the word
"Trustor" shall mean each Trustor and any subsequent owner or owners of the
Secured Property or any part thereof or interest therein; the words
"Beneficiary" and "Trustee" shall mean Beneficiary or Trustee, as applicable, or
any subsequent holder of a Note or successor Trustee, as applicable; the word
"Note" shall mean the Secured Promissory Note or any other evidence of
indebtedness secured by this Deed of Trust; the word "Loan Agreement" shall mean
the Loan and Security Agreement; the word "Guarantor" shall mean each person
guaranteeing payment of the Obligations or any portion thereof or performance by
Trustor of any of the terms of this Deed of Trust and their respective heirs,
executors, administrators, legal representatives, successors and assigns; the
word "person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other entity;
the words "Secured Property" shall include any portion
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<PAGE>
of the Secured Property or interest therein; the word "Obligations" shall mean
all sums secured by this Deed of Trust; and the word "default" shall mean the
occurrence of any default by Trustor or other person in the observance or
performance of any of the terms, covenants or provisions of the Notes, this Deed
of Trust or the Loan Agreement on the part of Trustor or such other person to be
observed or performed without regard to whether such default constitutes or
would constitute upon notice or lapse of time, or both, an Event of Default
under this Deed of Trust. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
7.15 Waiver of Notice. Trustor shall not be entitled to any notices of any
----------------
nature whatsoever from Beneficiary except with respect to matters for which this
Deed of Trust or applicable law specifically and expressly provides for the
giving of notice by Beneficiary to Trustor, and Trustor hereby expressly waives
the right to receive any notice from Beneficiary with respect to any matter for
which this Deed of Trust or applicable law do not specifically and expressly
provide for the giving of notice by Beneficiary to Trustor.
7.16 No Oral Change. This Deed of Trust may only be modified, amended or
--------------
changed by an instrument in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by Beneficiary. No waiver of any term, covenant or provision of this
Deed of Trust shall be effective unless given in writing by Beneficiary and if
so given by Beneficiary shall only be effective in the specific instance in
which given. Trustor acknowledges that the Notes, this Deed of Trust, the Loan
Agreement and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the Loan secured hereby set
forth the entire agreement and understanding of Trustor and Beneficiary with
respect to the Loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Notes, this Deed of Trust, the
Loan Agreement and such other executed and delivered documents and instruments.
7.17 Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
Trustor's obligation to pay the Obligations in accordance with the provisions of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Trustor thereunder to pay the Obligations or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Trustor under the Note or this Deed of Trust or otherwise
with respect to the Loan secured hereby, and Trustor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Trustor to pay the Obligations in accordance with the provisions
of the Notes and this Deed of Trust or the obligations of any other person
relating to the Notes or this Deed of Trust or obligations of Trustor under the
Notes or this Deed of Trust or otherwise with respect to the Loan secured
-29-
<PAGE>
hereby in any action or proceeding brought by Beneficiary to collect the
Obligations, or any portion thereof, or to enforce, foreclose and realize upon
the lien and security interest created by this Deed of Trust or any other
document or instrument securing repayment of the Obligations, in whole or in
part.
7.18 WAIVER OF TRIAL BY JURY. TRUSTOR HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY WAIVES, AND BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS
DEED OF TRUST IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH,
OUT OF OR OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST, THE LOAN
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND
DELIVERED IN CONNECTION THEREWITH OR THE LOAN SECURED BY THIS DEED OF TRUST.
7.19 Waiver of Statutory Rights. Trustor shall not and will not apply for
--------------------------
or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "moratorium laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Deed of Trust,
but hereby waives the benefit of such laws to the full extent that Trustor may
do so under applicable law. Trustor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Secured Property marshalled upon any foreclosure of the lien of this Deed of
Trust and agrees that any court having jurisdiction to foreclose such lien may
order the Secured Property sold as an entirety. Trustor hereby waives for
itself and all who may claim through or under it, and to the full extent Trustor
may do so under applicable law, any and all rights of redemption from sale under
any order or decree of foreclosure of this Deed of Trust or granted under any
statute now existing or hereafter enacted.
7.20 Superior Lien. If Trustor fails to pay any installment of principal or
-------------
interest or any other sum due under any mortgage, deed of trust, security deed
or other lien superior in lien to the lien of this Deed of Trust, as the same
becomes due and payable, Beneficiary may, at its option, pay the same, and
Trustor shall upon demand reimburse Beneficiary for all sums so expended by
Beneficiary, with interest at a rate per annum equal to the Default Rate. All
such sums expended by Beneficiary, with interest, shall be secured by this Deed
of Trust.
7.21 Loan Agreement. Unless specifically provided to the contrary, all of
--------------
the terms and provisions of the Loan Agreement are hereby incorporated and shall
become a part of this Deed of Trust.
7.22 Solvency, Binding Effect and Enforceability. Trustor is (and, after
-------------------------------------------
giving effect to this Deed of Trust, will be) solvent. This Deed of Trust is
the legal, valid and binding obligation of the Trustor enforceable in accordance
with its terms.
-30-
<PAGE>
7.23 Relationship. The relationship of Beneficiary to Trustor hereunder is
------------
strictly and solely that of lender and borrower and nothing contained in the
Notes, this Deed of Trust, the Loan Agreement or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between Beneficiary and Trustor other than
as lender and borrower.
7.24 Non-Waiver. The failure of Beneficiary to insist upon strict
----------
performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay the Obligations at the time and in the manner provided for its
payment in the Loan Documents by reason of (i) failure of Beneficiary to comply
with any request of Trustor to take any action to foreclose this Deed of Trust
or any other mortgage or deed of trust securing the Obligations or any portion
thereof or otherwise enforce any of the provisions of this Deed of Trust or any
of the other Loan Documents, (ii) the release, regardless of consideration, of
the whole or any part of the Secured Property or any other security for the
Obligations, or (iii) any agreement or stipulation between Beneficiary and any
subsequent owner or owners of the Secured Property or other person extending the
time of payment or otherwise modifying or supplementing the terms of the Loan
Documents without first having obtained the consent of Trustor, and in the
latter event, Trustor shall continue to be obligated to pay the Obligations at
the times and in the manner provided in the Loan Documents, as so extended,
modified and supplemented, unless expressly released and discharged from such
obligation by Beneficiary in writing. Regardless of consideration, and without
the necessity for any notice to or consent by the holder of any subordinate
security title, encumbrance, right, title or interest in or to the Secured
Property, Beneficiary may release any person at any time liable for the payment
of the Obligations or any portion thereof or any part of the security held for
the Obligations and may extend the time of payment of the Obligations or
otherwise modify the terms of the Loan Documents, including, without limitation,
a modification of the interest rate payable on the principal balance of the
Notes, without in any manner impairing or affecting this Deed of Trust or the
security title thereof or the priority of this Deed of Trust, as so extended and
modified, as security for the Obligations over any such subordinate security
title, encumbrance, right, title or interest. Beneficiary may resort for the
payment of the Obligations to any other security held by Beneficiary in such
order and manner as Beneficiary, in its discretion, may elect. Beneficiary may
take action to recover the Obligations, or any portion thereof, or to enforce
any covenant hereof without prejudice to the right of Beneficiary thereafter to
foreclose this Deed of Trust. Beneficiary shall not be limited exclusively to
the rights and remedies herein stated but shall be entitled to every additional
right and remedy set forth in the Loan Documents or now or hereafter afforded by
law. The rights of Beneficiary under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision of this Deed of Trust or of
the other Loan Documents to the exclusion of any other provision set forth in
this Deed of Trust or the other Loan Documents.
-31-
<PAGE>
7.25 WAIVER OF TRUSTOR'S RIGHT. BY EXECUTION OF THIS DEED OF TRUST AND BY
-------------------------
INITIALING THIS SECTION, TRUSTOR EXPRESSLY, TO THE EXTENT PERMITTED BY LAW: (A)
ACKNOWLEDGES THE RIGHT TO ACCELERATE THE DEBT EVIDENCED BY THE NOTES AND THE
POWER OF SALE GIVEN HEREIN TO TRUSTEE TO SELL THE SECURED PROPERTY BY
NONJUDICIAL FORECLOSURE UPON DEFAULT BY TRUSTOR WITHOUT ANY JUDICIAL HEARING AND
WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH TRUSTOR MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OR ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR TRUSTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO EITHER; (C) ACKNOWLEDGES THAT TRUSTOR HAS READ THIS DEED OF
TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO TRUSTOR AND TRUSTOR HAS
CONSULTED WITH COUNSEL OF TRUSTOR'S CHOICE PRIOR TO EXECUTING THIS DEED OF
TRUST; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF TRUSTOR
HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY TRUSTOR AS PART OF A
BARGAINED-FOR LOAN TRANSACTION.
/s/ JC
--------------------
INITIALED BY TRUSTOR
-32-
<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of
the day and year first above written.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
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<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF LOS ANGELES )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Lisa M. Torres
--------------------------
Notary Public
Notarial Seal
My Commission Expires:
December 11, 1999
---------------------------
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<PAGE>
EXHIBIT A
(Description of Premises)
-35-
<PAGE>
ORDER NO. 822874-46
EXHIBIT "A"
PARCEL 1:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead, County of Los Angeles, State of California, as shown on
Map recorded in Book 54 Page(s) 71 and 72 of miscellaneous records, in the
office of the County Recorder of said County, and of San Gabriel Boulevard,
vacated described as follows:
Beginning at the Southeasterly corner of San Gabriel Boulevard and Hellman
Avenue, as shown on Map of Tract No. 11568, recorded in Book 209, pages 24 and
25 of Maps, in the Office of the County Recorder of said County; thence along
the Southerly line of said Hellman Avenue and the Northerly line of said Lot 61,
North 89 (Degrees) 44' 20" East 42.71 feet; thence South 0 (Degree) 15' 40" East
25.00 feet; thence North 89 (Degrees) 44' 20" East 50.00 feet; thence North
0 (Degree) 15' 40" West 25.00 feet to said Northerly line; thence along said
Northerly line North 89 (Degrees) 44' 20" East 57.29 feet to the Northerly
prolongation of the Westerly line of Lot 41 of said Tract No. 11568; thence
along said prolongation South 0 (Degree) 33' 25" East 50.00 feet to a point in a
line parallel with said Northerly line which passes through a point in the
Easterly line of said San Gabriel Boulevard, distant South 0 (Degree) 33' 25"
East 50.00 feet from the point of beginning; thence along said parallel line
South 89 (Degrees) 44' 20" West 150.00 feet to said Easterly line; thence North
0 (Degree) 33' 25" West 50.00 feet to the point of beginning.
PARCEL 2:
That portion of Lot 61 of the lands of the San Gabriel Improvement Company, in
the City of Rosemead County of Los Angeles, State of California, as per Map
Recorded in Book 54, Pages 71 and 72 of Miscellaneous Records, and of San
Gabriel Boulevard, vacated, described as follows:
Beginning at a point in the Easterly line of San Gabriel Boulevard, distant
along said Easterly line South 0 (Degree) 33' 25" East 50.00 feet from the
Southeasterly corner of San Gabriel Boulevard and Hellman Avenue as shown on Map
of Tract No. 11568, as per Map Recorded in Book 209, Page 24 of Maps; thence
along said Easterly line South 0 (Degree) 33' 24" East 79.94 feet to the
Northwest Corner of said Tract No. 11568; thence along the Northerly line of
said Tract No. 11568, North 89 (Degrees) 47' 45" East 150 feet to the Northwest
Corner of Lot 41 of said last mentioned tract; thence along the Northerly
prolongation of the Westerly line of said Lot 41, North 0 (Degree) 33' 25" West
80.10 feet to a line parallel with the Northerly line of said Lot 61 and which
passes through the point of beginning; thence South 89 (Degrees) 44' 20" West
150 feet to the point of beginning.
<PAGE>
LEGAL DESCRIPTION CONTINUED:
PARCEL 3:
Lot 42 of Tract No. 11568, in the City of Rosemead, County of Los Angeles, State
of California, as per Map Recorded in Book 209, Pages 24 and 25 of Maps, in the
Office of the County Recorder of said County.
<PAGE>
Exhibit 10.68
INDEMNITY AND GUARANTY AGREEMENT
--------------------------------
THIS INDEMNITY AND GUARANTY AGREEMENT (this "Agreement") made as of the 26 day
of October, 1999, by JOHN D. CASTELLUCCI, an individual ("Indemnitor"), whose
address is 23805 Stuart Ranch Road, Suite 265, Malibu, California 90265, in
favor of CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited liability
company (together with its successors and assigns, "Lender").
WITNESSETH:
-----------
WHEREAS, LLO-GAS, INC., a Delaware corporation ("Borrower"), has obtained a
loan in the principal amount of SEVEN MILLION EIGHT HUNDRED THOUSAND DOLLARS
($7,800,000.00) (the "Loan") from Lender;
WHEREAS, the Loan is evidenced by certain Secured Promissory Notes dated of
even date herewith (each a "Note" and collectively, the "Notes"), executed-by-
Borrower and payable to the order of Lender in the stated aggregate principal
amount of the Loan and are secured by one or more deeds of trust, mortgages,
and/or deeds to secure debt (each a "Mortgage" and collectively, the
"Mortgages") on the commercial properties (each a "Property" and collectively,
the "Properties") with the addresses, in the counties and states set forth on
EXHIBIT A attached hereto, and by other documents and instruments (the Notes,
- ---------
the Mortgages and such other documents and instruments, as the same may from
time to time be amended, consolidated, renewed or replaced, being collectively
referred to herein as the "Loan Documents"); and
WHEREAS, as a condition to making the Loan to Borrower, Lender has required
that Indemnitor indemnify Lender from and against and guarantee payment to
Lender of certain items for which Borrower is now or may hereafter be liable to
Lender.
NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:
1. Indemnity and Guaranty. Indemnitor hereby assumes liability for,
----------------------
hereby guarantees payment to Lender of hereby agrees to pay, protect, defend and
save Lender harmless from and against, and hereby indemnifies Lender from and
against any and all liabilities, obligations, losses, damages, costs and
expenses (including, without limitation, attorneys' fees), causes of action,
suits, claims, demands and judgments of any nature or description whatsoever
(collectively, "Costs") which may at any time be imposed upon, incurred by or
awarded against Lender as a result of:
(a) Proceeds paid under any insurance policies (or paid as a result of
any other claim or cause of action against any person or entity) by reason of
damage, loss or destruction to all or any portion of any Property, to the full
extent of such proceeds not previously delivered to Lender, but which, under the
terms of the Loan Documents, should have
1
<PAGE>
been delivered to Lender;
(b) Proceeds or awards resulting from the condemnation or other
taking in lieu of condemnation of all or any portion of any Property, to the
full extent of such proceeds or awards not previously delivered to Lender, but
which, under the terms of the Loan Documents, should have been delivered to
Lender;
(c) Rents, issues, profits and revenues of all or any portion of any
Property received or applicable to a period after the occurrence of any Event of
Default (as defined in the Mortgage) or any event which will notice on the
passage of time, or both, would constitute an Event of Default, which are not
either applied to the ordinary and necessary expenses of owning and operating
the Property or paid to Lender;
(d) Waste committed on any Property by, or damage to any Property as
a result of the intentional misconduct or gross negligence of, Borrower or any
of its principals, officers, general partners or members or any agent or
employee of such persons, or any removal of Property in violation of the terms
of the Loan Documents, to the full extent of the losses or damages incurred by
Lender on account of such occurrence;
(e) Failure by Borrower to pay any valid taxes, assessments,
mechanic's liens, materialmen's liens or other liens which could create liens on
any portion of any Property which would be superior to the lien or security
title of the Mortgage or the other Loan Documents, except, with respect to any
such taxes or assessments, to the extent that funds have been deposited with
Lender pursuant to the terms of the Mortgage specifically for the applicable
taxes or assessments and not applied by Lender to pay such taxes;
(f) All obligations and indemnities of Borrower under the Loan
Documents relating to hazardous or toxic substances or compliance with
environmental laws and regulations to the full extent of any losses or damages
(including those resulting from diminution in value of any Property) incurred by
Lender as a result of the existence of such hazardous or toxic substances or
failure to comply with environmental laws or regulations; and
(g) Fraud or material misrepresentation or failure to disclose a
material fact by Borrower or any of its principals, officers, general partners
or members, any guarantor, any indemnitor or any agent, employee or other person
authorized or apparently authorized to make statements, representations or
disclosures on behalf of Borrower, any principal, officer, partner or members,
of Borrower, or any guarantor or any indemnitor, to the full extent of any
losses, damages and expenses of Lender on account thereof.
This is a guaranty of payment and performance and not of collection. The
liability of Indemnitor under this Agreement shall be direct and immediate and
not conditional or contingent upon the pursuit of any remedies against Borrower
or any other person (including, without limitation, other guarantors, if any),
nor against the collateral for the Loan. Indemnitor waives any right to require
that an action be brought against Borrower or any other person or to require
that resort be had to any collateral for the Loan or to any balance of any
deposit account or credit on the books of Lender in favor of Borrower or any
other person. In the event, on account of the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law
2
<PAGE>
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable,
Borrower shall be relieved of or fail to incur any debt, obligation or liability
as provided in the Loan Documents, Indemnitor shall nevertheless be fully liable
therefor. In the event of a default under the Loan Documents which is not cured
within any applicable grace or cure period. Lender shall have the right to
enforce its rights, powers and remedies (including, without limitation,
foreclosure of all or any portion of the collateral for the Loan) thereunder or
hereunder, in any order, and all rights, powers and remedies available to Lender
in such event shall be non-exclusive and cumulative of all other rights, powers
and remedies provided thereunder or hereunder or by law or in equity. If the
indebtedness and obligations guaranteed hereby are partially paid or discharged
by reason of the exercise of any of the remedies available to Lender, this
Agreement shall nevertheless remain in full force and effect, and Indemnitor
shall remain liable for all remaining indebtedness and obligations guaranteed
hereby, even though any rights which Indemnitor may have against Borrower may be
destroyed or diminished by the exercise of any such remedy.
2. Indemnification Procedures.
--------------------------
(a) If any action shall be brought against Lender based upon any of
the matters for which Lender is indemnified hereunder, Lender shall notify
Indemnitor in writing thereof and Indemnitor shall promptly assume the defense
thereof, including, without limitation, the employment of counsel acceptable to
Lender and the negotiation of any settlement; provided, however, that any
failure of Lender to notify Indemnitor of such matter shall not impair or reduce
the obligations of Indemnitor hereunder. Lender shall have the right, at the
expense of Indemnitor (which expense shall be included in Costs), to employ
separate counsel in any such action and to participate in the defense thereof.
In the event Indemnitor shall fail to discharge or undertake to defend Lender
against any claim, loss or liability for which Lender is indemnified hereunder,
Lender may, at its sole option and election, defend or settle such claim, loss
or liability. The liability of Indemnitor to Lender hereunder shall be
conclusively established by such settlement, provided such settlement is made in
good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation,
attorneys' fees and disbursements incurred by Lender in effecting such
settlement. In such event, such settlement consideration, costs and expenses
shall be included in Costs and Indemnitor shall pay the same as hereinafter
provided. Lender's good faith in any such settlement shall be conclusively
established if the settlement is made on the advice of independent legal counsel
for Lender.
(b) Indemnitor shall not, without the prior written consent of Lender:
(i) settle or compromise any action, suit, proceeding or claim or consent to the
entry of any judgment that does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Lender of a full and complete written
release of Lender (in form, scope and substance satisfactory to Lender in its
sole discretion) from all liability in respect of such action, suit, proceeding
or claim and a dismissal with prejudice of such action, suit, proceeding or
claim; or (ii) settle or compromise any action, suit, proceeding or claim in any
manner that may adversely affect Lender or obligate Lender to pay any sum or
perform any obligation as determined by Lender in its sole discretion.
(c) All Costs shall be immediately reimbursable to Lender when and as
3
<PAGE>
incurred and, in the event of any litigation, claim or other proceeding, without
any requirement of waiting for the ultimate outcome of such litigation, claim or
other proceeding, and Indemnitor shall pay to Lender any and all Costs within
ten (10) days after written notice from Lender itemizing the amounts thereof
incurred to the date of such notice. In addition to any other remedy available
for the failure of Indemnitor to periodically pay such Costs, such Costs, if not
paid within said ten-day period, shall bear interest at the Default Rate (as
defined in the Notes).
3. Reinstatement of Obligations. If at any time all or any part of any
----------------------------
payment made by Indemnitor or received by Lender from Indemnitor under or with
respect to this Agreement is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of Indemnitor or Borrower), then the obligations of Indemnitor
hereunder shall, to the extent of the payment rescinded or returned, be deemed
to have continued in existence, notwithstanding such previous payment made by
Indemnitor, or receipt of payment by Lender, and the obligations of Indemnitor
hereunder shall continue to be effective or be reinstated, as the case may be,
as to such payment, all as though such previous payment by Indemnitor had never
been made.
4. Waivers by Indemnitor. To the extent permitted by law, Indemnitor
---------------------
hereby waives and agrees not to assert or take advantage of:
(a) Any right to require Lender to proceed against Borrower or any
other person or to proceed against or exhaust any security held by Lender at any
time or to pursue any other remedy in Lender's power or under any other
agreement before pr oceeding against Indemnitor hereunder;
(b) The defense of the statute of limitations in any action hereunder;
(c) Any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or the failure of
Lender to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other person or persons.
(d) Demand, presentment for payment, notice of nonpayment, intent to
accelerate, acceleration, protest, notice of protest and all other notices of
any kind, or the lack of any thereof, including, without limiting the generality
of the foregoing notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on
the part of any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by Lender;
(e) Any defense based upon an election of remedies by Lender,
(f) Any right or claim or right to cause a marshalling of the assets
of Indemnitor;
(g) Any principle or provision of law, statutory or otherwise, which
is or
4
<PAGE>
might be in conflict with the terms and provisions of this Agreement;
(h) Any duty on the part of Lender to disclose to Indemnitor any facts
Lender may now or hereafter know about Borrower or the Properties, regardless of
whether Lender has reason to believe that any such facts materially increase the
risk beyond that which Indemnitor intends to assume or has reason to believe
that such facts are unknown to Indemnitor or has a reasonable opportunity to
communicate such facts to Indemnitor, it being understood and agreed that
Indemnitor is fully responsible for being and keeping informed of the financial
condition of Borrower, of the condition of the Properties and of any and all
circumstances bearing on the risk that liability may be incurred by Indemnitor
hereunder;
(i) Any lack of notice of disposition or of manner of disposition of
any collateral for the Loan;
(j) Any invalidity, irregularity or unenforceability, in whole or in
part, of any one or more of the Loan Documents;
(k) Any lack of commercial reasonableness in dealing with the
collateral for the Loan;
(l) Any deficiencies in the collateral for the Loan or any deficiency
in the ability of Lender to collect or to obtain performance from any persons or
entities now or hereafter liable for the payment and performance of any
obligation hereby guaranteed;
(m) Any assertion or claim that the automatic stay provided by 11
U.S.C. (S)362 (arising upon the voluntary or involuntary bankruptcy proceeding
of Borrower) or any other stay provided under any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, shall
operate or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of Lender to enforce any of its rights, whether now or hereafter
required, which Lender may have against Indemnitor or the collateral for the
Loan;
(n) Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and
(o) Any action, occurrence, event or matter consented to by Indemnitor
under Section 5(g) hereof, under any other provision hereof, or otherwise.
5. General Provisions.
------------------
(a) Fully Recourse. All of the terms and provisions of this Agreement
--------------
are recourse obligations of Indemnitor and not restricted by any limitation on
personal liability.
(b) Unsecured Obligations. Indemnitor hereby acknowledges that
---------------------
Lender's
5
<PAGE>
appraisal of the Properties is such that Lender is not willing to accept the
consequences of the inclusion of Indemnitor's indemnity set forth herein among
the obligations secured by the Mortgages and the other Loan Documents and that
Lender would not make the Loan but for the unsecured personal liability
undertaken by Indemnitor herein.
(c) Survival. This Agreement shall be deemed to be continuing in
--------
nature and shall remain in full force and effect and shall survive the exercise
of any remedy by Lender under the Mortgage or any of the other Loan Documents,
including, without limitation, any foreclosure or deed in lieu thereof even if,
as a part of such remedy, the Loan is paid or satisfied in full.
(d) No Subrogation: No Recourse Against Lender. Notwithstanding the
------------------------------------------
satisfaction by Indemnitor of any liability hereunder, Indemnitor shall not have
any right of subrogation, contribution, reimbursement or indemnity whatsoever or
any, right of recourse to or with respect to the assets or property of Borrower
or to any collateral for the Loan. In connection with the foregoing, Indemnitor
expressly waives any and all rights of subrogation to Lender against Borrower,
and Indemnitor hereby waives any rights to enforce any remedy which Lender may
have against Borrower and any right to participate in any collateral for the
Loan. In addition to and without in any way limiting the foregoing, Indemnitor
hereby subordinates any and all indebtedness of Borrower now or hereafter owed
to Indemnitor to all indebtedness of Borrower to Lender, and agrees with Lender
that Indemnitor shall not demand or accept any payment of principal or interest
from Borrower, shall not claim any offset or other reduction of Indemnitor's
obligations hereunder because of any such indebtedness and shall not take any
action to obtain any of the collateral from the Loan. Further, Indemnitor shall
not have any right of recourse against Lender by reason of any action Lender may
take or omit to take under the provisions of this Agreement or under the
provisions of any of the Loan Documents.
(e) Reservation of Rights. Nothing contained in this Agreement shall
---------------------
prevent or in any way diminish or interfere with any rights or remedies,
including, without limitation, the right to contribution, which Lender may have
against Borrower, Indemnitor or any other party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (codified at
Title 42 U.S.C. (S)9601 et seq.), as it may be amended from time to time, or any
-------
other applicable federal, state or local laws, all such rights being hereby
expressly reserved.
(f) Rights Cumulative: Payments. Lender's rights under this Agreement
---------------------------
shall be in addition to all rights of Lender under the Notes, the Mortgages and
the other Loan Documents. Further, payments made by Indemnitor under this
Agreement shall not reduce in any respect Borrower's obligations and liabilities
under the Notes, the Mortgages and the other Loan Documents.
(g) No Limitation on Liability. Indemnitor hereby consents and
--------------------------
agrees that Lender may at any time and from time to time without further consent
from Indemnitor do any of the following events, and the liability of Indemnitor
under this Agreement shall be unconditional and absolute and shall in no way be
impaired or limited by any of the following events, whether occurring with or
without notice to Indemnitor or with or without consideration: (i) any
extensions of time for performance required by any of the Loan Documents or
extension or renewal of the Notes; (ii) any sale, assignment or foreclosure of
the Notes, the Mortgages or any of the other Loan Documents or any sale or
transfer of the Property;
6
<PAGE>
(iii) any change in the composition of Borrower, including, without limitation,
the withdrawal or removal of Indemnitor from any current or future position of
ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of
the representations and warranties made by Indemnitor herein or by Borrower in
any of the Loan Documents; (v) the release of Borrower or of any other person or
entity from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law,
Lender's voluntary act or otherwise; (vi) the release or substitution in whole
or in part of any security for the Loan; (vii) Lender's failure to record any
Mortgage or to file any financing statement (or Lender's improper recording or
filing thereof) or to otherwise perfect, protect, secure or insure any lien or
security interest given as security for the Loan; (viii) the modification of the
terms of any one or more of the Loan Documents; or (ix) the taking or failure to
take any action of any type whatsoever. No such action which Lender shall take
or fail to take in connection with the Loan Documents or any collateral for the
Loan, nor any course of dealing with Borrower or any other person, shall limit,
impair or release Indemnitor's obligations hereunder, affect this Agreement in
any way or afford Indemnitor any recourse against Lender. Nothing contained in
this Section shall be construed to require Lender to take or refrain from taking
any action referred to herein.
(h) Entire Agreement; Amendment; Severability. This Agreement
-----------------------------------------
contains the entire agreement between the parties respecting the matters herein
set forth and supersedes all prior agreements, whether written or oral, between
the parties respecting such matters. Any amendments or modifications hereto, in
order to be effective, shall be in writing and executed by the parties hereto. A
determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.
(i) Governing Law; Binding Effect; Waiver of Acceptance. This
---------------------------------------------------
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, except to the extent that the applicability of any of such
laws may now or hereafter be preempted by Federal law, in which case such
Federal law shall so govern and be controlling. This Agreement shall bind
Indemnitor and the heirs, personal representatives, successors and assigns of
Indemnitor and shall inure to the benefit of Lender and the officers, directors,
shareholders, agents and employees of Lender and their respective heirs,
successors and assigns. Notwithstanding the foregoing, Indemnitor shall not
assign any of its rights or obligations under this Agreement without the prior
written consent of Lender, which consent may be withheld by Lender in its sole
discretion. Indemnitor hereby waives any acceptance of this Agreement by Lender,
and this Agreement shall immediately be binding upon Indemnitor.
(j) Notices. All notices and other communications given pursuant to
-------
or in connection with this Agreement shall be in dully executed writing
delivered to the parties at the addresses set forth below (or such other address
as may be provided by one party in a notice to the other):
If to Secured Party:
7
<PAGE>
Convenience Store Finance Company, LLC
10880 Wilshire Boulevard
21st Floor
Los Angeles, CA 90071
Attention: Steven M. Wheelon
Facsimile No.: (310) 481-2899
With a Copy To:
Credit Suisse First Boston Mortgage Capital LLC
11 Madison Avenue
New York, New York 10010
Attention: Malini Majumdar and Edmund Taylor
Facsimile No.: (212) 325-8218
(212) 325-8106
With a Copy To:
Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, CA 90067
Attention: Chauncey M. Swalwell, Esq.
Facsimile No.: (310) 556-5959
If to Indemnitor:
Mr. John D. Castellucci
23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
Facsimile No.: (310) 456-6094
With a copy to:
The Law Firm of Kenneth P. Roberts
6355 Topanga Canyon Blvd.
Woodland Hills, CA 91367
Attention: Kenneth P. Roberts, Esq.
Facsimile No.: (818) 888-2686
Notice delivered in accordance with the foregoing shall be effective
(i) when delivered, if delivered personally or by receipted-for telex,
telecopier, or facsimile transmission; (ii) one (1) day after being delivered in
the United States (properly addressed and all fees paid) for overnight delivery
service to a courier (such as Federal Express) which regularly provides such
service and regularly obtains executed receipts evidencing delivery or (iii)
five (5) days after being deposited (properly addressed and stamped for first-
class delivery) in a daily serviced United States mail box.
8
<PAGE>
(k) No Waiver; Time of Essence; Business Day. The failure of any party
----------------------------------------
hereto to enforce any right or remedy hereunder, or to promptly enforce any such
right or remedy, shall not constitute a waiver thereof nor give rise to any
estoppel against such party nor excuse any of the parties hereto from their
respective obligations hereunder. Any waiver of such right or remedy must be in
writing and signed by the party to be bound. This Agreement is subject to
enforcement at law or in equity, including actions for damages or specific
performance. Time is of the essence hereof. The term "business day" as used
herein shall mean a weekday, Monday through Friday, except a legal holiday or a
day on which banking institutions in New York are authorized by law to be
closed.
(l) Captions for Convenience. The captions and headings of the sections
------------------------
and paragraphs of this Agreement are for convenience of reference only and shall
not be construed in interpreting the provisions hereof.
(m) Attorneys' Fees. In the event it is necessary for Lender to retain the
---------------
services of an attorney or any other consultants in order to enforce this
Agreement, or any portion thereof, Indemnitor agrees to pay to Lender any and
all costs and expenses, including, without limitation, attorneys' fees, incurred
by Lender as a result thereof and such costs, fees and expenses shall be
included in Costs.
(n) Successive Actions. A separate right of action hereunder shall arise
------------------
each time Lender acquires knowledge of any matter indemnified or guaranteed by
Indemnitor under this Agreement. Separate and successive actions may be brought
hereunder to enforce any of the provisions hereof at any time and from time to
time. No action hereunder shall preclude any subsequent action, and Indemnitor
hereby waives and covenants not to assert any defense in the nature of splitting
of causes of action or merger of judgments.
(o) Reliance. Lender would not make the Loan to Borrower without this
--------
Agreement. Accordingly, Indemnitor intentionally and unconditionally enters
into, the covenants and agreements as set forth above and understands that, in
reliance upon and in consideration of such covenants and agreements, the Loan
shall be made and, as part and parcel thereof, specific monetary and other
obligations have been, are being and shall be entered into which would not be
made or entered into but for such reliance.
(p) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
------------------------------------------------
(1) INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT,
(B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION OVER THE COUNTY IN WHICH THE PROPERTY
IS LOCATED, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE
FULLEST EXTENT PERMITTED BY LAW, INDEMNITOR AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING
9
<PAGE>
IN ANY OTHER FORUM). INDEMNITOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY REGISTERED OR CERTIFIED U.S. MAIL., POSTAGE PREPAID, TO THE INDEMNITOR AT THE
ADDRESS FOR NOTICES DESCRIBED IN SECTION 5(j) HEREOF, AND CONSENTS AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE IN , EVERY RESPECT VALID AND EFFECTIVE
SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF
PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(2) LENDER AND INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR
INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS., MEMBERS, EMPLOYEES,
AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR.
IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
(q) Waiver by Indemnitor. Indemnitor covenants and agrees that,
--------------------
upon the commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, Indemnitor shall not seek or cause Borrower or any other
person or entity to seek a supplemental stay or other relief, whether injunctive
or otherwise, pursuant to 1I U.S.C. (S) 105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to enforce
any rights of Lender against Indemnitor or the collateral for the Loan by virtue
of this Agreement or otherwise.
(r) No Petition. Indemnitor hereby covenants and agrees that it
-----------
will not at any time institute against Borrower, or join in any institution
against Borrower of any bankruptcy proceedings under any United States Federal
or state bankruptcy or similar law.
IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement as of
the day and year first above written.
/s/ John Castellucci
---------------------------
JOHN D. CASTELLUCCI
10
<PAGE>
Exhibit 10.73
CUESTA TITLE
Recording Requested by [Recorder's Stamp]
and Return to:
Recording Requested by and Upon Recording Mail to:
Carl Lindros
Mortgate Co. of Santa Barbara
200 E. Carrillo, Suite 302
Santa Barbara, CA 93101
OPTION AGREEMENT [Recorded in counterpart]
This Option Agreement is made on March 1, 2000, by and between Carl E. Lindros
or assignee (hereafter referred to collectively as "Buyer") and Mr. John
Castrellucci, Manager of LLO GAS TRUCK STOP NO. 1, LLC (hereafter referred to as
"Optionee").
Witnesseth:
Whereas on February, 2000, Optionee assigned or caused to be assigned the
interest of LLO GAS TRUCK STOP NO. 1, LLC in Escrow No. 00503052-001-LAA at
Cuesta Title Company in Visalia, CA on the Real Property known as 979 East Paige
Av., Tulare, CA 93274, APN 191-050-029, plus or minus 40 acres (the Property):
and
Whereas Optionee may wish to repurchase said Property from Buyer in a twelve
month period:
Now therefore it is agreed:
For valuable consideration, Buyer agrees to give Optionee an exclusive option to
purchase its interest in the Property on the following terms:
1. Unless exercised, the option period will expire on February 28, 2001.
2. Notices regarding this Option are to be sent as follows:
Buyer: Carl Lindros
200 E. Carrillo, suite 302 [Title Company Stamp]
Santa Barbara, CA 93101
Optionee: John Castrellucci
23805 Stuart Ranch Rd., suite 200
Malibu, CA 90265
3. At any time prior to February 28, 2001, Optionee and the option and
exclusive right to buy the Property from Buyer for the Option Price of Nine
Hundred Sixty One Thousand Seven Hundred and Fifty Dollars ($961,750.00) plus
the adjustments as noted below in item #4.
<PAGE>
Option Agreement, Page 2
4. The following sums will be added to the option price.
a. Any transactional costs incurred by Buyer in the purchase of the Property
including but not limited to, commissions, title insurance, escrow fees, etc.
and the sale of the Property by buyer to Optionee if this option is exercised.
b. Twenty percent (20%) of the total dollars invested by Buyer to purchase the
property including but not limited to the purchase price and the costs incurred
in item #a above.
c. Any costs of holding the property during the option period including but not
limited to insurance, taxes, special assessments, fees, permits, etc.
d. An asset management fee payable to the Mortgage Co. of Santa Barbara of the
three percent annually (3%) of the total costs incurred in item #b above,
prorated over the holding period.
e. Any costs incurred by Buyer by activities necessary to perfect or protect
Buyers interest in the property during the option period including but not
limited to professional fees paid to attorneys, accountants or others.
5. Buyer may assign its interest in the Property at any time during the option
period with the condition that the assignee assumes and agrees to perform, for
the benefit of Optionee, the obligations of Buyer under this Option Agreement.
6. In the event that Optionee elects to exercise this option, a formal Purchase
Contract for the sale of Real Estate incorporating the terms referred to herein
will be executed by and between Buyer and Optionee.
7. No modification of this agreement will be in effect unless it is in writing
and is signed by both Buyer and Optionee and any successors. Time of the
essence of this Agreement. This document, including any attachments, is the
entire agreement between Buyer and Optionee.
8. This Option Agreement shall be recorded with the County Recorder's office in
Tulare County, California.
9. This Agreement is governed by the laws of the State of California and any
legal actions must be entered in Superior Court of the County of Santa
Barbara
Buyer:
/s/ Carl E. Landros
Carl E. Landros, Mortgage Co. of Santa Barbara
Optionee:
John Castrellucci, Manager, LLO GAS TRUCK STOP NO. 1, LLC
<PAGE>
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
================================================================================
<TABLE>
<S> <C>
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA BARBARA )
On 3-1-2000 before me, Elise M. Bahia, Notary Public
-------------- ------------------------------------------------------------------------------
NAME, TITLE OF OFFICER -E.G., "JANE DOE", NOTARY PUBLIC
personally appeared Carl Lindros
-------------------------------------------------------------------------------------
[X] personally known to me
proved to me on the basis of satisfactory evidence to be the person
[SEAL] whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Elise M. Bahia
-----------------------------------------------------------------
SIGNATURE OF NOTARY
</TABLE>
===========================OPTIONAL=============================================
Though the data is not required by law, it may prove valuable to persons relying
on the document and could prevent the fraudulent reattachment of this form
Description of Attached Document
Title or Type of Document: Option Agreement
----------------------------------------------------
Document Date: 3-1-2000 Number of Pages: 2
------------- --------------------------------
Signer(s) Other Than Named Above:
----------------------------------------------
Capacity(ies) Claimed by Signer
Signer's Name:
-----------------------------------------------------------------
[X] Individual
[_] Corporate Officer - Title(s):
[_] Partner [_] Limited [_] General [RIGHT THUMBPRINT
[_] Attorney-in-Fact OF SIGNER]
[_] Trustee
[_] Guardian/Conservator
[_] Other:______________________________________________________________________
_______________________________________________________
SIGNER IS REPRESENTING: Mortgage Co. of Santa Barbara
------------------------------------------------------
<PAGE>
Exhibit 10.77
OFFICE LEASE
MIRAMAR PROFESSIONAL PARK
MIRAMAR INVESTMENT CO.,
a California General Partnership
as Landlord,
and
WEST STAR ENERGY GROUP LLO-GAS, INC.
a Delaware corporation,
as Tenant
<PAGE>
MIRAMAR PROFESSIONAL PARK
SUMMARY OF OFFICE LEASE INFORMATION
The undersigned hereby agree to the following terms of this Summary of
Office Lease Information (the "Summary"). This Summary is incorporated into and
made a part of the attached Office Lease (the "Office Lease") which pertain to
the "Premises," as that term is defined in the Office Lease, which is a portion
of the real property commonly known as "Miramar Professional Park" located in
Malibu, California. In the event of a conflict between the terms of this
Summary and the Office Lease, the terms of the Office Lease shall prevail. Any
capitalized terms used in the Summary and not otherwise defined in the Summary
shall have the meanings set forth in the Office Lease.
TERMS OF LEASE DESCRIPTION
1. Commencement Date: October 1, 1999
2. Landlord: MIRAMAR INVESTMENT CO.
a California General Partnership
3. Tenant: WEST STAR ENERGY GROUP
LLO-GAS, INC., a Delaware Corporation
4. Premises (Article 1).
4.1 Building Address: 23805 Stuart Ranch Road
Malibu, California 90265
1st year 2nd and 3rd years
1896 RSF
4.2 Premises: Approximately 1434 "rentable" (1247 usable)
square feet of (1649) USF space located on the
floor of the Building Suite. 224
5. Lease Term (Article 2).
5.1 Length of Term: 3 years.
5.2 Lease Commencement Date: The Lease Commencement Date shall occur as set
forth in Article 2 of the Office Lease. The
Lease Commencement date is October 1, 1999
5.3 Lease Expiration Date: September 30, 2002
6. Base Rent (Article 3): 1st yr. $45,601.00; 2nd yr. $63,910.00; 3rd
yr. $67,745.00
i
<PAGE>
Annual Base Rent $ subject to annual CPI increases & add.
operation expense
1st yr. $3,810.00; 2nd yr. $5326.00;
3rd yr. $5,645.00
Monthly Installment $ subject to annual CPI increases; upon
execution of Lease by Tenant and Miramar,
Tenant shall pay first and last month's rent:
$9,455.00
7. Additional Rent
(Article 4):
7.1 Tenant's Share: Approximately % 4.68% (1st yr. 3.54%)
7.2 Tenant's Share of tax Tenant to pay allocable share.
increase:
8. Security Deposit $3,810.00
(Article 21): $ which tenant shall pay upon execution
of this lease.
9. Parking Spaces
(Article 28): 5 unreserved parking spaces at no cost to
Tenant.
10. Tenant Improvements: For 1st year divide Ste. 200; remove
partition wall to enlarge Reception rm. in
Ste. 224; remove divider wall on 10/01/00.
Tenant shall contribute $1,500.00 to T.I.
cost.
11. Broker(s)
(Section 29.18): N/A
12. Address of Tenant __________________________________________
(Section 29.13) __________________________________________
__________________________________________
Attention: _______________________________
(Before Lease Commencement Date)
and
23805 Stuart Ranch Road, Suite 224
Malibu, California 90265
(After Lease Commencement Date)
13. Guarantor Not Applicable
Initial Here:
Tenant: /s/JC
--------------
Landlord: /s/BLG
------------
ii
<PAGE>
The foregoing terms of this Summary are hereby agreed to by Landlord and Tenant.
"Landlord":
MIRAMAR INVESTMENT CO., a California General
Partnership
By: /s/ Betty L. Gartland
----------------------------------------
Betty Gartland, Partner
and
"Tenant"
WEST STAR ENERGY GROUP LLO-GAS, INC., a
Delaware Corporation
By: /s/ John Castellucci
----------------------------------------
John Castellucci, CEO
Initial Here:
Tenant:
--------------
Landlord:
------------
iii
<PAGE>
MIRAMAR PROFESSIONAL PARK
INDEX
ARTICLE SUBJECT MATTER PAGE
- ------- -------------- ----
ARTICLE 1 PREMISES, BUILDING, PROPERTY, AND COMMON AREAS...... 1
ARTICLE 2 LEASE TERM.......................................... 3
ARTICLE 3 BASE RENT........................................... 3
ARTICLE 4 ADDITIONAL RENT..................................... 4
ARTICLE 5 USE OF PREMISES..................................... 10
ARTICLE 6 SERVICES AND UTILITIES.............................. 10
ARTICLE 7 REPAIRS............................................. 12
ARTICLE 8 ADDITIONS AND ALTERATIONS........................... 12
ARTICLE 9 COVENANT AGAINST LIENS.............................. 14
ARTICLE 10 INSURANCE........................................... 14
ARTICLE 11 DAMAGE AND DESTRUCTION.............................. 16
ARTICLE 12 NONWAIVER........................................... 18
ARTICLE 13 CONDEMNATION........................................ 18
ARTICLE 14 ASSIGNMENT AND SUBLETTING........................... 19
ARTICLE 15 SURRENDER OF PREMISES, REMOVAL OF TRADE FIXTURES.... 23
ARTICLE 16 HOLDING OVER........................................ 24
ARTICLE 17 ESTOPPEL CERTIFICATES............................... 24
ARTICLE 18 SUBORDINATION....................................... 25
ARTICLE 19 DEFAULTS; REMEDIES.................................. 25
ARTICLE 20 ATTORNEYS' FEES..................................... 28
ARTICLE 21 SECURITY DEPOSIT.................................... 28
ARTICLE 22 SUBSTITUTION OF OTHER PREMISES...................... 28
ARTICLE 23 SIGNS............................................... 29
ARTICLE 24 COMPLIANCE WITH LAW................................. 29
ARTICLE 25 LATE CHARGES........................................ 31
ARTICLE 26 MIRAMAR'S RIGHT TO CURE DEFAULT;
PAYMENT'S BY TENANT................................. 31
ARTICLE 27 ENTRY BY MIRAMAR.................................... 32
ARTICLE 28 PARKING............................................. 32
ARTICLE 29 MISCELLANEOUS PROVISIONS............................ 33
EXHIBITS
A OUTLINE OF PREMISES N/A
Initial Here:
Tenant:
--------------
Landlord:
------------
i
<PAGE>
B FORM OF NOTICE OF LEASE TERM DATES
C RULES AND REGULATIONS
D FORM OF TENANT'S ESTOPPEL CERTIFICATE
E FORM OF TENANT WORK LETTER N/A
F FORM OF GUARANTY OF LEASE N/A
ADDENDUM TO LEASE AGREEMENT - OPTION TO RELEASE PREMISES N/A
Initial Here:
Tenant:
--------------
Landlord:
------------
ii
<PAGE>
MIRAMAR PROFESSIONAL PARK
OFFICE LEASE
This Office Lease, which incorporates by this reference the preceding
Summary of Office Lease Information (Summary) attached to this Lease (the Office
Lease and Summary are sometimes collectively referred to herein as the Lease,
dated as of the date set forth in Section 1 of the Summary, is made by and
between Landlord MIRAMAR INVESTMENT CO., a California General Partnership
(Miramar), and Tenant WEST STAR ENERGY GROUP LLO-GAS, INC., a Delaware
Corporation.
ARTICLE 1
PREMISES, BUILDING, PROPERTY, AND COMMON AREAS
1.1 Premises, Building, Property and Common Areas.
1.1.1 The Premises. On the terms set forth in this Lease, Miramar
hereby leases to Tenant and Tenant hereby leases from Miramar the premises set
forth in Section 4.2 of the Summary (the "Premises"), which Premises are located
in the "Building," as that term is defined in Section 1.1.2, below.
1.1.2 The Building and The Property. The Premises are a part of the
building located at 23805 Stuart Ranch Road, Malibu, California, as set forth in
Section 4.1 of the Summary (the "Building"). The Building is part of an office
project "Miramar Professional Park," which contains two office buildings located
at 23805 Stuart Ranch Road and 23815 Stuart Ranch Road. The term "Property", as
used in this Lease, shall mean collectively (i) the two buildings, the Adjacent
Site and the "Common Areas" as that term is defined in section 1.1.3 below, (ii)
the land (which is improved with landscaping, parking facilities and other
improvements) upon which the Buildings, the Adjacent Site, and the Common Areas
are located, and (iii) at Miramar's discretion, any additional real property,
areas, buildings or other improvements added to the Property pursuant to the
terms of Section 1.1.4 of this Lease.
1.1.3 Common Areas. Tenant shall have the non-exclusive right to use
in common with other tenants in the Property, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Property which are provided, from time to time, for use in common by Miramar and
by Tenant and any other tenants of the Property whether or not those areas are
open to the general public (such areas, together with such other portions of the
Property designated by Miramar in its discretion, including certain areas
designated for the exclusive use of certain tenants or to be shared by Miramar
and certain tenants, such as balconies abutting tenants' premises, are
collectively referred to in this Lease as the "Common Areas").
Initial Here:
Tenant:
--------------
Landlord:
------------
1
<PAGE>
The Common Areas shall consist of the "Property Common Areas" and the "Building
Common Areas". The term "Property Common Areas", as used in this Lease, shall
mean the portion of the Property designated as such by Miramar "Building Common
Areas" as used in this Lease, shall mean the portions of the Common Areas
located within the Stuart Ranch Buildings designated as such by Miramar. The
manner in which the Common Areas are maintained and operated shall be at the
sale discretion and responsibility of Miramar.
1.1.4 Miramar's Use and Operation of the Building, Property, and
Common Areas. Miramar reserves the right from time to time without notice to
Tenant (i) to close temporarily any of the Common Areas; (ii) to make changes to
the Common Areas, including, without limitation, changes in the location, size,
shape and number of street entrances, driveways, ramps, entrances, exits,
passages. stairways and other ingress and egress, direction of traffic,
landscaped areas, loading and unloading areas and walkways; (iii) to expand the
Buildings, or either of them, or the Adjacent Site; (iv) to add additional
buildings and improvements to the Common Areas; (v) to designate land outside
the Property to be part of the Property, and in connection, with such additions
to add additional buildings and common areas to the Property; (vi) to use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Property or to any adjacent land or any portion thereof; and
(vii) to do and perform such other acts and make such other changes in, to or
with respect to, the Property, Common Areas and Building, or the expansion
thereof, as Miramar may, in the exercise of sound business judgment, deem to be
appropriate. Reasonable efforts will be made by Miramar to minimize any
inconvenience to Tenant.
1.2 Calculation and Verification of Rentable Square Feet of Premises,
Building, Stuart Ranch Buildings and Property. For purposes of this Lease.
"rentable square feet" shall be calculated pursuant to Standard Method for
Measuring Floor Area in Office Buildings. ANSI Z65.1 - 1980 ("BOMA"), provided
that the rentable square footage of the Building and any other buildings in the
Property shall include all of (and the rentable square footage of the Premises
therefore shall include a portion of) (i) the Building Common Areas and (ii) any
occupied space of the portion of the Property dedicated to the service of the
Property.
1.3 Base, Shelf and Core Work in the Premises Required of Miramar. Except
as specifically set forth in this Lease and in the Tenant Work Letter between
Miramar and Tenant dated as of even date herewith (the "Tenant Work Letter") the
form of which is attached hereto marked Exhibit E, Miramar shall not be
obligated to provide or pay for any improvement work or services whatsoever
related to the improvement of the Premises. Tenant also acknowledges that
Miramar has made no representation or warranty regarding the condition of the
Premises or the Property except as specifically set forth in this Lease and the
Tenant Work Letter. As of the Lease Commencement Date, Tenant represents that
it has Inspected the Premises, that the Building and the Property constitute
first-class office building property, as that term is used in this Lease, and
that the Premises are acceptable to Tenant and suitable for Tenant's [sic]
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ARTICLE 2
LEASE TERM
2.1 Commencement and Lease Term. The terms and provisions of this Lease
shall be effective as of the date of this Lease. The term of this Lease (the
"Lease Term") shall be as set forth in Section 5.1 of the Summary, shall
commence on the date Miramar delivers possession of the Premises to Tenant which
date is **** (the "Lease Commencement Date"), and shall terminate on the date
set forth in Section 5.3 of the Summary (the "Lease Expiration Date") unless
this Lease is sooner terminated as provided in this Lease. For purposes of this
Lease, the term "Lease Year" shall mean each consecutive twelve (12) month
period during the Lease Term; provided, however, that the first Lease Year shall
commence on the Lease Commencement Date and end on the last day of the eleventh
month thereafter and the second and each succeeding Lease Year shall commence on
the first day of the next calendar month; and further provided that the last
Lease Year shall end on the Lease Expiration Date. At any time during the Lease
Term, Miramar may deliver to Tenant a notice in the form as set forth in Exhibit
B, attached to this Lease which notice Tenant shall execute and return to
Miramar within five (5) days of receipt thereof.
2.2 Delay in Possession. Notwithstanding said Lease Commencement Date, if
for any reason Miramar cannot deliver possession of the Premises to Tenant on
said date Miramar shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Tenant hereunder
or extend the term hereof, but in such case, Tenant shall not be obligated to
pay rent until possession of the Premises is tendered to Tenant; provided,
however, that if Miramar shall not have delivered possession of the Premises
within sixty (60) days from said commencement date, Tenant may at Tenant's
option, by notice in writing to Miramar within ten (10) days thereafter, cancel
this Lease, in which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of Tenant is
not received by Miramar within said ten (10) day period Tenant's right to cancel
this Lease hereunder shall terminate and be of no further force or effect.
2.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay rent
for such period at the initial monthly rates set forth below.
ARTICLE 3
BASE RENT
3.1 Base Rent During Initial Term. Tenant shall pay, without notice or
demand, to
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Miramar or Miramar's agent at the management office of the Property, or at such
other place as Miramar may from time to time designate in writing in advance, in
currency or a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent ("Base
Rent"), payable in equal monthly installments as set forth in Section 6 of the
Summary in advance on or before the first day of each and every month during the
Lease Term, without any setoff or deduction whatsoever. The Base Rent for the
first full month of the Lease Term shall be paid at the time of Tenant's
execution of this Lease. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the Rent. All
other payments or adjustments required to be made under the terms of this Lease
that require proration on a time basis shall be prorated on the same basis.
3.2 Rent During Term. The Base Rent payable by Tenant during the Term
shall be increased annually by the increase if any, in the Consumer Price Index
for All Urban Consumers (Los Angeles - Long Beach - Anaheim), "All Items," which
is compiled and published by the United States Department of Labor, Bureau of
Labor Statistics or any successor agency. During the term of the Agreement, the
monthly rent payable under paragraph 3.1 shall be adjusted by the change, if
any, from the Base Month specified below, in the Consumer Price Index of the
Bureau of Labor Statistics of the U.S. Department of Labor for CPIU (All Urban
Consumers), for Los Angeles - Long Beach - Riverside. All items (1982-
1984=100), herein referred to as "C.P.I." The monthly rent payable in
accordance with this paragraph shall be calculated as follows: the Base Rent set
forth in paragraph 3.1, shall be multiplied by a fraction the numerator of which
shall be the C.P.I. of the calendar month two (2) months prior to the month(s)
specified above during which the adjustment is to take effect, and the
denominator of which shall be the C.P.I. of the calendar month which is two (2)
months prior to the first month of the immediately preceding Lease Year with
each year beginning on the anniversary of the Commencement Date. The sum so
calculated shall constitute the new monthly rent hereunder, but in no event,
shall any such new monthly rent be less than the rent payable for the month
immediately preceding the date for rent adjustment. In the event that the
Bureau of Labor Statistics, United States Department of Labor, should cease to
publish said price index, then any similar index compiled and published by any
other branch or department of the United States government shall be used for the
purpose of making the foregoing rental adjustment.
ARTICLE 4
ADDITIONAL RENT
4.1 General Terms. As set forth in this Article 3, in addition to paying
the Base
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Rent specified in Article a of this Lease, Tenant shall pay "Tenant's Share" of
the actual "Property Expenses." Such payments by Tenant, together with any and
all other amounts payable by Tenant to Miramar pursuant to the terms of this
Lease, are collectively referred to in this Lease as the "Additional Rent", and
the Base Rent and the Additional Rent are collectively referred to as "Rent."
All amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner as the Base Rent. Without limitation on
other obligations of Tenant which survive the expiration of the Lease Term and
this Lease, the obligations of Tenant to pay the Additional Rent provided for in
this Article 4 shall survive the expiration of the Lease term and this Lease.
4.2 Definitions. As used in this Article 4, the following terms shall
have the meanings set forth in this paragraph:
4.2.1 "Base Year Expenses" shall mean the amount of Property Expenses
for the Base Year.
4.2.2 "Expense Year" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.3 "Operating Expenses" shall mean all expenses, costs and amounts
of every kind and nature incurred in connection with the management,
maintenance, repair, replacement, restoration or operation of the Property,
including, without limitation, any amounts paid or incurred for (i) the cost of
supplying all utilities, the cost of operating, maintaining, repairing,
renovating, complying with conservation measures in connection with, and
managing the utility systems, mechanical systems, sanitary and storm drainage
systems, and elevator systems, and the cost of supplies and equipment,
maintenance, and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections and the cost of contesting the
validity or applicability of any governmental enactments which may affect
Operating Expenses, and the costs incurred in connection with the implementation
and operation of a transportation system management program or a municipal or
public shuttle service or parking program; (iii) the cost of all insurance
carried in connection with the Property, or any portion thereof; (iv) the cost
of landscaping, relamping, and all supplies, tools, equipment and materials used
in the operation, repair and maintenance of the Property, or any portion
thereof; (v) the cost of parking area repair, restoration, and maintenance,
including, but not limited to, resurfacing, repainting, restriping, and
cleaning; (vi) fees, charges and other costs, including consulting fees,
reasonable legal fees and accounting fees, of all contractors and consultants;
(vii) payments under any equipment rental agreements or management agreements
(including the cost of any management fee and the fair rental value of any
office space provided thereunder); (viii) wages, salaries and other compensation
and benefits of all persons engaged in the operation, maintenance, management,
or security of the Property, or any portion thereof, including employer's Social
Security taxes, unemployment taxes or insurance, and any other taxes which may
be levied on
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such wages, salaries, compensation and benefits; (ix) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Property, or any portion
thereof; (x) the cost of operation, repair, maintenance and replacement of all
systems and equipment which serve the Property in whole or part; (xi) the cost
of janitorial services, alarm and security service, window cleaning, trash
removal, replacement of wall and floor coverings, ceiling tiles and fixtures in
lobbies, corridors, restrooms and other common or public areas or facilities,
maintenance and replacement of curbs and walkways, repair to roofs and re-
roofing; and (xii) the cost of any capital improvements made to the Property
which are intended as a labor-saving device or to effect other economies in the
operation or maintenance of the Property, or any portion thereof, or made to all
or any portion of the Property, or any portion thereof, after the Lease
Commencement Date that are required under any governmental law or regulation
that was not applicable to the Property at the time that permits for the
construction of the Building or Stuart Ranch Buildings were obtained; provided,
however, that each such permitted capital expenditure shall be amortized
(including interest on the unamortized cost) over its useful life as reasonably
determined. Notwithstanding the foregoing, Operating Expenses shall not,
however, include (A) costs of leasing commissions and other costs and expenses
incurred in connection with negotiations with present or prospective tenants or
other occupants of the Stuart Ranch Buildings; (B) costs incurred due to a
violation by all other tenants of the terms and conditions of any lease of space
in the Stuart Ranch Buildings; and (C) the costs of general overhead and general
administrative expenses, not including management fees and building office
expenses which are included in operating expenses by Landlords of other
comparable first class office buildings located in the vicinity of the Building.
If the Property is not fully occupied during all or a portion of any Expense
Year. Miramar may elect to make an appropriate adjustment to the variable
components of Operating Expenses for such year employing sound accounting and
management principles, to determine the amount of Operating Expenses that would
have been paid had the Project been fully occupied; and the amount so determined
shall be deemed to have been the amount of Operating Expenses for such year.
4.2.4 "Property Expenses" shall mean the sum of "Operating Expenses"
and "Tax Expenses".
4.2.5 "Tax Expenses" shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary (including,
without limitation, real estate taxes, general and special assessments, transit
taxes, leasehold taxes or taxes based upon the receipt of rent, including gross
receipts or sales taxes applicable to the receipt of rent, unless required to be
paid by Tenant, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with all or any portion of the Property),
which shall be paid during any Expense Year (without regard to any different
fiscal year used by such governmental or
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municipal authority) because of or in connection with the ownership, leasing and
operation of the Property, or any portion thereof.
4.2.5.1 Tax Expenses shall include, without limitation:
(i) Any assessment, tax, fee, levy or charge in addition to,
or in substitution, partially or totally, of any assessment, tax, fee,
levy or charge previously included within the definition of real
property tax, it being acknowledged by Tenant and Miramar that
Proposition 13 was adopted by the voters of the State of California in
the June 1978 election ("Proposition 13") and that assessments, taxes,
fees, levies and charges may be imposed by governmental agencies for
such services as fire protection, street, sidewalk and road
maintenance, refuse removal and for other governmental services
formerly provided without charge to property owners or occupants, and,
in further recognition of the decrease in the level and quality of
governmental services and amenities as a result of Proposition 13, Tax
Expenses shall also include any governmental or private assessments or
the Property's contribution towards a governmental or private cost-
sharing agreement for the purpose of augmenting or improving the
quality of services and amenities normally provided by governmental
agencies. It is the intention of Tenant and Miramar that all such new
and increased assessments, taxes, fees, levies, and charges and all
similar assessments, taxes, fees, levies and charges be included
within the definition of Tax Expanses for the purposes of this Lease;
(ii) Any assessment, tax, fee, levy, or charge allocable to or
measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any gross Income tax with respect to
the receipt of such rent or upon or with respect to the possession,
leasing, operating, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or any portion thereof.
Notwithstanding anything to the contrary in this Section 4.2.5.1, Tax
Expenses shall not include federal, state and local income taxes, and
other taxes to the extent applicable to Miramar's general or net
income (as opposed to such taxes attributable to such rents, receipts,
or Income attributable to operations at the Property);
(iii) Any assessment, tax, fee, levy or charge, upon this
transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises; and
(iv) Any possessory taxes charged or levied in lieu of real
estate taxes.
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4.2.5.2 Any reasonable expenses incurred in attempting to protest,
reduce or minimize Tax Expenses shall be included in Tax Expenses in the Expense
Year such expenses are paid.
4.2.5.3 Tax refunds shall be deducted from Tax Expenses in the
Expense Year they are received.
4.2.6 "Base Year" shall mean the initial twelve month period of
this Lease.
4.2.7 "Tenant's Share" shall mean the percentage set forth in
Section 7.2 of the Summary. Tenant's Share was calculated by multiplying the
number of rentable square feet of the Premises by 100, and dividing the product
by the total rentable square feet in the Buildings; provided, however, if the
amount of rentable square feet of the Building or other buildings on the
Property increases or decreases pursuant to Article 1 of this Lease, then
Tenant's share shall be recalculated accordingly.
4.3 Allocation of Property Expenses to Tenants of the Building. Property
Expenses (i.e., Operating Expenses and Tax Expenses) are determined annually for
the Property as a whole.
4.4 Calculation and Payment of Additional Rent.
4.4.1 Calculation of Excess. If for any Expense Year ending or
commencing within the Lease Term, Tenant's share of property Expenses allocated
to the tenants of the Building pursuant to section 4.3 above for such Expense
Year exceeds Tenant's Share of the Base Year Expenses, then Tenant shall pay to
Miramar, without offset or deduction, in the manner set forth in Section 4.4.2.,
the Additional Rent.
4.4.2 Statement of Actual Property Expenses and Payment by Tenant.
Miramar shall give to Tenant on or before the first day of April following the
end of each Expense Year, a statement (the "Statement") which shall state the
property Expenses incurred or accrued for such preceding Expense Year and the
amount thereof allocated to the tenants of the Building, and which shall
indicate the amount, if any, of any Excess. Upon receipt of the Statement for
each Expense Year ending during the Lease Term, if an Excess is present, Tenant
shall pay, within thirty (30) days of receipt of the Statement, the full amount
of the Excess for such Expense Year, less the amounts, if any, paid during such
Expense Year as "Estimated Excess," as that term is defined in Section 4.4.3.
below. The failure of Miramar to timely furnish the Statement for any Expense
year shall not prejudice Miramar or Tenant from enforcing its rights under this
Article 4. Even though the Lease Term has expired and Tenant has vacated the
Premises, "when the final determination is made of Tenant's Share of Property
Expenses allocated to the tenants of the Building for the Expense Year in which
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terminates, if an Excess is present. Tenant shall pay within thirty (30) days to
Miramar an amount as calculated pursuant to the provisions of Section 4.4.7 of
this Lease. The provisions of this Section 4.4.2 shall survive the expiration or
earlier termination of the Lease Term.
4.4.3 Statement of Estimated Property Expenses. In addition,
Miramar shall give Tenant a yearly expense estimate statement (the "Estimate
Statement") which shall set forth Miramar's reasonable estimate (the "Estimate")
of what the total amount of Property Expenses for the then-current Expense Year
shall be, the amount thereof to be allocated to the tenants of the Building, and
the estimated Excess (the "Estimated Excess") as calculated by comparing
Tenant's Share of Property Expenses allocated to the tenants of the Building.
The failure of Miramar to timely furnish the Estimate Statement for any Expense
Year shall not preclude Miramar from enforcing its rights to collect any
Estimated Excess under this Article 4. If pursuant to the Estimate Statement an
Estimated Excess is calculated for the then-current Expense Year. Tenant shall
pay, within thirty (30) days of receipt of such Estimate Statement a fraction of
the Estimated Excess for the then-current Expense Year (reduced by any amounts
paid pursuant to the last sentence of this Section 4.4.3). Such fraction shall
have as its numerator the number of months which have elapsed in such current
Expense Year, including the month of such payment, and twelve (12) as its
denominator. Until a new Estimate Statement is furnished (which Miramar shall
have the right to deliver to Tenant at any time), Tenant shall pay monthly, with
the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the
total Estimated Excess set forth in the previous Estimate Statement delivered by
Miramar to Tenant.
4.4.4 Tenant's Payment of Certain Tax Expenses. Notwithstanding
anything to the contrary contained in this Lease, in the event that, at any time
after the Lease Commencement Date and prior to the last day of the Lease Year,
any sale, refinancing, or change in ownership of the Property is consummated,
and as a result thereof, and to the extent that in connection therewith, the
Property is reassessed (the Reassessment") for real estate tax purposes by the
appropriate governmental authority, then the terms of this Section 4.4.4.1 shall
apply to such Reassessment of the Property.
4.4.4.1 The Tax Increase. For purposes of this Article 4, the term
"Tax Increase" shall mean that portion of the Tax Expenses, as calculated
immediately following the Reassessment, which is attributable solely to the
Reassessment. Accordingly, the term Tax Increase shall not include any portion
of the Tax Expenses, as calculated Immediately following the Reassessment, which
(i) is attributable to the initial assessment of the value of the Property, the
base, shell and core of the Building or the tenant improvements located in the
Building, (ii) is attributable to assessments which were pending immediately
prior to the Reassessment which assessments were conducted during, and included
in, such Reassessment, or which assessments were otherwise rendered unnecessary
following the Reassessment, or (iii) is attributable to the
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annual inflationary increase of real estate taxes.
4.4.4.2 Protection. During the first two (2) Lease Years, Tenant
shall not be obligated to pay any portion of the Tax Increase in connection with
a Reassessment during the first two (2) Lease Years.
4.5 Taxes and Other Charges for Which Tenant is Directly Responsible.
Tenant shall reimburse Miramar upon demand for any and all taxes required to be
paid by Miramar, excluding state, local and federal personal or corporate income
taxes measured by the net income of Miramar from all sources and estate and
inheritance taxes, whether or not now customary or within the contemplation of
the parties hereto, when:
4.5.1 Said taxes are measured by or reasonably attributable to the
cost or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or by the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, to the extent the cost
or value of such leasehold improvements exceeds the cost or value of a building
standard build-out as determined by Miramar regardless of whether title to such
improvements shall be vested in Tenant or Miramar;
4.5.2 Said taxes are assessed upon or with respect to the possession,
leasing, operation. management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion of the Property (including
the Property parking facility); or
4.5.3 Said taxes are assessed upon this transaction or any document
to which Tenant is a party creating or transferring an interest or an estate in
the Premises.
ARTICLE 5
USE OF PREMISES
5.1 Permitted Use. Tenant shall use the premises solely for general
office purposes consistent with the character of the Property as a first-class
office building property, and Tenant shall not use or permit the Premises to be
used for any other purpose or purposes whatsoever without the prior written
consent of Miramar. Tenant further covenants and agrees that Tenant shall not
use, or suffer or permit any person or persons to use, the Premises or any part
thereof for any use or purpose contrary to the provisions of the Rules and
Regulations set forth in Exhibit C, attached hereto, or in violation of the laws
of the United States of America, the State of California, or the ordinances,
regulations or requirements of the local municipal or county governing body or
other lawful authorities having jurisdiction over the Property. Tenant shall
comply with all recorded covenants, conditions, and restrictions now or
hereafter affecting the Property. Miramar acknowledges, however, that Tenant's
use of the Premises for general office
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purposes shall not cause a violation of any such recorded covenants, conditions
and restrictions affecting the Property. Tenant shall not use or allow another
person or entity to use any part of the Premises or the Property for the
storage, use, treatment, manufacture or sale of "Hazardous Material," as that
term is defined in Section 29.23 of this Lease.
ARTICLE 6
SERVICES AND UTILITIES
6.1 Standard Tenant Services. Miramar shall provide the following
services on all normal business days (Mondays through Fridays, unless otherwise
stated below) during the Lease Term.
6.1.1 Subject to all governmental rules, regulations and guidelines
applicable thereto, Miramar shall provide heating and air conditioning when
necessary for normal comfort for normal office use in the Premises, from Monday
through Friday, during the period from 8 a.m. to 6 p.m. and on Saturday during
the period from 9 a.m. to 1 p.m., except for the date of observation of New
Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day and, at Miramar's discretion, other locally or
nationally recognized holidays (collectively, the "Holidays").
6.1.2 Miramar shall provide adequate electrical wiring and facilities
and power for normal general office use as determined by Miramar. Tenant shall
bear the cost of replacement of lamps, starters and ballasts for lighting
fixtures within the premises if required for any reason other than normal wear
and tear or if such items shall not be provided by Miramar upon delivery of the
Premises to Tenant.
6.1.3 Miramar shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Miramar shall provide janitorial services Monday through Friday
except the date of observation of the Holidays, in and about the Premises and
window washing services in a manner consistent with other first-class office
buildings in the Malibu, California area.
6.2 Overstandard Tenant Use. Tenant shall not, without Miramar's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Miramar pursuant to the terms of Section
6.1 of this Lease. If such consent is given, Miramar shall have the right to
install supplementary air conditioning units or other facilities in the
Premises, including supplementary or additional
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metering devices, and the cost thereof, including the cost of installation,
operation and maintenance, increased wear and tear on existing equipment and
other similar charges, shall be paid by Tenant to Miramar upon billing by
Miramar. If Tenant desires to use heat, ventilation or air conditioning during
hours other than those for which Miramar is obligated to supply such utilities
pursuant to the terms of Section 6.1 of this Lease, Tenant shall give Miramar
such prior notice, as Miramar shall from time to time establish as appropriate,
of Tenant's desired use and Miramar shall supply such utilities to Tenant at
such hourly cost to Tenant as Miramar shall from time to time establish. Amounts
payable by Tenant to Miramar for such use of additional utilities shall be
deemed Additional Rent hereunder and shall be billed on a monthly basis.
6.3 Interruption of Use. Except as set forth in Section 19.4 of this
Lease. Tenant agrees that Miramar shall not be liable for damages, by abatement
of Rent or otherwise, for failure to furnish or delay In furnishing any service
(including telephone and telecommunication services), or for any diminution in
the quality or quantity thereof, when such failure or delay or diminution is
occasioned, in whole or in part, by repairs. replacements, or improvements, by
any strike, lockout or other labor trouble, by inability to secure electricity,
gas, water, or other fuel at the Building or Property after reasonable effort to
do so, by any accident or casualty whatsoever, by act or default of Tenant or
other parties, or by any other cause beyond Miramar's reasonable control; and
such failures or delays or diminution shall never be deemed to constitute an
eviction or disturbance of Tenant's use and possession of the Premises or
relieve Tenant from paying Rent or performing any of its obligations under this
Lease. Furthermore, Miramar shall not be liable under any circumstances for a
loss of, or injury to, property or for injury to, or interference with, Tenant's
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article 6. Miramar may comply with
voluntary controls or guidelines promulgated by any governmental entity relating
to the use or conservation of energy, water, gas, light or electricity or the
reduction of automobile or other emissions without creating any liability of
Miramar to Tenant under this Lease, provided that the Premises are not thereby
rendered untenantable.
ARTICLE 7
REPAIRS
Tenant shall, at Tenant's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term, ordinary wear and tear excepted.
In addition. Tenant shall, at Tenant's own expense, but under the supervision
and subject to the prior approval of Miramar, and within any reasonable period
of time specified by Miramar, promptly and adequately repair all damage to the
Premises and replace or repair all damaged. broken, or worn fixtures and
appurtenances; provided however, that, at Miramar's option, or if Tenant fails
to make such repairs, Miramar may, but
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need not, make such repairs and replacements, and Tenant shall pay Miramar the
reasonable cost thereof, including a percentage of the cost thereof (to be
uniformly established for the Building and for the Property and which percentage
shall be comparable to that charged by landlords of comparable buildings in
Malibu, California) sufficient to reimburse Miramar for all overhead. general
conditions fees and other costs or expenses arising from landlord's involvement
with such repairs and replacements forthwith upon being billed for same. Miramar
may, but shall not be required to, enter the Premises at all reasonable times
upon reasonable written notice to Tenant (24 hours conclusively deemed to be
reasonable) to make such repairs, alterations, improvements or additions to the
premises or to the Property or to any equipment located in the Property as
Miramar shall desire or deem necessary or as Miramar may be required to do by
governmental or quasi-governmental authority or court order or decree. Tenant
hereby waives and releases its right to make repairs at Miramar's expense under
Sections 1941 and 1942 of the California Civil Code or under any similar law,
statute, or ordinance now or hereafter in effect; provided, however, that
nothing in this Article 7 shall limit Tenant's rights under Section 19.4 of this
Lease.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Miramar's Consent to Alterations. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "Alterations") without first procuring the prior written consent of Miramar
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent shall not
be unreasonably withheld or delayed by Miramar; provided however, that Tenant
may make strictly cosmetic changes to the finish work in the Premises, not
requiring any structural or other substantial modifications to the Premises,
upon thirty (30) days prior notice to Miramar. The construction of any Initial
improvements to the Premises called for by this Lease shall be governed by the
terms of the Tenant Work Letter, made as part of this Lease, and not the terms
of this Article 8.
8.2 Manner of Construction. Miramar may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Miramar in its sole discretion may deem
desirable, including, but not limited to, the requirement that upon Miramar's
request, Tenant shall, at Tenant's expense, remove such alterations upon the
expiration or any early termination of the Lease Term, and/or the requirement
that Tenant utilize for the purposes of such construction and/or removal, only
contractors, materials, mechanics and materialmen selected by Miramar, Tenant
shall construct such Alterations and perform such repairs in conformance with
any and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the City of
Malibu, all in conformance with Miramar's construction rules and regulations.
All work with respect to any
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Alterations must be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the Premises shall at all times be a
complete unit except during the period of work. In performing the work of any
such Alterations, Tenant shall have the work performed in such manner so as not
to obstruct access to the Property or any portion thereof; by any other tenant
of the Property, and so as not to obstruct the business of Miramar or other
tenants in the Property, or interfere with the labor force working in the
Property. In addition to Tenant's obligations under Article 9 of this Lease,
upon completion of any Alterations, Tenant agrees to cause a Notice of
Completion to be recorded in the office of the Recorder of the County of Los
Angeles in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and Tenant shall deliver to the Property
management office a reproducible copy of the "as built" drawings of the
Alterations.
8.3 Payment for Improvements. In the event Tenant orders any Alterations
or repair work directly from Miramar, or from the contractor selected by
Miramar, the charges for such work shall be deemed Additional Rent under this
Lease, payable within thirty (30) days of billing therefor, either periodically
during construction or upon the substantial completion of such work at Miramar's
option. Upon completion of such work, Tenant shall deliver to Miramar evidence
of payment, contractors' affidavits and full and final waivers of all liens for
labor, services or materials. Tenant shall pay to Miramar a percentage of the
cost of such work, which percentage shall be uniformly established for the
Building and/or Property and shall be comparable to that charged by landlords of
comparable buildings in Malibu, California, sufficient to compensate Miramar for
all overhead, general conditions, fees and other costs and expenses arising from
Miramar's involvement with such work.
8.4 Construction Insurance. In the event that Tenant makes any
Alterations Tenant agrees to carry "Builder's All Risk" Insurance in an amount
approved by Miramar covering the construction of such Alterations, and such
other insurance as Miramar may require it being understood and agreed that all
of such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, Miramar may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Miramar in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Miramar as a co-
obligee.
8.5 Miramar's Property. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Miramar.
Furthermore, Miramar may require Tenant, at Tenant's expense, to remove such
Alterations upon the expiration or earlier termination of this Lease, and to
repair any damage to the Premises and Property caused by such removal. If
Tenant fails to complete such removal and/or to repair any damage caused by the
removal of any Alterations, Miramar may do so and may charge the reasonable cost
thereof to Tenant.
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ARTICLE 9
COVENANT AGAINST LIENS
Tenant has no authority or power to cause or permit any lien or encumbrance
of any kind whatsoever, whether created by act of Tenant, operation of law or
otherwise, to attach to or be placed upon the Property or Premises, and any and
all liens and encumbrances created by Tenant shall attach to Tenant's interest
only. Miramar shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from such liens.
Tenant covenants and agrees not to suffer or permit any lien of mechanics or
materialmen or others to be placed against the Property, the Building or the
Premises, or any portion thereof, with respect to work or services claimed to
have been performed for or materials claimed to have been furnished to Tenant or
the Premises, and, in case of any such lien attaching or notice of any lien.
Tenant covenants and agrees to cause it to be immediately released and removed
of record. Notwithstanding anything to the contrary set forth in this Lease, in
the event that such lien is not released and removed on or before the date
occurring five (5) business days after notice of such lien is delivered by
Miramar to Tenant. Miramar, at its sole option, may immediately take all action
necessary to release and remove such lien, without any duty to investigate the
validity thereof, and all sums, costs and expenses, including reasonable
attorneys' fees and costs, incurred by Miramar in connection with such lien
shall be deemed Additional Rent under this Lease and shall be due and payable by
Tenant within five (5) business days after notice thereof.
ARTICLE 10
INSURANCE
10.1 Indemnification and Waiver. To the extent not prohibited by law,
Miramar, its partners, subpartners and its and their respective officers,
agents, servants, employees, and independent contractors (collectively, "Miramar
Parties") shall not be liable for, any damage either to person or property or
resulting from the loss of use thereof, which damage is sustained by Tenant
unless said damage or loss of use is the sole and direct result of Miramar's
willful misconduct or gross negligence. Tenant shall indemnify, defend,
protect, and hold harmless Miramar Parties from any and all loss, cost, damage,
expense and liability including without limitation court costs and reasonable
attorneys' fees) incurred in connection with or arising from any cause in, on or
about the Premises, either prior to, during, or after the expiration of the
Lease Term, provided that the terms of the foregoing indemnity shall not apply
to the negligence or wilful misconduct of Miramar. The provisions of this
Section 10.1 shall survive the expiration or sooner termination of this Lease
with respect to any claims or liability occurring prior to such expiration or
termination.
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10.2 Tenant's Compliance with Miramar's Fire and Casualty Insurance.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any Increase in the premium for such insurance policies
then Tenant shall reimburse Miramar for any regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body, upon notice thereof from Miramar.
10.3 Tenant's Insurance. Tenant shall maintain the following coverages in
the following amounts.
10.3.1 Comprehensive General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Broad Form Comprehensive General Liability endorsement covering the
insuring provisions of this Lease and the performance by Tenant of the indemnity
agreements set forth in Section 10.1 of this Lease, for limits of liability not
less than:
Bodily Injury and $2,000,000 each occurrence
Property Damage Liability $2,000.000 annual aggregate
Personal Injury Liability $2,000,000 each occurrence
$2,000,000 annual aggregate
Insured's participation 0%
10.3.2 Physical Damage Insurance covering (i) all office furniture,
trade fixtures, office equipment, merchandise and all other items of Tenant's
property on the Premises installed by, for, or at the expense of Tenant, (ii)
the Tenant Improvements, and (iii) all other improvements, alterations and
additions to the Premises. Such insurance shall be written on an "all risks" of
physical loss or damage basis, for the full replacement cost value new without
deduction for depreciation of the covered items and in amounts that meet any co-
insurance clauses of the policies of insurance and shall include a vandalism and
malicious mischief endorsement, sprinkler leakage coverage and earthquake
sprinkler leakage coverage.
10.4 Form of Policies. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (1) name Miramar, and any other
party it so specifies, as an additional insured; (ii) specifically cover the
liability assumed by Tenant under this Lease, including, but not limited to,
Tenant's obligations under Section 10.1 of this Lease; (iii) be issued by an
insurance company having a rating of not less than A-X in Best's Insurance Guide
or which is otherwise acceptable to Miramar and licensed to do business in the
State of California; (iv) be primary insurance as to all claims thereunder and
provide that any insurance carried by Miramar is not excess and is
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non-contributing with any insurance requirement of Tenant; (v) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Miramar and any mortgagee of
Miramar; and (vi) contain a cross-liability endorsement or severability of
interest clause acceptable to Miramar. Tenant shall deliver said policy or
policies or certificates thereof to Miramar on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof.
10.5 Subrogation. Miramar and Tenant agree to have their respective
insurance companies issuing property damage insurance waive any rights of
subrogation that such companies may have against Miramar or Tenant, as the case
may be, so long as the insurance carried by Miramar and Tenant, respectively, is
not invalidated thereby. As long as such waivers of subrogation are contained
in their respective insurance policies, Miramar and Tenant hereby waive any
right that either may have against the other on account of any loss or damage to
their respective property to the extent such loss or damage is insurable under
policies of insurance for fire and ail risk coverage, theft, or other similar
insurance.
10.6 Additional Insurance Obligations. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Miramar; provided, however, Miramar shall only
require such additional types and amounts of insurance as is required by
landlords of comparable buildings in Malibu, California, of tenants situated
similarly to Tenant.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Miramar. Tenant shall promptly
notify Miramar of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Miramar shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Miramar's reasonable control, and subject to all other terms of
this Article 11, restore the base, shell, and core of the Premises and such
Common Areas. Such restoration shall be to substantially the same condition of
the base, shelf, and core of the Premises and the Common Areas prior to the
casualty except for modifications required by zoning and building codes and
other laws or by the holder of a mortgage on the Building or Property or any
other modifications to the Common Areas deemed desirable by Miramar, provided
that access to the Premises and any common restrooms serving the Premises shall
not be materially impaired. Upon the occurrence of any damage to the Premises.
Tenant shall assign to Miramar (or to any party designated by Miramar) all
insurance proceeds payable to
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Tenant under Tenant's insurance required under Section 10.3 of this Lease which
relates to Tenant Improvements trade fixtures and all installed items of Tenant
property, and Miramar shall diligently repair any injury or damage to the Tenant
Improvements installed in the Premises and shall return such Tenant improvements
to their original condition; provided that if the cost of such repair by Miramar
exceeds the amount of insurance proceeds actually received. at the commencement
of repairs, by Miramar from Tenant's insurance carrier, as assigned by Tenant,
the cost of such repairs shall be paid by Tenant to Miramar prior to Miramar's
repair of the damage. In connection with such repairs and replacements, Tenant
shall, prior to the commencement of construction, submit to Miramar, for
Miramar's review and approval, all plans, specifications and working drawings
relating thereto, and Miramar shall select the contractors to perform such
improvement work. Miramar shall not be liable for any inconvenience or annoyance
to Tenant or its visitors, or injury to Tenant's business resulting in any way
from such damage or the repair thereof; provided however, that if such fire or
other casualty shall have damaged the Premises or Common Areas necessary to
Tenant's occupancy, and if such damage is not the result of the negligence or
wilful misconduct of Tenant or Tenant's employees or contractors, Miramar shall
allow Tenant a proportionate and equitable abatement of Rent during the time and
to the extent the Premises are unfit for occupancy for the purposes permitted
under this Lease, and not occupied by Tenant as a direct result thereof.
11.2 Miramar's Option to Repair. Notwithstanding the terms of Section
11.1 of this Lease Miramar may elect not to rebuild and/or restore the Premises,
Building and/or Property or any portion thereof; and instead terminate this
Lease by notifying Tenant in writing of such termination within sixty (60) days
after the date of damage, such notice to include a termination date giving
Tenant ninety (90) days to vacate the Premises, but Miramar may so elect only if
the Building or Property shall be damaged by fire or other casualty or cause,
whether or not the Premises are affected, and one or more of the following
conditions is present: (i) repairs cannot reasonably be completed within one
hundred twenty (120) days after the date of damage (when such repairs are made
without the payment of overtime or other premiums); (ii) the holder of any
mortgage on the Building or Property or any portion thereof or ground lessor
with respect to the Building or Property or any portion thereof shall require
that the insurance proceeds or any portion thereof be used to retire the
mortgage debt. or shall terminate the ground lease, as the case may be; or (iii)
the damage is not fully covered, except for deductible amounts, by Miramar's
insurance policies.
11.3 Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Miramar and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Property, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of any express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this
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Lease or any damage or destruction to all or any part of the Premises, the
Building or the Property or any portion thereof.
11. Damage Near End of Term. In the event that the Premises, the
Building, or the Property or any portion thereof is destroyed or damaged to any
substantial extent during the last eighteen (18) months of the Lease Term, then
notwithstanding anything contained in this Article 11, Miramar shall have the
option to terminate this Lease by giving written notice to Tenant of the
exercise of such option within twenty (20) days after such damage or
destruction, in which event this Lease shall cease and terminate as of the date
of such notice, Tenant shall pay the Base Rent and Additional Rent, properly
apportioned up to such date of damage, and both parties hereto shall thereafter
be freed and discharged of all further obligations hereunder, except as provided
for in provisions of this Lease which by their terms survive the expiration or
earlier termination of the Lease Term.
ARTICLE 12
NONWAIVER
No waiver of any provision of this Lease shall be implied by any failure of
Miramar to enforce any remedy on account of the violation of such provision,
even if such violation shall continue or be repeated subsequently, and any
waiver by Miramar of any provision of this Lease may only be in writing.
Additionally, no express waiver shall affect any provision other than the one
specified in such waiver and then only for the time and in the manner
specifically stated. No receipt of monies by Miramar from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Miramar may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Property or any
portion thereof shall be taken by power of eminent domain or condemned by any
competent authority for any public or quasi-public use or purpose, or if Miramar
shall grant a deed or other instrument in lieu of such taking by eminent domain
or condemnation, Miramar shall have the option to terminate this Lease upon
sixty (60) days' notice, provided such notice is given no later than one hundred
eighty (180) days after the date of such taking, condemnation, reconfiguration,
vacation, deed or
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other instrument. If more than twenty-five percent (25%) of the rentable square
feet of the Premises is taken, or if access to the Premises is substantially
Impaired Tenant shall have the option to terminate this Lease upon ninety (90)
days' notice, provided such notice is given no later than one hundred eighty
(180) days after the date of such taking, Miramar shall be entitled to the
entire award or payment in connection therewith, except that Tenant shall have
the right to file any separate claim available to Tenant for any taking of
Tenant's personal property and fixtures belonging to Tenant and removable by
Tenant upon expiration of the Lease Term pursuant to the terms of this Lease,
and for moving expenses, so long as such claims do not diminish the award
available to Miramar with respect to the Building or Property or its mortgagee,
and such claim is payable separately to Tenant. All Rent shall be apportioned as
of the date of such termination, or the date of such taking. whichever shall
first occur. If any part of the Premises shall be taken, and this Lease shall
not be so terminated the Rent shall be proportionately and equitably abated,
Tenant hereby waives any and all rights it might otherwise have pursuant to
Section 1265.130 of the California Code of Civil Procedure.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers. Tenant shall not, without the prior written consent of
Miramar, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or permit the use of
the Premises by any persons other than Tenant and its employees (all of the
foregoing are sometimes referred to in this Lease collectively as "Transfers"
and any person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a "Transferee"). If Tenant desires Miramar's consent
to any Transfer, Tenant shall notify Miramar in writing, which notice (the
"Transfer Notice") shall include (i) the proposed effective date of the
Transfer, which shall not be less than forty-five (45) days nor more than one
hundred eighty (180) days after the date of delivery of the Transfer Notice,
(ii) a description of the portion of the Premises to be transferred (the
"Subject Space"), (iii) all of the material terms of the proposed Transfer and
the consideration therefor (including calculation of the "Transfer Premium", as
that term is defined to section 14.3 below, in connection with such Transfer),
the name and address of the proposed Transferee, and a copy of all existing
executed and/or proposed documentation pertaining to the proposed Transfer,
including all existing operative documents to be executed to evidence such
Transfer or the agreements incidental or related to such Transfer, and (iv)
current financial statements of the proposed Transferee certified by an officer,
partner or owner thereof, and any other information reasonably required by
Miramar to determine the financial responsibility, character, and reputation of
the proposed Transferee, nature of such Transferee's business and proposed use
of the Subject Space, and such other Information as Miramar may reasonably
require. Any Transfer made without Miramar's prior
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written consent shall, at Miramar's option, be null, void and of no effect, and
shall, at Miramar's option, constitute a default by Tenant under Section 19.1.7
of, this Lease. Whether or not Miramar consents to any proposed Transfer, Tenant
shall pay Miramar's review and processing fees, as well as any reasonable legal
fees incurred by Miramar, within thirty (30) days after written request by
Miramar; provided, however, that the aggregate cost of all fees for a Transfer
in the ordinary course of business, including reasonable third party legal fees
shall not exceed one thousand and No/100 Dollars ($1,000.00).
14.2 Miramar's Consent. Miramar shall not unreasonably withhold or delay
its consent to any proposed transfer of the Subject Space to the Transferee on
the terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Miramar to
withhold consent to any proposed Transfer where one or more of the following
apply:
14.2.1 The Transferee is of a character or reputation or engaged in
a business which is not consistent with the quality of the Building or the
Property, or would be a significantly less prestigious occupant of the Building
than Tenant:
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof;
14.2.3 The Transfer occurs during the period from the Lease
Commencement Date until the date at least ninety-five percent (95%) of the
rentable square feet of the Building and Property is leased, and the rent
charged by Tenant to such Transferee during the term of such Transfer (the
"Transferee's Rent") calculated using a present value analysis, is less than
ninety-five percent (95%) of the rent being quoted by Miramar, at the time of
such Transfer.
14.2.4 The Transferee is not a party of reasonable financial worth
and/or financial stability in light of the responsibilities involved under the
Lease on the date consent is requested;
14.2.5 The proposed Transfer would cause a violation of another
lease for space on the Property, or would give an occupant of the Property a
right to cancel its lease;
14.2.6 The terms of the proposed Transfer will allow the Transferee
to exercise a right of renewal, right of expansion, right of first offer, or
other similar right held by Tenant (or will allow the Transferee to occupy space
leased by Tenant pursuant to any such right); or
14.2.7 Either the proposed Transferee. or any person or entity which
directly or indirectly, controls, is controlled by, or is under common control
with, the proposed Transferee, (i) occupies space in the Property at the time of
the request for consent, (ii) is negotiating with
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Miramar to lease space in the Property at such time, or (iii) has negotiated
with Miramar during the twelve (12)-month period immediately preceding the
Transfer Notice. It Miramar consents to any Transfer pursuant to the terms of
this Section 14.2 (and does not exercise any recapture rights Miramar may have
under Section 14.4 of this Lease), Tenant may within six (6) months after
Miramar's consent, but not later than the expiration of said six-month period,
enter into such Transfer of the Premises of portion thereof, upon substantially
the same terms and conditions as are set forth in the Transfer Notice furnished
by Tenant to Miramar pursuant to Section 14.1 of this Lease, provided that if
there are any material changes in the terms and conditions from those specified
in the Transfer Notice (1) such that Miramar would initially have been entitled
to refuse its consent to such Transfer under this Section 14.2, or (ii) which
would cause the proposed Transfer to be more favorable to the Transferee than
the terms set forth in Tenant's original Transfer Notice, Tenant shall again
submit the Transfer to Miramar for its approval and other action under this
Article 14 (including Miramar's right of recapture, if any, under Section 14.4
of this Lease).
14.3 Transfer Premium. If Miramar consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Miramar fifty percent of any "Transfer Premium," as that term is defined in this
Section 14.3. received by Tenant from such Transferee. "Transfer Premium" shall
mean all rent, additional rent or other consideration payable by such Transferee
in excess of the Rent and Additional Rent payable by Tenant under this Lease on
a per rentable square foot basis if less than all of the Premises is
transferred. "Transfer Premium" shall also include, but not be limited to, key
money and bonus money paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
Notwithstanding anything to the contrary in this Section 14.3, Tenant shall have
no obligation to pay any Transfer Premium to Miramar in connection with a sale
of substantially all of Tenant's assets to a Transferee. In the calculations of
Rent (as it relates to the Transfer Premium calculated under this Section 14.3),
and the Transferee's Rent and Quoted Rent under Section 14.2 of this Lease, the
Rent paid during each annual period for the Subject Space by tenant, and the
Transferee's Rent and the Quoted Rent, shall be computed after adjusting such
rent to the actual effective rent to be paid, taking into consideration any and
all leasehold concessions granted in connection therewith, including, but not
limited to, any rent credit and tenant improvement allowance. For purposes of
calculating any such effective rent all such concessions shall be amortized on a
straight-line basis over the relevant term.
14.4 Miramar's Option as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, in the event Tenant contemplates a
Transfer of substantially all of the Premises (or in the event of any other
transfer or Transfers entered into by Tenant as a subterfuge in order to avoid
the terms of this Section 14.4), Tenant shall give Miramar notice (the
"Intention to Transfer Notice") of such contemplated Transfer (whether or
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not the (the "Contemplated Transfer Space") the contemplated date of
commencement of the Contemplated Transfer (the "Contemplated Effective Date"),
and the contemplated length of the term of such contemplated Transfer, and shall
specify that such intention to Transfer Notice is delivered to Miramar pursuant
to this Section 14.4 in order to allow Miramar to elect to recapture the
Contemplated Transfer Space for the term set forth in the intention to Transfer
Notice. Thereafter, Miramar shall have the option, by giving written notice to
Tenant within sixty (60) days after receipt of any Intention to Transfer Notice,
to recapture the Contemplated Transfer Space. Such recapture shall cancel and
terminate this Lease with respect to such Contemplated Transfer Space as of the
Contemplated Effective Date until the last day of the term of the contemplated
Transfer as set forth in the Intention to Transfer Notice. In the event of a
recapture by Miramar, if this Lease shall be canceled with respect to less than
the entire Premises, the Rent reserved herein shall be prorated on the basis of
the number of rentable square feet retained by Tenant in proportion to the
number of rentable square feet contained in the Premises, and this lease as so
amended shall continue thereafter in full force and effect. and upon request of
either party, the parties shall execute written confirmation of the same. If
Miramar declines, or fails to elect in a timely manner. to recapture such
Contemplated Transfer Space under this Section 1.4.4, then, subject to the other
terms of this Article 14, for a period of six (6) months (the "Six Month
Period") commencing on the last day of such sixty (60) day period, Miramar shall
not have any right to recapture the Contemplated Transfer Space with respect to
any Transfer made during the Six Month Period, provided that any such Transfer
is substantially on the terms set forth in the Intention to Transfer Notice;
provided however, that any such Transfer shall be subject to the remaining terms
of this Article 14. If such a Transfer is not so consummated within the Six
Month Period (or if a Transfer is so consummated, then upon the expiration of
the term of any Transfer of such Contemplated Transfer Space consummated within
such Six Month Period), Tenant shall again be required to submit a new Intention
to Transfer Notice to Miramar with respect any contemplated Transfer, as
provided above in this Section 14.4.
14.5 Effect of Transfer. If Miramar consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified except that the term Tenant as it is used in this Lease shall be deemed
to refer, also, to the Transferee, (ii) such consent shall not be deemed consent
to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall
deliver to Miramar, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Miramar, (iv) Tenant shall furnish upon Miramar's request a complete statement,
certified by an independent certified public accountant, or Tenant's chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, (v) except as
otherwise agreed in writing between Miramar and a Transferee at the time of
Transfer, a Transferee shall have all of the rights and obligations of or
attributed to Tenant under this Lease, and (vi) must surrender the premises at
the same time as the Tenant, upon the expiration of Tenant's Lease Term, or upon
any earlier termination of this Lease for
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any reason and regardless the expiration of the Lease Term between the
Transferee and the Tenant, (vii) no Transfer relating to this Lease or agreement
entered into. with respect thereto. whether with or without Miramar's consent,
shall relieve Tenant or any guarantor of the Lease from liability under this
Lease.
14.6 Additional Transfers. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of twenty-five percent
(25%) or more of the partners, or transfer of twenty-five percent (25%) or more
of partnership interests, within a twelve (12)-month period, or the dissolution
of the partnership without immediate reconstitution thereof, and (ii) if Tenant
is a closely held corporation (i.e., whose stock is not publicly held and not
traded through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or, (B) the sale or other
transfer of more than an aggregate of forty-nine percent (49%) of the voting
shares of Tenant (other than to immediate family members by reason of gift or
death) in one or a series of transactions, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of forty-nine percent (49%) of
the value of the unencumbered assets of Tenant in one or a series of
transactions.
ARTICLE 15
SURRENDER OF PREMISES, REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises. No act or thing done by Miramar or any agent
or employee of Miramar during the Lease Term shall be deemed to constitute an
acceptance by Miramar of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Miramar. The delivery of keys
to the Premises to Miramar or any agent or employee of Miramar shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Miramar, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this lease shall have been properly
terminated. Tenant shall surrender the Premises to Miramar upon the expiration
or earlier termination of this Lease free of any Hazardous Materials that Tenant
is required to remediate.
15.2 Removal of Tenant Property by Tenant Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Miramar in as good order and condition as when Tenant took possession and as
thereafter improved by Miramar and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Miramar hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Miramar, remove or cause to be removed from the Premises all debris and rubbish,
and such items of furniture, equipment, free-standing cabinet work, and other
articles, of personal
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property owned by Tenant, or Miramar may, in its sole discretion, require to be
removed, and Tenant shall repair at its own expense all damage to the Premises,
the Building and the Property resulting from such removal.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term hereof, with or
without the express or implied consent of Miramar, such tenancy shall be from
month-to-month only, and shall not constitute a renewal hereof or an extension
for any further term, and in such case for the first three (3) months after the
expiration of the Lease Term the Base Rent shall be payable at a monthly rate
equal to one hundred fifty percent (150%) of the Base Rent applicable during the
last rental period of the Lease Term under this Lease and for any period
thereafter, such holdover Base Rent shall be payable at a monthly rate equal to
two hundred percent (200%) of the Base Rent applicable during the last rental
period of the Lease Term under this Lease. Such month-to-month tenancy shall be
subject to every other applicable term, covenant and agreement contained herein.
Nothing contained in this Article 16 shall be construed as consent by Miramar to
any holding over by Tenant, and Miramar expressly reserves the right to require
Tenant to surrender possession of the Premises to Miramar as provided in this
Lease upon the expiration or other termination of this Lease. The provisions of
this Article 16 shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Miramar provided herein or at law. If Tenant fails to
surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Miramar accruing therefrom, Tenant shall
protect, defend, indemnify and hold Miramar harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender (including
such tenant's lost profits) and any lost profits to Miramar resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) days following a request in writing by Miramar, Tenant
shall execute and deliver to Miramar an estoppel certificate. which, as
submitted by Miramar, shall be substantially in the form of Exhibit D, attached
hereto (or such other form as may be required by any prospective mortgagee or
purchaser of the Property, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Miramar or Miramar's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of Tenant to
timely execute and deliver such estoppel
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certificate or other instruments shall constitute an acceptance of the Premises
and an acknowledgment by Tenant that statements included in the estoppel
certificate are true and correct, without exception.
ARTICLE 18
SUBORDINATION
This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building, the Miramar Buildings or Property
and to the lien of any first mortgage or trust deed. now or hereafter in force
against the Building, the Miramar Buildings or Property, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages or trust deeds,
or the lessors under such ground lease or underlying leases, require in writing
that this Lease be superior thereto. Tenant covenants and agrees in the event
any proceedings are brought for the foreclosure of any such mortgage or deed in
lieu thereof, to attorn, without any deductions or set-offs whatsoever, to the
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof if so requested to do so by such purchaser. and to recognize such
purchaser as the lessor under this Lease. Tenant shall, within five (5)
business days of request by Miramar, execute such further instruments or
assurances as Miramar may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust deeds,
ground leases or underlying leases. In consideration of, and as a condition
precedent to Tenant's agreement to permit its interest pursuant to this Lease to
be subordinated to any particular future ground or underlying lease of the
Building, the Miramar Buildings or the Property or to the lien of any first
mortgage or trust deed, hereafter enforced against the Building, the Miramar
Buildings or the Property and to any renewals, extensions, modifications,
consolidations and replacements thereof, Miramar shall deliver to Tenant a
commercially reasonable non-disturbance agreement executed by the landlord under
such ground tease or underlying lease or the holder of such mortgage or trust
deed.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 Defaults. The occurrence of any of the following shall constitute an
Event of Default ("Event of Default") of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof; or
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19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for twenty (20) days after written notice
thereof from Miramar to Tenant; or
19.1.3 Abandonment or vacation of the Premises by Tenant; or
19.1.4 To the extent permitted by law, a general assignment by
Tenant or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or
19.1.5 The hypothecation or assignment of this Lease or subletting of
the Premises, or attempts at such actions, in violation of Article 14 hereof.
19.2 Remedies Upon Default. Upon the occurrence of any Event of Default
by Tenant as set forth in Section 19.1 of this Lease, and provided Tenant has
not cured such default within the applicable grace period set forth in Section
19.1, above, Miramar shall have, in addition to any other remedies available to
Miramar at law or in equity, the option to pursue any one or more of the
following remedies, each and all of which shall be cumulative and nonexclusive,
without any notice or demand whatsoever.
19.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Miramar, and if Tenant fails to do so, Miramar may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Miramar may recover from Tenant the following:
(i) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination until
the time of award; plus
(iii) The worth at the time of award of the unpaid rent for
the balance of
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the Lease Term; plus
(iv) Any other amount necessary to compensate Miramar 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; and
(v) At Miramar's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by
applicable law.
The term "rent" as used in this Section 19.2 shall be deemed to be and to mean
all sums of every nature required to be paid by Tenant pursuant to the terms of
this Lease, whether to Miramar or to others. As used in Paragraphs 19.2.1(1)
and (ii), above, the "worth at the time of award" shall be computed by allowing
interest at the rate set forth in Article 25 of this Lease, but in no case
greater than the maximum amount of such interest permitted by law. As used in
Paragraph 1 9.2.1(iii) above, the "worth at the time of 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 (19%).
19.2.2 Miramar shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign. subject only to reasonable limitations). Accordingly, if
Miramar does not elect to terminate this Lease on account of any default by
Tenant. Miramar may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all Rent as it becomes due.
19.3 Sublessees of Tenant. Whether or not Miramar elects to terminate
this Lease on account of any default by Tenant as set forth in this Article 19,
Miramar shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Miramar's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Miramar's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements Tenant shall as of the date of
notice by Miramar of such election, have no further right to or interest in the
rent or other consideration receivable thereunder.
19.4 Miramar Default. If the Premises are untenantable and unusable by
Tenant and such condition relates the nonfunctioning of the heating, ventilation
and air-conditioning system in the Premises, the electricity in the Premises,
the substantial nonfunctioning of the elevator service to the Premises, or a
total failure to provide access to the Premises, Tenant shall give Miramar
notice (the "Initial Notice"), specifying such failure to perform by Miramar
(the
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"Miramar Default"). If Miramar has not cured such Miramar Default within five
(5) business days after the receipt of the Initial Notice, Tenant may deliver an
additional notice to Miramar (the "Additional Notice"), specifying such Miramar
Default and Tenant's intention to abate the payment of rent under this Lease. If
Miramar does not cure such Miramar Default within five (5) business days of
receipt of the Additional Notice (the "Abatement Date"), Tenant may, upon
written notice to Miramar, immediately abate Base tent payable under this Lease
for the Premises rendered untenantable, for the period beginning on the
Abatement Date and the nonuse of the Premises by Tenant to the earlier of the
date Miramar cures such Miramar Default or the date Tenant recommences the use
of the Premises. Such right to abate Base Rent shall be Tenant's sole and
exclusive remedy at law or in equity for a Miramar Default. In no event shall
Tenant have the right to terminate this Lease as a result of a landlord default.
Except as provided in this Section 19.4, nothing contained herein shall be
interpreted to mean that Tenant is excused from paying Rent due hereunder.
ARTICLE 20
ATTORNEYS' FEES
If either party commences litigation against the other for the specific
performance of this Lease, for damages for the breach hereof or otherwise for
enforcement of any remedy hereunder, in the event of any such commencement of
litigation, the prevailing party shall be entitled to recover from the other
party such costs, including expert witness fees and reasonable attorneys' fees,
as may have been incurred.
ARTICLE 21
SECURITY DEPOSIT
Concurrent with Tenant's execution of this Lease Tenant shall deposit with
Miramar a security deposit (the "Security Deposit") in the amount set forth in
Section 8 of the Summary. The Security Deposit shall be held by Miramar as
security for the faithful performance by Tenant of all the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the Lease
Term. If Tenant defaults with respect to any provisions of this Lease,
including but not limited to, the provisions relating to the payment of Rent,
Miramar may, but shall not be required to, use, apply or retain all or any part
of the Security Deposit for the payment of any Rent or any other sum in default,
or for the payment of any amount that Miramar may spend or become obligated to
spend by reason of Tenant's default, or to compensate Miramar for any other loss
or damage that Miramar may suffer by reason of Tenant's default. If any portion
of the Security Deposit is so used or applied, Tenant shall, within ten (10)
days after written demand therefor, deposit cash with Miramar in an amount
sufficient to restore the Security Deposit to its original amount, and Tenant's
failure to do so
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shall be a default under this Lease. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit, or any balance thereof, shall be returned to Tenant, or, at Miramar's
option, to the last assignee of Tenant's interest hereunder, within sixty (60)
days following the expiration of the Lease Term. Tenant shall not be entitled to
any interest on the Security Deposit.
ARTICLE 22
SUBSTITUTION OF OTHER PREMISES
Miramar shall have the privilege of moving Tenant to other space in the
Stuart Ranch Buildings comparable to he Premises, and all terms hereof shall
apply to the new space with equal force. In such event, Miramar shall give
tenant prior notice, shall provide Tenant, at Miramar's sole cost and expense,
with tenant improvements at least equal in quality to those in the Premises and
shall move Tenant's effects to the new space at Miramar's sole cost and expense
at such time and in such manner as to inconvenience Tenant as little as
practicable and Miramar shall bear the sole cost of replacing Tenant's
stationery rendered obsolete by such move. Simultaneously with such relocation
of the Premises, the parties shall immediately execute an amendment to this
Lease stating the relocation of the Premises.
ARTICLE 23
SIGNS
Tenant's identifying signage shall be provided by Miramar, at Tenant's
cost, and such signage shall be comparable to that used by Miramar for other
similar floors in the Buildings and shall comply with Miramar's Building
standard signage program. Any signs, notices, logos, pictures, names or
advertisements which are installed and that ave not been separately approved by
Miramar may be removed without notice by Miramar at the sole expense of Tenant.
Tenant may not install any signs on the exterior or roof of the Property or the
Common Areas. Any signs, window coverings, or blinds (even if the same are
located behind the Miramar-approved window coverings for the building), or other
items visible from the exterior of the Premises or Buildings, shall be subject
to the prior approval of Miramar, in its sole discretion.
ARTICLE 24
COMPLIANCE WITH LAW
24.1 Tenant's Covenants. Tenant shall not do anything or suffer anything
to be done in or about the Premises which will in any way conflict with any
applicable law, statute, ordinance or other governmental rule, regulation or
requirement now in force or which may
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hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
structural changes or changes to the Buildings' life safety systems. Should any
standard or regulation now or hereafter be imposed on Miramar or Tenant in
connection with Tenant's use of the Premises by a state, federal or local
governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, landlords or
tenants, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations which are applicable to Tenant's use as a
lessee of the Premises. The judgment of any court of competent jurisdiction or
the admission of Tenant in any judicial action, regardless of whether Miramar is
a party thereto, that Tenant has violated any of said governmental measures,
shall be conclusive of that fact as between Miramar and Tenant. Without limiting
the generality of the foregoing, Tenant shall (i) comply with all applicable
Environmental Requirements (as that term is defined in Section 29.23 of the
Lease) relating to the Property and the Premises, the use of the Premises, and
the business operations of Tenant and not engage in or permit others to engage
in any activity in violation of any applicable Environmental Requirements; (ii)
deliver to Miramar as soon as practical, but in no event later than within
fifteen (15) days following the occurrence of any such event, written notice of
the discovery by the Tenant of any event, the occurrence of which would cause a
breach of the covenants set forth in this Article 24 or which requires reporting
or notification to a governmental agency; (iii) promptly comply with any
Environmental Requirements requiring the remediation, abatement, removal,
treatment or disposal of Hazardous Material; cause any party who enters upon the
Premises to comply with this Article 24; and (iv) not cause or suffer any liens
to be recorded against or imposed against the Premises as a result of an
Environmental Requirement. Notwithstanding any provisions to the contrary in
this Article 24. Tenant shall have no liability to Miramar under this Article 24
for the removal or remediation of any Hazardous Material from the Premises to
the extent that Tenant, its employees, agents, or contractors or invitees did
not introduce the Hazardous Material to the Premises; provided, however, Tenant
shall be liable to Miramar for any costs, damages, fines, penalties, or other
obligations arising from any disturbance of Hazardous Material at the Premises,
other than a disturbance caused by Miramar, whether or not the Tenant introduced
the Hazardous Material to the Premises.
24.2 Duty to Inform Miramar. If Tenant knows, or has reasonable cause to
believe, that a Hazardous Material, or a condition involving or resulting from
same; has come to be located in, on, under or about the Premises, other than as
previously consented to in writing by Miramar, Tenant shall immediately give
written notice of such fact to Miramar. Tenant also shall immediately give
Miramar a copy of any statement, report, notice, registration, application,
permit, business plan, license, claim, action or proceeding given to, or
received from, any governmental authority or private party, or persons entering
or occupying the Premises, concerning the presence, spill, release, discharge
of, or exposure to, any Hazardous Material or contamination in, on, or about the
Property or the Premises, including but not limited to all such documents as may
be involved in any uses involving the Premises.
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24.3 Special Indemnification. Tenant shall indemnify, protect, defend and
hold Miramar, its agents, employees, lenders and ground lessor, if any, and the
Property and the Premises, harmless from and against any and all loss of rents
and/or damages, liabilities. Judgments, costs, claims, liens, expenses,
penalties, permits and attorney's and consultant's fees arising out of or
involving any Hazardous Material or storage tank brought onto the Property or
the Premises by or for Tenant or under Tenant's control. Tenant's obligations
shall include, but not be limited to, the effects of any contamination or Injury
to person, property or the environment created or suffered by Tenant, and the
cost of investigation (including consultant's and attorney's fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Miramar and Tenant shall release Tenant from its obligations
under this Lease with respect to Hazardous Material or storage tanks, unless
specifically so agreed by Miramar in writing at the time of such agreement.
ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Miramar or Miramar's designee within five (5) business days after
said amount is due, then Tenant shall pay to Miramar a late charge equal to five
percent (5%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Miramar's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Miramar's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within five (5) business days after the date they are due shall bear
interest from the date when due until paid at a rate per annum equal to the
lesser of (i) twelve percent (12%) per annum or (ii) the highest rate permitted
by applicable law.
ARTICLE 26
MIRAMAR'S RIGHT TO CURE DEFAULT; PAYMENT'S BY TENANT
26.1 Miramar's Cure. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent. If Tenant shall fail to perform
any of its obligations under this Lease, within a reasonable time after such
performance is required by the terms of this Lease, Miramar may, but shall not
be obligated to, after reasonable prior notice to Tenant (except in the case of
an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.
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26.2 Tenant's Reimbursement. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Miramar, within fifteen (15)
days after delivery by Miramar to Tenant of statements therefor: (i) sums equal
to expenditures reasonably made and obligations incurred by Miramar in
connection with the remedying by Miramar of Tenant's defaults pursuant to the
provisions of Section 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in Article 10 of this Lease; and (iii) sums
equal to all expenditures made and obligations incurred by Miramar in collecting
or attempting to collect the Rent or in enforcing or attempting to enforce any
rights of Miramar under this Lease or pursuant to law, including, without
limitation. all reasonable third party attorneys' fees and other amounts so
expended. Tenant's obligations under this Section 26.2 shall survive the
expiration or sooner termination of the Lease Term.
ARTICLE 27
ENTRY BY MIRAMAR
Miramar reserves the right at all reasonable times and upon reasonable
notice (24 hours conclusively deemed to be reasonable) to Tenant (except in the
case of an emergency) to enter the Premises to (i) inspect them; (ii) show the
premises to prospective purchasers, mortgagees or tenants, or to the ground or
underlying lessors; (iii) post notices of nonresponsibility; or (iv) alter,
Improve or repair the Premises or the Building in which the Premises are located
if necessary to comply with current building codes or other applicable laws, or
for structural alterations, repairs or improvements to the Building in which the
Premises are located. Notwithstanding anything to the contrary contained in
this Article 27. Miramar may enter the Premises at any time after 24 hours'
notice to (A) perform services required of Miramar, (B) take possession due to
any event of default as defined in Section 19.1 of this Lease in the manner
provided herein; and (C) perform any covenants of Tenant which Tenant fails to
perform. Miramar may make any such entries without the abatement of Rent and may
take such reasonable steps as required to accomplish the stated purposes.
Tenant hereby waives any claims for damages or for any injuries or inconvenience
to or Interference with Tenant's business, lost profits, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby;
provided, however, that Miramar shall be responsible for any physical damage to
Tenant's personal property or the Premises caused by Miramar's negligence or
wilful misconduct. For each of the above purposes, Miramar shall at all times
have a key with which to unlock all the doors in the Premises, excluding
Tenant's vaults, safes and special security areas which are designated in
advance by Tenant. In an emergency, Miramar shall have the right to use any
means that Miramar may deem proper to open the doors in and to the Premises.
Any entry into the Premises by Miramar in the manner hereinbefore described
shall not be deemed to be a forcible or unlawful entry into, or a detailed of,
the Premises, or an actual or constructive eviction of Tenant from any portion
of the Premises.
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ARTICLE 28
PARKING
Tenant is hereby allocated by Miramar, commencing on the Lease
Commencement Date, the amount of unreserved parking spaces set forth in Section
9 of the Summary, on a monthly basis throughout the Lease Term. Tenant's
continued right to use the parking spaces is conditioned upon Tenant abiding by
all terms of this Lease, rules and regulations which are prescribed from time to
time for the orderly operation and use of the Property parking facility and upon
Tenant's cooperation in seeing that Tenant's employees and visitors also comply
with such rules and regulations. Miramar specifically reserves the right to
change the size, configuration, design, layout and all other aspects of the
Property parking facility at any time and Tenant acknowledges and agrees that
Miramar may, without incurring any liability to Tenant and without any abatement
of Rent under this Lease, from time to time, close-off or restrict access to the
Property parking facility for purposes of permitting, or facilitating any such
construction, alteration or improvements. Miramar may delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control attributed hereby to the Miramar.
The parking spaces allocated to Tenant pursuant to this Article 28 are provided
to Tenant solely for use by Tenant's own personnel, or permitted subtenants and
such rights may not be transferred, assigned, subleased or otherwise alienated
by Tenant without Miramar's prior written approval.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 Binding Effect. Subject to all other provisions of this Lease, each
of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Miramar and of Tenant, but
also of their respective successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of this
Lease.
29.2 Modification of Lease. Should any current or prospective mortgagee
or ground lessor for the Building or Property or any portion thereof require a
modification or modifications of this Lease, which modification or modifications
will not cause an increased cost or expense to Tenant or in any other way
adversely change the rights and obligations of Tenant hereunder, then and in
such event. Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are reasonably required therefor and to deliver the
same to Miramar within ten (10) days following a request therefor. Should
Miramar or any such prospective mortgagee or ground lessor require execution of
a short form of Lease for recording, containing. among
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other customary provisions, the names of the parties. a description of the
Premises and the Lease Term, Tenant agrees to execute and deliver such short
form of Lease to Miramar within ten (10) days following the request therefor.
29.3 Transfer of Miramar's Interest. Tenant acknowledges that Miramar has
the right to transfer all or any portion of its interest in the Property or
Building and in this Lease. and Tenant agrees that in the event of any such
transfer. Miramar shall automatically be released from all liability under this
Lease and Tenant agrees to look solely to such transferee for the performance of
Miramar's obligations hereunder after the date of transfer. Tenant further
acknowledges that Miramar may assign its interest in this Lease to the holder of
any mortgage or deed of trust as additional security, but agrees that an
assignment shall not release Miramar from its obligations hereunder and Tenant
shall continue to look to Miramar for the performance of its obligations
hereunder.
29.4 Prohibition Against Recording. Except as provided in Section 29.3 of
this Lease, neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through.
under or on behalf of Tenant. and the recording thereof in violation of this
provision shall make this Lease null and void at Miramar's election.
29.5 Captions. The captions of Articles and Sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such Articles and Sections.
29.6 Time of Essence. Time is of the essence of this Lease and each of
its provisions.
29.7 Partial Invalidity. If any term, provision or condition contained in
this Lease shall, to any extent be invalid or unenforceable the remainder of
this Lease or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.8 No Warranty. In executing and delivering this Lease, Tenant has not
relied on any representations, including but not limited to, any representation
as to the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Miramar is furnishing the same services
to other tenants, at all, on the same level or on the same basis, or any
warranty or any statement of Miramar which is not set forth herein or in one or
more of the exhibits attached hereto.
29.9 Omitted.
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29.10 Entire Agreement. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease, attached
thereto, and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures agreements and understandings, if any,
between the parties hereto or displayed by Miramar to Tenant with respect to the
subject matter thereof and none thereof shall be used to interpret or construe
his Lease. This Lease and any side letter or separate agreement executed by
Miramar and Tenant in connection with his Lease and dated of even date herewith,
contain all of the terms, covenants, conditions. warranties and agreements of
the parties relating in any manner to the rental, use and occupancy of the
Premises and shall be considered to be the only agreements between the parties
hereto and their representatives and agents. None of the terms, covenants
conditions or provisions of this Lease can be modified, deleted or added to
except in writing signed by the parties hereto.
29.11 Flight to Lease. Miramar reserves the absolute right to effect such
other tenancies in the Property as Miramar in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
property. Tenant does not rely on the fact, nor does Miramar represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Property.
29.12 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, except with respect to the obligations
imposed with regard to Rent and other charges to be paid by Tenant pursuant to
this Lease (collectively, the "Force Majeure"), notwithstanding anything to the
contrary contained in this Lease, shall excuse the performance of such party for
a period equal to any such prevention, delay or stoppage and, therefore, if this
Lease specifies a time period for performance of an obligation of either party,
that time period shall be extended by the period of any delay on such party's
performance caused by a Force Majeure.
29.13 Notices. All notices, demands, statements. designations, approvals
or other communications (collectively, "Notices") given or required to be given
by either party to the other hereunder shall be in writing, shall be sent by
United States certified or registered mail, postage prepaid, return receipt
requested, or delivered personally (i) to Tenant at the appropriate address set
forth in Section 11 of the Summary, or to such other place as Tenant may from
time to time designate in a Notice to Miramar or (ii) to Miramar at the
following addresses or to such other firm or to such other place as Miramar may
from time to time designate in a Notice to Tenant:
MIRAMAR INVESTMENT CO.
23815 Stuart Ranch Road
Malibu, California 90265
Att.: Timothy S. Novoselski
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With a copy to:
Rutter, Hobbs & Davidoff
1900 Avenue of the Stars
Suite 2700
Los Angeles, California 90067
Att.: Frank D. Hobbs, Esq.
Any Notice will be deemed given on the date it is mailed as provided in this
Section 29.13 or upon the date personal delivery is made. If Tenant is notified
of the identity and address of the holder of any deed of trust or ground or
underlying lessor. Tenant shall give to such mortgagee or ground or underlying
lessor written notice of any default by Miramar under the terms of this Lease by
registered or certified mail. and such mortgagee or ground or underlying lessor
shall be given a reasonable opportunity to cure such default prior to Tenant's
exercising any remedy available to Tenant.
29.14 Joint and Several. If there is more than one tenant the obligations
imposed upon tenants under this Lease shall be joint and several.
29.15 Authority. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so.
29.16 Governing Law. This Lease shall be construed and enforced in
accordance with the laws of the State of California, without regard to choice of
law provisions.
29.17 Submission of Lease. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Miramar and Tenant.
29.18 Brokers. Miramar and Tenant hereby warrant to each other that they
have had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 10 of the Summary (the "Brokers"), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses. liabilities, lawsuits, judgments, and costs and expenses (including
without limitation reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of any
dealings with any real estate broker or agent, other than the Brokers.
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occurring by, through, or under the indemnifying party.
29.19 Independent Covenants. This Lease shall be construed as though the
covenants herein between Miramar and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Miramar fails to perform its obligations set forth herein,
Tenant shall not be entitled to hake any repairs or perform any acts hereunder
at Miramar's expense or to any setoff of the Rent or other amounts owing
hereunder against Miramar; provided, however, that the foregoing shall in no way
impair the right of Tenant to commence a separate action against Miramar for any
violation by Miramar of the provisions hereof so long as notice is first given
to Miramar and any holder of a mortgage or deed of trust covering the Building
or Property or any portion hereof, whose address has theretofore been given to
Tenant, and an opportunity is granted to Miramar and such solder to correct such
violations as provided above.
29.20 Property or Building Name and Signage. Miramar shall have the right
at any time to change the name of the Property or Building and to install, affix
and maintain any and all signs on the exterior and on the interior of the
Property or Building as Miramar may, in Miramar's sole discretion, desire.
Tenant shall not use the name of the Property or Building or use pictures or
illustrations of the Property or Building in advertising or other publicity,
without the prior written consent of Miramar.
29.21 Transportation Management. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Property or Building, and in connection therewith. Tenant
shall take responsible action for the transportation planning and management of
all employees located at the Premises by working directly with Miramar, any
governmental transportation management organization or any other transportation-
related committees or entities. Such programs may include, without limitation:
(i) restrictions on the number of peak-hour vehicle trips generated by Tenant;
(ii) increased vehicle occupancy; (iii) implementation of an in-house
ridesharing program and an employee transportation coordinator: (iv) working
with employees and any Property, Building or area-wide ridesharing program
manager; (v) instituting employer-sponsored incentives (financial or in-kind) to
encourage employees to rideshare; and (vi) utilizing flexible work shifts for
employees.
29.22 No Discrimination. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, age, sex,
religion, marital status, ancestry or national origin in the leasing,
subleasing, transferring use or enjoyment of the Premises, nor shall Tenant
itself, or any person claiming under or through Tenant, establish or permit such
practice or practices of
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discrimination or segregation with reference to the selection, location, number,
use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the
Premises.
29.23 Hazardous Material/Environmental Requirements. As used in this
Lease, the term "Hazardous Material" means any hazardous or toxic substance.
material or waste which is or becomes regulated by, or is dealt with in, any
Environmental Requirements. Tenant acknowledges that Miramar may incur costs (A)
for complying with laws, codes, regulations or ordinances relating to Hazardous
Material, or (B) otherwise in connection with Hazardous Material including,
without limitation, the following: (i) Hazardous Material present in soil or
ground water; (iii) Hazardous Material that migrates, flows, percolates,
diffuses or in any way moves onto or under the Property; (iii) Hazardous
Material present on or under the Property as a result of any discharge, dumping
or spilling (whether accidental or otherwise) on the Property by other tenants
of the Property or their agents, employees, contractors or invitees, or by
others; and (iv) material which becomes Hazardous Material due to a change in
laws, codes, regulations or ordinances which relate to hazardous or toxic
material, substances or waste. Tenant agrees that the costs incurred by Miramar
with respect to or in connection with, the Property for complying with laws,
codes, regulations or ordinances relating to Hazardous Material shall be an
operating Expense, unless the cost of such compliance, as between Miramar and
Tenant, is made the responsibility of Tenant under this Lease; provided,
however, that Operating Expenses shall not include any costs associated with
Hazardous Materials violations of other tenants of the Property. To the extent
any such Operating Expense relating to Hazardous Material is subsequently
recovered or reimbursed through insurance, or recovery from responsible third
parties, or other action, Tenant shall be entitled to a proportionate share of
such Operating Expense to which such recovery or reimbursement relates. As used
in this Lease, the term, "Environmental Requirements," means all laws, statutes,
rules, regulations, ordinance, guidance documents, judgments, decrees, orders,
agreements and other restrictions and requirements (whether now or hereafter in
effect) of any governmental authority, including, without limitation, federal,
state, and local authorities, relating to the regulation or protection of human
health and safety, natural resources, conservation, the environment, or to any
Hazardous Material.
29.24 Development of the Property.
29.24.1 Subdivision. Tenant acknowledges that the Property has
been subdivided. Miramar reserves the right to further subdivide all or a
portion of the buildings and Common Areas in the Property. Tenant agrees to
execute and deliver, upon demand by Miramar and in the form reasonably requested
by Miramar, any additional documents needed to conform this Lease to the
circumstances resulting from a subdivision and any all maps in connection
therewith. Notwithstanding anything to the contrary set forth in this Lease, the
separate ownership of any buildings and/or Common Areas of the Property by an
entity other than Miramar shall not affect the calculation of Property Expenses
or Tenant's payment of Tenant's
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Share of Property Expenses.
29.24.2 The Other Improvements. If portions of the Property or
property adjacent to the Property (collectively, the "Other Improvements") are
owned by an entity other than Miramar. Miramar, at its option, may enter into an
agreement with the owner or owners of any of the Other Improvements to provide
(i) for reciprocal rights of access, use and/or enjoyment of the Property and
the other Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Property and all or any
portion of the Other Improvements, (iii) for the allocation of a portion of the
Property Expenses to the Other Improvements and the allocation of a portion of
the operating expenses and taxes for the Other Improvements to the Property,
(iv) for the use or improvement of the Other Improvements and/or the Property in
connection with the improvement, construction, and/or excavation of the Other
improvements and/or the Property, and (v) for any other matter which Miramar
deems necessary. Nothing contained herein shall be deemed or construed to limit
or otherwise affect Miramar's right to sell all or any portion of the Property
or any other of Miramar's rights described in this Lease.
29.24.3 Construction of Property and Other Improvements. Tenant
acknowledges that portions of the Property and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed Property. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction.
29.24.4 Tenant's ERISA Representation. Tenant hereby represents and
warrants to Miramar that none of the assets of Tenant are "plan assets" as that
term is defined in 29 C.F.R. (S) 2509-75-2 or (S) 2510.3-101.
29.24.5 Miramar Exculpation. It is expressly understood and agreed
that notwithstanding anything in this Lease to the contrary, and notwithstanding
any applicable law to the contrary, the liability of Miramar hereunder
(including any successor landlord hereunder) and any recourse by Tenant against
Miramar shall be limited solely and exclusively to the interest of Miramar in
and to the Building and Property and any insurance proceeds received by Miramar
in connection therewith, and neither Miramar, nor any of its constituent
partners or subpartners, if any, shall have any personal liability therefor, and
Tenant, on behalf of itself and all persons claiming by, through or under
Tenant, hereby expressly waives and releases Miramar and such partners and
subpartners from any and all personal liability.
IN WITNESS WHEREOF, Miramar and Tenant have caused this Lease to be
executed the day and date first above written.
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"Landlord"
MIRAMAR INVESTMENT CO.: a California
General Partnership
By: /s/ Betty L. Gartland
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Betty Gartland, Partner
"Tenant"
WEST STAR ENERGY GROUP LLO-GAS, INC.
a Delaware Corporation
By: /s/ John Castellucci
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John Castellucci, CEO
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EXHIBIT B
MIRAMAR PROFESSIONAL PARK
NOTICE OF LEASE TERM DATES
To:
Re: Office Lease dated ______________, 199__, between MIRAMAR INVESTMENT CO., a
California General Partnership, as Landlord (Miramar), and (Tenant),
concerning Suite ___ on floor ___ of the office building located at 23805
Stuart Ranch Road, Malibu, California.
Gentlemen:
In accordance with the referenced Office Lease (the "Lease"), we wish to advise
you and/or confirm as follows:
1. The Substantial completion of the premises has occurred,, and the
Lease Term has commenced on _______________, 199___, for a term of ______ years
ending on ________________, 199__.
2. Rent commenced to accrue on __________________, 199___, in the amount
of ________________________, 199___.
3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.
4. Your rent checks should be made payable to ___________________ at
5. The exact number of rentable square feet within the Premises is
________ square feet.
6. Tenants Share as adjusted based upon the exact number of rentable
square feet within the Building is _____%.
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"Landlord":
MIRAMAR INVESTMENT CO., a California
General Partnership.
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By: Timothy S. Novoselski
Its: President
Agreed to and Accepted as
of ________________________, 199___.
"Tenant":
By:
Its:
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EXHIBIT C
MIRAMAR PROFESSIONAL PARK
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and
Regulations. Miramar shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Property.
1. Tenant shall not alter any lock or install any new or additional locks
or bolts on any doors or windows of the Premises without obtaining Miramar's
prior written consent. Tenant shall bear the cost of any lock changes or repairs
required by Tenant. Two keys will be furnished by Miramar for the Premises. and
any additional keys required by Tenant must be obtained from Miramar at a
reasonable cost to be established by Miramar.
2. All doors opening to public corridors shall be kept closed at all
times except for normal ingress and egress to the Premises.
3. Miramar reserves the right to close and keep locked all entrance and
exit doors of the Building during such hours as are customary for comparable
buildings in the greater Los Angeles area. Tenant, its employees and agents
must be sure that the doors to the Building are securely closed and locked when
leaving the Premises if it is after the normal hours of business for the
Building. Any tenant, its employees. agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. The Miramar and his agents shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In case of invasion, mob, riot, public
excitement, or other commotion. Miramar reserves the right to prevent access to
the Building or the Property during the continuance thereof by any means it
deems appropriate for the safety and protection of life and property.
4. No furniture, freight or equipment of any kind shall be brought into
the Building without prior notice to Miramar. All moving activity into or out
of the Building shall be scheduled with Miramar and done only at such time and
in such manner as Miramar designates. No service deliveries (other than
messenger services) will be allowed between hours of 4:00 p.m. to 6:00 p.m.
Monday through Friday. Miramar shall have the right to prescribe the weight,
size and position of all safes and other heavy property brought into the
Building and also the
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times and manner of moving the same in and out of the Building. Safes and other
heavy objects shall, if considered necessary by Miramar, stand on supports of
such thickness as is necessary to properly distribute the weight. Miramar will
not be responsible for loss of or damage to any such safe or property in any
case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be the
sole responsibility and expense of Tenant.
5. No furniture, packages, supplies. equipment or merchandise will be
received in the Building or carried up or down in the elevators, except between
such hours and in such specific elevator as shall be designated by Miramar.
6. Any requests of Tenant shall be directed to the management office for
the Property or at such office location designated by Miramar. Employees of
Miramar shall not perform any work or do anything outside their regular duties
unless under special instructions from Miramar.
7. Tenant shall not disturb, solicit, or canvass any occupant of the
Property and shall cooperate with Miramar and its agents to prevent such
activities.
8. The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein. The expense
of any breakage, stoppage or damage resulting from the violation of this rule
shall be borne by the tenant who, or whose employees or agents, shall have
caused it.
9. Tenant shall not overload the floor of the premises, nor mark, drive
nails or screws, or drill into the partitions, woodwork or plaster, except in
the course of hanging standard-sized pictures, frames and objects of art, or in
any way deface the Premises or any part thereof without Miramar's consent first
had and obtained.
10. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Miramar.
11. Tenant shall not use or keep in or on the Premises, the Building, or
the Property any kerosene, gasoline or other inflammable or combustible fluid or
material.
12. Tenant shall not without the prior written consent of Miramar use any
method of heating or air conditioning
13. Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or
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substance in or on the Premises. or permit or allow the Premises to be occupied
or used in a manner offensive or objectionable to Miramar or other occupants of
the Property by reason of noise, odors, or vibrations, or interfere in any way
with other tenants or those having business therein.
14. Tenant shall not bring into or keep within the Property, the Building
or the Premises any animals, birds, bicycles or other vehicles.
15. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state and city laws, codes, ordinances, rules and
regulations.
16. Miramar will approve where and how telephone and telegraph and other
wires are to be Introduced to the Premises. No boring or cutting for wires
shall be allowed without the consent of Miramar. The location of telephone,
call boxes and other office equipment affixed to the Premises shall be subject
to the approval of Miramar.
17. Miramar reserves the right to exclude or expel from the Property any
person who, in the judgment of Miramar, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.
18. Tenant, its employees and agents shall not loiter in the entrances or
corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or
elevators, and shall use them only as a means of ingress and egress for the
Premises.
19. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Miramar to ensure the most effective operation of
the Building's heating and air conditioning system, and shall refrain from
attempting to adjust any controls.
20. Tenant shall store all its trash and garbage within the interior of
the Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in Malibu,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Miramar shall designate.
21. Tenant shall comply with all safety, fire protection and evacuation
procedures and
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regulations established by landlord or any governmental agency.
22. Tenant shall assume any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to the Premises closed as required by these Rules and
Regulations.
23. No awnings or other Property shall be attached to the outside walls of
the Building without the prior written consent of landlord. No curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with, any window or door of the Premises without the prior written consent of
Miramar. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Building must be fluorescent and/or of a quality, type, design
and bulb color approved by Miramar. Tenant shall abide by Miramar's regulations
concerning the opening and closing of window coverings which are attached to the
windows in the Premises. if any, which have a view of any interior portion of
the Building or Building common Areas.
24. The sashes, sash doors, skylights windows, and doors that reflect or
admit light and air into the halls, passageways or other public places in the
Building shall not be covered or obstructed by Tenant, nor shall any bottles,
parcels or other articles be placed on the windowsills.
25. Miramar reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Miramar's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the common Areas and the Property, and for the preservation of good
order therein, as well as for the convenience of other occupants and tenants
therein, provided that Miramar shall promptly provide Tenant with a copy of such
amended Rules and Regulations. Tenant shall be deemed to have read these Rules
and Regulations and to have agreed to abide by them as a condition of its
occupancy of the Premises. Miramar may waive any one or more of these Rules and
Regulations for the benefit of any particular tenants, but no such waiver by
Miramar shall be construed as a waiver of such Rules and Regulations in favor of
any other tenant, nor prevent Miramar from thereafter enforcing any such Rules
or Regulations against any or all tenants of the Property.
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EXHIBIT D
MIRAMAR PROFESSIONAL PARK
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain office Lease (the "Lease")
made and entered into as of ______, 199__ by and between Miramar Investment Co.
as Landlord, and the undersigned as Tenant, for premises on the _____ floor of
the office building located at 23808 Stuart Ranch Road, Malibu, California,
certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease
and all amendments and modifications thereto. The documents contained in
Exhibit A represent the entire agreement between the parties as to the premises.
2. The undersigned currently occupies the Premises described in the
Lease.
3. The Lease Term commenced on _____________, 199__, and the Lease Term
expires on ______, 199__.
4. Base Rent became payable on _____________, 199__.
5. The lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.
6. Tenant has not transferred, assigned, or sublet any portion of the
premises nor entered into any license or concession agreements with respect
thereto except as follows:
7. Tenant shall not modify the documents contained in Exhibit A without
the prior written consent of the holder of the first deed of trust on the
premises.
8. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ____, 199__. The current monthly installment of Base Rent is $________.
9. All conditions of the Lease to be performed by Landlord necessary to
the enforceability of the Lease have been satisfied and Landlord is not in
default thereunder.
10. The current amount of the security Deposit held by Landlord is
$___________.
Initial Here:
Tenant:
--------------
Landlord:
------------
48
<PAGE>
11. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.
12. As of the date hereof, there are no existing defenses or offsets that
the undersigned has against Landlord nor have any events occurred that with the
passage of time or the giving of notice, or both, would constitute a default on
the part of Landlord under the Lease.
13. The undersigned acknowledges that this Estoppel Certificate may be
delivered to Miramar or to a prospective mortgagee, or a prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the premises are a part and that receipt by it of this
certificate is a condition of making of such loan or acquisition of such
property.
14. If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in
California, that Tenant has full right and authority to execute and deliver this
Estoppel certificate and that each person signing on behalf of Tenant is
authorized to de so.
Executed at Malibu, California on the _____ day of _____________, 199__.
"Tenant"
By:
----------------------------------------------
Its:
---------------------------------------------
Initial Here:
Tenant:
--------------
Landlord:
------------
49
<PAGE>
RECORDING REQUESTED BY EXHIBIT 10.79
UNIVERSAL TITLE COMPANY [RECORDER STAMP]
AND WHEN RECORDED MAIL TO:
CAPSTONE CAPITAL, LLC
515 Madison Avenue, 21st Floor
New York, NY 10022
Order No. Escrow No. 12243-MC
_____________________________________________________________________________
A.P.N. 0237-054-19-0-000 Space above the line is for recorder's use
SHORT FORM DEED OF TRUST WITH ASSIGNMENT OF RENTS
(THIS DEED OF TRUST CONTAINS AN IRREVOCABLE APPOINTMENT OF TRUSTEE)
BY THIS DEED OF TRUST, made this 22nd day of November, 1999,
between Llo Gas, Inc.
, herein called TRUSTOR, whose address is
23805 Stuart Ranch Road Malibu CA
and SBS TRUST DEED NETWORK, a California corporation herein called TRUSTEE, and
CAPSTONE CAPITAL, LLC, A Delaware limited liability company
, herein called BENEFICIARY,
trustor grants, transfers, and assigns to trustee in trust, with power of sale,
that property in City of Fontana San Bernardino County, California,
described as:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF FOR LEGAL DESCRIPTION
Together with the rents, issues and profits thereof, subject, however, to the
right, power and authority hereinafter given to and countered upon Beneficiary
to collect and apply such rents, issues and profits.
For the Purpose of Securing:
(1) Payment of the indebtedness evidenced by one promissory note in the
principal sum of $200,000 with interest thereon according to the terms of a
promissory note or notes of even date herewith made by Trustor, payable to order
of Beneficiary, and extensions or renewals thereof, (2) the performance of each
agreement of Trustor incorporated by reference or contained herein, (3) Payment
of additional sums and interest thereon which may hereunder be loaned to
Trustor, of his successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Deed of Trust.
Form No. TD 301 (9/94) Initial: /s/ JC
------
Page 1 of 1
<PAGE>
To protect the security of this Deed of Trust, and will respect to the property
above, described, Trustor expressly makes each and all of the agreements, and
adopts and agrees to perform and be bound by each and all of the terms and
provisions set forth in subdivision A, and it is mutually agreed that each and
all of the terms and provisions set forth in subdivision B of the fictitious
deed of trust recorded in Official Records in the office of the county recorder
of the county where said property is located, noted below opposite the name of
such county, namely.
[ILLEGIBLE]
shall inure to and bind the parties hereto, with respect to the property above
described. Said agreements, terms and provisions contained in said subdivision
A and B, (identical in all counties and printed on the reverse side of page one
hereof) are by within reference thereto, incorporated herein and made a part of
this Deed of Trust for all purposes as fully as if set forth at length herein,
and Beneficiary may charge for a statement regarding the obligation secured
hereby, provided the charge therefore does not exceed the maximum allowed by
law.
The undersigned Trustor requests that a copy of any notice of default and any
notice of sale hereunder be mailed to him at the address hereinbefore set forth.
STATE OF CALIFORNIA
COUNTY OF Orange )SS Llo-Gas, Inc., a Delaware Corporation
------ -------------------------------------
On December 12, 1999 , before me, /s/ John Castellucci
----------------- ------------------------------------
By: John Castellucci, CEO/Chairman
Mildred N. Cork, a notary public ___________________________________
---------------
personally appeared JOHN CASTELLUCCI
----------------
personally known to me (or provided to me on the bases of
satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged [NOTARY STAMP]
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
WITNESS my hand and official seal
Signature: /s/ Mildred N. Cork (This area for official notary seal)
--------------------
________________________________________________________________________________
APN 0237-054-19-0-000 ORDER NO. ESCROW NO. 12243-MG
Page 2 of 2
<PAGE>
PARCEL 1:
That portion of the Northwest Quarter of the Northeast Quarter of Section 21,
Township 9 South, Range 3 West, San Bernardino Maridian, in the County of San
Diego, State of California, according to Official Plat thereof, described as
follows:
Commencing at the Southwest corner of said Northwest Quarter of the Northeast
Quarter, thence along the Southerly line of said Northwest Quarter of the
Northeast Quarter, North 68 (Degrees) 21'30" East, 143.56 feet; thence North 55
(Degrees) 52' 30" East, 272.51 feet; thence North 68 (Degrees) 17'00" East,
203.85 feet to the most Southerly corner of land described in deed to HENRY
MORRISSETT, at [illegible] , recorded October 18, 1988 as File No. 192464,
thence along the Northwesterly line of said land North 60 (Degrees) 17'00" East
262.37 feet to the Southeasterly corner of land described in deed to
[illegible], at [illegible], recorded April 30, 1972 as File No. 87708, being a
point herein designated as Point "A" and being also the TRUE POINT OF BEGINNING;
thence along the boundary of said Brahm's Land as follows; North 29 (Degrees)
43'00" West, 57.22 feet; North 58 (Degrees) 51'00" West, 47.60 feet to the
beginning of a tangent 30.00 foot radius curve concave Southerly; Westerly along
the arc of said curve through a central angel of 64 (Degrees) 00'00" a distance
of 33.51 feet; tangent to said curve south 57 (Degrees) 09'00" West, 48.77 feet
to the beginning of a tangent 20.00 foot radius curve, concave Northeasterly;
Westerly and Northwesterly along the arc of said curve through a central angle
of 101 (Degrees) 30'00" a distance of 35.43 feet; tangent to said curve North 21
(Degrees) 21'00" West, 104.02 feet; continuing North 21 (Degrees) 21'00" West,
104.02 feet; continuing North 21 (Degrees) 21'00" West, 39.35 feet to the
beginning of a tangent 30.00 foot radius curve, concave Southwesterly along the
arc of said curve through a central angle of 78 (Degrees) 30'00" a distance of
41.10 feet; thence South 21 (Degrees) 21'00" East, 15.34 feet; thence North 57
(Degrees) 09'00" East, 181.57 feet to an intersection with the Easterly line of
said Morrissett's Land; thence along the boundary of said Morrissett's land as
follows: South 04 (Degrees) 51'00" East, 329.75 feet to the Southeasterly corner
therein; and South 60 (Degrees) 17'00" West, 20.00 feet to the TRUE POINT OF
BEGINNING.
PARCEL 2:
An easement and right of way for road and utility purposes and appurtenance
therein, to be used in common with others, over, under, along and across those
portion of the Northwest Quarter of the Northeast Quarter of Section 21,
Township 9 South, Range 3 West, San Bernardino Meridian, in the County of San
Diego, State of California, according to Official Plat thereof, being note
particularly described as Easement Parcels "A" and "B" as follows:
<PAGE>
Exhibit 10.80
Facility 81633
-----
AGREEMENT FOR CORPORATE am/pm NON-LESSEE DEALER
THIS AMENDMENT, dated _______________________, by and among Llo-Gas, Inc., a
-------------
corporation ("Corporation"), John Castellucci individual
-------------------------
("Shareholder(s)") and ARCO Products Company, a division of Atlantic Richfield,
a Delaware corporation ("ARCO").
WITNESSETH
WHEREAS Corporation and ARCO are parties to an am/pm Mini Market Agreement and a
Contract Dealer Gasoline Agreement ("Store Agreement") dated January 9, 1995,
---------------
providing for the operation of an am/pm Mini Market and a gasoline service
station at premises located at 16096 Slover Avenue, Fontana, CA 92335
--------------------------------------
WHEREAS ARCO has entered into the Store Agreement with Corporation in reliance
upon personal, active participation of Shareholder in the ownership and
management of Corporation.
NOW THEREFORE, the parties hereto, each intending to be legally bound hereby,
and for good and valuable consideration, hereby agree as follows:
1. Shareholder(s) and Corporation jointly and severally represent and warrant
to ARCO that as of the date hereof.
a. Corporation is duly organized and in good standing under the Laws of
the State of N/A
---
b. Shareholder(s) as individual(s) own a combined total of 100% of the
issued and outstanding voting stock of Corporation and own the number
of shares and the percentage of total issued and outstanding shares
indicated below. There are no other classes of stock of Corporation
which have any voting rights.
Number Percentage of Total Issued
Name of Shares *& Outstanding Shares
---- --------- ---------------------
John Castellucci 750 100%
- ---------------------- ------------- ---------------------
Corporation and Shareholders acknowledge that, pursuant to Article 17 of the
Store Agreement, the Store Agreement may not be assigned without the prior
written consent of ARCO which consent shall not be unreasonably withheld.
<PAGE>
For purposes of Section 17 of the Store Agreement, any transfer of stock,
issuance of additional stock, change in rights of any class of series of stock
of contractual agreement affecting stock rights which results in present
Shareholder(s) as an individual (or group) owning legally or beneficially having
voting control of less than 100% of the stock of the Corporation shall be deemed
an assignment of Operator's rights under the Store Agreement.
For purposes of this Agreement (Section 17.02) of the Store Agreement, N/A is
---
the officer and shareholder of the Corporation who is the Corporate Designee
(applies to more than one shareholder only).
c. The Corporate Designee presently is an officer of the Corporation and
holds the following office or offices of Corporation:
N/A
---
(applies to more than one shareholder only)
d. This Agreement has been duly authorized by Corporation and the
Corporate Designee (or Single Shareholder), as the person executing
this Agreement, has specific authority to execute this agreement on
behalf of Corporation.
2. Shareholder and Shareholder's spouse (if any) shall execute concurrently
herewith a Guarantee Agreement in the form attached hereto as Exhibit "A"
and incorporated herein by reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above stated.
ARCO Products Company, Franchisee
a division of AtlanticRichfieldCompany Llo-Gas, Inc.
/s/ Connie Carroll 1/19/00 1-12-2000
- ------------------------------------------ ----------------------------
Date Date
/s/ Wilma Caleron 1/19/00
/s/ John Castellucci
/s/ [illegible] 1-12-2000 John Castellucci - President
- ----------------------------------------------- ----------------------------
Witness Date Typed Name & Title
<PAGE>
Facility 81633
-----
ASSIGNMENT AND ASSUMPTION
OF NON-LESSEE am/pm AGREEMENTS
This agreement, dated _______________________ between Time Out, LLC, a Limited
Liability Company (individually or collectively "Assignor"), and Llo-Gas, Inc.,
a corporation, (individually or collectively "Assignee").
WITNESS
-------
A. Assignor is a party to the following agreements with ARCO Products Company,
a division of Atlantic Richfield Company ("ARCO") pertaining to the
operation of the facility located at 16096 Slover Ave., Fontana, California
92335.
1. am/pm Mini-Market Agreement, dated January 9, 1995, (and any and all
---------------
amendments and addenda thereto); and
2. Contract Dealer Gasoline Agreement, dated January 9, 1995, (and any
---------------
and all amendments and addenda thereto); and
3. Addendum to Contract Dealer Gasoline Agreement (Paypoint Network Non-
Lessee Retailer) dated January 9, 1995, and any and all amendments and
---------------
addenda thereto;
Assignee acknowledges receipt from Assignor of legible copies of each of
the foregoing agreements, and all amendments and addenda thereto, which are
collectively referred to herein as the "am/pm Agreements."
B. Assignor desires to assign to Assignee and Assignee desires to assume the
assignment of the am/pm Agreements, subject to obtaining the consent of
ARCO.
C. Assignee acknowledges that no representations or promises have been made to
Assignee by anyone that the am/pm Agreements, or any of them, will be
renewed or extended beyond the expiration date contained in said
agreements.
NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants
herein contained agree as follows:
1. Assignor hereby assigns to Assignee, effective _____________________
or if the
<PAGE>
unconditional written date of such date, effective on the date of such
unconditional consent as provided in Paragraph 3 below, all of
Assignor's rights, title and interest in and to the am/pm Agreements.
2. Assignee hereby assumes and covenants to perform all of Assignor's
obligations under the am/pm Agreements from and after the effective
date of assignment hereunder.
3 Assignor and Assignee hereby acknowledge that this assignment is
subject to obtaining the express written, unconditional consent of
ARCO and that unless and until such consent of ARCO is obtained and
unconditionally effective, this assignment shall not be effective for
any purpose if the written, unconditional consent of ARCO has not been
obtained within 15 business days after ARCO's written, conditional
consent, if any, to the assignment.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement as of the
date first above written.
Witness: Assignor(s):
/s/ [illegible] /s/ [illegible]
- ----------------------------- ---------------------------------
Time Out, LLC
Witness: Assignee(s):
/s/ [illegible] /s/ John Castellucci
- ----------------------------- ---------------------------------
Llo-Gas, Inc.
<PAGE>
RECORDING REQUESTED BY EXHIBIT 10.81
UNIVERSAL TITLE COMPANY [RECORDER STAMP]
AND WHEN RECORDED MAIL TO:
TIME OUT, LLC
2339 N. Euclid Avenue
Upland, CA 91784
Order No. Escrow No. 12243-MC
________________________________________________________________________________
A.P.N. 0237-054-19-0-000 Space above the line is for recorder's use
SHORT FORM DEED OF TRUST WITH ASSIGNMENT OF RENTS
(THIS DEED OF TRUST CONTAINS AN IRREVOCABLE APPOINTMENT OF TRUSTEE)
BY THIS DEED OF TRUST, made this 29th day of October, 1999, between
Llo Gas, Inc.
, herein called TRUSTOR, whose address is
23805 Stuart Ranch Road Malibu CA 90265
and SBS TRUST DEED NETWORK, a California corporation herein called TRUSTEE, and
TIME OUT, L.L.C.
, herein called BENEFICIARY,
Trustor grants, transfers, and assigns to trustee in trust, with power of sale,
that property in City of Fontana San Bernardino County, California,
described as:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF FOR LEGAL DESCRIPTION
SEE RIDER TO DEED OF TRUST ATTACHED HERETO
THIS DEED OF TRUST IS SECOND AND SUBORDINATE TO A FIRST DEED OF TRUST NOW OF
RECORD
Together with the rents, issues and profits thereof, subject, however, to the
right, power and authority hereinafter given to and countered upon Beneficiary
to collect and apply such rents, issues and profits.
For the Purpose of Securing:
(1) Payment of the indebtedness evidenced by one promissory note in the
principal sum of $300,000.00 with interest thereon according to the terms of a
promissory note or notes of even date herewith made by Trustor, payable to order
of Beneficiary, and extensions or renewals thereof, (2) the performance of each
agreement of Trustor incorporated by reference or contained herein, (3) Payment
of additional sums and interest thereon which may hereunder be loaned to
Trustor, of his successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Deed of Trust.
Form No. TD 301 (9/94) Initial: /s/ JC
------
Page 1 of 1
<PAGE>
To protect the security of this Deed of Trust, and will respect to the property
above, described, Trustor expressly makes each and all of the agreements, and
adopts and agrees to perform and be bound by each and all of the terms and
provisions set forth in subdivision A, and it is mutually agreed that each and
all of the terms and provisions set forth in subdivision B of the fictitious
deed of trust recorded in Official Records in the office of the county recorder
of the county where said property is located, noted below opposite the name of
such county, namely.
[ILLEGIBLE]
shall inure to and bind the parties hereto, with respect to the property above
described. Said agreements, terms and provisions contained in said subdivision
A and B, (identical in all counties and printed on the reverse side of page one
hereof) are by within reference thereto, incorporated herein and made a part of
this Deed of Trust for all purposes as fully as if set forth at length herein,
and Beneficiary may charge for a statement regarding the obligation secured
hereby, provided the charge therefore does not exceed the maximum allowed by
law.
The undersigned Trustor requests that a copy of any notice of default and any
notice of sale hereunder be mailed to him at the address hereinbefore set forth.
STATE OF CALIFORNIA
COUNTY OF Orange )SS Lio-Gas, Inc., a Delaware Corporation
------ -------------------------------------
On October 29, 1999 , before me, /s/ John Castellucci
---------------- ------------------------------------
By: John Castellucci, CEO/Chairman
Mildred N. Cork, a notary public __________________________________
---------------
personally appeared JOHN CASTELLUCCI
----------------
personally known to me (or provided to me on the bases of
satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged [NOTARY SEAL]
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
WITNESS my hand and official seal
Signature: /s/ Mildred N. Cork (This area for official notary seal)
-------------------
________________________________________________________________________________
APN ESCROW NO.
Page 2 of 2
<PAGE>
RIDER TO NOTE & DEED OF TRUST
1) In addition to being secured by trust deeds against 16096 Slover Avenue,
Fontana, CA 92335, seller's $300,000 note, executed by Llo-Gas, Inc. (John
Castallucci, CEO) & John Castallucci personally, and seller's $300,000 note,
executed by Llo-Gas, Inc. (John Castallucci, CEO), each and together, are to be
secured by a second trust deed against each of the following real properties,
which are being acquired by or are owned by Llo-Gas, Inc. or by John Castallucci
in fee:
<TABLE>
<CAPTION>
ADDRESS CITY COUNTY STATE ZIP TYPE
<S> <C> <C> <C> <C> <C>
1) 3817 W. Third St. Los Angeles Los Angeles CA 90020 ARCO am/pm
2) 3366 N. San Gabriel Blvd. Rosemead Los Angeles CA 91770 ARCO
3) 4100 California Ave. Bakersfield Kern CA 93309 ARCO am/pm
4) 13001 Stockdale Hwy Bakersfield Kern CA 93312 ARCO am/pm
5) 64200 20th St. No. Palm Springs Riverside CA 93546 ARCO am/pm
6) 240 Commerce Dr. Mammoth Lakes Mono CA 93546 ARCO cdloc
7) 702 W. Broadway Phoenix Maricopa AZ 85032 ARCO am/pm
</TABLE>
2) It is further agreed that with each $50,000 principal reduction of said
notes, either or together, seller will release (reconvey) one of above
additional securing properties of buyer's choice, excerpt that $100,000
principal reduction of said notes, either or together, is required to release
(reconvey) each of the above properties #'s 5, or 6, $200,000 for 4.
3) ACCELERATION CLAUSE. The following is applicable to each seller note and
securing property of each deed of trust: The payment of the entire unpaid
balance of principal may be accelerated by the holder at holder's option, except
as expressly limited by law, if the maker or maker's successor without the
holder's prior written consent does any of the following: (A) Fails to make any
payments of interest or principal when due or defaults in any of the covenants
and conditions contained in the notes or securing deeds of trust or any prior
encumbrance, (B) Causes or permits or accepts any modification or extension of
any prior encumbrance following recording of same, (C) Sells, conveys or
alienates all or any part of the situs real property, (D) Suffers the title or
any interest in the secured property to be divested, whether voluntarily or
involuntarily, (E) Is a corporation with fewer than 100 stockholders at the date
of execution of these notes and deeds of trust and more than 50% of its capital
stock is sold, transferred or assigned during a 12-month period, excerpt that
Llo-Gas, inc. may be merged into or acquired by Discovery Investments, Inc.
(DCIV, OTC).
Llo-Gas, inc., a Delaware Corp.
/s/ John Castellucci /s/ John Castellucci
John Castellucci, CEO/Chairman John Castellucci, personally
<PAGE>
RECORDING REQUESTED BY EXHIBIT 10.82
UNIVERSAL TITLE COMPANY [RECORDER STAMP]
AND WHEN RECORDED MAIL TO:
TIME OUT, LLC
2339 N. Euclid Avenue
Upland, CA 91784
Order No. Escrow No. 12243-MC
_____________________________________________________________________________
A.P.N. 0237-054-19-0-000 Space above the line is for recorder's use
SHORT FORM DEED OF TRUST WITH ASSIGNMENT OF RENTS
(THIS DEED OF TRUST CONTAINS AN IRREVOCABLE APPOINTMENT OF TRUSTEE)
BY THIS DEED OF TRUST, made this 29th day of October, 1999,
between Llo Gas, Inc.
, herein called TRUSTOR, whose address is
23805 Stuart Ranch Road Malibu CA 90265
and SBS TRUST DEED NETWORK, a California corporation herein called TRUSTEE, and
TIME OUT, L.L.C.
, herein called BENEFICIARY,
Trustor grants, transfers, and assigns to trustee in trust, with power of sale,
that property in City of Fontana San Bernardino County, California,
described as:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF FOR LEGAL DESCRIPTION
SEE RIDER TO DEED OF TRUST ATTACHED HERETO
THIS DEED OF TRUST IS THIRD AND SUBORDINATE TO A FIRST DEED OF TRUST NOW OF
RECORD AND A SECOND DEED OF TRUST RECORDING CONCURRENTLY HEREWITH
Together with the rents, issues and profits thereof, subject, however, to the
right, power and authority hereinafter given to and countered upon Beneficiary
to collect and apply such rents, issues and profits.
For the Purpose of Securing:
(1) Payment of the indebtedness evidenced by one promissory note in the
principal sum of $300,000.00 with interest thereon according to the terms of a
promissory note or notes of even date herewith made by Trustor, payable to order
of Beneficiary, and extensions or renewals thereof, (2) the performance of each
agreement of Trustor incorporated by reference or contained herein, (3) Payment
of additional sums and interest thereon which may hereunder be loaned to
Trustor, of his successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Deed of Trust.
Form No. TD 301 (9/94) Initial: /s/ JC
------
Page 1 of 1
<PAGE>
To protect the security of this Deed of Trust, and will respect to the property
above, described, Trustor expressly makes each and all of the agreements, and
adopts and agrees to perform and be bound by each and all of the terms and
provisions set forth in subdivision A, and it is mutually agreed that each and
all of the terms and provisions set forth in subdivision B of the fictitious
deed of trust recorded in Official Records in the office of the county recorder
of the county where said property is located, noted below opposite the name of
such county, namely.
[ILLEGIBLE]
shall inure to and bind the parties hereto, with respect to the property above
described. Said agreements, terms and provisions contained in said subdivision
A and B, (identical in all counties and printed on the reverse side of page one
hereof) are by within reference thereto, incorporated herein and made a part of
this Deed of Trust for all purposes as fully as if set forth at length herein,
and Beneficiary may charge for a statement regarding the obligation secured
hereby, provided the charge therefore does not exceed the maximum allowed by
law.
The undersigned Trustor requests that a copy of any notice of default and any
notice of sale hereunder be mailed to him at the address hereinbefore set forth.
STATE OF CALIFORNIA
COUNTY OF Orange )SS Llo-Gas, Inc., a Delaware Corporation
------ -------------------------------------
On October 29, 1999 , before me, /s/ John Castellucci
---------------- ----------------------------------
By: John Castellucci, CEO/Chairman
Mildred N. Cork, a notary public ___________________________________
---------------
personally appeared JOHN CASTELLUCCI
----------------
personally known to me (or provided to me on the bases of
satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged [NOTARY STAMP]
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
WITNESS my hand and official seal
Signature: /s/ Mildred N. Cork (this area for official notary seal)
--------------------
________________________________________________________________________________
APN ESCROW NO.
Page 2 of 2
<PAGE>
RIDER TO NOTE & DEED OF TRUST
1) In addition to being secured by trust deeds against 16096 Slover Avenue,
Fontana, CA 92335, seller's $300,000 note, executed by Llo-Gas, Inc. (John
Castallucci, CEO) & John Castallucci personally, and seller's $300,000 note,
executed by Llo-Gas, Inc. (John Castallucci, CEO), each and together, are to be
secured by a second trust deed against each of the following real properties,
which are being acquired by or are owned by Llo-Gas, Inc. or by John Castallucci
in fee:
<TABLE>
<CAPTION>
ADDRESS CITY COUNTY STATE ZIP TYPE
<S> <C> <C> <C> <C> <C>
1) 3817 W. Third St. Los Angeles Los Angeles CA 90020 ARCO am/pm
2) 3366 N. San Gabriel Blvd. Rosemead Los Angeles CA 91770 ARCO
3) 4100 California Ave. Bakersfield Kern CA 93309 ARCO am/pm
4) 13001 Stockdale Hwy Bakersfield Kern CA 93312 ARCO am/pm
5) 64200 20th St. No. Palm Springs Riverside CA 92258 ARCO am/pm
6) 240 Commerce Dr. Mammoth Lakes Mono CA 93546 ARCO cdloc
7) 702 W. Broadway Phoenix Maricopa AZ 85032 ARCO am/pm
</TABLE>
2) It is further agreed that with each $50,000 principal reduction of said
notes, either or together, seller will release (reconvey) one of above
additional securing properties of buyer's choice, except that $100,000 principal
reduction of said notes, either or together, is required to release (reconvey)
each of the above properties #'s 5, or 6, $200,000 for 4.
3) ACCELERATION CLAUSE. The following is applicable to each seller note and
securing property of each deed of trust: The payment of the entire unpaid
balance of principal may be accelerated by the holder at holder's option, except
as expressly limited by law, if the maker or maker's successor without the
holder's prior written consent does any of the following: (A) Fails to make any
payments of interest or principal when due or defaults in any of the covenants
and conditions contained in the notes or securing deeds of trust or any prior
encumbrance, (B) Causes or permits or accepts any modification or extension of
any prior encumbrance following recording of same, (C) Sells, conveys or
alienates all or any part of the situs real property, (D) Suffers the title or
any interest in the secured property to be divested, whether voluntarily or
involuntarily, (E) Is a corporation with fewer than 100 stockholders at the date
of execution of these notes and deeds of trust and more than 50% of its capital
stock is sold, transferred or assigned during a 12-month period, except that
Llo-Gas, Inc. may be merged into or acquired by Discovery Investments, Inc.
(DCIV, OTC).
Llo-Gas, inc., a Delaware Corp.
/s/ John Castellucci /s/John Castellucci
John Castellucci, CEO/Chairman John Castellucci, personally
<PAGE>
Exhibit 10.83
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
[RECORDER'S STAMP]
UNIVERSAL TITLE ESCROW
1205 E. Chapman Ave
Orange, CA 92866
- --------------------------------------------------------------------------------
MODIFICATION TO DEED OF TRUST AND RIDER
THAT CERTAIN DEED OF TRUST DATED: October 29, 1999 AND RECORDED ON November 3
-------------------- ------------
1999 As instrument No. 19990459019 , WHEREIN Llo Gas, Inc. WAS
-------------------------
TRUSTOR AND SBS TRUST DEED NETWORK, WAS TRUSTEE, AND TIME OUT LLC WAS
BENEFICIARY, COVERING THE PROPERTY LEGALLY DESCRIBED AS: SEE EXHIBIT "A" FOR
LEGAL DESCRIPTION, IS HEREBY MODIFIED IN THE FOLLOWING PARTICULARS ONLY:
RIDER TO NOTE & DEED OF TRUST IS MODIFIED TO DELETE ITEM 2)
ALL OTHER TERMS AND CONDITIONS OF SAID DEED OF TRUST AND RIDER TO NOTE & DEED OF
TRUST REMAIN UNAFFECTED AND IN FULL FORCE AND EFFECT.
DATED: November 23, 1999
------------------------------
Llo-Gas, INC., a Delaware corporation TIME OUT LLC, a California limited
liability company
/s/ John Castellucci /s/ James Borba
- ----------------------------------- -----------------------------------
BY: John Castellucci, CEO/Chairman BY: James Borba, Managing Member
/s/ Joseph Borba
-----------------------------------
By: Joseph Borba
STATE OF California
-----------------
COUNTY OF Orange
----------------
On November 23, 1999 before me Mildred N. Cork ,
--------------------------- -------------------------
personally appeared John Castellucci
----------------------------------------------
|_| personally known to me OR |_| proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument
[NOTARY SEAL] 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.
<PAGE>
WITNESS my hand and official seal.
/s/ Mildred N. Cork
----------------------------------
SIGNATURE OF NOTARY
STATE OF CALIFORNIA
COUNTY OF Orange
---------------
On December 10, 1999 before me
--------------------------- --------
Mildred N. Cork , [FOR NOTARY SEAL OR STAMP]
- -----------------------------------------------
personally appeared James A. Borba and Joseph Borba
---------------------------------
_____________________________________________________
_____________________________________________________
personally known to me (or proved to me on the basis of [NOTARY SEAL]
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.
WITNESS my hand and official seal.
Signature /s/ Mildred N. Cork
------------------------------
<PAGE>
Exhibit "A"
The land referred to in this report is situated in the County of SAN BERNARDINO,
State of California and described as follows:
Legal Description:
THE SOUTH ONE-HALF OF THE EAST ONE-HALF OF THE EAST ONE-HALF OF FARM LOT 840, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO MAP SHOWING
SUBDIVISION OF LANDS BELONG TO SEMI-TROPIC LAND AND WATER COMPANY, AS PER MAP
RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
EXCEPT THE NORTH 75 FEET OF THE EAST 180 FEET THEREOF.
ALSO EXCEPTING THAT PORTION CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED
FEBRUARY 6, 1958 IN BOOK 4430 OF OFFICIAL RECORDS, PAGE 391, RECORDS OF SAID
COUNTY.
AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER
LINE OF ALL ADJOINING STREETS AND ROADS.
<PAGE>
Exhibit 10.84
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO: [RECORDER'S STAMP]
TIME OUT, LLC.
2339 N. Euclid Ave.
Upland, CA 91784
Order No. 75898-02 Escrow No. 12243-MC
- --------------------------------------------------------------------------------
A.P.N. 0216-411-32-0-000 SPACE ABOVE THIS LINE IS FOR RECORDER'S USE
SHORT FORM DEED OF TRUST WITH ASSIGNMENT OF RENTS
(This Deed of Trust contains an acceleration clause)
BY THIS DEED OF TRUST, made this 23/rd/ day of November , 1999,
between Llo-Gas, Inc. ,
, herein called TRUSTOR, whose address is
23805 Stuart Rancho Road Malibu CA 90625
(number and street) (city) (State zip)
and SBS TRUST DEED NETWORK, a California corporation, herein called TRUSTEE, and
TIME OUT, LLC
, herein called BENEFICIARY,
Trustor grants, transfers, and assigns to trustee, in trust, with power of sale,
that property in
County, California, described as:
City of Fontana San Bernardino
SEE EXHIBIT "A" FOR LEGAL DESCRIPTION
THIS DEED OF TRUST IS SECOND AND SUBORDINATE TO A FIRST DEED OF TRUST NOW OF
RECORD
If the trustor shall sell, convey or alienate said property, or any part
thereof, or any interest therein, or shall be divested of his title or any
interest therein in any manner or way, whether voluntarily or involuntarily,
without the written consent of the beneficiary being first had and obtained,
beneficiary shall have the right, at its option, except as provided by law, to
declare any indebtedness or obligations secured hereby, irrespective of the
maturity date specified in any note evidencing the same, immediately due and
payable.
Together with the rents, issues and profits thereof, subject, however, to the
right, power and authority hereinafter given to and conferred upon Beneficiary
to collect and apply such rents, issues and profits.
For the Purpose of Securing:
Payment of the indebtedness evidenced by one promissory note in the principal
sum of $ 200,000.00 with interest thereon according to the terms of a promissory
note or notes of even date herewith made by Trustor incorporated by order of
Beneficiary, and extensions or renewals thereof, (2) the performance of each
agreement of Trustor incorporated by reference or contained herein, (3) Payment
of additional sums and interest thereon which may hereafter be loaned to
Trustor, or his successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Deed of Trust.
Initials: /s/ JC
-------
Page 1 of 3
<PAGE>
To protect the security of this Deed of Trust, and with respect to the property
above described, Trustor expressly makes each and all of the agreements, and
adopts and agrees to perform and be bound by each and all of the terms and
provisions set forth in subdivision A, and it is mutually agreed that each and
all of the terms ands provisions set forth in subdivision B of the fictitious
deed of trust recorded in Official Records in the office of the county recorder
of the county where said property is located, noted below opposite the name of
such county, namely:
<TABLE>
<CAPTION>
COUNTY REC INSTR COUNTY REC INSTR COUNTY REC INSTR COUNTY REC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alameda 6/27/91 91-156716 Kings 6/21/91 9108782 Placer 6/24/91 91036303 Sierra 6/24/91
Alpine 6/25/91 540 Lake 6/25/91 9102766 Plumas 6/21/91 4420 Siskiyou 6/21/91
Amador 6/21/91 005768 Lassen 6/24/91 3386 Riverside 7/19/91 245412 Solano 6/24/91
Butte 6/25/91 91-026840 Los 6/24/91 91-946254 Sacramento 7/3/91 0474 Sonoma 6/21/91
Angeles
Calaveras 6/24/91 009420 Madora 7/2/91 9118500 San Benito 6/24/91 9105170 Stanislaus 6/21/91
Colusa 6/21/91 2607 Marin 6/26/91 91038937 San 7/10/91 91-259301 Sutter 6/26/91
Bernardino
Contra 6/21/91 91-120190 Mariposa 6/28/91 913411 San Diego 6/28/91 0316280 Tohama 6/21/91
Costa
Del Norte 6/24/91 913259 Mendocino 7/15/91 12895 San 6/25/91 E928920 Trinity 6/25/91
Francisco
El Dorado 7/3/91 36427 Merced 6/25/91 19271 San 8/1/91 91073579 Tulare 6/25/91
Joaquin
Fresno 6/25/91 91075138 Modoc 6/25/91 2488 San Luis 6/21/91 35748 Tuolomne 6/24/91
Obispo
Glenn 7/3/91 91-3218 Mono 6/24/91 03313 San Mateo 7/1/91 91-083116 Ventura 6/27/91
Humboldt 6/21/91 91-135742 Monterey 6/21/91 35849 Santa 6/21/91 91-039382 Yolo 6/21/91
Barbara
Imperial 6/24/91 91011468 Napa 6/21/91 16535 Santa 7/3/91 10960045 Yuba 6/21/91
Clara
Inyo 6/21/91 91-2937 Nevada 7/15/91 91-20768 Santa Cruz 7/5/91 41718
Kern 7/16/91 088220 Orange 7/3/91 91-346093 Shasta 7/5/91 27911
</TABLE>
<TABLE>
<CAPTION>
COUNTY INSTR
<S> <C>
Alameda 107968
Alpine 91-007362
Amador 91-0043517
Butte 0058832
Calaveras 046838
Colusa 12012
Contra 7739
Costa
Del Norte 2167
El Dorado 39212
Fresno 10016
Glenn 090808
Humboldt 125132
Imperial 91-7046
Inyo
Kern
</TABLE>
shall insure to and bind the parties hereto, with respect to the property above
described. Said agreements, terms and provisions contained in said subdivision
A and B (identical in all counties, and printed on the reverse side of page one
hereof) are by within reference thereto, incorporated herein and made a part of
this Deed of Trust for all purposes as fully as if set forth at length herein,
and Beneficiary may charge for a statement regarding the obligation secured
hereby, provided the charge therefore does not exceed the maximum allowed by
law.
The undersigned Trustor requests that a copy of any notice of default and any
notice of sale hereunder be mailed to him at this address hereinbefore set
forth.
Llo-Gas, Inc.
STATE OF CALIFORNIA
COUNTY OF Orange /s/ John Castellucci
--------------------- ---------------------------------
BY: John Castellucci CEO/Chairman
On November 23, 1999 before me
---------------------------
Mildred N. Cork , a notary public /s/ John Castellucci
- ------------------------ --------------------------------
personally known to me (or proved to me on the BY: John Castellucci, Personally
basis of satisfactory evidence) to be the Llo-Gas, Inc.
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 [NOTARY SEAL]
behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
Signature /s/ Mildred N. Cork
------------------------------------
(This area for official notarial seal)
- --------------------------------------------------------------------------------
A.P.N. 0237-054-19-0-000 ORDER NO. 75898-02 ESCROW NO. 12243-MC
Page 2 of 3
<PAGE>
Exhibit "A"
The land referred to in this report is situated in the County of SAN BERNARDINO,
State of California and described as follows:
Legal Description:
THE SOUTH ONE-HALF OF THE EAST ONE-HALF OF THE EAST ONE-HALF OF FARM LOT 840, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO MAP SHOWING
SUBDIVISION OF LANDS BELONG TO SEMI-TROPIC LAND AND WATER COMPANY, AS PER MAP
RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
EXCEPT THE NORTH 75 FEET OF THE EAST 180 FEET THEREOF.
ALSO EXCEPTING THAT PORTION CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED
FEBRUARY 6, 1958 IN BOOK 4430 OF OFFICIAL RECORDS, PAGE 391, RECORDS OF SAID
COUNTY.
AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER
LINE OF ALL ADJOINING STREETS AND ROADS.
Page 3 of 3
<PAGE>
EXHIBIT 10.85
AND WHEN RECORDED MAIL TO
WHEN RECORDED MAIL TO
[ ]
[ ]
- --------------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE
PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER
OR LATER SECURITY INSTRUMENT.
THIS AGREEMENT, made this ____________ day of ____________________,
19_____, by Llo-Gas, Inc. owner of the land hereinafter described and
--------------
hereinafter referred to as "Owner," and Time Out, LLC
---------------------------------------,
present owner and holder of the deed of trust and note first hereinafter
described and hereinafter referred to as "Beneficiary";
WITNESSETH
THAT WHEREAS, Llo-Gas, Inc.
-------------------------------------------------------------
did execute a deed of trust, dated October 29, 1999
--------------------------------------------,
to Time Out, LLC
----------------------------------------------------------------------------,
as trustee, covering:
THE SOUTH ONE-HALF OF THE EAST ONE-HALF OF THE EAST ONE HALF OF FARM LOT 840, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO MAP SHOWING
SUBDIVISION OF LANDS BELONG TO SEMI-TROPIC LAND AND WATER COMPANY, AS PER MAP
RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY EXCEPT THE NORTH 75 FEET OF THE EAST 160 FEET THEREOF
ALSO EXCEPTING THAT PORTION CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED
FEBRUARY 6, 1958 IN BOOK 4430 OF OFFICIAL RECORDS, PAGE 391. RECORDS OF SAID
COUNTY AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE
CENTER LINE OF ALL ADJOINING STREET AND ROADS.
to secure a note in the sum of $300,000.00 , dated
----------------------------------------
October 29, 1999 , in favor of Time Out, LLC , which deed of trust
- --------------------- -----------------------
was recorded on ________________________________, in book _____________ page
________________ Official Records of said county; and
WHEREAS, Owner has executed, or is about to execute, a deed of trust and
note in the sum of $ 200,000.00 , dated __________________
---------------------------------
____________________________, in favor of Capstone Financial
-------------------------------------,
hereinafter referred to as "Lender," payable with interest and upon the terms
and conditions described therein, which deed of trust is to be recorded
concurrently herewith; and
WHEREAS, it is a condition precedent to obtaining said loan that said deed
of trust last above mentioned shall unconditionally be and remain at all times a
lien or charge upon the land hereinbefore described, prior and superior to the
lien or charge of the deed of trust first above mentioned; and
WHEREAS, Lender is willing to make said loan provided the deed of trust
securing the same is a lien or charge upon the above described property prior
and superior to the lien or charge of the deed of trust first above mentioned
and provided that Beneficiary will specifically and unconditionally subordinate
the lien or charge of the deed of trust first above mentioned to the lien or
charge of the deed of trust in favor of Lender; and
<PAGE>
WHEREAS, it is to the mutual benefit of the parties hereto that Lender make
such loan to Owner; and Beneficiary is willing that the deed of trust securing
the same shall, when recorded, constitute a lien or charge upon said land which
is unconditionally prior and superior to the lien or charge of the deed of trust
first above mentioned.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the
parties herein and other valuable consideration, the receipt and sufficiency of
which consideration is hereby acknowledged, and in order to induce Lender to
make the loan above referred to, it is hereby declared, understood and agreed as
follows:
(1) That said deed of trust securing said note in favor of Lender, and
any renewals or extensions thereof, shall unconditionally be and remain at
all times a lien or charge on the property therein described, prior to and
superior to the lien or charge of the deed of trust first above mentioned.
(2) That Lender would not make its loan above described without this
subordination agreement.
(3) That this agreement shall be the whole and only agreement with
regard to the subordination of the lien or charge of the deed of trust
first above mentioned to the lien or charge of the deed of trust in favor
of Lender above referred to and shall supersede and cancel, but only
insofar as would affect the priority between the deed of trust hereinbefore
specifically described, any prior agreements as to such subordination,
including, but not limited to, those provisions, if any, contained in the
deed of trust first above mentioned, which provide for the subordination of
the lien or charge thereof to another deed or deeds of trust or to another
mortgage or mortgages.
Beneficiary declares, agrees and acknowledges that
(a) He consents to and approves (i) all provisions of the note and
deed of trust in favor of Lender above referred to, and (ii) all
agreements, including but not limited to any loan or escrow agreements,
between Owner and Lender for the disbursement of the proceeds of Lender's
loan;
(b) Lender in making disbursements pursuant to any such agreement is
under no obligation or duty to, nor has Lender represented that it will,
see to the application of such proceeds by the person or persons to whom
Lender disburses such proceeds and any application or use of such proceeds
for purposes other than those provided for in such agreement or agreements
shall not defeat the subordination herein made in whole or in part;
(c) He intentionally and unconditionally waives, relinquishes and
subordinates the lien or charge of the deed of trust first above mentioned
in favor of the lien or charge upon said land of the deed of trust in favor
of Lender above referred to and understands that in reliance upon, and in
consideration of, this waiver, relinquishment and subordination specific
loans and advances are being and will be made and, as part and parcel
thereof, specific monetary and other obligations are being and will be
entered into which would not be made or entered into but for said reliance
upon this waiver, relinquishment and subordination; and
(d) An endorsement has been placed upon the note secured by the deed
of trust first above mentioned that said deed of trust has by this
instrument been subordinated to the lien or charge of the deed of trust in
favor of Lender above referred to.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE
PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF
WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND.
<PAGE>
Time Out, LLC Llo-Gas, Inc.
------------- -------------
/s/ John Castellucci
- ------------------------------ --------------------------------
By: James Borba Beneficiary By: John Castellucci Owner
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
<PAGE>
Exhibit 10.87
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
[RECORDER'S STAMP]
UNIVERSAL TITLE ESCROW
1205 E. Chapman Ave
Orange, CA 92866
- --------------------------------------------------------------------------------
MODIFICATION TO DEED OF TRUST AND RIDER
THAT CERTAIN DEED OF TRUST DATED: October 29, 1999 AND RECORDED ON November 3
------------------ -----------
1999 As instrument No. 19990459020 , WHEREIN Llo Gas, Inc. WAS TRUSTOR AND
----------------
SBS TRUST DEED NETWORK, WAS TRUSTEE, AND TIME OUT LLC WAS BENEFICIARY, COVERING
THE PROPERTY LEGALLY DESCRIBED AS: SEE EXHIBIT "A" FOR LEGAL DESCRIPTION, IS
HEREBY MODIFIED IN THE FOLLOWING PARTICULARS ONLY:
RIDER TO NOTE & DEED OF TRUST IS MODIFIED TO DELETE ITEM 2)
ALL OTHER TERMS AND CONDITIONS OF SAID DEED OF TRUST AND RIDER TO NOTE & DEED OF
TRUST REMAIN UNAFFECTED AND IN FULL FORCE AND EFFECT.
DATED: November 23, 1999
------------------------------
Llo-Gas, INC., a Delaware corporation TIME OUT LLC, a California limited
liability company
/s/ John Castellucci /s/ James Borba
- ------------------------------------- -----------------------------------
BY: John Castellucci, CEO/Chairman BY: James Borba, Managing Member
/s/ Joseph Borba
-----------------------------------
By: Joseph Borba
STATE OF California
------------------
COUNTY OF Orange
-----------------
On November 23, 1999 before me Mildred N. Cork ,
-------------------------- ---------------------------
personally appeared John Castellucci
-----------------------------------------------
[_] personally known to me OR [_] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument
[NOTARY SEAL] 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.
<PAGE>
WITNESS my hand and official seal.
/s/ Mildred N. Cork
------------------------------------
SIGNATURE OF NOTARY
STATE OF CALIFORNIA }
COUNTY OF Orange } SS.
--------------
On December 10, 1999 before me
--------------------------- --------
Mildred N. Cork [FOR NOTARY SEAL OR STAMP]
- ------------------------------------------------,
personally appeared James A. Borba and Joseph Borba
---------------------------------
_____________________________________________________
_____________________________________________________
personally known to me (or proved to me on the basis of [NOTARY SEAL]
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.
WITNESS my hand and official seal.
Signature /s/ Mildred N. Cork
--------------------------------
<PAGE>
Exhibit "A"
The land referred to in this report is situated in the County of SAN BERNARDINO,
State of California and described as follows:
Legal Description:
THE SOUTH ONE-HALF OF THE EAST ONE-HALF OF THE EAST ONE-HALF OF FARM LOT 840, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO MAP SHOWING
SUBDIVISION OF LANDS BELONG TO SEMI-TROPIC LAND AND WATER COMPANY, AS PER MAP
RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY.
EXCEPT THE NORTH 75 FEET OF THE EAST 180 FEET THEREOF.
ALSO EXCEPTING THAT PORTION CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED
FEBRUARY 6, 1958 IN BOOK 4430 OF OFFICIAL RECORDS, PAGE 391, RECORDS OF SAID
COUNTY.
AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER
LINE OF ALL ADJOINING STREETS AND ROADS.
