Preview
1 Gerald M. Murphy (SBN 99994)
LUBIN OLSON & NIEWIADOMSKI LLP
2 The Transamerica Pyramid ELECTRONICALLY
600 Montgomery Street, 14th Floor
3 San Francisco, California 94111 FILED
Superior Court of California,
Telephone: (415) 981-0550 County of San Francisco
4 Facsimile: (415) 981-4343
gmurphy@lubinolson.com 03/07/2024
Clerk of the Court
5 BY: JAMES FORONDA
Attorneys for Plaintiff Deputy Clerk
6 ROTH JACKSON LLC, a Delaware limited
liability company
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SAN FRANCISCO
10
CGC-24-612922
11 ROTH JACKSON LLC, a Delaware limited Case No.
liability company,
12 COMPLAINT FOR BREACH OF
Plaintiff, CONTRACT AND GUARANTY
13
v.
14
SCOTT ALLEY ASSOCIATES, LLC, a
15 California limited liability company; ALBERT
CHEN, an individual, STEPHEN CHEN, an
16 individual and JOHN CHU, an individual; and
DOES 1 through 10,
17
Defendants.
18
19 Plaintiff Roth Jackson LLC, a Delaware limited liability company (“Plaintiff” or
20 “Landlord”), for its complaint against Scott Alley Associates, LLC, a California limited liability
21 company; Albert Chen, an individual, Stephen Chen, an individual and John Chu, an individual;
22 and Does 1 through 10 (collectively, “Defendants”), and each of them, alleges as follows:
23 THE PARTIES
24 1. Plaintiff Roth Jackson LLC is a limited liability company duly organized and
25 existing under the laws of the State of Delaware and is authorized to do business in the State of
26 California with its address for service of process in California at 330 N. Brand Boulevard,
27 Glendale, California. Plaintiff is the owner of that commercial building situated 244 Jackson
28 Street, San Francisco, California, in which the below described Premises are located, and Landlord
02767.00008/1340080v1 1
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 under the Lease described below.
2 2. Plaintiff is informed and believes, and thereon alleges, that Defendant Scott Alley
3 Associates, LLC, (“SAA” or “Tenant”) is, and at all times herein mentioned, a limited liability
4 company organized and existing under the laws of the State of California and is authorized to do
5 business in the State of California with its principal place of business at 244 Jackson Street, San
6 Francisco, California 94111. SAA is the tenant under the Lease described below.
7 3. Plaintiff is informed and believes, and thereon alleges, that Defendant Albert Chen
8 (“Albert” or “Guarantor”) is, and at all times herein mentioned was an individual residing in the
9 City and County of San Francisco. Albert is a guarantor of the obligations of SAA under the
10 Lease described below.
11 4. Plaintiff is informed and believes, and thereon alleges, that Defendant Stephen
12 Chen (“Stephen” or “Guarantor”) is, and at all times herein mentioned was an individual residing
13 in the City of San Leandro and County of Alameda. Stephen is a guarantor of the obligations of
14 SAA under the Lease described below.
15 5. Plaintiff is informed and believes, and thereon alleges, that Defendant John Chu
16 (“John” or “Guarantor”) is, and at all times herein mentioned was an individual residing in the
17 City of Castro Valley and County of Alameda. John is a guarantor of the obligations of SAA
18 under the Lease described below. (Albert, Stephen and John are collectively referred to as
19 “Defendant Guarantors”)
20 6. Plaintiff is ignorant of the true names and capacities of Defendants Does 1 through
21 10, inclusive, and therefore sues each of these Defendants by such fictitious names. Plaintiff will
22 amend this complaint to show the true names and capacities of these defendants when ascertained.
23 Plaintiff is informed and believes that each of the Defendants, including each fictitiously named
24 defendant, is liable in some manner for the events referred to in the complaint.
25 7. Plaintiff alleges on information and belief that at all times mentioned herein, each
26 of the Defendants was and now is the agent, servant, employee, representative and/or alter ego of
27 each of the other Defendants, and in doing the things hereinafter mentioned, was acting within the
28 scope of his/her authority as such agent, servant, employee, representative and/or alter ego, with
02767.00008/1340080v1 2
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 the permission and consent of the remaining Defendants.
2 VENUE
3 8. Venue is proper in the City and County of San Francisco because this is the county
4 where the written lease and guaranty contracts at issue, regarding the lease of 244 Jackson Street
5 in San Francisco, California, were made and were to be performed, where the obligation or
6 liability arose, and where the breach occurred.
7 FIRST CAUSE OF ACTION
8 (Breach of Contract)
9 9. Plaintiff repleads, realleges, and incorporates by reference the allegations contained
10 in the paragraphs set forth above, as though set forth herein in full.
11 10. Baner-Los Robles Investments, as landlord (“Original Landlord”), entered into that
12 Restaurant Lease, dated July 16, 2003 (“Original Lease”), with Sprezzatura Restaurant Group,
13 LLC, as tenant (“Original Tenant”), for those certain premises commonly known as the ground
14 floor and portion of lower level of 244 Jackson Street, San Francisco, California, consisting of
15 5,112 usable square feet on the ground floor and 3,725 usable square feet on the lower level,
16 including storage for an aggregate of 8,837 usable square feet, excluding the area designated on
17 Exhibit A attached to the Lease as Blg. Service Area #1 (“Music Room”), unless included
18 pursuant to Section 1(b) of the Lease (“Premises”). Attached hereto as Exhibit A is a true and
19 correct copy of the July 16, 2023 Original Lease.
20 11. At some point prior to March 6, 2012, Original Tenant assigned its interest in the
21 Original Lease to Defendant SAA. On March 6, 2012, Original Landlord and SAA, as Tenant,
22 executed the Fourth Amendment to Lease.
23 12. At some point prior to January 19, 2019, Original Landlord assigned its interest in
24 the Original Lease to Plaintiff Roth Jackson LLC. On January 30, 2019, Plaintiff Roth Jackson
25 LLC, as landlord and Defendant SAA as tenant entered into the “Sixth” Amendment to Lease.
26 13. The Original Lessee, as amended five times (the first amendment was mis-
27 numbered as the second amendment and each amendment third through sixth thereafter was
28 likewise mis-numbered), was most recently amended on September 23, 2021 by that
02767.00008/1340080v1 3
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 Reinstatement and Sixth Amendment to Restaurant Lease (collectively the “Lease”). A true and
2 correct copy of the Reinstatement and Sixth Amendment to Lease (“Sixth Amendment”) is
3 attached hereto as Exhibit B.
4 14. The Sixth Amendment provides Defendant shall pay a flat sum of $41,000.00 per
5 month for base rent and operating expenses. The Sixth Amendment also provided for the original
6 security deposit to be increased to $165,312.00.
7 15. Defendant SAA made partial payments of $20,0000.00 during the period June
8 through October 2023, and stopped paying rent altogether in November 2023. The current amount
9 owing as of March 1, 2024 is $289,000.00.
10 16. After applying the security deposit to any costs to repair and return the premises to
11 broom clean condition reasonable wear and tear excepted, the remaining amount of the security
12 deposit will be applied toward amount outstanding amount of unpaid rent. Said net amount will
13 be determined at trial.
14 17. In January 2024 it became apparent to Plaintiff that Defendant was no longer
15 occupying the Premises. On January 23, 2024, Plaintiff served Defendant in the manner required
16 by law a Notice of Belief of Abandonment under California Civil Code Section 1951.35, including
17 a lease termination date of February 9, 2024. Attached hereto as Exhibit C is a true and correct
18 copy of the January 23, 2024 Notice of Belief of Abandonment.
19 18. As of February 9, 2024, Defendant did not respond to the Notice of Belief of
20 Abandonment and accordingly the lease was terminated on that date. The expiration date of the
21 Lease is March 31, 2024.
22 19. Plaintiff has performed all covenants and conditions required of it to be performed
23 under the Lease.
24 20. Defendant has breached the Lease, as described above, and caused damage to
25 Plaintiff in the amount set forth above, $289,000, plus the amounts described in Section 14 (b)(ii)
26 of the Lease and Civil Code Sections 1951.2(a), (b) and (d) including any other amounts and costs
27 of court necessary to compensate Plaintiff for the detriment proximately caused by Defendants’
28 default, less any remaining amount of the security deposit, which net total amount of which shall
02767.00008/1340080v1 4
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 be proved at trial.
2 21. Pursuant to paragraph 23 of the Lease, in any action brought to enforce or for the
3 breach of the Lease, the prevailing a party in such action shall be entitled to recover its reasonable
4 attorneys fees. Plaintiff has engaged the law firm of Lubin, Olson & Niewiadomski LLP to
5 prosecute this action for breach of the Lease and has incurred and will continue to incur fees
6 through the trial of this action.
7 SECOND CAUSE OF ACTION
8 (Action on Guaranty)
9 22. Plaintiff repleads, realleges, and incorporates by reference the allegations contained
10 in the paragraphs forth above, as though set forth herein in full.
11 23. On September 23, 2021, Defendant Guarantors executed the Guaranty of all of
12 Defendant SAA’s obligations under the Lease. Attached hereto as Exhibit D is a true and correct
13 copy of the Guaranty. The Guaranty was and is a condition to the Lease and an inducement to
14 Plaintiff to enter and execute the Sixth Amendment to Lease, dated September 23, 2021.
15 24. Defendant Guarantors agreed in the Guaranty that it was absolutely, irrevocably
16 and unconditionally obligated as a primary obligor, and not as a surety, to pay, without deduction
17 or offset, all sums of rent and other charges payable by Defendant SAA under the Lease, and that
18 such guaranteed obligations shall continue and terminate only up full and complete performance
19 of the guaranteed obligations.
20 25. Defendant SAA breached the Lease as set forth in the First Cause of Action.
21 26. On February 13, 2024 Plaintiff delivered the a notice of default to the Guarantor
22 Defendants, demanding the sum of unpaid rent and other charges due under the Lease as of that
23 time totaling $289,000.00, which represents the amount of rent outstanding as of March 1, 2024
24 which amount may be reduced to reflect the application of the remaining security deposit.
25 27. Guarantor has failed to pay the guaranteed obligations described above, and
26 Plaintiff has been damaged, as set forth in paragraph 20 above, an amount that exceeds the
27 jurisdictional minimum of the Court to be proved at trial.
28 28. Paragraph 1 (iii) of the Guaranty provides that the Guarantor Defendants shall pay
02767.00008/1340080v1 5
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 to Plaintiff all costs and expenses related to the enforcement of the Guaranty, including its
2 attorneys’ fees and collection costs. Plaintiff has engaged the law firm of Lubin, Olson &
3 Niewiadomski LLP to prosecute this action for breach of the Lease and has incurred and will
4 continue to incur fees through the trial of this action.
5 PRAYER
6 WHEREFORE, Plaintiff seeks judgment against Defendants, as follows:
7 As to the First Cause of Action Against Scott Alley, LLC
8 1. For judgment in the sum of at least $289,000.00 plus such additional amounts of
9 due under the Lease as described in paragraph 14 of the Lease, less any unapplied amount
10 remaining on the security deposit, as shall be proved at trial.
11 2. For pre-judgment and post-judgment interest on money damages to the maximum
12 extent allowed by law and/or as provided by the terms of the Lease;
13 3. For costs of suit and
14 4. For reasonable Attorneys’ fees pursuant to the Lease and Civil Code Section 1717;
15 and,
16 5. For such other relief as the Court deems proper.
17 As to the Second Cause of Action Against the Guarantor Defendants)
18 6. For judgment in the sum of at least $289,000.00, plus such additional amounts of
19 base rent and other charges due described in paragraph 14 of the Lease, less any unapplied
20 amounts remaining on the security deposit as shall be proved at trial;
21 7. For pre-judgment and post-judgment interest on money damages to the maximum
22 extent allowed by law and/or as provided by the terms of the Lease;
23 8. For costs of suit
24 9. For reasonable Attorneys’ fees pursuant to the Guaranty and Civil Code Section
25 1717; and;
26 10. For such other relief as the Court deems proper.
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02767.00008/1340080v1 6
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
1 Dated: March 7, 2024 LUBIN OLSON & NIEWIADOMSKI LLP
2
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By:
4 Gerald M. Murphy
Attorneys for Plaintiff
5 ROTH JACKSON LLC, a Delaware limited liability
company
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02767.00008/1340080v1 7
COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY
EXHIBIT A
RESTAURANT LEASE
BASIC LEASE INFORMATION
In the event of any conflict between the Basic Lease Information and any other Lease provision,
such other Lease provision shall control.
DATE OF LEASE: July 16, 2003
BUILDING AND PROPERTY: 244 Jackson Street
San Francisco, California
LANDLORD AND ADDRESS: BANER-LOS ROBLES INVESTMENTS
c/o William B. Baner
220 Jackson Street, 3rd floor
San Francisco, California 94111
Phone: 415 362-2844
TENANT AND ADDRESS FOR
NOTICES: Sprezzatnra Restaurant Group, LLC
c/o Andrew McCormack
555 California Street, Suite 4360
San Francisco, California 94104
PREMISES: Ground Floor and portion of lower level of Property known
as 244 Jackson Street.
SIZE OF PREMISES: 5,112 usable square feet on the ground floor and 3,725
usable sqnare feet on the lower level, including storage for
an aggregate of 8,837 usable square feet, excluding the area
designated on Exhibit A attached hereto as Blg. Service
Area #1 ("Music Room"), unless included pursuant to
S.ection 1(b)
TERM: 10 years
RENEWAL OPTION: Two 5-year options
ESTIMATED RENT
COMMENCEMENT DATE: March 10, 2004 (240 days after the Date of Lease)
ESTIMATED EXPIRATION
DATE: March 31, 2014
The Expiration Date shall be on the last day of the month
/]f)1c: Ltx> that is the last day of the calendar month in which occurs
th
F the 1o annual anniversary of the Rent Commencement
Date.
1
1235765.03
INITIAL BASE RENT: Months Monthly Base Rent
. 1ij,/I :-1-12 $20,000.00
(1/.1/.Ji'- ; 13-24 $20,600.00
'1/1/ut· '1/,/(!_25--36 $21,218.00
1.!J'' ',,
J; , - ! .
·
I
].•J7-48 $21.854.54
.y N,s · •' 1•/" '49-60 $22,510.18
61-72
i-1/1/J(~ i!Ji(I/, $23,185.48
!;J;/J;)-'i/'1 73-84 11 $23,881.05
.. 85-96 $24,597.48 ' ii
'//;/ri ,,1;,; 97-108 $25,335.40 ,-
109-120 $26,095.46
The Base Rent for the first month of the Term shall be paid
upon execution of this Lease by Tenant.
SIZE OF BUILDING: 24,496 usable square feet
TENANT'S PERCENTAGE
SHARE:
USE: Operation of a full service restaurant, including a catering
business, with a bar and/or lounge. A portion of tqe
Premises may be used for a smoking room, provided that
such use complies with all applicable Legal Requirements.
A portion of the Premises may be used for Tenant's general
office operations.
Subject to compliance with all Legal Requirements, the
Use may include the services of a disc jockey; however, the
Lease is not conditioned upon Tenant's ability to obtain or
continue in effect any approvals or permits with respect to
the Use.
SECURITY DEPOSIT: $60,000.00
The Security Deposit shall be paid upon Tenant's execution
of this Lease.
LANDLORD'S BROKER: Stanners & Associates
69 Sunshine A venue
Sausalito, California 94965
Grubb & Ellis
255 California Street
San Francisco, California 94111
2
1235765.03
TENANT'S BROKER: Ritchie Commercial
351 California Street
San Francisco, California 94104
3
1235765.03
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SPREZZATURA RESTAURANT GRP LLC
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SPREZZATURA RESTAURANT GRP LLC
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RESTAURANT LEASE
THIS LEASE, which is effective as of the date set forth in the Basic Lease Information,
is entered by Landlord and Tenant, as set forth in the Basic Lease Information. Terms, which are
capitalized in this Lease, shall have the meanings set forth in the Basic Lease Information.
1. PREMISES
(a) Premises. Landlord leases to Tenant, and Tenant leases from Landlord, the
Premises described in the Basic Lease Information (as described on Exhibit A), together with the
license in common with other tenants and occupants, if any, of the Building to use the Common
Areas (as hereinafter defined).
(b) Music Room. The Premises does not include the area marked as the "Music
Room". Landlord agrees to use commercially reasonable efforts to relocate the existing tenant
from the Music Room and if Landlord is able to so relocate such tenant, such area shall be
included as part of the Premises. Tenant shall pay the actual out of pocket costs and expenses
incurred by Landlord in connection with the relocation of the tenm1ts from the Music Room,
including, without limitation, any costs of terminating the. lease with the tenant in the Music
Room and relocating such tenant. The Music Room is presently under lease to a tenant and
Landlord is under no obligation to terminate such lease.
(c) Common Areas. The Common Areas shall mean the areas within the Building
provided and designated by Landlord for the general use, convenience or benefit of Tenant and
other tenants and occupants, if any, of the Property; provided, however, that the Common Areas
shall not include the existing elevator, the lobby serving the office portion of the Building or the
existing stairs, except to the extent that they are used by Tenant to service the lower level
("Excluded Common Areas"). Notwithstanding the foregoing, prior to the substantial
completion of the Tenant Improvements in accordance with the Workietter, Tenant shall be
entitled to use the existing elevator, the building lobby and the existing stairs (collectively, the
"Limited Lobby Usage") prior to Tenant's completion of construction of the 2-stop elevator and
stairs within the Premises, which Tenant agrees to constmct pursuant to the Workietter; provided
that (i) the use of the elevator is scheduled during non-business hours (i.e., on weekends or
between 6 p.m. and 7 a.m. on weekdays); (ii) Tenant notifies Landlord prior to such usage and
Landlord may supervise such work; (iii) Tenant shall properly prepare such elevator for caffying
freight to the reasonable satisfaction of Landlord; and (iv) Tenant shall, at its sole cost and
expense, repair and restore the lobby, stairs and elevator to the condition existing prior to the
Limited Lobby Usage. Landlord reserves the right to make changes to the Common Areas and
to withdraw property from the Common Areas and to establish time periods for customers' usage
of the Common Areas so long as Tenant's access and Use me not adversely affected. The
Building and the Common Areas are collectively referred to in this Lease as the "Property"
which consists of a mixed-use retail and office complex. Reference herein to the "Building"
includes all leasable space and Common Areas located therein. The size of the Premises and the
Building have been stipulated to by Landlord and Tenant for all purposes of this Lease and shall
not be subject to remeasurement during the Term. Landlord and Tenant acknowledge that certain
utility lines connected to the Premises, will run through that portion of the Common Areas
designated on Exhibit A attached hereto as "Building Service Area #2," and Landlord agrees that
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1235765.03
Tenant shall have access to Building Service Area #2 for the purpose of inspecting, serv1cmg,
and repairing such lines upon reasonable prior notice to Landlord; provided however that Tenant
shall have access thereto twenty--four (24) hours per day, seven (7) days per week in the event of
an emergency. Tenant agrees to service any lines collecting grease qnarterly unless more
frequent servicing is reasonably recommended by Landlord or by such contractor. Landlord
agrees to require any tenant storing personal property in Building Service Area #2 to elevate
such storage to at least six inches (6") above the t1oor.
(d) Parking. During the Tenn, Tenant may, subject to compliance with Legal
Requirements, without payment of additional amounts to Landlord, designate up to 4 parking
spaces directly in front of the Premises for exclusive use by Tenant, including but not limited to
valet parking, customer drop off, delivery and loading. Tenant shall comply with any and all
reasonable parking mies and regnlations from time to time established by Landlord. Such spaces
are presently public spaces and Landlord makes no representations or warranties as to whether
the City of San Francisco will permit Tenant to have exclusive use of such spaces or to limit the
public's use of such spaces.
2. TERM
(a) Lease Term. The term of this Lease (the "Term") shall commence on the Date of
Lease (as defined in the Basic Lease Information) and, unless terminated on an earlier date in
accordance with the terms of this Lease, shall end on the Expiration Date, except as otherwise
provided in this Lease and Landlord shall deliver possession of the Premises to Tenant on the
later of the Date of Lease or the date that Tenant provides Landlord with evidence of the
insurance required to be obtained by Tenant hereunder.
(b) Rent Commencement Date. The Rent Commencement Date shall be the earlier of
(i) 240 days after the date of delivery of the Premises to Tenant for construction of Tenant
Improvements or (ii) the date that Tenant opens the Premises for business for the Use, provided,
however that the Use shall not include private parties for a soft "opening" of the restaurant which
are not open to the general public.
(c) Condition of Premises.
(i) On the Date of Lease, the Premises shall be delivered to Tenant broom
clean and washed and free of asbestos and with respect to any walls or areas which will not be
demolished during constmction of Tenant Improvements, free of mold, but otherwise in its then
"as-is" condition and Landlord shall not have any obligation to make or pay for any alterations,
additions, improvements or repairs to prepai.-e the Premises for Tenant's occupancy. Landlord
shall, at its election, either remove such mold or, after receiving an estimate of the cost of
removing such mold that is approved by Landlord and Tenant, provide Tenant with an allowance
covering the cost of such removal which Tenant shall remove during the construction of its
Tenant Improvements.
(ii) The "as-is" condition includes the following improvements: all plumbing
for water is.stubbed to the lower level; HVAC is stubbed to the ground level; electrical power is
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1235765.03
800 amps, 120/208V 3 Phase, 4 Wire; the Premises has a 2 inch gas line stubbed to the Premises
with ventilation vault.
(iii) Tenant shall perform alterations to the Premises in accordance with
Exhibit B attached hereto and made a pmt hereof (the "Workletter"). Appropriate noise
abatement insulation designed to minimize the level of noise capable of being heard in any rental
space above the Premises shall be incorporated by Tenant into the improvements to be
constructed by Tenant pursuant to Workletter.
(iv) The Base Rent has been established based upon the agreement by Tenant
to perform alterations to the Premises in accordance with the Workletter. The failure by Tenant
to commence and/or complete construction and installation of the Tenant Improvements in
accordance with the terms and conditions set forth in the Workletter shall be an Event of Default
under this Lease and in addition to Landlord's other rights and remedies under this Lease and
applicable law, Landlord shall have the right to obtain specific performance of Tenant's
obligations under the Workletter.
(d) Rent Commencement Date Memorandum. When the Rent Commencement Date
is determined, the parties shall execute a Rent Commencement Date Memorandum, in the form
attached hereto as Exhibit C, setting forth the Rent Commencement Dates and the Expiration
Date and confirming the other information set forth therein. If Tenant fails to enter into such
agreement, then the Rent Commencement Date and the Expiration Date shall be the dates
designated by Landlord in such agreement, subject to Tenant's right to contest snch date by
appropriate legal action.
(e) Early Entry. The entry by Tenant into the Premises prior to the Rent
Commencement Date shall be subject to all the terms and provisions of this Lease, except that
Tenant's obligation to pay Base Rent, and Operating Expenses (as defined in Section 4 (c) and
Taxes (as defined in Section 4(d)) shall not commence until the Rent Commencement Date.·
3. RENT
(a) Rent. As used in this Lease, the term "Rent" shall include: (i) Base Rent; (ii)
Operating Expenses and Taxes; and (iii) all other amounts which Tenant is obligated to pay
under the terms of this Lease. All amounts of money payable by Tenant to Landlord shall be
paid without prior notice or demand, deduction or offset. Commencing on the Rent
Commencement Date, Tenant shall pay monthly Rent for the Premises in advance on the first
day of each month of the Term, to Landlord (or other entity designated by Landlord), in advance,
at Landlord's address for notices (as set forth in the Basic Lease Information) or at such other
address as Landlord may designate, without any prior demand therefor and without any
deduction or offset whatsoever. The initial Base Rent shall be the amount set forth in the Basic
Lease Infonnation. Tenant's covenant to pay Rent shall be independent of every other covenant
in this Lease.
(b) Proration of Rent. If the Rent Commencement Date is not the first day of a
calendar month, or if the end of the Term is not the last day of a calendar month, Base Rent,
Taxes and Operating Expenses payable by Tenant, shall be prorated on a daily basis (based upon
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1235765.03
a thirty (30) clay month) for such fractional month. If any elate on which Base Rent is to be
adjusted hereunder is not the first clay of a calendar month, Base Rent payable by Tenant for such
calendar month shall be prorated on a daily basis (based on the number of days in such month) to
take into account the differing Base Rent rates. The termination of this Lease shall not affect the
obligations of Landlord and Tenant herenncler for amounts accrued as of the date of terrnination.
(c) Late Charge; Interest Rate.
(i) If any installment of Base Rent, Operating Expenses, or Taxes is not paid
by Tenant by the fifth (5t11) clay of the month, or if any payment of any other amonnt payable by
Tenant is not paid within five (5) clays of the due date thereof, Tenant shall pay to Landlord a late
payment charge eqnal to five percent (5%) of such amount, in addition to the amount of Rent
then owing, regardless of whether a notice of default or notice of termination has been given by
Landlord.
(ii) In addition to the late charge, any Base Rent, Operating Expenses or other
amounts owing hereunder which are not paid within five (5) days after the date they are clue shall
thereafter bear interest at the rate ("Interest Rate") which is the lesser of four percent (4%) above
the publicly announced prime rate (sometimes referred to as such bank's reference rate) charged
on such due elate by the San Francisco Main Office of Bank of America, NA (or any successor
bank thereto) (or if there is no such publicly announced rate, the rate quoted by such bank in
pricing ninety (90) day commercial loans to substantial commercial borrowers) or the maximum
rate permitted by applicable law.
(iii) Notwithstanding the foregoing, Landlord shall provide Tenant with
written notice and five (5) days in which to cure such default one time during each calendar year
of the Term prior to the imposition of a late charge or interest at the Interest Rate.
(iv) Payment of interest at the Interest Rate and/or of late charges shall not
excuse or cure any default of Tenant under this Lease nor prevent Landlord from exercising any
right or remedy available to Landlord upon an Event of Default.
4. OPERATING EXPENSES, TAXES AND DIRECT REIMBURSEMENT EXPENSES
(a) Payment of Operating Expenses, Taxes and Direct Reimbursement Expenses.
Tenant shall pay for each year of the Term (i) Tenant's Percentage Share of the Operating
Expenses (as hereinafter defined in 4.c.), (ii) Tenant's Percentage Share of Taxes (as hereinafter
defined in 4.cl) and (iii) Tenant's Direct Reimbursement Expenses (as defined in 4.e)
(collectively, "Rent Adjustnients") as follows:
(i) Tenant shall pay monthly, together with the Base Rent, an amount equal to
Landlord's estimate of the Rent Adjustments attributable to each month of the applicable Lease
year ("Rent Adjustment Deposit"). On or before the beginning of the first Lease year, Landlord
may estimate and notify Tenant in writing of its estimate of the Direct Reimbursement Expenses
for such Lease year. On or before the beginning of each subsequent Lease year, or with
Landlord's Annual Statement (as hereinafter defined in 4.b.), Landlord may estimate and notify
Tenant in writing of its estimate of the Operating Expenses, Taxes and Direct Reimbursement
Expenses for such Lease year. The last estimate by Landlord shall remain in effect as the
7
1235765.03
applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a
change, which notice may be given by Landlord from time to dme during a Lease year.
(ii) Tenant shall also pay within thirty (30) days after submission of any
Annual Statement, any Rent Adjustments which are cine in excess of the Rent Adjustment
Deposits made by Tenant for such Lease year.
(b) Operating Expenses and Taxes for Calendar Year 2004. Although Tenant shall
pay Tenant's Share of the Actual Operating Expenses and Taxes for calendar year 2004,
Tenant's estimated payments will be approximately $3,140.00 per month, snbject to adjustment.
(c) Annual Statement.
(i) Landlord will furnish Tenant a statement ("Annual Statement") showing
(i) Operating Expenses, Taxes and Direct Reimbursement Expenses for the calendar year; (ii) the
amount of Rent Adjustments due Landlord for the last calendar year, less credit for Rent
Adjustment Deposits paid, if any; and (iii) any change in the Rent Adjustment Deposit due
monthly in the current calendar year, including the amount or revised amount due for months
preceding any such change pursuant to the Annual Statement. Landlord shall use commercially
reasonable efforts to provide a complete Annual Statement by July 1 of each year.
(ii) Tenant shall pay to Landlord within thirty (30) days after receipt of such
statement any amounts for Rent Adjustments then due in accordance with the Annual Statement.
Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent
Adjustment Deposit next coming due, or refunded to Tenant if the Term bas already expired
provided Tenant is not in default hereunder. Landlord's failure to deliver an Annual Statement
or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of
its right to deliver such items nor constitute a waiver or release of Tenant's obligations to pay
such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for
the applicable calendar year. During the last complete calendar year or during any partial
calendar year in which the Lease terminates, Landlord may include in the Rent Adjustment
Deposit its estimate of Rent Adjustments which may not be finally determined until after the
termination of this Lease. Tenant's obligation to pay Rent Adjustments that accrued during the
Term shall survive the expiration or termination of the Lease.
(iii) The Annual Statement shall be certified by Landlord. The Annual
Statement shall be binding upon Landlord and Tenant except as otherwise provided herein.
Landlord shall maintain books and records showing Direct Reimbursement Expenses, Operating
Expenses and Taxes in accordance with sound . accounting and management practices,
consistently applied. Tenant or its representative (which representative shall be a certified public
accountant licensed to do business in California and whose primary business is certified public
accounting and not an entity employed on a contingency fee basis) shall have the right, for a
period of four (4) months following the date upon which the Annual Statement is delivered to
Tenant, to examine the Landlord's books and records with respect to the items in the foregoing
statement of Direct Reimbursement Expenses, Operating Expenses and Taxes during normal
business hours upon written notice, delivered at least three (3) business days in advance. If
Tenant does not object in writing to the Annual Statement within six (6) months of Tenant's
8
1235765.03
receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then the
Annual Statement shall be considered final and accepted by Tenant. If Tenant disputes the
Annual Statement, it shall provide a copy of its audit report, if any, to Landlord at the time of
such written objection. If an adjudication of any disputed Annual Statement results in a
discrepancy of 3 % or more between the Annual Statement and the actual expenses, Landlord
shall pay the cost of the audit. Any amount due to Landlord as shown on the Annual Statement,
whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as
provided above, without prejudice to any such written objection.
(cl) Definition of Onerating Exnenses.
(i) "Operating Expenses" are costs, expenses and disbursements which
Landlord shall pay or become obligated to pay in connection with the management, operation,
maintenance, replacement and repair of the Building and Common Area which are not Direct
Reimbursement Expenses. Operating Expenses shall include but not be limited to (i) business
taxes; (ii) office expenses of Landlord directly attributed to the management and operation of the
Property; (iii) the costs of all supplies and materials (including work clothes and uniforms, based
upon the portion of such person's time allocated to the Property) used in the operation, repair,
maintenance and security; (iii) cost of performance by Landlord's personnel of, or of all service
agreements for, maintenance, and landscaping, excluding maintenance and repair on the
Excluded Common Areas; acc.ess control and alarm service (such cost shall include the rental of
personal property used by Landlord's personnel in the maintenance and repair); (iv) the
establishment of a maintenance reserve for categories of expenses that constitute Operating
Expenses; (v) insurance premiums, accounting costs and reasonable legal fees actually incurred
by Landlord or paid by Landlord to third parties for the Property (exclusive of legal fees with
respect to disputes with individual tenants, negotiations of tenant leases, or the sale or
refinancing of the Property, none of which shall be included as an Operating Expense); (vi) cost
of repairs and general maintenance for any portion of the Property (including, without limitation,
signage, sidewalks, roof, and exterior facade), excluding the Excluded Common Areas; (vii) cost
of improvements or equipment which are capital in nature and which are for the purpose of
reducing Operating Expenses or complying with applicable laws affecting the Property
excluding the Excluded Common Areas which are enacted after the Rent Commencement Date
of the Lease, all such costs, including interest actually paid by Landlord in connection with such
capital improvements or equipment (or at a market rate of imputed interest if self-financed by
Landlord), shall be amortized on a straight-line basis over the useful life of the capital investment
items or the pay back period, as reasonably determined by Landlord; (viii) if the Property is
managed by a third party or by Landlord, a management fee which is not in excess of the
management fee that would be charged by a bona fide, reputable third party manager. If any
Operating Expense, though paid in one year, relates to more than one calendar year, such
expense shall be proportionately allocated among such related calendar years. Operating
Expenses for the Building that are not, in Landlord's reasonable discretion, allocable solely to
either the office or retail portion of the Property shall be equitably allocated by Landlord
between and charged to the office and retail portions of the Property.
(ii) Operating Expenses shall not include, (i) costs of alterations of the
premises of tenants of the Property, (ii) except as expressly provided above, costs of capital
improvements to the Property (except for amortized portion of capital improvements instaUed for
9
1235765.03
the purpose of reducing or controlling Operating Expenses or complying with applicable laws),
(iii) depreciation charges, (iv) interest and principal payments on loans (except for loans for
capital improvements which Landlord is allowed to include in Operating Expenses as provided
above), (v) ground rental payments, (vi) real estate brokerage and leasing commissions,
(vii) advertising and mmketing expenses, (viii) costs of Landlord reimbursed by insurance
proceeds or condemnation proceeds or
Preview
1 Gerald M. Murphy (SBN 99994) LUBIN OLSON & NIEWIADOMSKI LLP 2 The Transamerica Pyramid ELECTRONICALLY 600 Montgomery Street, 14th Floor 3 San Francisco, California 94111 FILED Superior Court of California, Telephone: (415) 981-0550 County of San Francisco 4 Facsimile: (415) 981-4343 gmurphy@lubinolson.com 03/07/2024 Clerk of the Court 5 BY: JAMES FORONDA Attorneys for Plaintiff Deputy Clerk 6 ROTH JACKSON LLC, a Delaware limited liability company 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SAN FRANCISCO 10 CGC-24-612922 11 ROTH JACKSON LLC, a Delaware limited Case No. liability company, 12 COMPLAINT FOR BREACH OF Plaintiff, CONTRACT AND GUARANTY 13 v. 14 SCOTT ALLEY ASSOCIATES, LLC, a 15 California limited liability company; ALBERT CHEN, an individual, STEPHEN CHEN, an 16 individual and JOHN CHU, an individual; and DOES 1 through 10, 17 Defendants. 18 19 Plaintiff Roth Jackson LLC, a Delaware limited liability company (“Plaintiff” or 20 “Landlord”), for its complaint against Scott Alley Associates, LLC, a California limited liability 21 company; Albert Chen, an individual, Stephen Chen, an individual and John Chu, an individual; 22 and Does 1 through 10 (collectively, “Defendants”), and each of them, alleges as follows: 23 THE PARTIES 24 1. Plaintiff Roth Jackson LLC is a limited liability company duly organized and 25 existing under the laws of the State of Delaware and is authorized to do business in the State of 26 California with its address for service of process in California at 330 N. Brand Boulevard, 27 Glendale, California. Plaintiff is the owner of that commercial building situated 244 Jackson 28 Street, San Francisco, California, in which the below described Premises are located, and Landlord 02767.00008/1340080v1 1 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 under the Lease described below. 2 2. Plaintiff is informed and believes, and thereon alleges, that Defendant Scott Alley 3 Associates, LLC, (“SAA” or “Tenant”) is, and at all times herein mentioned, a limited liability 4 company organized and existing under the laws of the State of California and is authorized to do 5 business in the State of California with its principal place of business at 244 Jackson Street, San 6 Francisco, California 94111. SAA is the tenant under the Lease described below. 7 3. Plaintiff is informed and believes, and thereon alleges, that Defendant Albert Chen 8 (“Albert” or “Guarantor”) is, and at all times herein mentioned was an individual residing in the 9 City and County of San Francisco. Albert is a guarantor of the obligations of SAA under the 10 Lease described below. 11 4. Plaintiff is informed and believes, and thereon alleges, that Defendant Stephen 12 Chen (“Stephen” or “Guarantor”) is, and at all times herein mentioned was an individual residing 13 in the City of San Leandro and County of Alameda. Stephen is a guarantor of the obligations of 14 SAA under the Lease described below. 15 5. Plaintiff is informed and believes, and thereon alleges, that Defendant John Chu 16 (“John” or “Guarantor”) is, and at all times herein mentioned was an individual residing in the 17 City of Castro Valley and County of Alameda. John is a guarantor of the obligations of SAA 18 under the Lease described below. (Albert, Stephen and John are collectively referred to as 19 “Defendant Guarantors”) 20 6. Plaintiff is ignorant of the true names and capacities of Defendants Does 1 through 21 10, inclusive, and therefore sues each of these Defendants by such fictitious names. Plaintiff will 22 amend this complaint to show the true names and capacities of these defendants when ascertained. 23 Plaintiff is informed and believes that each of the Defendants, including each fictitiously named 24 defendant, is liable in some manner for the events referred to in the complaint. 25 7. Plaintiff alleges on information and belief that at all times mentioned herein, each 26 of the Defendants was and now is the agent, servant, employee, representative and/or alter ego of 27 each of the other Defendants, and in doing the things hereinafter mentioned, was acting within the 28 scope of his/her authority as such agent, servant, employee, representative and/or alter ego, with 02767.00008/1340080v1 2 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 the permission and consent of the remaining Defendants. 2 VENUE 3 8. Venue is proper in the City and County of San Francisco because this is the county 4 where the written lease and guaranty contracts at issue, regarding the lease of 244 Jackson Street 5 in San Francisco, California, were made and were to be performed, where the obligation or 6 liability arose, and where the breach occurred. 7 FIRST CAUSE OF ACTION 8 (Breach of Contract) 9 9. Plaintiff repleads, realleges, and incorporates by reference the allegations contained 10 in the paragraphs set forth above, as though set forth herein in full. 11 10. Baner-Los Robles Investments, as landlord (“Original Landlord”), entered into that 12 Restaurant Lease, dated July 16, 2003 (“Original Lease”), with Sprezzatura Restaurant Group, 13 LLC, as tenant (“Original Tenant”), for those certain premises commonly known as the ground 14 floor and portion of lower level of 244 Jackson Street, San Francisco, California, consisting of 15 5,112 usable square feet on the ground floor and 3,725 usable square feet on the lower level, 16 including storage for an aggregate of 8,837 usable square feet, excluding the area designated on 17 Exhibit A attached to the Lease as Blg. Service Area #1 (“Music Room”), unless included 18 pursuant to Section 1(b) of the Lease (“Premises”). Attached hereto as Exhibit A is a true and 19 correct copy of the July 16, 2023 Original Lease. 20 11. At some point prior to March 6, 2012, Original Tenant assigned its interest in the 21 Original Lease to Defendant SAA. On March 6, 2012, Original Landlord and SAA, as Tenant, 22 executed the Fourth Amendment to Lease. 23 12. At some point prior to January 19, 2019, Original Landlord assigned its interest in 24 the Original Lease to Plaintiff Roth Jackson LLC. On January 30, 2019, Plaintiff Roth Jackson 25 LLC, as landlord and Defendant SAA as tenant entered into the “Sixth” Amendment to Lease. 26 13. The Original Lessee, as amended five times (the first amendment was mis- 27 numbered as the second amendment and each amendment third through sixth thereafter was 28 likewise mis-numbered), was most recently amended on September 23, 2021 by that 02767.00008/1340080v1 3 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 Reinstatement and Sixth Amendment to Restaurant Lease (collectively the “Lease”). A true and 2 correct copy of the Reinstatement and Sixth Amendment to Lease (“Sixth Amendment”) is 3 attached hereto as Exhibit B. 4 14. The Sixth Amendment provides Defendant shall pay a flat sum of $41,000.00 per 5 month for base rent and operating expenses. The Sixth Amendment also provided for the original 6 security deposit to be increased to $165,312.00. 7 15. Defendant SAA made partial payments of $20,0000.00 during the period June 8 through October 2023, and stopped paying rent altogether in November 2023. The current amount 9 owing as of March 1, 2024 is $289,000.00. 10 16. After applying the security deposit to any costs to repair and return the premises to 11 broom clean condition reasonable wear and tear excepted, the remaining amount of the security 12 deposit will be applied toward amount outstanding amount of unpaid rent. Said net amount will 13 be determined at trial. 14 17. In January 2024 it became apparent to Plaintiff that Defendant was no longer 15 occupying the Premises. On January 23, 2024, Plaintiff served Defendant in the manner required 16 by law a Notice of Belief of Abandonment under California Civil Code Section 1951.35, including 17 a lease termination date of February 9, 2024. Attached hereto as Exhibit C is a true and correct 18 copy of the January 23, 2024 Notice of Belief of Abandonment. 19 18. As of February 9, 2024, Defendant did not respond to the Notice of Belief of 20 Abandonment and accordingly the lease was terminated on that date. The expiration date of the 21 Lease is March 31, 2024. 22 19. Plaintiff has performed all covenants and conditions required of it to be performed 23 under the Lease. 24 20. Defendant has breached the Lease, as described above, and caused damage to 25 Plaintiff in the amount set forth above, $289,000, plus the amounts described in Section 14 (b)(ii) 26 of the Lease and Civil Code Sections 1951.2(a), (b) and (d) including any other amounts and costs 27 of court necessary to compensate Plaintiff for the detriment proximately caused by Defendants’ 28 default, less any remaining amount of the security deposit, which net total amount of which shall 02767.00008/1340080v1 4 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 be proved at trial. 2 21. Pursuant to paragraph 23 of the Lease, in any action brought to enforce or for the 3 breach of the Lease, the prevailing a party in such action shall be entitled to recover its reasonable 4 attorneys fees. Plaintiff has engaged the law firm of Lubin, Olson & Niewiadomski LLP to 5 prosecute this action for breach of the Lease and has incurred and will continue to incur fees 6 through the trial of this action. 7 SECOND CAUSE OF ACTION 8 (Action on Guaranty) 9 22. Plaintiff repleads, realleges, and incorporates by reference the allegations contained 10 in the paragraphs forth above, as though set forth herein in full. 11 23. On September 23, 2021, Defendant Guarantors executed the Guaranty of all of 12 Defendant SAA’s obligations under the Lease. Attached hereto as Exhibit D is a true and correct 13 copy of the Guaranty. The Guaranty was and is a condition to the Lease and an inducement to 14 Plaintiff to enter and execute the Sixth Amendment to Lease, dated September 23, 2021. 15 24. Defendant Guarantors agreed in the Guaranty that it was absolutely, irrevocably 16 and unconditionally obligated as a primary obligor, and not as a surety, to pay, without deduction 17 or offset, all sums of rent and other charges payable by Defendant SAA under the Lease, and that 18 such guaranteed obligations shall continue and terminate only up full and complete performance 19 of the guaranteed obligations. 20 25. Defendant SAA breached the Lease as set forth in the First Cause of Action. 21 26. On February 13, 2024 Plaintiff delivered the a notice of default to the Guarantor 22 Defendants, demanding the sum of unpaid rent and other charges due under the Lease as of that 23 time totaling $289,000.00, which represents the amount of rent outstanding as of March 1, 2024 24 which amount may be reduced to reflect the application of the remaining security deposit. 25 27. Guarantor has failed to pay the guaranteed obligations described above, and 26 Plaintiff has been damaged, as set forth in paragraph 20 above, an amount that exceeds the 27 jurisdictional minimum of the Court to be proved at trial. 28 28. Paragraph 1 (iii) of the Guaranty provides that the Guarantor Defendants shall pay 02767.00008/1340080v1 5 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 to Plaintiff all costs and expenses related to the enforcement of the Guaranty, including its 2 attorneys’ fees and collection costs. Plaintiff has engaged the law firm of Lubin, Olson & 3 Niewiadomski LLP to prosecute this action for breach of the Lease and has incurred and will 4 continue to incur fees through the trial of this action. 5 PRAYER 6 WHEREFORE, Plaintiff seeks judgment against Defendants, as follows: 7 As to the First Cause of Action Against Scott Alley, LLC 8 1. For judgment in the sum of at least $289,000.00 plus such additional amounts of 9 due under the Lease as described in paragraph 14 of the Lease, less any unapplied amount 10 remaining on the security deposit, as shall be proved at trial. 11 2. For pre-judgment and post-judgment interest on money damages to the maximum 12 extent allowed by law and/or as provided by the terms of the Lease; 13 3. For costs of suit and 14 4. For reasonable Attorneys’ fees pursuant to the Lease and Civil Code Section 1717; 15 and, 16 5. For such other relief as the Court deems proper. 17 As to the Second Cause of Action Against the Guarantor Defendants) 18 6. For judgment in the sum of at least $289,000.00, plus such additional amounts of 19 base rent and other charges due described in paragraph 14 of the Lease, less any unapplied 20 amounts remaining on the security deposit as shall be proved at trial; 21 7. For pre-judgment and post-judgment interest on money damages to the maximum 22 extent allowed by law and/or as provided by the terms of the Lease; 23 8. For costs of suit 24 9. For reasonable Attorneys’ fees pursuant to the Guaranty and Civil Code Section 25 1717; and; 26 10. For such other relief as the Court deems proper. 27 28 02767.00008/1340080v1 6 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY 1 Dated: March 7, 2024 LUBIN OLSON & NIEWIADOMSKI LLP 2 3 By: 4 Gerald M. Murphy Attorneys for Plaintiff 5 ROTH JACKSON LLC, a Delaware limited liability company 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 02767.00008/1340080v1 7 COMPLAINT FOR BREACH OF CONTRACT AND GUARANTY EXHIBIT A RESTAURANT LEASE BASIC LEASE INFORMATION In the event of any conflict between the Basic Lease Information and any other Lease provision, such other Lease provision shall control. DATE OF LEASE: July 16, 2003 BUILDING AND PROPERTY: 244 Jackson Street San Francisco, California LANDLORD AND ADDRESS: BANER-LOS ROBLES INVESTMENTS c/o William B. Baner 220 Jackson Street, 3rd floor San Francisco, California 94111 Phone: 415 362-2844 TENANT AND ADDRESS FOR NOTICES: Sprezzatnra Restaurant Group, LLC c/o Andrew McCormack 555 California Street, Suite 4360 San Francisco, California 94104 PREMISES: Ground Floor and portion of lower level of Property known as 244 Jackson Street. SIZE OF PREMISES: 5,112 usable square feet on the ground floor and 3,725 usable sqnare feet on the lower level, including storage for an aggregate of 8,837 usable square feet, excluding the area designated on Exhibit A attached hereto as Blg. Service Area #1 ("Music Room"), unless included pursuant to S.ection 1(b) TERM: 10 years RENEWAL OPTION: Two 5-year options ESTIMATED RENT COMMENCEMENT DATE: March 10, 2004 (240 days after the Date of Lease) ESTIMATED EXPIRATION DATE: March 31, 2014 The Expiration Date shall be on the last day of the month /]f)1c: Ltx> that is the last day of the calendar month in which occurs th F the 1o annual anniversary of the Rent Commencement Date. 1 1235765.03 INITIAL BASE RENT: Months Monthly Base Rent . 1ij,/I :-1-12 $20,000.00 (1/.1/.Ji'- ; 13-24 $20,600.00 '1/1/ut· '1/,/(!_25--36 $21,218.00 1.!J'' ',, J; , - ! . · I ].•J7-48 $21.854.54 .y N,s · •' 1•/" '49-60 $22,510.18 61-72 i-1/1/J(~ i!Ji(I/, $23,185.48 !;J;/J;)-'i/'1 73-84 11 $23,881.05 .. 85-96 $24,597.48 ' ii '//;/ri ,,1;,; 97-108 $25,335.40 ,- 109-120 $26,095.46 The Base Rent for the first month of the Term shall be paid upon execution of this Lease by Tenant. SIZE OF BUILDING: 24,496 usable square feet TENANT'S PERCENTAGE SHARE: USE: Operation of a full service restaurant, including a catering business, with a bar and/or lounge. A portion of tqe Premises may be used for a smoking room, provided that such use complies with all applicable Legal Requirements. A portion of the Premises may be used for Tenant's general office operations. Subject to compliance with all Legal Requirements, the Use may include the services of a disc jockey; however, the Lease is not conditioned upon Tenant's ability to obtain or continue in effect any approvals or permits with respect to the Use. SECURITY DEPOSIT: $60,000.00 The Security Deposit shall be paid upon Tenant's execution of this Lease. LANDLORD'S BROKER: Stanners & Associates 69 Sunshine A venue Sausalito, California 94965 Grubb & Ellis 255 California Street San Francisco, California 94111 2 1235765.03 TENANT'S BROKER: Ritchie Commercial 351 California Street San Francisco, California 94104 3 1235765.03 '' ' ! I i! ! I ' i ' -- ----'- ' -·r :,: >- if> if> 0 <: z w 0: z ., "':,:0w 0 0: jO 0 ::, 0 5 0 0 r . ! CITY NATIONAL BANK PRIVATE CLIENT SERVICES SAN FRANCISCO, CA 94111 TOTAL ITEMS c __ I __J $ Foo tJ o .o <> Clfl()VF$i()lNA(,'1f"t:>,[NI 1006 SPREZZATURA RESTAURANT GRP LLC Date J~li It I UJ; '3, SS-7265/212 1s';~1~~~l~ f¾Y\ / J ~ ln~_e,~.005_---+--7 ,c__:L-L--'------'-C.,,_ _ ____, $ 001(ff)-0D ';)l'i,4-lliQv_C, AfJD Db~S ?r~?li\&_'--Sc==--=---~--- - - - - - - ~ - - Dollars SMlTHlli\RNEY D o ( FINANCIAL MANAGEMENT ACCOUNT &00-634-98S5 Citibank F.S.B. Englewood Cliffs, N.J. 1007 SPREZZATURA RESTAURANT GRP LLC J{;_// /~_ 2/JD3ff'·""m' Date .LJLLL.::.!..!.!.£.LL.f..L.0Lf.=,_k'._v_!.LIL-"=c:____ _ _ U 1 m. oD _____J $ {TI ... '°'""" '"'"" 0•'"."" RESTAURANT LEASE THIS LEASE, which is effective as of the date set forth in the Basic Lease Information, is entered by Landlord and Tenant, as set forth in the Basic Lease Information. Terms, which are capitalized in this Lease, shall have the meanings set forth in the Basic Lease Information. 1. PREMISES (a) Premises. Landlord leases to Tenant, and Tenant leases from Landlord, the Premises described in the Basic Lease Information (as described on Exhibit A), together with the license in common with other tenants and occupants, if any, of the Building to use the Common Areas (as hereinafter defined). (b) Music Room. The Premises does not include the area marked as the "Music Room". Landlord agrees to use commercially reasonable efforts to relocate the existing tenant from the Music Room and if Landlord is able to so relocate such tenant, such area shall be included as part of the Premises. Tenant shall pay the actual out of pocket costs and expenses incurred by Landlord in connection with the relocation of the tenm1ts from the Music Room, including, without limitation, any costs of terminating the. lease with the tenant in the Music Room and relocating such tenant. The Music Room is presently under lease to a tenant and Landlord is under no obligation to terminate such lease. (c) Common Areas. The Common Areas shall mean the areas within the Building provided and designated by Landlord for the general use, convenience or benefit of Tenant and other tenants and occupants, if any, of the Property; provided, however, that the Common Areas shall not include the existing elevator, the lobby serving the office portion of the Building or the existing stairs, except to the extent that they are used by Tenant to service the lower level ("Excluded Common Areas"). Notwithstanding the foregoing, prior to the substantial completion of the Tenant Improvements in accordance with the Workietter, Tenant shall be entitled to use the existing elevator, the building lobby and the existing stairs (collectively, the "Limited Lobby Usage") prior to Tenant's completion of construction of the 2-stop elevator and stairs within the Premises, which Tenant agrees to constmct pursuant to the Workietter; provided that (i) the use of the elevator is scheduled during non-business hours (i.e., on weekends or between 6 p.m. and 7 a.m. on weekdays); (ii) Tenant notifies Landlord prior to such usage and Landlord may supervise such work; (iii) Tenant shall properly prepare such elevator for caffying freight to the reasonable satisfaction of Landlord; and (iv) Tenant shall, at its sole cost and expense, repair and restore the lobby, stairs and elevator to the condition existing prior to the Limited Lobby Usage. Landlord reserves the right to make changes to the Common Areas and to withdraw property from the Common Areas and to establish time periods for customers' usage of the Common Areas so long as Tenant's access and Use me not adversely affected. The Building and the Common Areas are collectively referred to in this Lease as the "Property" which consists of a mixed-use retail and office complex. Reference herein to the "Building" includes all leasable space and Common Areas located therein. The size of the Premises and the Building have been stipulated to by Landlord and Tenant for all purposes of this Lease and shall not be subject to remeasurement during the Term. Landlord and Tenant acknowledge that certain utility lines connected to the Premises, will run through that portion of the Common Areas designated on Exhibit A attached hereto as "Building Service Area #2," and Landlord agrees that 4 1235765.03 Tenant shall have access to Building Service Area #2 for the purpose of inspecting, serv1cmg, and repairing such lines upon reasonable prior notice to Landlord; provided however that Tenant shall have access thereto twenty--four (24) hours per day, seven (7) days per week in the event of an emergency. Tenant agrees to service any lines collecting grease qnarterly unless more frequent servicing is reasonably recommended by Landlord or by such contractor. Landlord agrees to require any tenant storing personal property in Building Service Area #2 to elevate such storage to at least six inches (6") above the t1oor. (d) Parking. During the Tenn, Tenant may, subject to compliance with Legal Requirements, without payment of additional amounts to Landlord, designate up to 4 parking spaces directly in front of the Premises for exclusive use by Tenant, including but not limited to valet parking, customer drop off, delivery and loading. Tenant shall comply with any and all reasonable parking mies and regnlations from time to time established by Landlord. Such spaces are presently public spaces and Landlord makes no representations or warranties as to whether the City of San Francisco will permit Tenant to have exclusive use of such spaces or to limit the public's use of such spaces. 2. TERM (a) Lease Term. The term of this Lease (the "Term") shall commence on the Date of Lease (as defined in the Basic Lease Information) and, unless terminated on an earlier date in accordance with the terms of this Lease, shall end on the Expiration Date, except as otherwise provided in this Lease and Landlord shall deliver possession of the Premises to Tenant on the later of the Date of Lease or the date that Tenant provides Landlord with evidence of the insurance required to be obtained by Tenant hereunder. (b) Rent Commencement Date. The Rent Commencement Date shall be the earlier of (i) 240 days after the date of delivery of the Premises to Tenant for construction of Tenant Improvements or (ii) the date that Tenant opens the Premises for business for the Use, provided, however that the Use shall not include private parties for a soft "opening" of the restaurant which are not open to the general public. (c) Condition of Premises. (i) On the Date of Lease, the Premises shall be delivered to Tenant broom clean and washed and free of asbestos and with respect to any walls or areas which will not be demolished during constmction of Tenant Improvements, free of mold, but otherwise in its then "as-is" condition and Landlord shall not have any obligation to make or pay for any alterations, additions, improvements or repairs to prepai.-e the Premises for Tenant's occupancy. Landlord shall, at its election, either remove such mold or, after receiving an estimate of the cost of removing such mold that is approved by Landlord and Tenant, provide Tenant with an allowance covering the cost of such removal which Tenant shall remove during the construction of its Tenant Improvements. (ii) The "as-is" condition includes the following improvements: all plumbing for water is.stubbed to the lower level; HVAC is stubbed to the ground level; electrical power is 5 1235765.03 800 amps, 120/208V 3 Phase, 4 Wire; the Premises has a 2 inch gas line stubbed to the Premises with ventilation vault. (iii) Tenant shall perform alterations to the Premises in accordance with Exhibit B attached hereto and made a pmt hereof (the "Workletter"). Appropriate noise abatement insulation designed to minimize the level of noise capable of being heard in any rental space above the Premises shall be incorporated by Tenant into the improvements to be constructed by Tenant pursuant to Workletter. (iv) The Base Rent has been established based upon the agreement by Tenant to perform alterations to the Premises in accordance with the Workletter. The failure by Tenant to commence and/or complete construction and installation of the Tenant Improvements in accordance with the terms and conditions set forth in the Workletter shall be an Event of Default under this Lease and in addition to Landlord's other rights and remedies under this Lease and applicable law, Landlord shall have the right to obtain specific performance of Tenant's obligations under the Workletter. (d) Rent Commencement Date Memorandum. When the Rent Commencement Date is determined, the parties shall execute a Rent Commencement Date Memorandum, in the form attached hereto as Exhibit C, setting forth the Rent Commencement Dates and the Expiration Date and confirming the other information set forth therein. If Tenant fails to enter into such agreement, then the Rent Commencement Date and the Expiration Date shall be the dates designated by Landlord in such agreement, subject to Tenant's right to contest snch date by appropriate legal action. (e) Early Entry. The entry by Tenant into the Premises prior to the Rent Commencement Date shall be subject to all the terms and provisions of this Lease, except that Tenant's obligation to pay Base Rent, and Operating Expenses (as defined in Section 4 (c) and Taxes (as defined in Section 4(d)) shall not commence until the Rent Commencement Date.· 3. RENT (a) Rent. As used in this Lease, the term "Rent" shall include: (i) Base Rent; (ii) Operating Expenses and Taxes; and (iii) all other amounts which Tenant is obligated to pay under the terms of this Lease. All amounts of money payable by Tenant to Landlord shall be paid without prior notice or demand, deduction or offset. Commencing on the Rent Commencement Date, Tenant shall pay monthly Rent for the Premises in advance on the first day of each month of the Term, to Landlord (or other entity designated by Landlord), in advance, at Landlord's address for notices (as set forth in the Basic Lease Information) or at such other address as Landlord may designate, without any prior demand therefor and without any deduction or offset whatsoever. The initial Base Rent shall be the amount set forth in the Basic Lease Infonnation. Tenant's covenant to pay Rent shall be independent of every other covenant in this Lease. (b) Proration of Rent. If the Rent Commencement Date is not the first day of a calendar month, or if the end of the Term is not the last day of a calendar month, Base Rent, Taxes and Operating Expenses payable by Tenant, shall be prorated on a daily basis (based upon 6 1235765.03 a thirty (30) clay month) for such fractional month. If any elate on which Base Rent is to be adjusted hereunder is not the first clay of a calendar month, Base Rent payable by Tenant for such calendar month shall be prorated on a daily basis (based on the number of days in such month) to take into account the differing Base Rent rates. The termination of this Lease shall not affect the obligations of Landlord and Tenant herenncler for amounts accrued as of the date of terrnination. (c) Late Charge; Interest Rate. (i) If any installment of Base Rent, Operating Expenses, or Taxes is not paid by Tenant by the fifth (5t11) clay of the month, or if any payment of any other amonnt payable by Tenant is not paid within five (5) clays of the due date thereof, Tenant shall pay to Landlord a late payment charge eqnal to five percent (5%) of such amount, in addition to the amount of Rent then owing, regardless of whether a notice of default or notice of termination has been given by Landlord. (ii) In addition to the late charge, any Base Rent, Operating Expenses or other amounts owing hereunder which are not paid within five (5) days after the date they are clue shall thereafter bear interest at the rate ("Interest Rate") which is the lesser of four percent (4%) above the publicly announced prime rate (sometimes referred to as such bank's reference rate) charged on such due elate by the San Francisco Main Office of Bank of America, NA (or any successor bank thereto) (or if there is no such publicly announced rate, the rate quoted by such bank in pricing ninety (90) day commercial loans to substantial commercial borrowers) or the maximum rate permitted by applicable law. (iii) Notwithstanding the foregoing, Landlord shall provide Tenant with written notice and five (5) days in which to cure such default one time during each calendar year of the Term prior to the imposition of a late charge or interest at the Interest Rate. (iv) Payment of interest at the Interest Rate and/or of late charges shall not excuse or cure any default of Tenant under this Lease nor prevent Landlord from exercising any right or remedy available to Landlord upon an Event of Default. 4. OPERATING EXPENSES, TAXES AND DIRECT REIMBURSEMENT EXPENSES (a) Payment of Operating Expenses, Taxes and Direct Reimbursement Expenses. Tenant shall pay for each year of the Term (i) Tenant's Percentage Share of the Operating Expenses (as hereinafter defined in 4.c.), (ii) Tenant's Percentage Share of Taxes (as hereinafter defined in 4.cl) and (iii) Tenant's Direct Reimbursement Expenses (as defined in 4.e) (collectively, "Rent Adjustnients") as follows: (i) Tenant shall pay monthly, together with the Base Rent, an amount equal to Landlord's estimate of the Rent Adjustments attributable to each month of the applicable Lease year ("Rent Adjustment Deposit"). On or before the beginning of the first Lease year, Landlord may estimate and notify Tenant in writing of its estimate of the Direct Reimbursement Expenses for such Lease year. On or before the beginning of each subsequent Lease year, or with Landlord's Annual Statement (as hereinafter defined in 4.b.), Landlord may estimate and notify Tenant in writing of its estimate of the Operating Expenses, Taxes and Direct Reimbursement Expenses for such Lease year. The last estimate by Landlord shall remain in effect as the 7 1235765.03 applicable Rent Adjustment Deposit unless and until Landlord notifies Tenant in writing of a change, which notice may be given by Landlord from time to dme during a Lease year. (ii) Tenant shall also pay within thirty (30) days after submission of any Annual Statement, any Rent Adjustments which are cine in excess of the Rent Adjustment Deposits made by Tenant for such Lease year. (b) Operating Expenses and Taxes for Calendar Year 2004. Although Tenant shall pay Tenant's Share of the Actual Operating Expenses and Taxes for calendar year 2004, Tenant's estimated payments will be approximately $3,140.00 per month, snbject to adjustment. (c) Annual Statement. (i) Landlord will furnish Tenant a statement ("Annual Statement") showing (i) Operating Expenses, Taxes and Direct Reimbursement Expenses for the calendar year; (ii) the amount of Rent Adjustments due Landlord for the last calendar year, less credit for Rent Adjustment Deposits paid, if any; and (iii) any change in the Rent Adjustment Deposit due monthly in the current calendar year, including the amount or revised amount due for months preceding any such change pursuant to the Annual Statement. Landlord shall use commercially reasonable efforts to provide a complete Annual Statement by July 1 of each year. (ii) Tenant shall pay to Landlord within thirty (30) days after receipt of such statement any amounts for Rent Adjustments then due in accordance with the Annual Statement. Any amounts due from Landlord to Tenant pursuant to this Section shall be credited to the Rent Adjustment Deposit next coming due, or refunded to Tenant if the Term bas already expired provided Tenant is not in default hereunder. Landlord's failure to deliver an Annual Statement or to compute the amount of the Rent Adjustments shall not constitute a waiver by Landlord of its right to deliver such items nor constitute a waiver or release of Tenant's obligations to pay such amounts. The Rent Adjustment Deposit shall be credited against Rent Adjustments due for the applicable calendar year. During the last complete calendar year or during any partial calendar year in which the Lease terminates, Landlord may include in the Rent Adjustment Deposit its estimate of Rent Adjustments which may not be finally determined until after the termination of this Lease. Tenant's obligation to pay Rent Adjustments that accrued during the Term shall survive the expiration or termination of the Lease. (iii) The Annual Statement shall be certified by Landlord. The Annual Statement shall be binding upon Landlord and Tenant except as otherwise provided herein. Landlord shall maintain books and records showing Direct Reimbursement Expenses, Operating Expenses and Taxes in accordance with sound . accounting and management practices, consistently applied. Tenant or its representative (which representative shall be a certified public accountant licensed to do business in California and whose primary business is certified public accounting and not an entity employed on a contingency fee basis) shall have the right, for a period of four (4) months following the date upon which the Annual Statement is delivered to Tenant, to examine the Landlord's books and records with respect to the items in the foregoing statement of Direct Reimbursement Expenses, Operating Expenses and Taxes during normal business hours upon written notice, delivered at least three (3) business days in advance. If Tenant does not object in writing to the Annual Statement within six (6) months of Tenant's 8 1235765.03 receipt thereof, specifying the nature of the item in dispute and the reasons therefor, then the Annual Statement shall be considered final and accepted by Tenant. If Tenant disputes the Annual Statement, it shall provide a copy of its audit report, if any, to Landlord at the time of such written objection. If an adjudication of any disputed Annual Statement results in a discrepancy of 3 % or more between the Annual Statement and the actual expenses, Landlord shall pay the cost of the audit. Any amount due to Landlord as shown on the Annual Statement, whether or not disputed by Tenant as provided herein shall be paid by Tenant when due as provided above, without prejudice to any such written objection. (cl) Definition of Onerating Exnenses. (i) "Operating Expenses" are costs, expenses and disbursements which Landlord shall pay or become obligated to pay in connection with the management, operation, maintenance, replacement and repair of the Building and Common Area which are not Direct Reimbursement Expenses. Operating Expenses shall include but not be limited to (i) business taxes; (ii) office expenses of Landlord directly attributed to the management and operation of the Property; (iii) the costs of all supplies and materials (including work clothes and uniforms, based upon the portion of such person's time allocated to the Property) used in the operation, repair, maintenance and security; (iii) cost of performance by Landlord's personnel of, or of all service agreements for, maintenance, and landscaping, excluding maintenance and repair on the Excluded Common Areas; acc.ess control and alarm service (such cost shall include the rental of personal property used by Landlord's personnel in the maintenance and repair); (iv) the establishment of a maintenance reserve for categories of expenses that constitute Operating Expenses; (v) insurance premiums, accounting costs and reasonable legal fees actually incurred by Landlord or paid by Landlord to third parties for the Property (exclusive of legal fees with respect to disputes with individual tenants, negotiations of tenant leases, or the sale or refinancing of the Property, none of which shall be included as an Operating Expense); (vi) cost of repairs and general maintenance for any portion of the Property (including, without limitation, signage, sidewalks, roof, and exterior facade), excluding the Excluded Common Areas; (vii) cost of improvements or equipment which are capital in nature and which are for the purpose of reducing Operating Expenses or complying with applicable laws affecting the Property excluding the Excluded Common Areas which are enacted after the Rent Commencement Date of the Lease, all such costs, including interest actually paid by Landlord in connection with such capital improvements or equipment (or at a market rate of imputed interest if self-financed by Landlord), shall be amortized on a straight-line basis over the useful life of the capital investment items or the pay back period, as reasonably determined by Landlord; (viii) if the Property is managed by a third party or by Landlord, a management fee which is not in excess of the management fee that would be charged by a bona fide, reputable third party manager. If any Operating Expense, though paid in one year, relates to more than one calendar year, such expense shall be proportionately allocated among such related calendar years. Operating Expenses for the Building that are not, in Landlord's reasonable discretion, allocable solely to either the office or retail portion of the Property shall be equitably allocated by Landlord between and charged to the office and retail portions of the Property. (ii) Operating Expenses shall not include, (i) costs of alterations of the premises of tenants of the Property, (ii) except as expressly provided above, costs of capital improvements to the Property (except for amortized portion of capital improvements instaUed for 9 1235765.03 the purpose of reducing or controlling Operating Expenses or complying with applicable laws), (iii) depreciation charges, (iv) interest and principal payments on loans (except for loans for capital improvements which Landlord is allowed to include in Operating Expenses as provided above), (v) ground rental payments, (vi) real estate brokerage and leasing commissions, (vii) advertising and mmketing expenses, (viii) costs of Landlord reimbursed by insurance proceeds or condemnation proceeds or