Exhibit 10.2
LEASE
1. Parties. This Lease is made this __________ day of February, 1997, at
Menlo Park, California, SOLANO WAY PARTNERSHIP (hereinafter referred to as
"Lessor") and LITHIA REAL ESTATE, INC., an Oregon corporation (hereinafter
referred to as "Lessee").
2. Use and Premises. Lessor hereby leases to Lessee, and Lessee hires from
Lessor, for the purpose of conducting an automobile dealership sales and service
establishment, and purposes incidental thereto, and for no other purpose, those
certain premises with the appurtenances, buildings and improvements situated in
Concord, County of Contra Costa, State of California, and more particularly
described in Exhibit "A" attached hereto and incorporated herein by reference
(the "Premises").
3. Incorporation of Master Lease. Lessee hereby leases those premises
described in Paragraph 2 of this Lease subject to and agrees to be bound by and
shall abide by the terms and conditions of that certain lease entered into by,
and between the County of Contra Costa as Lessor ("County") and the Solano Way
Partnership as Lessee dated August 20, 1985 (the "Master Lease") as well as the
First Amendment to Lease and Consent to Assignment between the same parties
dated May 21, 1996 (the "First Amendment"); said Master Lease is attached hereto
as Exhibit "B" and the First Amendment is attached hereto as Exhibit "C" and the
terms and conditions of each are hereby incorporated by this reference as
pertains to the Premises leased hereunder.
Wherever in said Master Lease or the First Amendment, the Solano Way
Partnership shall be required to do any act or shall be obligated in any manner
with regard to the Premises leased hereunder (including the obligation not to
act in some manner), Lessee hereunder agrees to perform said acts and to assume
said obligations of the Solano Way Partnership so long as such performance
and/or assumption of obligations are not inconsistent herewith. In addition, in
the event Solano Way Partnership defaults under the Master Lease or the First
Amendment, Lessee agrees to attorn to County as if County was named as the
Lessor hereunder.
Whenever in said Master Lease or the First Amendment, the County retains or
is granted any rights with regard to the Premises or said Master Lease or the
First Amendment, including but not limited to, right of entry upon the Premises,
rights and remedies upon default of said Master Lease or the First Amendment or,
in general, rights to enforce the provisions of the Master Lease or the First
Amendment, Lessee hereunder agrees that Lessor hereunder shall have all such
right with respect to the Premises and this Lease.
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4. Term. The term of this Lease (hereinafter the "Lease Term") shall
commence on that day (hereinafter the "Sublease Commencement Date") when the
escrow closes between Lithia Motors, Inc. and Magnussen Dodge whereby Lithia
Motors, Inc. is acquiring some of the assets of Magnussen Dodge. The Lease Term
shall run concurrently with the Master Lease and the First Amendment between
Lessor and the County and therefore will terminate on August 20, 2020. For
purposes of Paragraphs 5 and 6 of this Lease, the "Sublease Years" shall be the
successive 12 month periods during the Lease Term which begin on the successive
anniversaries of the Sublease Commencement Date.
5. Rent.
(a) Lessee shall pay directly to Contra Costa County the monthly rental due
on the Master Lease and the First Amendment between Lessor and Contra Costa
County.
(b) In addition to the monthly rent payable to Contra Costa County, Lessee
shall pay to Lessor the sum of $25,000 per month for the first two Sublease
Years and $26,000 per month for the third Sublease Year.
(c) With respect to the Fourth Sublease Year and each Sublease Year
thereafter, the "Base Rent" of $26,000 per month shall be adjusted, upwards
only, to reflect any increases in the Consumer Price Index -- All Urban
Consumers (All Items, San Francisco-Oakland-San Jose, California; Base 1982-84 =
10) as published by the United States Department of Labor, Bureau of Labor
Statistics (hereinafter the "Index"). Specifically, the Index for the first
month of each Sublease Year after the third Sublease year (the "Adjustment
Date") shall be compared with the Index for the first month of the third
Sublease Year, and the Base Rent shall be increased in accordance with the
percentage increase, if any, in the Index between those respective periods. The
adjustment in rent pursuant to the two preceding sentences shall not exceed 5%
in any one Sublease Year or 15% in any period of five Sublease Years. Lessor
shall use its best efforts to calculate and give Lessee notice of any such
increase in the Base Rent on or near the Adjustment Date, and Lessee shall
commence to pay the increased Monthly Base Rent effective with the first month
of each Sublease Year. Should the Bureau of Labor Statistics discontinue the
publication of the Index, or publish the same less frequently, or alter the same
in some other manner, Lessor, in its discretion, shall adopt a substitute index
and procedure which reasonably reflects and monitors consumer prices.
6. Option to Purchase. Lessee shall have the option at any time during the
first two Sublease Years to purchase all of Lessor's improvements to the
Premises and all of Lessor's leasehold interests in the Master Lease (which
improvements and interests shall hereinafter be referred to as the "Optioned
Assets") under the terms and conditions set forth in this Paragraph 6:
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(a) Lessee shall have no right to exercise the purchase option granted
under this Paragraph 6 after the last day of the second Sublease Year. If Lessee
exercises the purchase option granted under this Paragraph 6 on or before the
last day of the second Sublease Year, then Lessee shall have the right to close
the purchase of the Optioned Assets at any time within 60 days after the date of
the notice exercising the option (even if that closing does not fall within the
first two Sublease Years).
(b) If Lessee wishes to exercise the right to purchase the Optioned Assets
pursuant to this Paragraph 6, the price for the Optioned Assets shall be
$2,500,000, payable in cash.
(c) If Lessee wishes to exercise the right to purchase the Optioned Assets
from Lessor pursuant to this Paragraph 6, Lessee shall deliver to Lessor a
written notice to that effect. Lessee shall be deemed to have exercised the
option to purchase the Optioned Assets when that written notice is delivered to
Lessor. If Lessee exercises the option to purchase the Optioned Assets from
Lessor, and if Lessee tenders to Lessor (within 60 days after the date of the
written notice) full payment for the Optioned Assets, then Lessor shall be
obligated to sell and deliver the Optioned Assets to Lessee in exchange for the
tendered purchase price and to take any and all actions and execute any and all
documents necessary to convey to Lessee good title to the Optioned Assets.
(d) The written consent of Contra Costa County to this Lease shall
constitute consent by the County to the purchase of the Optioned Assets by
Lessee from Lessor pursuant to this Paragraph 6.
7. Security Deposit. Lessee has deposited with Lessor $25,000 as security
for the full and faithful performance of each and every term, provision,
covenant and condition of this Lease. In the event Lessee defaults in respect of
any of the terms, provisions, covenants, or conditions of this Lease, including,
but not limited to the payment of rent, Lessor may use, apply or retain the
whole or any part of such security for the payment of any rent in default or for
any other sum which Lessor may spend or be required to spend by reason of
Lessee's default. Should Lessee faithfully and fully comply with all of the
terms, provisions, covenants and conditions of this Lease, upon expiration or
sooner termination of this Lease, Lessor shall return the entire security
deposit to Lessee. Otherwise, the security or any balance thereof shall be
returned to Lessee at the expiration of the term hereof or upon sooner
termination of this Lease. Lessee shall not be entitled to any interest on said
security deposit.
8. Taxes and Assessments.
(a) Lessee shall pay before delinquency any and all taxes, assessments,
license fees and public charges levied, assessed or imposed upon or against
Lessee's fixtures, equipment, furnishings, furniture, appliances and personal
property installed or located on or within the Premises. Lessee shall cause said
fixtures, equipment, furnishings, furniture, appliances and personal property
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to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay to Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement from Lessor setting forth the taxes
applicable to Lessee's property.
(b) Lessee shall pay all real property taxes or assessments, general or
special ("real property taxes") levied or assessed or hereafter levied or
assessed, by any governmental authority, against the Premises or any portion of
such taxes or assessment which becomes due or accrued during the term of this
Lease. Each year Lessor shall notify Lessee of real property taxes and
immediately on receipt of the tax bill shall furnish Lessee with a copy of the
tax bill. Lessee shall pay said real property taxes semiannually not later than
10 days before delinquency or 5 days after receipt of the Lessor's tax bill,
whichever is later.
9. Utilities. Lessee shall make all arrangements for and pay for all
utilities and services furnished to and used by it on the Premises, including,
without limitation, gas, electricity, water, telephone service, trash
collection, and for all connection charges.
10. Indemnification of Lessor. The Lessee, as a material part of the
consideration to be rendered to the Lessor, hereby waives all claims against the
Lessor for damages to goods, wares and merchandise, and all other personal
property in, upon, or about the Premises and for injuries to persons in or about
the Premises, from any cause arising at any time, excepting claims arising from
Lessor's wilful acts or gross negligence, and the Lessee will hold the Lessor
exempt and harmless and indemnify said Lessor from any damage or injury to any
person, or to the good, wares, and merchandise and all other personal property
of any person, arising from the use of the Premises by the Lessee, or from the
failure of the Lessee to keep the Premises in good condition and repair, as
herein provided.
11. Insurance.
(a) The public liability and property damage insurance and products
liability insurance which Lessee is obligated to maintain pursuant to
subparagraph 14.A. of the Master Lease shall name both the Lessor and the County
as co-insureds with the minimum combined single unit coverage for all damages
due to bodily injury or death to any person and damage to property including the
loss of use thereof, arising out of ownership, maintenance or use of the leased
premises and all operations necessary or incidental thereto being increased from
$500,000 to $5,000,000.
(b) The fire and extended coverage insurance which Lessee is obligated to
obtain and maintain pursuant to subparagraph 14.B. of the Master Lease shall
name the Lessor and the County as additional insureds.
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(c) Workers' Compensation. Lessee shall obtain and maintain workers'
compensation insurance as required by law covering all employees of Lessee.
(d) Boiler, Unusual Hazards, Other Insurance. Lessee shall procure and keep
in force in form and coverage reasonably satisfactory to County:
(i) Boiler and machinery insurance if at any time or from time to time such
equipment is located on the Premises;
(ii) If Lessee commits, permits or causes the conduct of any activity or
the bringing or operation of any equipment on or about the Premises creating
unusual hazards, Lessee shall, promptly on notice of demand from County, procure
and maintain in force during such activity or operation, insurance sufficient to
cover the risks represented thereby. County's demand for unusual hazard
insurance shall not constitute a waiver of County's right if County would
otherwise have that right, to demand the removal, cessation or abatement of such
activity or operation.
(iii) Other insurance, in amounts from time to time reasonably required by
County or Lessor, against other insurable risks, if at the time they are
commonly insured against for Premises similarly situated and containing
comparable improvements.
(e) Form of Policies. All policies of insurance required by this section
shall be in such standard form and written by such qualified insurance companies
as shall be satisfactory to Lessor and County. Evidence of such insurance shall
be provided by Lessee by filing with County and Lessor a copy of the Policy or
policies, together with a duly executed certificate to the effect that the
insurance required by this Lease is extended in favor of and consistent with the
terms set forth herein. Said policy or policies and/or certificates shall
contain a provision that written notice of cancellation or any change shall be
delivered to Lessor and County thirty (30) days in advance of the effective date
thereof.
(f) Notice. Each party hereto shall give to the other prompt and timely
notice of any claim made or suit instituted with which the party has been served
which in any way directly, contingently or otherwise, affects or might affect
the other, and both shall have the right to participate in the defense of the
same to the extent of its own interest.
12. Alterations and Additions. The Lessee shall make no alterations,
additions or improvements to the Premises or any part thereof without first
obtaining the prior written consent of Lessor, which consent shall not be
unreasonably withheld.
13. Maintenance of Premises. Lessee shall, at Lessee's sole cost, keep and
maintain the Premises, improvements, buildings, and appurtenances thereon and
every part thereof, including but not limited to parking areas, plumbing,
electrical systems, heating and
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air conditioning installation, the exterior of the walls, the structural
portifons of the roof, foundations, walls and floors as well as the interior of
the Premises in good order, condition, and repair.
14. Destruction. In the event of extensive damage (greater than twenty-five
percent (25%)) to or destruction of buildings or other improvements on the
Premises from any cause, initially Lessee shall determine whether to repair or
replace the improvements. If it is determined to repair or replace the
improvements, the proceeds of any insurance policy paid on account of such
damage or destruction shall be used by Lessee to defer the cost of repairing or
replacing the improvements. If it is determined not to repair or replace the
improvements, Lessee shall give written notice thereof to Lessor within twenty
(20) days of such damage or destruction. In such event, Lessor shall have ten
(10) days thereafter to determine whether to repair or replace the improvements.
If Lessor determines to repair or replace the improvements, the proceeds of any
insurance policy paid on account of such damage or destruction shall be used by
Lessor to defer the cost of repairing or replacing the improvements. If within
said ten (10) day period, Lessor determines not to repair or replace the
improvements, Lessor may terminate said Lease by giving written notice of same
to the Lessee and the County. In this event, the insurance proceeds shall be
paid to Lessor and thereafter distributed between Lessor and the County pursuant
to the terms of the Master Lease.
Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Lessee hereby expressly waives the
provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4 of
the California Civil Code.
15. Assignment and Subletting. The Lessee shall not assign, transfer, or
hypothecate the leasehold estate under this Lease, or any interest therein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of the Lessor, who agrees not to unreasonably withhold its consent. As a
condition to its consent, Lessor may properly require Lessee to pay all
reasonable expenses incurred by Lessor, including but not limited to reasonable
attorney fees, in connection with its approval and consent.
16. Condemnation. It is hereby agreed that the condemnation clauses
contained in Exhibit B regarding the Lessor and the County shall be fully
complied with in the event of a condemnation. It is further agreed that Lessee
hereunder shall have no interest whatsoever in any condemnation award, save and
except as may be permitted by the applicable law at that time.
17. Subordination. Lessee agrees that this Lease may, at the option of
Lessor, be subject and subordinate to any mortgage, deed
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of trust or other instrument of security which has been or shall be placed upon
the leasehold estate and any and all building improvements thereon and this
subordination is hereby made effective without any further act of Lessee. The
Lessee shall, at anytime hereafter, on demand, execute any instruments,
releases, or other documents that may be required by any mortgagee, mortgagor,
or trustor or beneficiary under any deed of trust for the purpose of subjecting
and subordinating this Lease to the lien of any such mortgage, deed or trust or
other instrument of security, and the failure of the Lessee to execute any such
instruments, releases or documents, shall constitute a default hereunder.
In this connection, in the event of a proceeding to foreclose any leasehold
mortgage, Lessee agrees to attorn the leasehold mortgagee, or any person so
designated in a notice from the leasehold mortgage.
Notwithstanding any other provision of this Paragraph 17, any subordination
of Lessee's interests in or under this Lease Agreement or the Leasehold estate
or the Premises shall be subject to the condition that Lessee's leasehold
interests hereunder shall remain in full force and effect and that Lessee shall
not be disturbed in the event of any sale, foreclosure or other action with
respect to the Premises so long as Lessee is not in default under the terms of
this Lease. Stated differently, the subordination of Lessee's interest to any
existing or new mortgage or trust deed is expressly conditioned upon the
agreement by the lienor or encumbrancer to simultaneously enter into an
agreement, in recordable form, which by its terms is binding upon the lienor or
encumbrancer and its successors and assigns, whereby the lienor or encumbrancer
agrees that in the event it should become necessary to foreclose said lien or
encumbrance, then the lienor or encumbrancer will cause the sale of the Premises
to be subject to this Lease and the rights of the Lessee hereunder, provided
only that the Lessee is not in default under any of the terms, conditions or
covenants of this Lease at the time of that foreclosure.
18. Acknowledgment of Option Agreement. The parties acknowledge that the
Lessor has granted to Chrysler Realty Corporation certain options affecting the
leased premises, pursuant to Option Agreements, dated September 5, 1985. Under
the terms and conditions of said option agreements, Lessee can sell, lease,
sublease, or assign his rights to the Premises leased hereunder, provided: (a)
concurrent with or prior to said sale, lease, sublease or assignment, the
proposed purchaser, lessee, sublessee or assignee shall have entered into a
Direct Dealer Sales Agreement with Chrysler Corporation relative to the
Premises. Lessee agrees that it shall not sell, lease, sublease or assign its
rights to the Premises leased hereunder unless it complies with the condition
set forth in (a) above, and unless it first obtains the prior written consent of
Lessor which consent shall not be unreasonably withheld. Further, Lessee
acknowledges that in the event Lessee, its successors, assigns, or sublessees
shall cease to use the Premises and the property for a purpose including the
selling and servicing
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of Chrysler Corporation products, that the Chrysler option to purchase or lease
the Premises and to assume the rights and duties of the option under the Master
Lease shall immediately become effective, and if Chrysler Realty Corporation
then elects to exercise said options, the rights of the Lessee, sublessee,
purchaser or assignee shall immediately terminate. No exercise of said options
pursuant to said Option Agreements shall constitute a breach or default of the
terms and conditions of this Lease, notwithstanding that this Lease may
terminate as a result thereof.
19. Lessee's Default. The occurrence of any of the following shall
constitute a default by Lessee:
(a) Failure to pay any amount of rent (including taxes or other sums which
are directed to be paid as rent under the Master Lease) within twenty (20) days
after notice is given by County or Lessor (whichever occurs first) to cure the
default.
(b) Failure to perform any other provision of this Lease if the failure to
perform is not cured within 30 days after notice has been given to Lessee. If
the default can not reasonably be cured within 30 days, Lessee shall not be in
default of Lease if Lessee commences to cure the default within the 30 day
period and diligently and in good faith continues to cure the default.
(c) The appointment of a receiver to take possession of the Premises or
improvements or of Lessee's interest in the leasehold estate or of Lessee's
operations on the Premises for any reason.
(d) An assignment by Lessee for the benefit of creditors or the filing of a
voluntary or involuntary petition by or against Lessee under any law for the
purpose of adjudicating Lessee a bankrupt; or for extending time for payment,
adjustment or satisfaction of Lessee's liabilities; or for reorganization,
dissolution or arrangement on account of or to prevent bankruptcy or insolvency,
unless the assignment or proceedings, and all subsequent orders, adjudications,
custodies and supervisions, are dismissed, vacated, or otherwise permanently
stayed or terminated within 60 days after the assignment, filing or other
initial event.
Notices given under this paragraph shall specify the alleged default and
the applicable Lease provision, and shall demand Lessee perform the provisions
of this Lease or pay the rent that is in arrears, as the case may be, within the
applicable period of time, or quit the Premises. No such notice shall be deemed
a forfeiture or a termination of this Lease unless Lessor so elects in the
notice.
20. Lessor's Remedies. In the event of any breach of this Lease by the
Lessee, or an abandonment of the Premises by the Lessee, the Lessor has the
option of 1) removing all persons and property from the Premises and
repossessing the Premises in which case any of the Lessee's property which the
Lessor removes from the Premises may be stored in a public warehouse or
elsewhere at the cost of, and for the account of Lessee, or 2) allowing the
Lessee
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to remain in full possession and control of the Premises. If the Lessor chooses
to repossess the Premises, the Lease will automatically terminate in accordance
with provisions of the California Civil Code, Section 1951.2. In the event of
such termination of the Lease, the Lessor may recover from the Lessee: 1) the
worth at the time of award of the unpaid rent which has been earned at the time
of termination; 2) 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 exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; 3) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and 4) any other amount necessary to compensate the Lessor
for all the detriment proximately caused by the Lessee's failure to perform his
obligations under the Lease or which in the ordinary course of things would be
likely to result therefrom. If the Lessor chooses not to repossess the Premises,
but allows the Lessee to remain in full possession and control of the Premises,
then in accordance with provisions of the California Civil Code, Section 1951.4,
the Lessor may treat the Lease as being in full force and effect, and may
collect from the Lessee all rents as they become due through the termination
date of the Lease as specified in the Lease. For the purposes of this paragraph,
the following do not constitute a termination of Lessee's right to possession:
(a) Acts of maintenance or preservation or efforts to relet the property.
(b) The appointment of a recover on the initiative of the Lessor to protect
his interest under this Lease.
21. Late Charges. Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within twenty (20) days after such amount shall be
due, Lessee shall owe and shall pay unto Lessor a late charge equal to five
percent (5%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's default with respect to such
overdue amount, nor prevent Lessor from exercising any of the other rights and
remedies granted hereunder.
22. Entry by Lessor. Lessor shall permit Lessor and his agents to enter
into and upon the Premises at all reasonable times for the purpose of inspecting
same.
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23. Compliance With Law. Lessee shall, at its sole cost and expense, comply
with all of the requirements of all Municipal, State, Federal and any other
governmental authorities now in force, or which may hereafter be in force,
pertaining to the Premises, and shall faithfully observe in the use of the
Premises all governmental ordinances and statutes now in force or which may
hereafter be in force.
24. Financial Statements. Lessee agrees to furnish to Lessor, within thirty
(30) days after the end of each quarter during the term of the Lease, copies of
the financial statements which Lessee submits to Chrysler Corporation on a
quarterly basis.
25. Hazardous Materials. Lessor will indemnify and defend and hold harmless
Lessee from and against all costs of response, corrective action, remedial
action, claims, demands, losses and liabilities arising from or relating to any
contamination of the Premises or the soils or ground waters thereon or
thereunder in violation of Hazardous Materials Laws that shall have been caused
by Lessor or Lessor's agents or contractors prior to the commencement date of
this Lease. Lessee will indemnify and defend and hold harmless Lessor from and
against all cost of response, corrective action, remedial action, claims,
demands, losses and liabilities arising from or relating to any contamination of
the Premises or the soils or ground waters thereon or thereunder in violation of
Hazardous Materials Laws that is caused by Lessee or Lessee's agents or
contractors during the term of this Lease. All hazardous and toxic materials
that Lessee brings on the Premises shall be stored according to all local, state
and federal governmental laws and regulations. For purposes of this Lease,
"Hazardous Materials Law" shall mean all local, state, and federal laws,
statutes, ordinances, rules, regulations, judgments, injunctions, stipulations,
decrees, orders, permits, approvals, treaties or protocols now or hereafter
enacted, issued or promulgated by any governmental authority which relate to any
Hazardous Material or the use, handling, transportation, production, disposal,
discharge, release, emission, sale or storage of, or exposure of any persons to
a Hazardous Material. Hazardous Materials shall mean those substances that are
recognized as posing a risk of injury to health or safety by any governmental
body having jurisdiction.
26. Entire Agreement. This Lease together with the provisions of the Master
Lease attached hereto as Exhibit "A" contains, the entire agreement of the
parties. No promise, representation, warranty, or covenant not included in this
lease or Exhibit "A" has been relied upon by either party.
27. Attorneys Fees. In the event that legal action is commenced by any of
the parties hereto to interpret or to enforce the terms of this Lease or to
recover damages as a result of the breach thereof, the party prevailing in any
such action shall be entitled to recover from the other party or parties all
reasonable attorneys' fees and costs incurred by the prevailing party.
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28. Time of Essence. Regarding each provision of this Lease, time is of the
essence.
29. Successors. This Lease shall be binding on and inure to the benefit of
the parties, their heirs and successors.
DATED: LESSOR:
SOLANO WAY PARTNERSHI
By _______________________________________
DATED: LESSEE:
LITHIA REAL ESTATE, INC., an Oregon corporation
By _______________________________________
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GUARANTY
Lithia Motors, Inc., an Oregon Corporation, in consideration of your
entering into the aforesaid Lease whereby Lithia Real Estate, Inc., an Oregon
Corporation, is the Lessee and as such is obligated to make certain rental and
other payments as well as perform other obligations as are set forth in certain
covenants contained in said Lease does hereby guarantee to Solano Way
Partnership, the Lessor under the Lease, all the payments to be made and all
obligations to be performed by Lithia Real Estate, Inc. under the Lease. With
regard to the payments referred to above, Lithia Motors, Inc. does hereby agree
to pay on demand any sum that may become due to Lessor whenever Lithia Real
Estate, Inc. fails to make a timely payment. It is understood that the guaranty
shall be a continuing, irrevocable guaranty and indemnity for any indebtedness
or breach of a covenant by Lithia Real Estate, Inc. under the Lease. Lithia
Motors, Inc.'s consent shall not be required for any modification or renewal
under the Lease, and any such act by Lithia Real Estate, Inc. will not cancel or
alter this guarantee in any way whatsoever.
DATED ____________________, 1997.
LITHIA MOTORS, INC.
By _______________________________________
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EXHIBIT "A"
A portion of the Rancho Monte Del Diablo situated in the County of Contra Costa,
State of California, described as follows:
Beginning at the most northerly corner of Flood Control Parcel No 391, described
as Parcel One in the deed to the Contra Costa County Flood Control and Water
Conservation District recorded August 6, 1968 in Book 5682 of Official Records
at page 356, Records of said County, said Point of Beginning being at the
southerly line of Marsh Drive and being further described as bearing North
27(degree) 12' 37" West, 194.66 feet from the standard Flood Control District
Monument No. 6818 marking a point on the easterly right of way line of said
Flood Control Parcel (5682 OR 356); thence along said southerly line of Marsh
Drive North 67(degree) 42' 20" East, 119.94 feet; thence continuing on Marsh
Drive along the arc of a non-tangent curve, concave to the south, the center of
said circle bears South 8(degree) 33' 21" East, having a radius of 470.00 feet,
through a central angle of 37(degree) 25' 22", a distance of 306.98 feet to the
beginning of a reverse curve concave to the north, the center of said circle
bears North 28(degree) 52' 01" East; thence along the arc of said curve having a
radius of 530.00 feet, through a central angle of 31(degree) 43' 52", a distance
of 293.52 feet to the beginning of a reverse curve concave to the southwest, the
center of said circle bears South 2(degree) 51' 51" East; thence along the arc
of said curve having a radius of 20.00 feet, through a central angle of
96(degree) 05' 37", a distance of 33.54 feet to the beginning of a compound
curve concave to the west, the center of said circle bears North 86(degree) 46'
14" East, thence along the arc of said curve having a radius of 2,310.84 feet,
through a central angle of 8(degree) 34' 49", a distance of 346.06 feet; thence
South 11(degree) 48' 35" West 82.34 feet to a point on the northerly line of an
easement for Flood Control purposes described as parcel Three in said deed to
the Contra Costa County Flood Control and Water Conservation district (5682 OR
356); thence along said line North 76(degree) 29' 10" West 267.76 feet; thence
continuing along said line South 13(degree) 30' 50" West 3.00 feet; thence
continuing along said line North 76(degree) 29' 10" West 185.01 feet to the
easterly line of said Flood Control Parcel No. 391 described as Parcel One in
said deed (5682 OR 356); thence along said easterly line North 25(degree) 39'
30" West, 58.88 feet to the standard Flood Control district Monument, No. 6817
marking the beginning of a tangent curve, concave to the southwest; thence along
the arc of said curve having a radius of 7,761.63 feet, through a central angel
to 1(degree) 33' 07", a distance of 210.24 feet to the standard Flood Control
District Monument No. 6818 marking the end of said curve; thence North
27(degree) 12' 37" West, 194.66 feet to the Point of Beginning.
Containing an area of 6.10 acres of land, more or less.
Bearings used in the above described are based on the California Coordinate
System Zone III.
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EXHIBIT B
THE SOLANO WAY PROJECT
Buchanan Field Airport, Concord, CA
EXHIBIT "D" TO LEASE OPTION
Parcel "A"
1. PARTIES: Effective on _____________________, the COUNTY OF CONTRA COSTA,
a political subdivision of the State of California, hereinafter referred to as
"COUNTY," and SOLANO WAY PARTNERSHIP, hereinafter referred to as "LESSEE,"
hereby mutually agree and promise as follows;
For the purpose of this lease, "COUNTY" is acting solely in its proprietary
capacity as the LESSOR and not in any governmental capacity unless so stated.
2. PURPOSE:
A. Purpose: COUNTY owns and operates Buchanan Field, the Contra Costa
County Public Airport at Concord, California, as shown on the Airport Layout
Plan, which plan is on file in the office of the Manager of Airports, and deems
it advantageous to lease to LESSEE a certain parcel of land of approximately six
(6) acres, together with certain rights, privileges, uses, and interest therein
as hereinafter set forth.
LESSEE has indicated a commitment to quality design and construction and
the necessary expertise, skill, and financial ability to carry out the planning,
construction, operation, and maintenance of a project in accordance with
standards established by the City of Concord and the COUNTY, and, therefore,
desires to obtain and avail itself of the privileges, rights, uses, and interest
in the leased property and in this lease.
3. PREMISES: For and in consideration of the rent and faithful performance
by LESSEE of the terns and conditions and the mutual covenants hereof, COUNTY
does hereby lease to LESSEE and LESSEE does lease from COUNTY, the real property
described in Attachment I and shown on Attachment II (to be attached at the time
of execution of the Lease), hereinafter referred to as the "leased premises."
4. TERM: This lease is for the term of thirty-five (35) years, commencing
on ___________, 19___ and expiring on ______________, 20___. This lease shall
terminate without further notice at expiration of the term. Any holding over
with COUNTY's written consent after the term of this lease as provided
hereinabove shall be construed to be a tenancy from month to month, subject to
the terms of this lease so far as applicable.
5. RENT:
A. Delete Section Five per amendment.
B. Rental after Construction: Beginning on the first day of the following
month the Certificate of Occupancy is issued or the
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first month of the second lease year, whichever occurs first, LESSEE shall pay
to the COUNTY rental based on the following schedule:
Period Monthly Rental
First year $1,815.00
Second year $3,630.00
Third year $5,445.00
Fourth year $7,260.00
On the first day of the first month of the fifth lease year, the rental
will be adjusted under the terms as set forth in paragraph 5.D.1, page 4.
C. Payment of Rent: All payment of Rent required to be paid to the COUNTY
under the terms of this lease shall be made in lawful money of the United
States, which at the time of such payment shall be legal tender for the payment
of public and private debts, free from all claims, demands, setoffs or counter
claims of any kind or character against COUNTY, and shall be payable to Contra
Costa County at the office of the Manager of Airports, 171 John Glenn Drive,
Concord, California 94520, or, at such other place or places as may from time to
time be designated by the COUNTY by written notice given to the LESSEE.
D. Rental Revision: Beginning on the first day of the month of the fifth
lease year of the term hereof, the rental then in effect will be revised each
year in accordance with subdivision 1) below; at the end of the first ten (10)
year period and each five (5) year period thereafter, in accordance with
subdivision 2). If, for any reason, the rental is not revised at such time or
times as herein specified, the rental shall continue to be subject to revision
in the manner herein specified and, when so revised, shall be retroactive to the
date the revised rental should have become effective.
1) Each Year-Consumer Price Index: Beginning on the first day of the first
month of the fifth lease year, COUNTY, without prior notice to LESSEE, shall
revise the rental then in effect based on the CPI Factor (as herein defined);
however, any increase in rental based on the CPI Factor shall be limited to a
maximum of ten percent (10%) per annum of rental then in effect, or a maximum of
forty percent (40%) over any five (5) year period, except years five (5) and six
(6) when the CPI factor is limited to an annual eight percent (8%) increase.
Such rental shall be automatically increased on the same date each year during
the term of this lease or any extensions thereto or holdover thereof. The CPI
Factor shall not be applied to reduce rental below the then existing rental nor
shall it be used in years when rent is reversed based on Fair Market Value as
covered in Section 2), Page 5.
The CPI Factor, as herein used, is that percentage of adjustment or
fluctuation to the nearest one-tenth of one percent established during the
period from the beginning of the base year
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(fourth lease year) to the date the revised rental is to commence, as stated in
the San Francisco-Oakland Consumer Price Index, All Urban Consumers (1967=100),
promulgated by the Bureau of Labor Statistics, or any successor or __________
175,000 square feet, shall be used for the purpose of establishing the Fair
Market Rental Value and for the provision of rent. In exchange for the
installation and maintenance of landscaping, no rent shall be charged for Parcel
C so long as the use for the parcel is restricted to use as an Airport buffer
zone, driveway at south end of the parcel, minor auto display located adjacent
to the intersection of Marsh Drive and Solano Way, and parking as indicated on
Exhibit "B". LESSEE hereby agrees to maintain Parcel C in a first-class manner
as set forth in section 9 (MAINTENANCE) of this Lease.
If at any time during the lease the F.A.A. regulations restricting the use
are revised and the LESSEE changes the use of Parcel C, it will be leased at the
same rate as Parcels A and B at the time as the change in use. The 2.1 acres
will then be subject to all rental revaluations, C.P.I. increases as provided.
In addition, a per vehicle fee will be negotiated for any new vehicle
dealerships created.
2) Arbitration:
In the event the parties hereto are unable to agree upon any rental, then
upon thirty (30) days' written notice by COUNTY to LESSEE, the matter shall be
submitted to and decided by a board of arbitrators consisting of three (3)
M.A.I. appraisers--one to be appointed by COUNTY, one by LESSEE, and a third by
the two so appointed. Should LESSEE fail or refuse to appoint an arbitrator
within thirty (30) days after delivery of notice from COUNTY, then the rental
established by COUNTY shall be deemed accepted by LESSEE. In the event the two
arbitrators chosen by the parties hereto are unable to agree upon the third
arbitrator, such arbitrator shall be appointed by a judge of any court having
jurisdiction over the premises upon application of either COUNTY or LESSEE to
said court, but such application shall not be made until such party shall have
given twenty (20) days advance notice in writing to the other of its intention
so to do. The arbitrators, as soon as possible after their selection, shall meet
to hear and decide the questions submitted to them and shall, within a
reasonable period of time, give to each of the parties hereto notice of the time
and place of such meeting. The hearings of the board of arbitrators shall be
conducted in a lawful manner. The written decision of the board, signed by at
least a majority of the arbitrators, shall determine the matter and such
determination shall be final and conclusive upon the parties hereto; upon
decision of the arbitrators, the rental payment shall be retroactive to its
increase date determined under either subdivision 1) or 2) above. The fees and
expenses of arbitration shall be borne as the parties may agree prior to
arbitration, or, in case of disagreement, shall be apportioned by the board of
arbitrators.
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3) Per Vehicle Fee Commencing the Eleventh (11th) Year and Each Year
Thereafter in Addition to the Foregoing:
Beginning with the eleventh (11th) year of this lease and continuing every
year thereafter, LESSEE shall pay to COUNTY as rent a per vehicle fee for every
new vehicle sold above a base number of 1,500 new vehicles per year. The per
vehicle fee paid in the eleventh (11th) year shall be FIFTY AND NO/100 DOLLARS
($50.00) per vehicle, plus an adjustment for the CPI increases for the previous
seven (7) years, which shall not exceed fifty-six percent (56%), or a total per
vehicle fee of SEVENTY-EIGHT AND NO/100 DOLLARS ($78.00). The per vehicle fee
after the eleventh (11th) year shall be adjusted annually for CPI increases, if
any, but shall never be increased more than ten percent (10%) annually nor
exceed forty percent (40%) in any five (5) year period. The per vehicle fee
shall not be applicable to vehicles sold, to governmental agencies. The per
vehicle fee shall never be less than the preceding year's per vehicle fee.
Per vehicle fee payments shall be made within thirty (30) days of the end
of each quarter once the minimum number (1,500) new vehicles is reached and
shall be accompanied by a statement signed by a responsible accounting officer
of LESSEE listing the number of new vehicles sold during the past quarter.
COUNTY shall be entitled during the term of this lease, and for that period of
time thereafter that LESSEE is required by law to keep its California Department
of Motor Vehicles Report of Sales Books, to inspect and examine said books.
The receipt by the COUNTY of any statement or the payment of any per
vehicle fees shall not bind the COUNTY as to the correctness of the statement or
the payment.
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EXAMPLE RENTAL PAYMENT
Actual
Example CPI Change Percentage Per
CPI CPI Previous Previous Adjustment Per Month Vehicle
Year Index Factor Yr. Five Yrs. in Rent Rental Fee
---- ------ ------ -------- --------- --------- -------- ---
Construction Rent
(12 Months or Less)
1) First Year After Construction $ 1,000
2) Second Year 1,815
3) Third Year 3,630
4) Fourth Year 5,445
--- ---
Base Year 251.0
5) 260.0 3.6 3.6 3.6 3.6 7,521
6) 287.9 14.7 10.7* 14.7 8.0 8,123
7) 304.3 21.2 5.7 21.2 8.3 8,797
8) 306.0 21.9 .6 21.9 .6 8,850
9) 305.0 21.5 .03 21.5 -0-** 8,850
10) Fair 314.0 25.1 3.0 20.8 2.6 9,080
Market
Value
11) 320.0 27.5 1.9 11.1 2.8**** 9,334 62.95
12) 365.0 45.4 14.1 19.9 10.0 10,267 69.25
13) 395.0 57.4 8.2 29.1 10.0 11,294 76.18
14) ****** 445.0 77.3 12.7 45.9 9.7 12,390 83.57
15) ****** 445.0 77.3 -0- 41.7 2.6 12,712 85.74
Method of Calculation
For the purpose of calculating the rent adjustment, the Base Year CPI figure
shall be subtracted from the current year CPI figure and the difference divided
by the Base Year CPI Figure to obtain the percentage increase in rent. (CPI
Factor)
Example "A", Year 5
CPI CPI Factor
Figure Base Year Difference Base Year in Rent
260.0 - 251.0 = 9.0 / 251.0 = 3.6%
The base year's rent is then multiplied by the CPI Factor in rent, plus 100%, to
establish the revised rental.
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Base Year Rent Increase in Rent Revised Rent
$7,260 X (100% + 3.6%) = $7,521
Example "B", Year 6
CIP Figure Base Year Difference Base Year CPI Factor
287.9 - 251.0 = 36.9 / 251.0 = 14.7%*
Adjusted
Preceding Year Rent Increase in Rent Annual Increase
- ------------------- ---------------- ---------------
$7,521 X (100% + 8%)* = $8,123
Example "C", Year 14
CIP Figure Base Year Difference Base Year CPI Factor
445.0 - 251.0 = 194 / 251.0 = 77.3%
Preceding Year Rent Increase in Rent Revised Rent
$11,294 X (100% + 10%) = $12,423
Preceding Rent Increase in Rent Actual
Five Years Ago Five Years Revised Rent
8,850 X (100% + 40%)**** = $12,390
* The revised rental will not exceed a 8% increase over the rent for the
previous 12-month period in years 5 and 6.
** Rent will never be less than rent for previous 12-month
period. (Example Year 9)
*** Year 10 rent based on Fair Market Value.
**** Year 11 per vehicle fee begins.
***** Years 14 and 15 rent not to exceed 40% in any five-year period.
E. Delinquent Rent: In addition to other remedies contained in paragraph
15, commencing on page 33, entitled "Lessee's Default", in the event that LESSEE
shall become delinquent in paying to COUNTY any rent payment due under this
lease, LESSEE shall pay to COUNTY interest on said unpaid balance at the
interest rate of eighteen percent (18%) per annum from the date such payment was
due and payable until the date such payment is made.
6. TAXES AND ASSESSMENTS:
This Lease may result in the creation of possessory interests subject to
property taxation and LESSEE may be subject to the payment of property taxes
levied on such interest. LESSEE agrees that this provision complies with the
notice provisions of Revenue and Taxation Code Section 107.6, and waives all
rights to further notice or to damages under that or any comparable statute.
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LESSEE shall promptly pay all taxes and assessment which shall become due
and payable during the occupancy of said demised premises under any levy or
assessment by COUNTY or other legally authorized governmental authority upon the
improvements, equipment, fixtures and personal property which LESSEE may erect
or place therein.
7. USE OF PREMISES:
A. The premises shall be used for the operation of a new automobile
dealership, which shall include new and used automobile sales, automobile
leasing, LESSEE's own automobile rentals, repairs, and service. However, nothing
in this definition shall be construed to include the operation of a national
franchise automobile rental agency.
B. Said lands and premises shall not be used, maintained, developed, or
improved for use for any other purpose without the expressed written permission
from COUNTY.
8. WORK OF IMPROVEMENT:
A. Lessee's Duty to Construct New Improvements: LESSEE agrees to commence
construction on the improvements described in Exhibits "C" and "D" attached
hereto within sixty (60) days of the commencement of this lease. Once work is
begun, LESSEE shall with reasonable diligence prosecute to completion all
construction of said improvements. Construction shall be completed and ready for
use within twelve (12) months after commencement of construction, provided that
the time for completion shall be extended for as long as LESSEE shall be
prevented from completing the construction by delays beyond LESSEE's control.
All work shall be performed in a good and workmanlike manner, shall comply with
Exhibits "C" and "D", and shall comply with all applicable governmental permits,
laws, ordinances, and regulations. All improvements shall be constructed within
the exterior property lines of the premises; provided, that required work beyond
the premises on utilities, access, and conditional use requirements will not
violate this provision.
B. Notice of Nonresponsibility: LESSEE shall give written notice to COUNTY
of LESSEE's intention to commence work on improvements at least twenty (20) days
before commencement of any such work or delivery of any materials. The notice
shall specify the approximate location and the nature of the intended
improvements COUNTY shall have the right to record, post, and maintain on the
premises any notices of nonresponsibility provided for under applicable law, and
to inspect the premises in relation to the constriction at all reasonable times.
C. County's Approval of General Contractor: LESSEE shall furnish COUNTY
with a true copy of LESSEE's contract with the general contractor and with
evidence of the general contractor's financial condition for COUNTY's approval.
The contract shall give
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COUNTY the right, but not the obligation, to assume LESSEE's obligations and
rights under the contract if LESSEE should default.
COUNTY shall not act unreasonably in disapproving the financial condition
of LESSEE's general contractor and may only disapprove such general contractor's
financial condition in the event COUNTY is in the possession of substantial and
credible evidence that such general contractor is not financially responsible
and will be unable to post the faithful performance and payment bonds called for
in subsection 5.0 of the Option to Lease, Page 9. In the event COUNTY shall
disapprove the financial responsibility of the proposed general contractor for
LESSEE, COUNTY shall give written notice thereof to LESSEE within twenty (20)
working days following delivery to COUNTY of a copy of the contract and shall
specify in said notice the grounds for disapproval.
D. Freedom from Liens: All improvements and facilities constructed or
placed within the demised premises by LESSEE must, upon completion, be free and
clear of all liens, claims or liability for labor or material.
LESSEE shall at all times defend, indemnify, and save COUNTY harmless from
all claims for labor or materials in connection with construction, repair,
alteration or installments of structures, improvements, equipment or facilities
within the demised premises, and from the cost of defending against such claims,
including attorney's fees.
E. Notice of Completion: On completion of the improvements LESSEE shall
file or cause to be filed a notice of completion. LESSEE hereby appoints COUNTY
as LESSEE's attorney-in-fact to file the notice of completion on LESSEE's
failure to do so after the work of improvement has been substantially completed.
F. Statement of Construction Costs and "As-Built" Plans: Within sixty (60)
days following completion of any substantial improvement within the demised
premises, LESSEE shall furnish COUNTY a complete set of "As-Built" plans and an
itemized statement of the actual construction cost of such improvement. The
statement of cost shall be certified by LESSEE its responsible agent.
9. MAINTENANCE; REPAIRS; ALTERATIONS; RECONSTRUCTION LESSEE REQUIRED TO
MAINTAIN PREMISES:
Throughout the term, LESSEE shall, at its sole cost and expense, maintain
the premises, all improvements, and landscaping in a first-class condition and
repair, and in accordance with all applicable laws, rules, ordinances, orders,
and regulations of: Federal, state, county, city, and other governmental
agencies and bodies having or claiming jurisdiction and their respective
departments, bureaus, and officials.
COUNTY may enter the premises at reasonable times to inspect and may employ
proper representatives to ensure the premises are
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being properly maintained in a first-class manner best calculated to preserve
and enhance the property in full compliance with the terms and conditions
hereof. If the LESSEE does not accomplish the maintenance and repairs in a
timely and first-class, workmanlike manner, COUNTY may proceed to accomplish the
necessary work provided COUNTY has given LESSEE thirty (30) days' prior written
notice of said deficiencies and provided LESSEE has not made a substantial
effort to correct same. Any costs incurred by COUNTY shall be, on written demand
by COUNTY to LESSEE, due and payable upon completion of the necessary work made
by COUNTY. "First- class" manner, as the term is used herein, shall mean the
maintenance and repair of buildings, equipment, fixtures, and appurtenances
necessary to keep the leased property in efficient condition, at least equal to
or better than the plan originally approved by COUNTY and constructed or
installed by LESSEE, reasonable wear and tear excepted.
Except as hereinafter provided, LESSEE shall promptly and diligently
repair, restore, and replace as required to maintain or comply as above, or to
remedy all damage to or destruction of all or any part of the improvements
resulting wholly or in part from causes required by this lease to be covered by
fire and extended coverage insurance. The completed work of maintenance,
compliance, repair, restoration or replacement shall be equal in value, quality,
and use to the condition of the improvements before the event giving rise to the
work. COUNTY shall not be required to furnish any services or facilities or to
make any repairs or alterations of any kind in or on the premises. COUNTY's
election to perform any obligation of LESSEE under this provision on LESSEE's
failure or refusal to do so shall not constitute a waiver of any right or remedy
for LESSEE's default, and LESSEE shall promptly reimburse, defend, and indemnify
COUNTY against all liability, loss, cost, and expense arising from it. Nothing
in this provision defining the duty of maintenance shall be construed as
limiting provisions relating to condemnation or to damage or destruction during
the final year or years of the term. No deprivation, impairment or limitation of
use resulting from any event of work contemplated by this paragraph shall
entitle LESSEE to any offset, abatement or reduction in rent nor to any
termination or extension of the term.
10. OWNERSHIP OF IMPROVEMENTS:
A. Ownership of New Improvements During Term: All improvements constructed
on the premises by LESSEE as permitted by this lease shall be owned by LESSEE
until expiration of the term or sooner termination of this lease. LESSEE shall
not, however, remove any improvements from the premises nor waste, destroy or
modify any improvements on the premises, except as permitted by this lease. All
leasehold improvements shall remain the property Of the LESSEE until LESSEE
relinquishes possession of the land.
B. Ownership at Termination: At such time as LESSEE relinquished possession
of the land, all improvements on the premises shall, without compensation to
LESSEE, then become
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COUNTY's property free and clear of all claims to or against them by LESSEE or
any third person, and LESSEE shall defend and indemnify COUNTY against all
liability and loss arising from such claims or from COUNTY's exercise of the
rights conferred by this paragraph.
11. PERMITTED LEASEHOLD ENCUMBRANCES:
A. Encumbrances of Leasehold Estate. LESSEE shall have the right, from time
to time, to subject the leasehold estate and any and all building improvements
thereon to one or more mortgages, deeds of trust or other security instruments
(herein referred to as "permitted leasehold encumbrance") and to assign,
hypothecate or pledge the same as security for any debt, the holder of any such
mortgage, pledge or other encumbrance, and the beneficiary of any such deed of
trust being hereafter referred to as "leasehold mortgagee" and such mortgage,
pledge, deed of trust or other instrument hereafter referred to as "leasehold
mortgage," upon and subject to each and all of the terms and conditions set
forth in this paragraph.
1) All such permitted leasehold encumbrances shall be made only for the
following purposes:
a) For short-term (interim) financing the costs and expenses for:
(1) All land development work and other costs required to place the demised
lands in a developed condition.
(2) The construction of, or addition or betterments to, buildings thereon,
and for installation of fixtures, machinery and equipment therefor.
b) For long-term (takeout) financing costs and expenses incurred by LESSEE
for:
(1) Fully completed land development work temporarily financed under the
provisions of paragraph 1) above;
(2) Fully completed work of the construction of, or additions or
betterments to, buildings thereon and for installation of fixtures, machinery
and equipment therein, temporarily financed under the provisions of paragraph
1)a)2 above.
c) For long-term or permanent refinancing of long-term (takeout) loans
referred to in paragraph 1)b)2 above. It is agreed that the term "refinancing"
shall mean refinancing of the then balance owing on unpaid or on any outstanding
long-term (takeout) leasehold mortgage referred to in subdivision 1)b) above,
including all costs and expenses incurred in connection therewith.
(1) Each such permitted leasehold mortgage shall cover no interest in any
real property other than the LESSEE's interest
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in the leased premises or some portion thereof and the subleases thereon.
(2) No such leasehold mortgage shall be binding upon COUNTY in the
enforcement of its rights and remedies herein and by law provided, unless and
until a certified copy of the original thereof bearing the date and book and
page of recordation thereof and a certified copy of the original note secured by
such leasehold mortgage has been delivered to COUNTY, together with written
notice of the address of the leasehold mortgagee to which notices may be sent;
and in the event of an assignment of such leasehold mortgage, such assignment
shall not be binding upon COUNTY, unless and until a certified copy thereof
bearing the date and book and page or recordation, together with written notice
of the address of the assignee thereof to which notices may be sent, have been
delivered to COUNTY.
B. Leasehold Rights Acquired. All rights acquired by said leasehold
mortgage shall be subject to each and all of the covenants, conditions and
restrictions set forth in this lease, and to all rights of COUNTY thereunder
none of which covenants, conditions and restrictions is or shall be waived by
COUNTY by reason of the giving of such leasehold mortgage, except as expressly
provided in this paragraph.
C. Provisions of Leasehold Mortgage For Protection of Leasehold Mortgagee.
COUNTY agrees that any such leasehold mortgage may contain, for the
protection of the leasehold mortgagee, provisions:
1) For an assignment of LESSEE's share of the net proceeds from any award
or other compensation resulting from the total or partial (other than temporary)
taking as set forth in section 14 (Condemnation), page 27, of this lease.
2) For the entry of the leasehold mortgagee upon the leased premises during
business hours to view the state of the premises.
3) That a default by LESSEE under the lease shall constitute a default
under the leasehold mortgage.
4) For an assignment of any sublease to which the leasehold mortgage is
subordinated.
5) Effective upon any default in any such leasehold mortgage, for:
a) The foreclosure of the leasehold mortgage pursuant to a power of sale by
judicial proceedings or other lawful means and the subsequent sale of the
leasehold estate to the purchaser at the foreclosure sale and the sale by such
purchaser and/or a sale by any subsequent purchaser;
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b) The appointment of a receiver, irrespective of whether the leasehold
mortgagee accelerates the maturity of all indebtedness secured by the leasehold
mortgage;
c) The right of a leasehold mortgagee or the receiver to enter and take
possession of the premises to manage and operate the same and to collect the
subrentals, issues and profits therefrom and to cure any default under the
leasehold mortgage or any default by the LESSEE under this lease; and
d) An assignment of LESSEE's right, title and interest in and to any
deposit of cash, securities or other property which may be held to secure the
performance of covenants, conditions and agreements contained in this lease, the
premiums for or dividends upon any insurance provided for the benefit of any
leasehold mortgagee or required by the terms of the lease, as well as in all
refunds or rebates of taxes or assessments upon or any other charges against the
demised premises, whether paid or to be paid.
D. Notice to County of Any Leasehold Mortgage. LESSEE, or the holder of the
permitted mortgage, shall promptly deliver to COUNTY in the manner herein
provided for the giving of notice to COUNTY, a true copy of each such permitted
mortgage and of any assignment thereof, and shall notify COUNTY of the address
of mortgagee and of any assignee of mortgagee to which notices may be sent.
E. Notice of Default to Permitted Mortgagee. COUNTY, in giving notice to
LESSEE with respect to any default under the provisions of section 15 (Default
Remedies), page 32, hereof, shall also serve a copy of such notice upon each
permitted mortgagee.
F. Permitted Mortgagee Allowed Same Period of Time to Cure Default As
Lessee.
Each permitted mortgagee shall have the period of time after the giving of
notice aforesaid to it for remedying the default or causing the same to be
remedied, as specified in section 15.c (Default Remedies), page 35, hereof.
G. Notice of Any Bankruptcy Proceedings By or Against Lessee or Assignment
by Lessee for Benefit of Creditors To Be Given to Permitted Mortgagee.
Upon the happening of any of the events set forth in section 15.A.3) hereof
(assignment for benefit of creditors and bankruptcy), COUNTY will notify each
permitted mortgagee of such happening within a reasonable time after COUNTY
shall have become aware thereof. As long as the permitted mortgagee complies
with the provisions contained in subdivision L, page 22, hereof, the defaults of
LESSEE mentioned in this subparagraph shall not be construed as a default as
against such permitted leasehold mortgagee.
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H. Leasehold Mortgagee Right To Remedy Default. Notwithstanding any other
provisions to the contrary contained in this lease, in case LESSEE shall make
default under any of the provisions of this lease, such permitted mortgagee
shall have the right to make good such default, whether the same consists of the
failure to pay rent or the failure to perform any other matter or thing which
LESSEE is hereby required to do or perform, and COUNTY shall accept such
performance on the part of permitted mortgagee as though the same had been done
or performed by LESSEE.
I. Leasehold Mortgagee Rights to Take Possession. In case of any default by
LESSEE (including any of the events set forth in section 15 hereof) (non-curable
defaults) other than in the payment of money hereunder, COUNTY will take no
action to effect a termination of the term of this lease by the service of a
notice by reason of any such default without first giving service of a notice by
reason of any such default without first giving permitted mortgagee reasonable
time in which either:
1) To obtain possession of that portion of the premises encumbered by such
permitted mortgage (including possession by a receiver), and cure such default
in the case of a default which is susceptible of being cured when permitted
mortgagee has obtained possession; or
2) To institute foreclosure proceedings and complete such foreclosure, or
otherwise acquire LESSEE's interest under this lease (with respect to such
portion of premises encumbered by such permitted mortgage) with diligence and
continuity in the case of a default which is not so susceptible of being cured
by permitted mortgagee; provided, however, that permitted mortgagee shall not be
required to continue such possession or continue such foreclosure proceedings if
the default, which would have been the reason for serving such notice, shall be
cured; and provided, further, that nothing contained herein shall preclude
COUNTY from exercising any rights or remedies under this lease with respect to
any other default by LESSEE during any period of such forbearance.
J. Mortgagee Right to Succeed To Leasehold Estate. Any permitted mortgagee
may become the legal owner and holder of this lease with respect to such portion
of the leased land encumbered by said permitted mortgage by foreclosure of its
permitted mortgage or as a result of the assignment of this lease in lieu of
foreclosure, whereupon such permitted mortgagee shall immediately become and
remain liable under this lease as provided in subparagraph B hereof.
K. Changes for Mortgage Financing. The parties hereto will cooperate in
including in this lease, by suitable amendment, from time to time, any provision
which may be reasonably necessary and customary to secure institutional
financing for the construction of major building improvements on the leased
premises; provided, however, that such amendments shall not in any way affect
the term hereby demised nor affect adversely in any material respect any rights
of COUNTY in the leased premises or under this lease. Any
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costs for preparing and approving an amendment or processing other documents
required for financing shall be paid by LESSEE.
L. The underlying fee title of COUNTY in the leased premises is not to be
subordinated to any leasehold mortgage, deed of trust or other encumbrance
placed upon the leased premises by LESSEE.
12. ASSIGNMENT AND SUBLETTING: LESSEE shall not voluntarily assign or
encumber its interest in this lease or in the leased premises, or sublease all
or any part of the leased premises, or allow any other person or entity (except
LESSEE's authorized representatives) to occupy or use all or any part of the
leased premises, without first obtaining COUNTY's written consent. Said consent
shall not unreasonably be withheld. Any assignment, encumbrance or sublease
without COUNTY's consent shall be voidable and, at COUNTY's election, shall
constitute a default. Any consent by COUNTY to an assignment, encumbrance or
sublease shall not constitute further waiver of the provisions of this
paragraph. Should the COUNTY for any reason refuse consent, LESSEE shall then
have the right to terminate this lease given thirty (30) days written notice and
thereafter have no further liability with regard to said lease.
Each sublease shall contain a provision requiring sublessee to attorn to
COUNTY or, in the event of any proceeding to foreclose any leasehold mortgage,
to the leasehold mortgagee, or any person designated in a notice from leasehold
mortgagee, if LESSEE defaults under this lease as if COUNTY or said other
persons were named as the sublessor to said sublessee and if the sublessee is
notified of LESSEE's default and instructed to make sublessee's rental payments
to COUNTY or leasehold mortgagee or designated person as in this paragraph.
Each such sublease shall provide that the sublessee will abide by the terms
and conditions of this lease and will not use or permit the use of the premises
for any purpose other than the use stated in paragraph 7, page 11, USE OF
PREMISES.
If LESSEE is a corporation, any dissolution, merger, consolidation, or
other reorganization of LESSEE, or the sale or other transfer of a controlling
percentage of the capital stock of LESSEE, shall be deemed a voluntary
assignment, The phrase "controlling percentage" means the ownership of, and the
right to vote, stock possessing at least thirty-three and one-third percent (33
1/3%) of the total combined voting power of all classes of LESSEE's capital
stock issued, outstanding, and entitled to vote for the election of directors,
This paragraph shall not apply to corporations whose stock is traded through an
exchange or over the counter.
13. INDEMNIFICATION: LESSEE shall defend, indemnify, save, and hold
harmless COUNTY and its officers and employees from any and all claims, costs,
and liability for any damages, injury or death arising directly or indirectly
from or connected with LESSEE's use or occupancy of the leased premises, save
and except claims or
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litigation arising through the sole negligence or sole willful misconduct of
COUNTY, and will make good to and reimburse COUNTY for any expenditures
including reasonable attorney's fees, COUNTY may make by reason of such matters
and, if requested by COUNTY, will defend any such suits at the sole cost and
expense of LESSEE."
14. INSURANCE: LESSEE shall procure and maintain, at its own cost and
expense, at all times during the term of this lease the following policies
issued by insurance companies authorized to do business in California, with a
financial rating of at lease an A + 3A status as rated in the most recent
edition of Best's Insurance Reports:
A. Public Liability and Property Damage Insurance: LESSEE shall obtain and
maintain public liability and property damage insurance and products liability
insurance covering LESSEE and naming County of Contra Costa as a co-insured
under the policy with a minimum combined single-limit coverage of $500,000.00
for all damages due to bodily injury or death to any person and damage to
property, including the loss of use thereof, arising out of ownership,
maintenance or use of the leased premises and all operations necessary or
incidental thereto. Not more frequently than each five (5) years, if, in the
opinion of COUNTY's insurance broker, the amount of public liability and
property damage insurance coverage at that time is not adequate, LESSEE shall
increase the insurance coverage as required by COUNTY's insurance broker. Said
increased coverage is subject to negotiation and/or arbitration.
B. Fire Insurance: LESSEE shall insure for fire and extended coverage risks
all personal property, improvements, and alterations, hereinafter referred to as
improvements, in, on or about the leased premises. Such insurance shall be in an
amount equal to one hundred percent (100%) of insurable, full replacement value
of such improvements, excluding costs of replacing excavations, foundations, and
flat work, but with and shall include vandalism and malicious mischief
endorsements. Said fire insurance policies shall contain loss payable
endorsements in favor of the parties as their respective interests may appear
hereunder. The County of Contra Costa shall be named as an additional insured in
such policy or policies.
All fire and extended coverage insurance policies insuring the improvements
may have a loss payable clause in favor of any lender of LESSEE, including, but
not limited to, any mortgagee of LESSEE, as such lender's interest may appear.
C. Workers' Compensation: LESSEE shall obtain and maintain workers'
compensation insurance as required by law, covering all employees of the LESSEE.
D. Boiler, Unusual Hazards, Other Insurance: LESSEE shall procure and keep
in force in form and coverage reasonably satisfactory to COUNTY:
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1) Boiler and machinery insurance if at any time or from time to time such
equipment is located on the premises;
2) If LESSEE commits, permits or causes the conduct of any activity or the
bringing or operation of any equipment on or about the premises creating unusual
hazards, LESSEE shall, promptly on notice of demand from COUNTY, procure and
maintain in force during such activity or operation, insurance sufficient to
cover the risks represented thereby, COUNTY's demand for unusual hazard
insurance shall not constitute a waiver of COUNTY's right, if COUNTY would
otherwise have that right, to demand the removal, cessation or abatement of such
activity or operation.
3) Other insurance, in amounts from time to time reasonably required by
COUNTY, against other insurable risks, if at the time they are commonly insured
against for premises similarly situated and containing comparable improvements.
E. Casualty: In the event of extensive damage (greater than twenty five
percent (25%)) to or destruction of buildings or other improvements on the
leased premises, LESSEE shall determine whether to repair or replace the
improvements. If it is determined to repair or replace the improvements, the
proceeds of any insurance policy paid on account of such damage or destruction
shall be used by LESSEE to defer the post of repairing or replacing the
improvements. If it is determined not to repair or replace the improvements,
LESSEE may terminate this lease upon written notice to COUNTY within thirty (30)
days of such damage or destruction. If LESSEE elects to terminate this lease
pursuant hereto within the last ten (10) year period of the term of this lease,
after deducting any proceeds payable to LESSEE's lender, the remaining proceeds
of any insurance policy paid on account of such damage or destruction shall be
distributed to LESSEE and to COUNTY pursuant to the following formula: COUNTY's
share shall be the product of the amount of the remaining proceeds multiplied by
a fraction, the numerator which is the number of months since the commencement
date of this lease until the date of the casualty causing such damage or
destruction, and the denominator of which is four hundred and twenty (420).
LESSEE's share shall be the excess of the remaining proceeds after subtracting
the COUNTY's share.
F. Form of Policies: All policies of insurance required by this section
shall be in such standard form and written by such qualified insurance companies
as shall be satisfactory to COUNTY. Evidence of such insurance shall be provided
by LESSEE by filing with COUNTY a copy of the policy or policies, together with
a duly executed certificate to the effect that the insurance required by this
lease is extended in favor of and consistent with the terms set forth herein.
Said policy or policies and/or certificates shall contain a provision that
written notice of cancellation or any change shall be delivered to COUNTY thirty
(30) days in advance of the effective date thereof.
G. Notice: Each party hereto shall give to the other prompt and timely
notice of any claim made or suit instituted with which
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the party has been served coming to its knowledge which in any way directly,
contingently or otherwise, affects or might affect the other, and both shall
have the right to participate in the defense of the same to the extent of its
own interest.
15. CONDEMNATION:
A. Definitions. The following definitions apply in construing provisions of
this lease relating to a taking of or damage to all or any part of the premises
or improvements or any interest in them by eminent domain or inverse
condemnation:
1) Taking means the taking or damaging, including severance damage, by
eminent domain or by inverse condemnation or for any public or quasi public use
under any statute. The transfer of title may be either a transfer resulting from
the recording of a final order in condemnation or a voluntary transfer or
conveyance to the condemning agency or entity under threat of condemnation, in
avoidance of an exercise of eminent domain, or while condemnation proceedings
are pending. The taking shall be considered to take place as of the later of a)
the date actual physical possession is taken by the condemnor or b) the date on
which the right to compensation and damages accrues under the law applicable to
the premises;
2) Total taking means the taking of the fee title to all the premises and
the improvements on the premises, which shall be considered to include any
off-site improvements effected by LESSEE to serve the premises or the
improvements on the premises;
3) Substantial taking means the taking of so much of the premises or
improvements or both that one or more of the following conditions results: A
reasonable amount of reconstruction would not make the land and improvements a
practical improvement and reasonably suited for LESSEE's continued occupancy for
the uses and purposes for which the premises are leased;
4) Partial taking means any taking of the fee title that is not either a
total or a substantial taking;
5) Improvements means all products of skill, artifice, plan or design for
construction on, modification of, or planned use of existing structures, natural
or cultivated, or earth contours on the premises, including but not limited to:
Buildings, structures, fixtures, fences, utility installations, excavations,
surfacing, water banks or channels and grading; ornamental trees, bushes and
vines, whether occurring on the premises naturally or emplaced by human design
or effort, and whether coming into being on the premises before or after
commencement of the term; landscaping ground cover crops, planting, and earth
contours forming part of a landscaping design; and artistic and ornament
components of any of the above;
6) Notice of intended taking means any notice or notification on which a
reasonably prudent man would rely and which
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he would interpret as expressing an existing intention of taking as
distinguished from a mere preliminary inquiry or proposal. It includes, but is
not limited to, the service of a condemnation summons and complaint on a party
to this lease. The notice is considered to have been received when a party to
this lease receives from the condemning agency or entity a notice of intent to
take in writing, containing a description or a map of the taking reasonably
defining the extent of the taking;
7) Award means compensation paid for the taking whether pursuant to
judgment or by agreement or otherwise.
B. Notice to Other Party. The party receiving any notice of the kinds
specified below shall promptly give the other party notice of the receipt,
contents and date of the notice received:
1) Notice of intended taking;
2) Service of any legal process relating to condemnation of the premises or
improvements;
3) Notice in connection with any proceedings or negotiations with respect
to such a condemnation; or
4) Notice of intent or willingness to make or negotiate a private purchase,
sale or transfer in lieu of condemnation.
C. Representative of Each Party; Effectuation. COUNTY, LESSEE and all
persons and entities holding under LESSEE shall each have the right to represent
his or its respective interest in each proceeding or negotiation With respect to
a taking or intended taking and to make full proof of his or its claims. No
agreement, settlement, sale or transfer to or with the condemning authority
shall be made without the consent of COUNTY and LESSEE. COUNTY and LESSEE each
agrees to execute and deliver to the other any instruments that may be required
to effectuate or facilitate the provisions of this lease relating to
condemnation.
D. Total or Substantial Taking; Effect on Rent and Term:
1) Total Taking. On a total taking, LESSEE's obligation to pay rent shall
terminate on the date of taking, but LESSEE's interest in the leasehold estate
shall continue until the taking is completed by deed, contract or order of final
condemnation.
2) Substantial Taking. If the taking is substantial under the definition
appearing on section A.3), page 27, hereof, LESSEE may, by notice to COUNTY
given within thirty (30) days after LESSEE receives notice of intended taking,
elect to treat the taking as a substantial taking. If LESSEE does not so notify
COUNTY, the taking shall be deemed a partial taking. A substantial taking shall
be treated as a total taking if a) LESSEE delivers possession to COUNTY within
ninety (90) days after determination that the taking was a substantial taking,
and b) LESSEE is not in default under the lease and has complied with all lease
provisions
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concerning apportionment of the award. If these conditions are not met, the
taking shall be treated as a partial taking.
E. Early Delivery of Possession. LESSEE may continue to occupy the premises
and improvements until the condemnor takes physical possession. However, at any
time following notice of intended total taking, or within the time limit
specified for delivering possession in the provision on substantial taking,
LESSEE may elect to deliver possession of the premises to COUNTY before the
actual taking. The election shall be made by notice declaring the election and
covenanting to pay all rents required under this lease to the date of taking,
LESSEE's right to apportionment of or compensation from the award shall then
accrue as of the date that LESSEE goes out of possession.
F. Apportionment, Distribution of Award for Total Taking. On a total
taking, all sums, including damages and interest awarded for the fee, shall be
promptly deposited with an escrow agent, acceptable to COUNTY and LESSEE, and
shall be distributed and disbursed by it in the following order of priority:
First: To discharge all real and personal property taxes and assessments
constituting a lien on the premises and improvements, less such prorata share
thereof allocable by State law to the condemnor cancellable upon consummation of
said taking; all such amounts so paid to be charged against and deducted from
LESSEE's share of said award.
Second: To COUNTY, a sum equal to the value of the leased lands taken,
valued exclusive of improvements as unimproved land and unburdened by all leases
and subleases; and, in case of a partial taking, treated as a substantial taking
as defined in section 14.0, page 29, hereof, plus the resulting or consequential
(severance) damages, if any, to the remaining part of the leased lands,
considered as vacant, unencumbered and unleased lands.
Third: To any Leasehold Mortgagee, the balance owing on the note secured by
such leasehold mortgage.
Fourth: The balance of the total award shall be paid to LESSEE.
G. Partial Taking; Effect on Lease and Term. On a partial taking, this
lease shall retain in full force and effect, covering the remaining property,
except that the Minimum Rent shall be reduced in the same ratio as the value of
the portion of the leased premises taken (after deducting expenses of
collection, including any attorney's fees and restoration costs) bears to the
value of the entire premises as of the date of taking possession, excluding
improvements then in existence.
H. Restoration of Improvements. Promptly after a partial taking, at
LESSEE's expense and in the manner specified in provisions of this lease
relating to maintenance, repairs and alterations, LESSEE shall restore, alter,
modify or reconstruct the
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improvements (hereafter referred to as "repairing") so as to make them
reasonably suitable for LESSEE's continued occupancy for the uses and purposes
for which the premises are leased; provided that there are in LESSEE's
determination sufficient funds from the award to cover such repairing; and
provided further, that LESSEE determines, in its good faith business judgment,
that such repairing should occur. If the reasonably estimated cost of the work
represents more than thirty-five percent (35%) of the then fair market value of
the leasehold improvements before the taking, LESSEE may, in the manner provided
for a substantial taking, elect to treat the taking as substantial. If LESSEE
does not restore, alter, modify or reconstruct as above, the cost of such repair
shall be deducted from LESSEE's share of the award and paid to any leasehold
mortgagee demanding it, and otherwise to COUNTY.
I. Apportionment, Distribution of Award for Partial Taking. On a partial
taking, all sums, including damages and interest, awarded for the fee title or
the leasehold or both, shall be deposited promptly with an escrow agent,
acceptable to COUNTY and LESSEE, and shall be distributed and disbursed in the
following order of priority:
First: To the cost of restoring the leasehold improvements, plus any amount
assessed, awarded, paid or incurred to remove or relocate subtenants, plus any
amount awarded for detriment to business.
Second: To COUNTY a sum equal to the fair market value of the lands taken,
valued as unimproved land, exclusive of improvements and unburdened by all
leases and subleases, plus the resulting or consequential (severance) damages,
if any, to the remaining part of the leased lands, considered as vacant,
unencumbered and unleased lands, COUNTY may, at COUNTY's election, direct
disbursement of this portion to any fee mortgagee under any note not executed by
LESSEE.
Third: To COUNTY and to LESSEE their respective expenses or disbursements
reasonably and necessarily paid or incurred for or in connection with the
condemnation proceedings.
Fourth: To leasehold mortgagee a sum equal to any decrease in its security
resulting from the taking.
Fifth: To LESSEE the residue thereof.
J. Taking of Less Than Fee Title. On the taking, other than a fee title
interest in the premises or improvements or both, the question whether the
taking is total, substantial or partial, and the effects on term rent and
apportionment of award shall be negotiated. If no portion of the net usable area
of the premises is taken, or if the portion thereof so taken is subterranean or
aerial and does not interfere with the use of the surface, then LESSEE shall not
be entitled to any adjustment of rental hereunder.
16. DEFAULT; REMEDIES:
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A. Lessee's Default. Each of the following events shall be a default by
LESSEE and a breach of this lease:
1) Failure to Perform Lease Covenants. Abandonment or surrender of the
premises or of the leasehold estate, or failure or refusal to pay when due any
installment of rent or any other sum required by this lease to be paid by
LESSEE, or to perform as required or conditioned by any other covenant or
condition of this lease.
2) Appointment of Receiver. The appointment of a receiver to take
possession of the premises or improvements or of LESSEE's interest in the
leasehold estate or of LESSEE's operations on the premises for any reason,
including, but not limited to, assignment for benefit of creditors or voluntary
or involuntary bankruptcy proceedings, but not including receivership a)
pursuant to administration of the estate of any deceased or incompetent LESSEE
or of any deceased or incompetent individual member of any LESSEE, or b)
pursuant to any mortgage permitted by provisions of this lease relating to
purchase or construction of improvements, or c) instituted by COUNTY, the event
of default being not the appointment of a receiver at COUNTY'S instance, but the
event justifying the receivership, if any.
3) Insolvency, Bankruptcy. An assignment by LESSEE for the benefit of
creditors or the filing of a voluntary or involuntary petition by or against
LESSEE under any law for the purpose of adjudicating LESSEE a bankrupt; or for
extending time for payment, adjustment or satisfaction of LESSEE's liabilities;
or for reorganization, dissolution or arrangement on account of or to prevent
bankruptcy or insolvency; unless the assignment or proceedings, and all
consequent orders, adjudications, custodies and supervision are dismissed,
vacated, or otherwise permanently stayed or terminated within sixty (60) days
after the assignment, filing or other initial event.
4) Default in Mortgage Payment. Default in the payment of any loan secured
by a leasehold mortgage permitted by this lease to be placed by LESSEE against
COUNTY's title or the leasehold or both.
B. Notice as Precondition to County's Remedies. As a precondition to
pursuing any remedy for an alleged default by LESSEE, COUNTY shall, before
pursuing any remedy, give notice of default to LESSEE and mortgagees or any
qualifying mortgagee stating that the notice was for the purpose of notice under
this provision. A qualifying mortgagee is a mortgagee under a mortgage then
existing under the provisions of this lease relating to purchase or construction
of improvements. Each notice of default shall specify in detail the alleged
event of default and the intended remedy.
C. Mortgagee's Right to Cure Defaults. Each mortgagee under a mortgage then
existing shall have thirty (30) days after service of notice of default within
which, at mortgagee's election, either:
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1) To cure the default if it can be cured by the payment or expenditure of
money; or
2) If mortgagee does not elect to cure by the payment or expenditure of
money, or if the default cannot be cured, to cause the prompt initiation of
foreclosure, to prosecute it diligently to conclusion, and to perform and comply
with all other covenants and conditions of this lease requiring the payment or
expenditure of money by LESSEE until the leasehold estate shall be released or
reconveyed from the affect of the mortgage or until it shall be transferred or
assigned pursuant to or in lieu of foreclosure.
D. Lessee's Right to Cure Defaults. If the alleged default is nonpayment of
rent, taxes or other sums to be paid by LESSEE as provided in paragraph 5, page
2, hereof on rent, or elsewhere in this lease directed to be paid as rent,
LESSEE shall have thirty (30) days after notice is given to cure the default.
For the cure of any other default, LESSEE shall promptly and diligently after
the notice to commence curing the default and shall have thirty (30) days after
notice is given to complete the cure.
E. Sublessee's Right to Cure Defaults and Attornment. The rights of
sublessee to cure defaults and to attorn to COUNTY are set forth in paragraph 12
hereof.
F. County's Right to Cure Lessee's Defaults. After expiration of the
applicable time for curing a particular default, or before the expiration of
that time in the event of emergency not involving the payment of rent, taxes or
other sums under paragraph 5 (RENT) and paragraph 6 (TAXES AND ASSESSMENTS),
COUNTY may, at COUNTY's election, but is not obligated to, make any payment
required of LESSEE under this lease or under any note or other document
pertaining to the financing of improvements or fixtures on the premises, or
perform or comply with any covenant or condition imposed on LESSEE under this
lease or any such note or document, and the amount so paid, plus the reasonable
cost of any such performance or compliance, plus interest on such sum at the
rate of eighteen percent (18%) per year from the date of payment, performance or
compliance (herein called "act"), shall be deemed to be additional rent payable
by LESSEE with the next succeeding installment of rent. No such act shall
constitute a waiver of default or of any remedy for default or render COUNTY
liable for any loss or damage resulting from any such act.
G. County's Remedies. If any default by LESSEE shall continue uncured
following notice of default as required by this lease, for the period applicable
to the default under the applicable provision of this lease, COUNTY has the
following remedies in addition to all other rights and remedies provided by law
or equity, to which COUNTY may resort cumulatively or in the alternative:
1) Nonmonetary Remedies.
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a) Termination. COUNTY may, at COUNTY's election, terminate this lease and
LESSEE's right to possession at any time, in accordance with the laws of the
State of California. Termination under this paragraph shall not relieve LESSEE
from the payment of any sum then due to COUNTY or from any claim for damages
previously accrued or then accruing against LESSEE.
b) Tenant's Right to Possession Not Terminated. COUNTY can continue this
lease in full force and effect, and the lease will continue in effect as long as
COUNTY does not terminate LESSEE's right to possession, and COUNTY shall have
the right to collect rent when due. During the period LESSEE is in default,
COUNTY can enter the premises and relet them, or any part of them, to third
parties for LESSEE's account. LESSEE shall be liable immediately to COUNTY for
all costs COUNTY incurs in reletting the premises, including, without
limitation, brokers' commissions, reasonable expenses of remodeling the premises
required by the reletting, and like costs. Reletting can be for a period shorter
or longer than the remaining term of this lease. LESSEE shall pay to COUNTY the
rent due under this lease on the dates the rent is due, less the rent COUNTY
receives from any reletting. No act by COUNTY allowed by this paragraph shall
terminate this lease unless COUNTY notifies LESSEE that COUNTY elects to
terminate this lease. After LESSEE's default and for as long as COUNTY does not
terminate LESSEE's right to possession of the premises, if LESSEE obtains
COUNTY'S consent, LESSEE shall have the right to assign or sublet its interest
in this lease, but LESSEE shall not be released from liability. COUNTY's consent
to a proposed assignment or subletting shall not be unreasonably withheld.
c) Lessee's Personal Property. Subject to the rights of any lienholders,
COUNTY may, at COUNTY's election, use LESSEE's personal property and trade
fixtures or any of such property and fixtures without compensation and without
liability for use or damage or store them for the account and at the cost of
LESSEE. The election of one remedy for any one item shall not foreclose an
election of any other remedy for another item or for the same item at a later
time.
2) Monetary Remedies-Recovery of Rent. COUNTY shall be entitled, at
COUNTY's election, to each installment of rent or to any combination of
installments for any period before termination, plus interest at the rate of
eighteen percent (18%) per year from the due date of each installment. Proceeds
of resetting or attorned subrents shall be applied, when received, as follows:
a) to COUNTY to the extent that the proceeds for the period covered do not
exceed the amount due from and charged to LESSEE for the same period, and b) the
balance of LESSEE, COUNTY shall make reasonable efforts to mitigate LESSEE's
liability under this provision.
H. Damages. COUNTY shall be entitled, at COUNTY's election, to damages in
the following sums: 1) all amounts that would have fallen due as rent between
the time of termination of this lease and the time of the claim, judgment or
other award, less the proceeds of all relettings and attornments, plus interest
on the
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balance at the rate of eighteen percent (18%) per year, and 2) the "worth" at
the time of the claim, judgment or other award, of the amount by which the
unpaid rent for the balance of the term exceeds the then fair rental value of
the premises at the higher of the fair rental value as then encumbered by the
lease and improvements and the fair rental value unencumbered by the lease and
improvements. "Worth," as used in this provision, is computed by discounting the
total at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the claim, judgment or award, plus one percent (1%).
I. Assignment of Subrents. LESSEE assigns to COUNTY all subrents and other
sums falling due from subtenants, licensees and concessionaires (herein called
"subtenants") during any period in which COUNTY has the right under this lease,
whether exercised or not, to re-enter the premises for LESSEE's default, and
LESSEE shall not have any right to such sums during that period. This assignment
is subject and subordinate to any and all assignments of the same subrents and
other sums made, before the default in question, to a mortgagee under any
mortgage permitted by provisions of this lease relating to purchase or
construction of improvements. During the period LESSEE is in default, COUNTY may
re-enter the premises and improvements without terminating this lease, and
either collect these sums or bring action for the recovery of the sums directly
from such obligors, or both. COUNTY shall receive and collect all subrents and
proceeds from reletting, applying them: first, to the payment of reasonable
expenses (including attorneys' fees or brokers' commissions or both) paid or
incurred by or on behalf of COUNTY in recovering possession, placing the
premises and improvements in good condition, and preparing or altering the
premises or improvements for reletting; second, to the reasonable expense of
securing new lessees; third, to the fulfillment of LESSEE's covenants to the end
of the term; and fourth, to COUNTY's uses and purposes. LESSEE shall
nevertheless pay to COUNTY on the due dates specified in this lease the
equivalent of all sums required of LESSEE under this lease, plus COUNTY's
expenses, less the proceeds of the sums assigned and actually collected under
this provision. COUNTY may proceed to collect either the assigned sums or
LESSEE's balances or both, or any installment or installments of them, either
before or after expiration of the term, but the period of limitations shall not
begin to run on LESSEE's payments until the due date of the final installment to
which COUNTY is entitled nor shall it begin to run on the payments of the
assigned sums until the due date of the final installment due from the
respective obligors.
J. Unavoidable Default or Delay. Any prevention, delay, nonperformance or
stoppage due to any of the following causes shall excuse nonperformance for a
period equal to any such prevention, delay, nonperformance or stoppages except
the obligations imposed by this lease for the payment of rent, taxes, insurance
or obligations to pay money that are treated as rent. The causes referred to
above are: strike, lockouts, labor disputes, failure of power, irresistible
superhuman cause, acts of public enemies of this state or of the United States,
riots, insurrections, civil
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commotion, inability to obtain labor or materials or reasonable substitutes for
either, governmental restrictions or regulations or controls (except those
reasonably foreseeable in connection with the uses contemplated by this lease),
casualties not contemplated by insurance provisions of this lease, or other
causes beyond the reasonable control of the party obligated to perform.
K. Waiver, Voluntary Acts. No waiver of any default shall constitute a
waiver of any other breach or default, whether of the same or any other covenant
or condition. No waiver, benefit, privilege or service voluntarily given or
performed by either party shall give the other any contractual right by custom,
estoppel or otherwise. The subsequent acceptance of rent pursuant to this lease
shall not constitute a waiver of any preceding default by LESSEE other than
default in the payment of the particular rental payment so accepted, regardless
of COUNTY's knowledge of the preceding breach at the time of accepting the rent,
nor shall acceptance of rent or any other payment after termination constitute a
reinstatement, extension or renewal of the lease or revocation of any notice or
other act by COUNTY.
L. Attorney's Fees. If either party brings any action or proceeding to
enforce, protect or establish any right or remedy, the prevailing party shall be
entitled to recover reasonable attorney's fees.
17. Special Provisions:
A. Instrument of Transfer. This lease shall be subordinate and subject to
the provisions and requirements of the Instrument of Transfer by and between the
United States and Airport, dated the 9th day of October, 1947, and recorded in
Book 1137, at Page 114 of Official Records of Contra Costa County, California.
B. Nondiscrimination.
1) LESSEE, as a part of the consideration hereof, does hereby covenant and
agree as a covenant running with the land, that in the event facilities are
constructed, maintained, or otherwise operated on the said property described in
this lease, for a purpose for which a DOT program or activity is extended or for
another purpose involving the provision of similar services or benefits, the
lessee shall maintain and operate such facilities and services in compliance
with all other requirements imposed pursuant to Title 49, Code of Federal
Regulations, DOT, Subtitle A, Office of the Secretary, Part 21,
Nondiscrimination in FederallyAssisted Programs of the Department of
Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations may be amended.
2) LESSEE, as a part of the consideration hereof, does hereby covenant and
agree as a covenant running with the land that: (1) no person on the grounds of
race, color, or national origin shall be excluded from participation in, denied
the benefits of, or be otherwise subjected to discrimination in the use of said
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facilities, (2) in the construction of any improvements on, over, or under such
land and the furnishing of services thereon, no person on the grounds of race,
color or national origin shall be excluded from participation in, denied the
benefits of, or otherwise be subject to discrimination, (3) the LESSEE shall use
the premises in compliance with all other requirements imposed by or pursuant to
Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A,
Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted
Programs of the Department of Transportation-Effectuation of Title VI of the
Civil Rights Act of 1964, and as said Regulations may be amended.
3) That in the event of breach of any of the above nondiscrimination
covenants, COUNTY shall have the right to terminate the lease and to reenter and
repossess said land the facilities thereon, and hold the same as if said lease
had never been made or issued. This provision does not become effective until
the procedures of 49 CFT Part 21 are followed and completed including expiration
of appeal rights.
4) LESSEE shall furnish its accommodations and/or services on a fair, equal
and not unjustly discriminatory basis to all users thereof and it shall charge
fair, reasonable and not unjustly discriminatory prices for each unit or
service; PROVIDED, THAT the LESSEE may be allowed to make reasonable and
nondiscriminatory discounts, rebates or other similar type of price reductions
to volume purchasers.
5) Non-compliance with Provision 4 above shall constitute a material breach
thereof and in the event of such non-compliance the COUNTY shall have the right
to terminate this lease and the estate hereby created without liability
therefore or at the election of the COUNTY or the United States either or both
said Governments shall have the right to judicially enforce Provisions.
6) LESSEE agrees that it shall insert the above five provisions in any
lease agreement by which said LESSEE grants a right or privilege to any person,
firm or corporation to render accommodations and/or services to the public on
the premises herein leased.
7) LESSEE assures that it will undertake an affirmative action program as
required by 14 CFR Par 152, Subpart E, to insure that no person shall on the
grounds of race, creed, color, national origin, or sex be excluded from
participating in any employment activities covered in 14 CFR Part 152, Subpart
E. LESSEE assures that it will require that its covered suborganizations provide
assurances to the LESSEE that they similarly will undertake affirmative action
programs and that they will require assurances from their suborganizations, as
required by 14 CFR 152, Subpart E, to the same effort.
C. Airport Use and Development.
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1) COUNTY reserves the right to further develop or improve the landing area
of the airport as it sees fit, regardless of the desires or view of LESSEE and
without interference or hindrance.
2) COUNTY reserves the right, but shall not be obligated to the lessee to
maintain and keep in repair the landing area of the airport and all
publicly-owned facilities of the airport together with the right to direct and
control all activities of the lessee in this regard.
3) This lease shall be subordinate to the provisions and requirements of
any existing or future agreements between the County and the United States,
relative to the development, operation or maintenance of the airport.
4) There is hereby reserved to the COUNTY, its successors and assigns, for
the use and benefit of the public, a right of flight for the passage of aircraft
in the airspace above the surface of the premises herein leased. This public
right of flight shall include the right to cause in said airspace any noise
inherent in the operation of any aircraft used for navigation or flight through
the said airspace or landing at, taking off from or operation on Buchanan Field
airport.
5) Any physical taking of the subject premises for use by the Airport shall
be considered a taking pursuant to the governmental power of eminent domain and
such condemnation shall be treated as such pursuant to the terms and conditions
of paragraph 14, page 27.
D. Development of Premises.
1) LESSEE agrees to comply with the notification and review requirements
covered in Part 77 of the Federal Aviation Regulation in the event future
construction of a building is planned for the leased premises, or in the event
of any planned modification or alteration of any present of future building or
structure situated on the leased premises.
2) LESSEE agrees that it will not erect nor permit the erection of any
structure or object, nor permit the growth of any tree on the leased premises to
exceed the established height contours. In the event the aforesaid covenants are
breached, the COUNTY reserves the right to enter upon the leased premises
hereunder and to remove the offending structure or object and cut the offending
tree, all of which shall be at the expense of LESSEE.
3) LESSEE by accepting this lease agrees that it will not take use of the
leased premises in any manner which might interfere with the landing and taking
off of aircraft from Buchanan Field Airport or otherwise constitute a hazard. In
the event the aforesaid covenant is breached, the COUNTY reserves the right to
enter upon the premises hereby leased and cause the abatement of such
interference at the expense of the LESSEE.
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4) It is understood and agreed that nothing herein contained shall be
construed to grant or authorize the granting of an exclusive right within the
meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. 1349a).
5) This lease and all the provisions hereof shall be subject to whatever
right the United States Government now has or in the future may have or acquire,
affecting the control, operation, regulation and taking over of said airport or
the exclusive or non-exclusive use of the airport by the United States during
the time of war or national emergency.
18. General Conditions; Miscellaneous Provisions:
A.
1) DELETED -- SEE AMENDMENT
2) Writing. All notices must be in writing.
3) Delivery. Notice is considered given either a) when delivered in person
to the recipient names as below or b) on the date shown on the return receipt
after deposit in the United States mail in a sealed envelope or container,
either registered or certified mail, return receipt requested, postage and
postal charges prepaid, addressed by name and address to the party or person
intended as follows:
Notice to COUNTY: Manager of Airports
171 John Glenn Drive
Concord, California 94520
Notice to LESSEE:
B. Entire Agreement. This lease contains the entire agreement between the
parties. No promise; representation, warranty or covenant not included in this
lease has been or is relied on by either party. Each party has relied on his own
examination of this lease, the counsel of his own advisors, and the warranties,
representations and covenants in the lease itself. The failure or refusal of
either party to inspect the premises or improvements, to read the lease or other
document, or to obtain legal or other advice relevant to this transaction
constitutes a waiver of any objection, contention or claim that might have been
based on such reading, inspection or advice.
-28-
C. Severability. The invalidity or illegality of any provision shall not
affect the remainder of the lease.
D. Successors. Subject to the provisions of this lease on assignment and
subletting, each and all of the covenants and conditions of this lease shall be
binding on and shall inure for the benefit of the heirs, successors, executors,
administrators, assigns and personal representatives of the respective parties.
E. Lessee's Duty to Surrender. At the expiration or earlier termination of
the term, LESSEE shall surrender to COUNTY the possession of the premises.
Surrender or removal of improvements, fixtures, trade fixtures and improvements
shall be as directed in provisions of this lease on ownership of improvements at
termination.
F. Recordation of Abstract Only. This lease shall not be recorded; only a
memorandum of this lease shall be recorded. The parties shall execute the
memorandum in form and substance as required by a title insurance company
insuring LESSEE's leasehold estate or the interest of any leasehold mortgagee or
mortgagee, and sufficient to give constructive notice of the lease to subsequent
purchasers and mortgagees.
G. The captions and the table of contents of this lease shall have no
effect on its interpretation.
H. No encroachment will be allowed on any of the Airport imaginary approach
surfaces as defined by Federal Air Regulation Part 77, and as shown on the
current Airport Layout Plan and further as described similarly by the Airport
Land Use Commission. It shall be the LESSEE's responsibility to assure that no
encroachment occurs. Contra Costa County requires that LESSEE submit written
certification that the building location does not encroach above any of the
imaginary surfaces and further requires that a registered surveyor attest to the
adequacy of the clearance for the imaginary surfaces.
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I. TIME IS OF THE ESSENCE of each and all of the terms and provisions of
this lease.
COUNTY LESSOR
COUNTY OF CONTRA COSTRA, a
political subdivision of
the State of California By /s/
By /s/ General Partner
Chairman, Board of Title
Supervisors
ATTEST: PHIL BATCHELOR, CLERK OF By
THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
Title
By /s/
Deputy Clerk
RECOMMENDED FOR APPROVAL: APPROVED AS TO FORM:
VICTOR J. WESTMAN,
County Counsel
By /s/
Deputy County
Administrator By /s/
By /s/
Deputy Public Works
Director Buildings
and Grounds
By /s/
Lease Manager
By /s/
Manager of Airports
-30-
EXHIBIT C
FIRST AMENDMENT TO LEASE
AND
CONSENT TO ASSIGNMENT
SOLANO WAY PARTNERSHIP
4901 Marsh Drive
Concord, CA 94520
Buchanan Field Airport
1. PARTIES. Effective on _____________, the COUNTY OF CONTRA COSTA, a
political subdivision of the State of California, hereinafter called "Airport,"
and THE SOLANO WAY PARTNERSHIP, a California General Partnership formed under
the laws of the State California, hereinafter called "Tenant," hereby mutually
agree as follows:
2. PURPOSE. Airport is the owner of certain real property located in the
City of Concord, California, near the Buchanan Field Airport. Said property was
leased by Airport to Tenant pursuant to a written lease dated August 20, 1985
(the "Original Lease"). The Original Lease, together with the amendment and all
of the assignments described herein shall be referred to as the "Lease". In
January 1990, Tenant assigned its leasehold interest to Comerica Bank-Detroit, a
Michigan banking corporation, as security for a loan. On January 23, 1990,
Airport consented to said leasehold assignment by Tenant, as provided in the
Lease. On May 1, 1991, Tenant further assigned its leasehold interest for the
purpose of securing a loan by entering into a Deed of Trust with Assignments of
Rents, and a Promissory Note Secured By a Deed of Trust, each as further
described herein. A purpose of this Agreement is to provide the necessary
consent to said assignment.
Subsection 5.D. Consumer Price Index Adjustment, of the Lease states that
rent for the leased premises shall be revalued after the first ten years of the
lease term and every five years thereafter based upon the fair market value of
the land. The purpose of the First Amendment to Lease is 1) to amend Section 5.
Rent, of the Lease to provide for said revaluation of rent, as further described
herein, and 2) to amend Section 18. General Conditions: Miscellaneous Conditions
pertaining to Notice.
3. CONSENT TO ASSIGNMENT.
On May 1, 1991, Tenant, as Trustor, entered into a Deed of Trust with
Assignments of Rents ("Deed") with Chicago Title Company, as Trustee, and with
the Chrysler Credit Corporation, a Delaware corporation, as the Beneficiary. On
May 1, 1991, Tenant also signed a Promissory Note Secured By a Deed of Trust
("Promissory Note") promising to repay the Chrysler Credit Corporation a
specified sum. Both the Deed and the Promissory Note acted to assign Tenant's
leasehold estate in the premises as
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security for said Deed and Promissory Note. The Deed and the Promissory Note are
together attached hereto and made a part hereof as Exhibits "C" and "D". Airport
hereby acknowledges and consents to such assignment by Tenant, and agrees that
said Deed and Promissory Note are permitted leasehold encumbrances, and are
leasehold mortgages, as defined in Section 11.A. of the Lease; provided,
however, that neither the Deed, the Promissory Note, nor any of the loan
instruments referenced therein, shall be construed to impose any obligation on
Airport, and that Airport's consent herein given does not constitute a consent
to any additional loan or loans, or to a waiver of any of the terms and
conditions set forth in the Lease, and shall not act to alter, amend, or
subordinate all or any part of this Lease.
4. AMENDMENT.
A. Section 5. Rent, shall be deleted in its entirety and replaced with the
following:
5. RENT. Tenant shall pay to Airport monthly rent as follows:
A. Base Rent. Beginning January 1, 1996, Tenant shall pay base rent ("Base
Rent") to Airport equal to Nine Thousand Four Hundred Twenty and No/100 Dollars
($9,420.00) per month, for the 4 acre site shown as parcels A and B on Exhibit
"B" of the Original Lease. Said parcels of land shall hereinafter together be
referred to as the "4 Acre Site". Said Base Rent shall be paid at the beginning
of each month during the term of this Lease, subject to the revisions described
in Subsections 5.D., 5.E., and 5.F., herein.
B. Additional Base Rent. Beginning September 1, 1998, Tenant shall pay to
Airport, in addition to the Base Rent described in Subsection 5.A. Base Rent
above, additional base rent ("Additional Base Rent") each month, for the 2.1
acre site shown as Parcel C on Exhibit "B" of the Original Lease, the "2.1 Acre
Site", equal to fifty percent (50%) of the per-square-foot rate paid for the 4
Acre Site, described in Subsection 5.A. Base Rent, herein, at that time. For
example, if, on September 1, 1998, Base Rent, for the 4 Acre Site, is $9,500.00
per month, this equals a per square- foot rate of $.0545 ($9,500.00/(4 acres X
43,560 sf)). In this example, Additional Base Rent for the 2.1 Acre Site would
be $2,495.00 (rounded) per month (2.1 acres X 43,560 sf X ($.0545/2)).
Additional Base Rent shall be adjusted at the same time that Base Rent is
adjusted as provided in Subsections 5.D., 5.E., and 5.F. herein.
C. Per-Vehicle-Fees. Beginning January 1, 1996, and continuing for every
month thereafter during the term of this Lease, Tenant shall pay to Airport, as
additional rent, a per- vehicle-fee (a "Per-Vehicle-Fee") for every new or used
vehicle sold above a base number of 140 vehicles per month, except as otherwise
provided herein. Per-Vehicle-Fee payments shall be calculated and made on or
before the tenth (10th) day of each month
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and shall represent vehicles sold in the most recent previous month.
The fee used in the calculation of Per-Vehicle-Fees described herein
beginning January 1, 1996, shall be $50.00 per vehicle, and shall be subject to
revision as described herein. For example, if Tenant sold 140 or fewer new or
used cars in the previous month, Tenant shall not pay a Per-Vehicle-Fee to
Airport for that month. However, if Tenant sold 150 cars, for example, in the
previous month, and the per-vehicle-fee was $50.00 per car at that time, Tenant
would pay a Per-Vehicle-Fee to Airport equal to $500.00 (150 - 140 = 10 cars X $
50.00).
Beginning January 1, 1997, the Per-Vehicle-Fee shall be adjusted annually
for CPI increases as described in Subsection 5.D. Consumer Price Index
Adjustment herein. The Per-Vehicle-Fee shall never be less than the preceding
year's Per-Vehicle-Fee.
All new or used cars sold by Tenant in a particular month, that are not
otherwise excludable as provided herein, shall be included in the calculation of
Per-Vehicle-Fees for that month. All vehicles 1) which specifically qualify as
"fleet sales", as defined herein, and which are sold to rental car companies or
to governmental agencies, or 2) which qualify as fleet sales and are
specifically approved as excludable, in writing, by the Manager of Airports, or
3) which are sold wholesale to others, shall be excluded from the calculation of
Per-Vehicle-Fees. For the purposes of this Subsection, "fleet sales" shall be
defined as any bulk sale of ten (10) or more vehicles, sold during a single
transaction, to an individual business or entity. For example, sales of vehicles
that do not qualify as "fleet sales", shall not be excluded from the calculation
of Per-Vehicle-Fees, nor shall fleet sales that are not approved as excludable
by the Manager of Airports, in writing.
Each Per-Vehicle-Fee payment shall be accompanied by a statement signed by
a responsible accounting officer of Tenant listing the number of new vehicles
sold during the past month. Airport shall be entitled during the term of this
Lease, and for that period of time thereafter that Tenant is required by law to
keep its California Department of Motor Vehicles Report of Sales Books, to
inspect and examine said books. The receipt by the Airport of any statement, or
the payment of any Per-Vehicle-Fees, shall not bind the Airport as to the
correctness of the statement or the payment.
D. Consumer Price Index Adjustment. Beginning on January 1, 1997, and
annually on each January 1, during the term of this Lease, Airport without prior
notice to Tenant, shall revise Base Rent, as described in Subsection 5.A. Base
Rent hereinabove, by multiplying said Base Rent figure times one plus the
one-year change in the Consumer Price Index ("CPI") as further described
hereinbelow. However, any increase in rents based on the CPI shall be limited to
a maximum of ten percent (10%) per annum of rental then in effect, or a maximum
of twenty-five percent (25%) over any
-3-
five (5) year period. Such rental shall be automatically increased on the same
date each year during the term of this Lease or any extensions thereto or
holdover thereof.
For the purposes of calculating the adjustments to rent provided in this
Lease, the one-year change in the CPI, as herein used, shall be calculated by
taking the CPI figure reported for the month just prior to the adjustment date,
subtracting the CPI figure reported twelve (12) months previously, (the "1 Year
CPI") and dividing the result by the 1 Year CPI. For example, if rent is to be
adjusted effective January 1, 1997, the CPI figure reported for December 1995
(the 1 Year CPI) will be subtracted from the CPI figure reported for December
1996, and the result will be divided by the December 1995 figure. The resulting
CPI figure shall be calculated to the nearest one-tenth of one percent. The CPI
figures used in the above calculations shall be as stated in the San
Francisco-Oakland-San Jose Consumer Price Index, All Urban Consumers (1982-84 =
100), promulgated by the Bureau of Labor Statistics, or any successor or
substitute index published as a replacement for that Index by said Department or
by any other United States governmental agency.
For example, if Base Rent for December 1996 is $9,420.00 per month, the CPI
figure for December 1996 is 154.5, and the CPI figure for December 1995 was
150.0, then Base Rent would be revised to $9,705.00 (rounded) effective January
1, 1997, as follows: ($9,420.00 X (((154.5 - 150.O)/150.0) + 1)).
E. Fair Rental Revaluation: On January 1, 2001, and on January 1, 2006,
2011, and 2016, in addition to the rent adjustments described in Subsection 5.D.
Consumer Price Index Adjustment above, Airport shall revise Base Rent, as
described herein, in effect at the time of such revision, based upon the fair
market value of the land.
For the purposes of revaluing the Base Rent, only the 4 Acre Site described
in Subsection 5.A. Base Rent above shall be valued. The resulting value per
square foot shall then be used to revise both Base Rent, for the 4 Acre Site,
and Additional Base Rent, for the 2.1 Acre Site, as defined and provided herein.
The fair market value of the land shall be determined as though the land
constituting the premises were unencumbered by this Lease, and shall be based on
the higher of the fair market value of the leasehold land with the highest and
best use established as a Light Industrial site or as a new car automobile
dealership. Base Rent or Additional Base Rent shall not be reduced by the
revaluations just described, nor shall Base Rent or Additional Base Rent be
increased by more than twenty-five percent (25%) above their levels stated five
(5) years previous.
For example, say Base Rent in 1996 is $100,000 per year, and is increased
by annual CPI adjustments to $120,000 per year by the year 2001. Then in 2001, a
fair market valuation of the land indicated that Base Rent should be $140,000
per year.
-4-
Because of the 25% cap described above, rent shall only be increased by the fair
market revaluation to $125,000 per year ($100,000 X 1.25), a $5,000.00 increase.
If, however, annual CPI adjustments increase rent to $125,000 per year by the
year 2001, and the five year revaluation of the land indicates a Base Rent of
$125,000, then rent shall remain at $125,000, until the next annual CPI
adjustment. Base Rent will then continue to be subject to increases as described
herein.
F. Rental Revision: If, for any reason, either Base Rent, Additional Base
Rent, or the Per-Vehicle-Fee, described herein, is not revised at such time or
times as herein specified, said rental shall continue to be subject to revision
in the manner herein specified and, when so revised, shall be retroactive to the
date the revised rental should have become effective. Neither the Fair Rental
Revaluations described in Subsection 5.E. Fair Rental Revaluation, nor the CPI
revisions described in Subsection 5.D. Consumer Price Index Adjustment shall be
applied to reduce either Base Rent, Additional Base Rent, or Per-Vehicle-Fees
below their levels existing just prior to said revaluation or revision.
G. Payment of Rent: All payment of rent required to be paid to the Airport
under the terms of this Lease shall be made in lawful money of the United
States, which at the time of such payment shall be legal tender for the payment
of public and private debts, free from all claims, demands, setoffs or counter
claims of any kind or character against Airport, and shall be payable to Contra
Costa County at the office of the Manager of Airports, 550 Sally Ride Drive,
Concord, California 94520, or at such other place or places as may from time to
time be designated by the Airport by written notice give to the Tenant.
H. Arbitration: In the event the parties hereto are unable to agree upon
any rental, then upon thirty (30) days' written notice by Airport to Tenant, the
matter shall be submitted to and decided by a board of arbitrators consisting of
three (3) M.A.I. appraisers; one to be appointed by Airport, one by Tenant, and
a third by the two appraisers so appointed. Should Tenant fail or refuse to
appoint an arbitrator within thirty (30) days after delivery of notice from
Airport, then the rental established by Airport shall be deemed accepted by
Tenant. In the event the two arbitrators chosen by the parties hereto are unable
to agree upon the third arbitrator, such arbitrator shall be appointed by a
judge of the Contra Costa County Superior Court upon application of either
Airport or Tenant to said court, but such application shall not be made until
such party shall have given twenty (20) days advance notice in writing to the
other of its intention so to do. The arbitrators as soon as possible after their
selection, shall meet to hear and decide the questions submitted to them and
shall, within a reasonable period of time, give to each of the parties hereto
notice of the time and place of such meeting. The hearings of the board of
arbitrators shall be conducted in a lawful manner. The written decision of the
board, signed by at least a majority of the arbitrators, shall determine the
matter and such determination shall be final and conclusive upon the parties
hereto; upon
-5-
decision of the arbitrators, the rental payment shall be retroactive to its
increase date as determined herein. The fees and expenses of arbitration shall
be borne as the parties may agree prior to arbitration, or, in case of
disagreement, shall be apportioned by the board of arbitrators.
I. Delinquent Rent. In addition to other remedies contained in Section
16.A., entitled "Lessee's Default", in the event that Tenant shall become
delinquent in paying to Airport any rent payment due under this Lease, Tenant
shall pay to Airport interest on said unpaid balance at the interest rate of
eighteen percent (18%) per annum from the date such payment was due and payable
until the date such payment is made in full.
B. Section 18., Subsection A. Notice, shall be deleted in its entirety and
replaced with the following:
A. Notices: Any and all notices given under this Lease, or otherwise, may
be served by enclosing same in a sealed envelope addressed to the party intended
to receive same, at its address, and deposited in the Untied States Post Office
as certified mail with postage prepaid. When so given, such notice shall be
effective forty-eight (48) hours from the date of the mailing of the same. For
the purposes thereof, unless otherwise provided in writing by the parties
hereto, the address of Airport, and the proper party to receive any such notices
on its behalf is:
Manager of Airports
Buchanan Field Airport
550 Sally Ride Drive
Concord, CA 94520
and the address of Tenant is:
Mr. Bernard L. Magnussen
The Solano Way Partnership
545 Middlefield Road, Suite 240
Menlo Park, CA 94025
and the address of Leasehold Mortgagees are:
Comerica Bank - Detroit
7901 Stoneridge Drive, Suite 247
Pleasanton, CA 94566
And
Chrysler Credit Corporation
4900 Hopyard Road, Suite 320
Pleasanton, CA 94566
ATTN: J. Moniz
-6-
With copy to:
Gregory E. Stubbs, Esq.
Stubbs, Hittig & Leone
1390 Market Street, Suite 818
San Francisco, CA 94102
4. EXCEPT for the amendments agreed to herein, the Lease of August 20,
1985, as amended, remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the above date.
SIGNATURES
AIRPORT
CONTRA COSTA COUNTY, a political subdivision
of the State of California
By ____________________________
J. Michael Walford,
Public Works Director
TENANT
THE SOLANO WAY PARTNERSHIP
By ____________________________
Bernard L. Magnussen,
General Partner
RECOMMENDED FOR APPROVAL: By:_____________________________
By ____________________________
DeRoyce Bell,
Deputy County Administrator
By ____________________________
Harold E. Wight,
Manager of Airports
By ____________________________
Dick R. Awenius,
Airports Lease Manager
APPROVED AS TO FORM:
VICTOR J. WESTMAN,
County Counsel
By ___________________________
Sharon L. Anderson
Deputy County Counsel
-7-
DO NOT DESTROY THIS NOTE:
WHEN PAID, THIS NOTE AND THE DEED OF TRUST SECURING SAME MUST BE
SURRENDERED TO TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE WILL BE MADE.
PROMISSORY NOTE SECURED BY DEED OF TRUST
$1,737,851.00 San Francisco, California
(9.94%) May 1, 1991
For value received, THE SOLANO WAY PARTNERSHIP, promises to pay to CHRYSLER
CREDIT CORPORATION, or order, at its offices at 4900 Hopyard Road, Pleasanton,
California 94588, or at such other place as the holder may from time to time
designate by written notice to maker, the principal sum of ONE MILLION SEVEN
HUNDRED THIRTY SEVEN THOUSAND EIGHT HUNDRED FIFTY ONE DOLLARS ($1,737,851.00)
with interest from the date of advance under this note until paid at the rate of
NINE AND NINETY-FOUR HUNDREDTHS percent (9.94%) per annum on the balance
remaining from time to time unpaid. Principal and interest shall be due and
payable in lawful money of the United States of America.
This note is due and payable as follows: On the first day of the month
immediately following the date of advance hereunder interest only shall be due
and payable for the period commencing on the date of advance to said first day;
thereafter on the first of each succeeding month the note is due and payable in
monthly installments of TWENTY TWO THOUSAND NINE HUNDRED EIGHT DOLLARS AND
THIRTEEN CENTS ($22,908.13). Each of such installments shall be applied first to
interest and the balance to principal until the first day of the sixty-first
month after the date of advance when the entire balance of principal then
outstanding together with interest accrued thereon shall be paid in full.
If default occurs in the payment of any sum under this note when due, or in
the performance of any of the agreements contained in the deed of trust securing
this note, any loan agreement between maker or THE SOLANO WAY PARTNERSHIP, as
borrower and CHRYSLER CREDIT CORPORATION as lender, any guarantee between
CHRYSLER CREDIT CORPORATION and maker or MAGNUSSEN DODGE, BERNARD MAGNUSSEN or
BOYDE D. BARBEE, as Guarantor then the entire principal sum and accrued interest
shall at once become due and payable without notice, at the option of the holder
of this note. Failure to exercise such option shall not constitute a waiver of
the right to exercise it in the event of any subsequent default.
This Promissory Note evidences borrowing under and is subject to the terms
of a Loan Agreement between the Borrower and Lender dated May 1, 1991 and the
terms, conditions and promises of that Agreement are hereby incorporated in this
Promissory Note by reference as fully as if set out herein.
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In case of default in the payment of any amounts due hereunder which shall
continue for more than 5 days, or default under any instruments securing this
Note which shall continue beyond the applicable grace period, if any, then, or
at any time thereunder during default the holder hereof may, without notice,
declare the entire debt then remaining unpaid immediately due and payable.
During the period of any default under the terms of this note the interest
rate on the entire indebtedness then outstanding shall be at the rate of 25% per
annum until such default be cured. For this purpose default means the failure to
make a payment on the date due. Any late payment may be subject to the
imposition of a late charge of 5% of the unpaid amount.
The Borrower, and each endorser, surety, guarantor and other party who may
be or become liable for the payment of this note, waives presentment for
payment, demand, notice of dishonor, protest and notice of protest, notice of
nonpayment, delays in collection, and agree that the holder hereof may at any
time, and from time to time, extend the time for, or the due date of, any
payment due hereunder, or otherwise modify the terms of payment of all or any
Part of the indebtedness evidenced by this note, whether such extension or
modification shall be granted or made before, at, or after maturity, and agrees
that at any time while this note shall be in default, all indebtedness due
hereunder shall, at the option of the holder hereof, be and become immediately
due and payable without demand or notice, and agrees to pay all costs of
collection, including reasonable attorney's fees, whether suit shall be brought
or not.
Under any default hereunder all persons liable hereon promise to pay all
costs of collection, enforcement and defense of this instrument and the
obligations there in and legal proceedings related, ancillary, or supplementary
thereto, including reasonable attorney's fees. It is expressly agreed that such
costs and attorney fees, aforesaid, shall include such as may be incurred by the
holder hereof in prosecuting or resisting any proceedings in appellate courts
before or after final decision of a court of competent jurisdiction arising out
of any action to collect, enforce or defend the herein instrument and
indebtedness and any and all other instruments, agreements, liens, assignments
or security agreements entered into in connection herewith.
Notwithstanding anything contained herein to the contrary no holder of this
note shall ever be entitled to receive, collect or apply, as interest on the
obligation, any amount in excess of the maximum lawful rate under applicable
law, and in the event the holder hereof ever receives, collects or applies as
interest, any Such excess, such amount which would be excessive interest shall
be applied to the reduction of the principal debt; and, if the principal debt is
paid in full, any remaining excess shall forthwith be paid to Borrower.
Should interest not be paid as required under this note, it shall bear like
interest as the principal but such interest so
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compounded shall not exceed an amount equal to simple interest on the unpaid
principal at the maximum rate then permitted for nonconsumer loans in
California.
In the event that the leasehold estate in the real property which is given
as security for this note, as provided in that certain deed of trust of even
date herewith and referred to above, or any part of it or any interest in it is
assigned, sold, further encumbered or if it is agreed that it will be assigned,
sold, conveyed, further encumbered, or alienated by the trustor, or by the
operation of law or otherwise, all obligations described in this note and
secured by the said deed of trust, irrespective of the maturity dates expressed
herein, at the option of the holder, and without demand or notice, shall
immediately become due and payable.
THE SOLANO WAY PARTNERSHIP
By __________________________________
General Partner
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