EXHIBIT 10.9.4
LEASE AGREEMENT
This Lease ("LEASE") is entered into this 1st day of July 1997 in the City
of Santa Clara, County of Santa Clara, State of California, between Rosewood
Village Associates, a California limited partnership ("LANDLORD") and
FirstAmerica Automotive, Inc., a Delaware corporation ("FIRSTAMERICA"), and
California Carriage Limited a California corporation ("SUBSIDIARY")
(collectively, "TENANT").
1. PREMISES. On and subject to the terms, covenants and conditions set forth
in this Lease, Landlord leases to Tenant and Tenant rents from Landlord that
certain real property, including all buildings, improvements and appurtenances
existing thereon, commonly known as 1300 Concord Avenue, Concord, California and
as more particularly described and shown on Exhibit A hereto (the "PREMISES").
2. TERM.
2.1 PERIOD. Subject to Section 2.2 below, the term of this Lease (the
"TERM") shall be for a period of fifteen (15) years commencing on July 1, 1997
(the "COMMENCEMENT DATE") and ending on June 30, 2012 (the "TERMINATION DATE"),
unless sooner terminated pursuant to any provision of this Lease. Except as
otherwise expressly set forth in this Lease, Tenant hereby accepts the Premises
in the condition existing as of the date of execution hereof and Tenant
acknowledges that neither Landlord, nor any representative of Landlord has made
any representation or warranty as to the suitability of the Premises for the
conduct of Tenant's business. If Landlord, for any reason, cannot deliver
possession of the Premises to Tenant on the Commencement Date, this Lease shall
not be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting from such delay. In that event, however, there shall be an
abatement of Rent (as defined below) covering the period between the
Commencement Date and the date when Landlord delivers possession to Tenant and
such date on which possession is delivered shall be the Commencement Date and
the Termination Date shall be the day immediately preceding the tenth
anniversary of the Commencement Date. If a delay in possession is caused by
Tenant's failure to perform any obligation in accordance with this Lease, the
Term shall commence as of the Commencement Date, and there shall be no reduction
of Rent between the Commencement Date and the time Tenant takes possession.
2.2 EXTENDED TERM. Tenant shall have the option to extend the Term for two
(2) consecutive five (5) year periods (the "FIRST EXTENDED TERM" and "SECOND
EXTENDED TERM", respectively) on all the terms and conditions contained in this
Lease including, without limitation, continuation of the adjustment of the Base
Rent on an annual basis as provided in Section 3.3 below (provided only that
upon commencement of the First Extended Term the only remaining option to extend
the Term shall be the Second Extended Term and upon exercise of the option with
respect to the Second Extended Term, no further right to extend the Term shall
exist). Tenant shall deliver, if at all, written notice of its exercise of the
option ("OPTION NOTICE") to Landlord at least six (6) months but not more than
one (1) year before the expiration of the Term or First Extended Term, as the
case may be. In the event Tenant fails to deliver the applicable Option Notice
within the time allowed, Landlord shall deliver written notice to Tenant of
Tenant's failure to deliver the Option Notice, and Tenant shall then have thirty
(30) days from receipt of such notice within which to deliver the Option Notice,
if at all, to Landlord. In the event (and only in the event) that, Tenant fails
to deliver an Option Notice to Landlord within such thirty (30) days, Tenant
shall be considered to have elected not to extend the Term of this Lease and
thereafter, Tenant shall have no further right to extend the Term of this Lease.
References in this Lease to the "Term" shall include the initial Term of
fifteen (15) years and shall,
in addition, include the First Extended Term and the Second Extended Term, if
applicable.
3. RENT.
3.1 BASE RENT. Tenant shall pay to Landlord as monthly base rent ("BASE
RENT") for the Premises, in advance on the Commencement Date and on the first
(1st) day of each and every calendar month of the Term thereafter, without
deduction, set-off, prior notice or demand in a lawful currency of the United
States of America, the Base Rent as described in this Lease. The Base Rent
commencing as of the Commencement Date and continuing through the last day of
the month in which the third anniversary of the Commencement Date occurs, shall
be the sum of $32,500 per month. Commencing on the first day of the calendar
month immediately thereafter, and continuing for the balance of the Term
(including the First Extended Term and the Second Extended Term, if applicable)
the Base Rent shall be adjusted as provided in Section 3.3.
3.2 LATE CHARGE. Tenant acknowledges that late payment by Tenant to
Landlord of any Base Rent shall cause Landlord to incur costs not contemplated
by this Lease, the exact amount of such cost being extremely difficult and
impracticable to ascertain. Such costs include, without limitation, processing
and accounting charges and late charges that may be imposed on Landlord by the
terms of any encumbrance or note secured by the Premises. Therefor, if any Base
Rent is not received by Landlord within ten (10) days of its due date, Tenant
shall pay to Landlord a late charge equal to Five Hundred Dollars ($500).
Landlord and Tenant hereby agree that such late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of any such
late payment and that the late charge is in addition to any and all remedies
available to the Landlord and that the assessment and/or collection of the late
charge shall not be deemed a waiver of any other default.
3.3 ADJUSTMENT TO BASE RENT. The Base Rent, commencing on the first day of
the calendar month immediately following the calendar month in which the third
anniversary of the Commencement Date occurs ("INITIAL ADJUSTMENT DATE") shall be
adjusted in accordance with the provisions of this Section 3.3 and shall,
thereafter, be adjusted annually on each anniversary of the Initial Adjustment
Date (each date an "ADJUSTMENT DATE") during the balance of the Term (including
the First Extended Term and the Second Extended Term, if applicable). Such
adjustment to Base Rent shall reflect two-thirds (2/3) of any increase in the
Consumer Price Index and shall be calculated as follows:
The base for computing the adjustment is the Consumer Price Index (All
Items) for Urban Consumers for the San Francisco-Oakland-San Jose Metropolitan
Area, published by the United States Department of Labor, Bureau of Labor
Statistics ("INDEX") which is in effect immediately prior to the second
anniversary of the Commencement Date ("BEGINNING INDEX"). The Index published
and in effect on the 30th day preceding the Initial Adjustment Date and on the
30th day preceding each Adjustment Date thereafter ("ADJUSTMENT INDEX") is to be
used in determining the amount of the increase from one year to the next.
Beginning as of the Initial Adjustment Date and continuing on each Adjustment
Date thereafter, the Base Rent shall be increased to equal the product achieved
by multiplying the initial Base Rent amount by a fraction, the numerator of
which shall be an amount equal to the sum of (i) the Beginning Index plus (ii)
two-thirds (2/3) of the amount, if any, by which the Adjustment Index is greater
than the Beginning Index, and the denominator of which will be the Beginning
Index. Notwithstanding the foregoing, the Base Rent shall not be increased by
more than six percent (6%) nor less than four percent (4%) of the Base Rent for
the immediately preceding year in any one year period.
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If the Index is changed so that the base year differs from that described
above, the Index shall be converted in accordance with the conversion factor
published by the United States Department of Labor, Bureau of Labor Statistics.
If the Index is discontinued or revised during the Term, such other government
index or computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised.
On adjustment of the Base Rent as provided in Section 3.3 above, the
parties shall immediately execute an amendment to the Lease stating the new Base
Rent.
3.4 PRORATION. If the Term begins or ends on a day other than the first
or last day of a calendar month, the Base Rent payable for such calendar month
of the Term shall be prorated on the basis which the number of days of the Term
in the calendar month bears to the total number of days in such month. The term
"RENT" as used in this Lease shall refer to Base Rent, prepaid rent, if any,
real property taxes, insurance costs, repairs and maintenance costs, utilities,
late charges and other similar charges payable by Tenant pursuant to this Lease,
either directly to Landlord or otherwise.
4. TAXES.
4.1 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant owned leasehold improvements,
trade fixtures, furnishings, equipment and all personal property of Tenant
contained in the Premises or elsewhere. When possible, Tenant shall cause its
leasehold improvements, trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Landlord.
4.2 REAL PROPERTY TAXES. Tenant shall pay prior to delinquency all Real
Property Taxes (as defined below) which accrue in connection with the Premises
during the Term of this Lease. Upon request, Tenant shall furnish Landlord with
satisfactory evidence that all Real Property Taxes are paid and current. If any
Real Property Taxes paid by Tenant cover any period of time prior to the
Commencement Date or after expiration of the Term, Tenant's share of the Real
Property Taxes shall be equitably prorated to cover only the period of time this
Lease is in effect, and Landlord shall reimburse Tenant for any overpayment by
reason of such proration. If Tenant shall fail to pay any Real Property Taxes
required by this Lease to be paid by Tenant, Landlord shall have the right to
pay the same upon ten (10) days written notice to Tenant, and Tenant shall
reimburse Landlord therefor, including any interest and penalties upon demand.
As used herein, the term "REAL PROPERTY TAXES" shall include any form of
real estate tax, any general, special, ordinary or extraordinary assessment, any
improvement bond, levy or similar tax (or any other fee, charge, or excise which
may be imposed as a substitute for any of the foregoing) imposed upon the
Premises by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
sanitary, fire, street, drainage or other improvement district, levied against
any legal or equitable interest of Landlord in the Premises. Tenant shall not
be responsible for the payment of any portion of Real Property Taxes which
result from a transfer of an ownership interest in the Premises during the Term
or any tax levied against Landlord's leasing of the Premises.
5. USES.
5.1 AUTHORIZED. The Premises shall be used by Tenant for the sale,
leasing, servicing and repair of new and used automobiles, and all uses
incidental and related thereto, or any other lawful use.
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5.2 COMPLIANCE WITH LAWS. Tenant shall not do or suffer anything to be
done in or on the Premises which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement applicable to
the Premises during the Term, or cause or create any nuisance. Tenant shall, at
its sole cost and expense, promptly comply with each and all of said
governmental measures existing now or in the future.
6. HAZARDOUS MATERIALS.
6.1 PERMITTED USE. Landlord acknowledges that the use of the Premises
contemplated by Section 5 above necessarily requires that Tenant have and
maintain certain petroleum-based and other substances on the Premises during the
Term which constitute Hazardous Materials (as defined below). At all times,
Tenant shall store, handle and otherwise maintain all Hazardous Materials kept
on the Premises in full compliance with all applicable laws and regulations, and
Tenant shall take every commercially reasonable caution in connection with the
presence and handling of Hazardous Materials on the Premises.
6.2 INDEMNIFICATION OF LANDLORD. Tenant shall defend, indemnify and hold
Landlord harmless from and against any and all claims, demands, liabilities,
responsibilities, losses, damages, penalties, fines and/or costs (including
reasonable attorney's and consultant fees) made against or incurred by Landlord
arising from or relating to the release of Hazardous Materials in, on or under
the Premises, or any neighboring property, resulting from Tenant's use or
storage of Hazardous Materials at the Premises. Tenant's indemnification
obligations created by this section shall include, without limitation, all costs
of (i) site investigation and testing, (ii) clean-up, remediation, removal or
restoration work, and (iii) all monitoring activities which are required by any
federal, state or local governmental agency with jurisdiction over the matter as
a result of use or storage of Hazardous Materials at the Premises by Tenant.
6.3 INDEMNIFICATION OF TENANT. Landlord shall defend, indemnify and hold
Tenant harmless from and against any and all claims, demands, liabilities,
responsibilities, losses, damages, penalties, fines and/or costs (including
reasonable attorney's and consultant fees) made against or incurred by Tenant
arising from or relating to the release or presence of Hazardous Materials in,
on or under the Premises, or any neighboring property, occurring or existing in
connection with the Premises prior to the Commencement Date. Landlord's
indemnification obligations created by this Section shall include, without
limitation, all costs of (i) site investigation and testing, (ii) clean-up,
remediation, removal or restoration work, and (iii) all monitoring activities
which are required by any federal, state or local governmental agency.
6.4 HAZARDOUS MATERIALS DEFINED. As used herein, the term "HAZARDOUS
MATERIALS" means any hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the State of California
or the United States Government. The term "hazardous material" includes, without
limitation, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste" or "restricted hazardous waste" under
Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-
Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of
the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a "hazardous
substance"
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under Section 25281 of the California Health and Safety Code, Division 20,
Chapter 6.7 (Under Storage of Hazardous Substances), (v) petroleum, (vi) friable
asbestos not in compliance with applicable laws or regulations, (vii) listed
under Article 9 or defined as hazardous or extremely hazardous pursuant to
Article 11 of Title 22 of the California Administrative Code, Division 4,
Chapter 20, (viii) designated as a "hazardous substance" pursuant to Section 311
of the Federal Water Pollution Control Act (33 U.S.C. Section 1317), (ix)
defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section
6903), or (x) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. (42 U.S.C. Section 9601).
7. SERVICES AND UTILITIES. Tenant shall pay prior to delinquency all charges
for water, gas, heat, light, power, telephone, sewage, air conditioning and
ventilating, scavenger, janitorial, landscaping, and all other materials and
utilities supplied to the Premises. Landlord shall not be liable, and Tenant
shall not be entitled to any abatement of Rent (including without limitation,
Base Rent) for the reduction, interruption or suspension of any utility service
to the Premises unless caused by the negligent act or omission of Landlord or
its agents. No such interruption, reduction or suspension of utilities shall
constitute an eviction of Tenant from the Premises.
8. ALTERATIONS.
8.1 TENANT IMPROVEMENTS. Tenant shall obtain Landlord's written consent
prior to performing any alteration, addition or improvement on or to the
Premises; provided, however, that Landlord's consent shall not be required where
the contemplated work (i) does not include any alteration of the structural
components of the Premises, and (ii) will not cost more than Two Hundred Fifty
Thousand Dollars ($250,000.00) to complete. In the event Landlord's consent is
required, such consent shall not be unreasonably withheld, conditioned or
delayed. In all events, Tenant shall provide to Landlord a written description
of any alterations (other than alterations involving expenditure of less than
$10,000). All alterations, additions and improvements shall be constructed in a
good and workmanlike manner by licensed contractors and in compliance with all
applicable laws, regulations, CC&R's, zoning ordinances and building codes.
Except as provided immediately below, all alterations, additions and
improvements constructed in or on the Premises by Tenant shall remain on the
Premises without compensation of any kind to Tenant upon expiration of the Term.
Tenant shall not be required to remove any of the alterations, additions or
improvements made to the Premises during the Term except only those alterations,
additions or improvements requiring Landlord's consent, to the extent Landlord
conditioned its consent upon removal of the subject alteration, addition or
improvement by Tenant at the expiration of the Term. With respect to such
alterations, additions or improvements only, Tenant upon the written request of
Landlord, shall upon the expiration of the Term, remove such alteration,
addition or improvement at its cost and restore the Premises to its condition
prior to such alteration, addition or improvement. Tenant shall maintain
insurance as required by Section 11.2 covering any improvements, alterations or
additions to the Premises made by Tenant under the provisions of this Section
8.1, it being understood and agreed that none of such improvements shall be
insured by Landlord.
8.2 LIENS. Tenant shall keep the Premises free from any liens arising out
of work performed, materials furnished, or obligations incurred by Tenant and
shall indemnify, hold harmless and defend Landlord from any liens and
encumbrances arising out of any work performed or materials furnished by or at
the direction of Tenant. Landlord shall have the right to post and keep posted
on the Premises any notices permitted or required by law, or which Landlord
shall deem proper, for the protection of Landlord and the
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Premises, and any other party having an interest therein, from mechanics' and
materialmen's liens. Tenant shall give Landlord written notice at least twenty
(20) days prior to the expected date of commencement of any work done or
materials delivered to the Premises for the purpose of posting notices.
9. MAINTENANCE AND REPAIRS.
9.1 AS IS. Tenant acknowledges that it accepts possession of the Premises
from Landlord in its "AS-IS" condition, without representation or warranty from
Landlord as to any component of the Premises unless otherwise expressly set
forth in this Lease.
9.2 TENANT'S OBLIGATIONS.
9.2.1 Tenant shall, at all times during the Term and at Tenant's sole
cost and expense, keep the Premises and every part thereof including structural
and non-structural in good order, condition and repair, ordinary wear and tear
and casualty as described in Section 18 excepted. Tenant shall exercise and
perform good maintenance practices. Tenant's repair and maintenance obligations
shall include all equipment or facilities serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, including fire
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior and exterior), foundations, ceilings, roof, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, about or adjacent
to the Premises (whether or not such portion of the Premises requiring repairs,
or the means of repairing same, are reasonably or readily accessible to Tenant,
and whether or not the need for such repairs occurs as a result of Tenant's use,
any prior use, the elements or the age of such portion of the Premises).
Tenant's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. If, inclusive of Tenant's occupancy
pursuant to earlier lease agreement(s) and amendments thereto, Tenant has
occupied the Premises for seven (7) years or more, Landlord may require Tenant
to repaint the exterior of the buildings on the Premises as reasonably required,
but not more frequently than once every seven (7) years.
9.2.2 Upon the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises in the same condition as delivered on the
Commencement Date, subject to permitted alterations, additions and improvements,
and ordinary wear and tear and casualty, and Tenant shall promptly remove or
cause to be removed, at Tenant's expense, all of Tenant's signs, displays, trade
fixtures and personal property from the Premises.
9.3 LANDLORD'S OBLIGATIONS. During the Term of this Lease, Landlord shall
have no obligation of any kind whatsoever to repair or maintain the Premises, or
any equipment therein, whether structural or non-structural, all of which
obligations are intended to be that of Tenant pursuant to Section 9.2 hereof.
It is the intention of the parties that the terms of this Lease govern the
respective obligations of the parties as to the maintenance and repair of the
Premises. Tenant expressly waives the benefits of any statute now or hereafter
in effect which would otherwise afford the Tenant the right to make repairs at
Landlord's expense or to terminate this Lease because of Landlord's failure to
keep the Premises in good order, condition and repair.
9.4 COMPLIANCE WITH LAW. Tenant shall each do all acts required to comply
with all present
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and future applicable laws, ordinances, regulations and rules of any public
authority relating to its maintenance obligations as set forth herein.
10. INDEMNITY.
10.1 TENANT'S OBLIGATIONS. Tenant shall defend, indemnify and hold
Landlord harmless from and against any and all claims, demands, liabilities,
responsibilities, losses, damages, penalties, fees, expenses and costs
(including attorney's fees) of any kind and nature whatsoever made against or
incurred by Landlord arising from or related to (i) Tenant's breach of any
material covenant or condition contained in this Lease, (ii) Tenant's use and
occupancy of the Premises, and/or (iii) the negligent or willful misconduct of
Tenant. In the event any action or proceeding is brought against Landlord which
falls within the scope of this section, Tenant, upon written notice from
Landlord, shall defend Landlord in such action at Tenant's expense by counsel
reasonably satisfactory to Landlord. For purposes of this paragraph, "Tenant"
shall include all of the employees, agents, officers and directors of Tenant.
10.2 LANDLORD'S OBLIGATIONS. Landlord shall defend, indemnify and hold
Tenant harmless from and against any and all claims, demands, liabilities,
responsibilities, losses, damages, penalties, fees, expenses and costs
(including attorney's fees) of any kind and nature whatsoever made against or
incurred by Tenant arising from or related to (i) Landlord's breach of any
material covenant or condition contained in this Lease, and/or (ii) the
negligent or willful misconduct of Landlord. In the event any action or
proceeding is brought against Tenant which falls within the scope of this
section, Landlord, upon written notice from Tenant, shall defend Tenant in such
action at Landlord's expense by counsel reasonably satisfactory to Tenant. For
purposes of this paragraph, "Landlord" shall include all of the employees,
agents, officers and directors of Landlord.
11. INSURANCE.
11.1 GENERAL. All insurance required to be carried by Tenant hereunder
shall be issued by responsible insurance companies reasonably acceptable to
Landlord and the holder of any mortgage or deed of trust secured by any portion
of the Premises (referred to herein as a "MORTGAGEE"). All policies of insurance
provided for in this Lease shall be issued by insurance companies licensed to do
business in the State of California, with general policy holder's rating of not
less than "A-" and a financial rating of not less than "Class X" as rated in the
most current available "Best's Insurance Reports." Each policy shall name
Landlord and at Landlord's request any Mortgagee as an additional insured, as
their respective interests may appear, and a duplicate original of all policies
or certificates evidencing the existence and amounts of such insurance shall be
delivered to Landlord upon Landlord's written request. All policies of insurance
delivered to Landlord shall contain a provision that the company writing said
policy will give Landlord (and any Mortgagee with respect to property insurance)
thirty (30) days written notice in advance of any cancellation or lapse of or
any change in such insurance. All public liability, property damage and other
casualty insurance policies shall be written as primary policies, not
contributing with, and not in excess of coverage which Landlord may carry.
Tenant shall furnish Landlord with renewals or "binders" of any such policy at
least thirty (30) days prior to the expiration thereof. If Tenant does not
procure and maintain such insurance, Landlord may (but shall not be required to)
obtain such insurance on Tenant's behalf and charge Tenant the premiums therefor
which shall be payable upon demand, and no such action by Landlord shall
constitute a waiver of Tenant's default hereunder. Tenant may carry such
insurance under a blanket policy, provided such blanket policy expressly affords
the coverage required by this Lease by a Landlord's protective liability
endorsement or otherwise.
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11.2 PROPERTY INSURANCE. Tenant shall obtain and keep in force during the
Term a policy of insurance in the name of Landlord and Tenant, with loss payable
to Landlord and to any Mortgagee insuring loss or damage to the Premises. The
amount of such insurance shall be equal to the full replacement cost of the
Premises, exclusive of foundations, as the same shall exist from time to time,
or the amount required by any lender(s), but in no event more than the
commercially reasonable and available insurable value thereof if, by reason of
the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. Such insurance shall, in addition, include
earthquake coverage to the extent required by any Mortgagee provided that such
coverage is available at reasonable commercial rates and shall, in addition,
include flood coverage if the Premises is within a designated flood zone. The
insurance required by this section shall, in addition, include coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Premises required
to be demolished, and shall also contain an agreed valuation provision in lieu
of any coinsurance clause, waiver of subrogation and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such insurance coverage has a deductible clause, then Tenant shall be liable for
such deductible amount provided that, in no event, shall Tenant be liable for a
deductible amount in excess of $20,000.
11.3 LIABILITY INSURANCE. Tenant shall obtain and keep in force during the
Term of this Lease a commercial general liability policy of insurance protecting
Tenant and Landlord (as an additional insured) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than Two Million Dollars
($2,000,000) per occurrence with an "Additional Insured-Managers or Landlords of
Premises" endorsement and contain an "Amendment of the Pollution Exclusion" for
damage caused by heat, smoke or fumes from a hostile fire. The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations. All insurance to be carried by Tenant shall be primary to and not
contributory with any similar insurance carried by Landlord, whose insurance
shall be considered excess insurance only.
11.4 RENTAL VALUE. Tenant shall, in addition, obtain and keep in force
during the Term of this Lease a policy or policies in the name of Landlord, with
loss payable to Landlord and any Mortgagee, insuring the loss of the full rental
or other charges payable by Tenant to Landlord pursuant to this Lease for a
period of not less than one year. Such insurance shall provide that in the
event that the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of Rent from the date of any such loss. Said insurance shall contain an agreed
evaluation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent payable by
Tenant for the next twelve (12) month period. Tenant shall be liable for any
deductible amount in the event of such loss.
11.5 MUTUAL WAIVER. Notwithstanding any provision to the contrary
contained in this Lease, to the extent that this release and waiver does not
invalidate or impair their respective insurance policies, the parties hereto
release each other and their respective agents, employees, officers, directors,
shareholders, successors and assigns from all liability for injury to any person
or damage to any property that is caused by
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or results from a risk which is actually insured against pursuant to the
provisions of this Lease without regard to the negligence or willful misconduct
of the parties so released. Each party shall use its best efforts to cause each
insurance policy it obtains to provide that the insurer thereunder waives all
right of recovery by way of subrogation as required herein in connection with
any injury or damage covered by the policy. If such insurance policy cannot be
obtained with such waiver of subrogation, or if such a waiver of subrogation is
only available at additional cost and the party for whose benefit the waiver is
not obtained does not pay such additional cost after reasonable notice, then the
party obtaining such insurance shall promptly notify the other party of the
inability to obtain insurance coverage with the waiver of subrogation.
12. ASSIGNMENT AND SUBLETTING.
12.1 ASSIGNMENT TO AFFILIATE. Tenant shall have the right to assign its
interest in this Lease, or sublet any portion of the Premises, to any entity in
which FirstAmerica and/or Subsidiary hold either directly or indirectly an
ownership interest without the prior consent of Landlord, provided that such
entity agrees to be bound by the terms and conditions of this Lease. Tenant
shall give Landlord written notice of the effective date of such assignment or
subletting as soon as practicable. In connection with any such assignment,
Tenant shall continue to be jointly and separately liable with the assignee for
the obligations of tenant pursuant to this Lease.
12.2 ASSIGNMENT TO THIRD PARTIES. Except as provided in Section 12.1
above, Tenant shall not assign or encumber its interest in this Lease or the
Premises or sublease all or any portion of the Premises without first obtaining
Landlord's written consent, which consent shall not be unreasonably withheld.
Landlord shall give written notice of its consent or its determination not to
consent within thirty (30) days following written request for such consent given
by Tenant to Landlord. Any assignment, encumbrance or sublease without
Landlord's prior written consent shall be voidable and at Landlord's election
shall constitute a default.
12.3 INVOLUNTARY ASSIGNMENT. No interest of Tenant in this Lease shall be
assignable by operation of law including, without limitation, the transfer of
this Lease by will or intestacy. Each of the following acts shall be considered
an involuntary assignment: (a) if Tenant is or becomes bankrupt or insolvent,
makes an assignment for the benefit of creditors, or institutes or becomes the
subject of a proceeding under the Bankruptcy Code in which Tenant is the debtor
and such proceeding remains undismissed for a period of sixty (60) days; (b) if
a writ of attachment or execution is levied on this Lease and not released
within sixty (60) days; (c) if, in any proceeding or action to which Tenant is a
party, a receiver is appointed with authority to take possession of the
Premises. An involuntary assignment shall be deemed to constitute a material
default by Tenant and Landlord shall have the right to elect to terminate this
Lease, in which case this Lease shall not be treated as an asset of Tenant.
12.4 NO RELEASE OF TENANT. Notwithstanding any assignment or subletting of
any interest in this Lease or the Premises by Tenant, unless Landlord otherwise
consents in writing, Tenant shall continue to be liable for the full performance
of all Tenant obligations set forth in the Lease.
13. SALE OF PREMISES OR BUILDING. Each conveyance by Landlord or its successor
in interest of Landlord's interest in the Premises prior to the expiration or
termination of this Lease shall be subject to this Lease and shall relieve the
grantor of all further liability or obligations as Landlord, except for such
liability or obligations accruing prior to the date of such conveyance. Tenant
agrees to attorn to Landlord's successors in interest, whether such interest is
acquired by sale, transfer, foreclosure, deed in lieu of
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foreclosure or otherwise.
14. ENTRY BY LANDLORD. Landlord and its authorized representatives shall have
the right to enter the Premises during business hours and after reasonable
notice (except in the event of an emergency in which case entry may be at any
time and with such prior notice to Tenant as is reasonable under the
circumstances): (a) to inspect the Premises; (b) to supply any service provided
to Tenant hereunder; (c) to show the Premises to prospective lenders,
purchasers, or broker and agents in connection with a sale of the building; (d)
to show the Premises to prospective tenants or brokers and agents in connection
with a leasing of the Premises, but only during the last twelve (12) months of
the Term; (e) to post notices of non-responsibility; (f) to alter, improve or
repair the Premises (to the extent permitted or required hereunder); and (g) to
erect scaffolding and other necessary structures, where required by the work to
be performed, all without reduction or abatement of rent.
15. INSOLVENCY OR BANKRUPTCY.
15.1 ACTS OF DEFAULT. Without limitation, the following events shall
constitute a default under this Lease: (a) if Tenant shall admit in writing its
inability to pay its debts as they mature; (b) if Tenant shall make an
assignment for the benefit of creditors or take any other similar action for the
protection or benefit of creditors; (c) if Tenant shall give notice to any
governmental body of insolvency or pending insolvency, or suspension or pending
suspension of operations; (d) if Tenant shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent; (e) if Tenant shall
file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other similar relief for
itself under any present or future applicable federal, state or other statute or
law relative to bankruptcy, insolvency or other relief for debtors; (f) if a
court of competent jurisdiction shall enter an order, judgment or decree
approving a petition filed against Tenant seeking any relief described in the
preceding clause (e), and (i) Tenant acquiesces in the entry of such order,
judgment or decree (the term "ACQUIESCE" as used in this Section shall include,
without limitation, Tenant's failure to file a petition or motion to vacate or
discharge any order, judgment or decree within sixty (60) days after entry of
such order, judgment or decree), or (ii) such order, judgment or decree shall
remain unvacated and unstayed for an aggregate of sixty (60) days, whether or
not consecutive, from the date of entry thereof; (g) if Tenant shall seek or
consent to or acquiesce in the appointment of any trustee, receiver, conservator
or liquidator of Tenant of all or any substantial part of Tenant's properties or
its interest in the Premises; (h) if any trustee, receiver, conservator or
liquidator of Tenant or of all or any substantial part of its property or its
interest in the Premises shall be appointed without the consent or acquiescence
of Tenant and such appointment shall remain unvacated and unstayed for an
aggregate of sixty (60) days, whether or not consecutive; or (i) if this Lease
or any estate of Tenant hereunder shall be levied upon under any attachment or
execution and such attachment or execution shall remain unvacated and unstayed
for an aggregate of sixty (60) days, whether or not consecutive. Notwithstanding
the foregoing, the above described events shall not constitute a default under
this Lease where Tenant has assigned the Premises as permitted in this Lease,
such assignee has assumed this Lease, and such assignee is not otherwise in
default hereunder.
15.2 RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE. Upon the filing of
a petition by or against Tenant under the United States Bankruptcy Code, Tenant,
as debtor in possession, and any trustee who may be appointed agree as follows:
(a) to perform each and every obligation of Tenant under this Lease until such
time as this Lease is either rejected or assumed by order of the United States
Bankruptcy Court; (b) to pay monthly in advance on the first day of each month
as reasonable compensation for use and occupancy of the Premises the sum
required under Section 3, and all other charges otherwise due pursuant
10
to this Lease; (c) to reject or assume this Lease within sixty (60) days of the
filing of such petition; (d) to give Landlord at least forty-five (45) days
prior written notice of any abandonment of the Premises, any such abandonment to
be deemed a rejection of this Lease; (e) to do all other things of benefit to
Landlord otherwise required under the Bankruptcy Code; (f) to be deemed to have
rejected this Lease in the event of the failure to comply with any of the above;
and (g) to have consented to the entry of an order by an appropriate United
States Bankruptcy Court providing all of the above, waiving notice and hearing
of the entry of same.
16. DEFAULT BY TENANT.
16.1 ACTS CONSTITUTING DEFAULTS. In addition to the events specified as a
default under Section 15.1 or elsewhere in this Lease, the material failure of
Tenant to perform each and every material covenant made under this Lease,
including any abandonment of the Premises by Tenant, shall constitute a default
hereunder. However, Landlord shall not commence any action to terminate Tenant's
right of possession as a consequence of a default until any period of grace with
respect thereto has elapsed; provided, such period of grace shall be in lieu of
and not in addition to the period during which Tenant may cure such default
following the delivery of notice pursuant to California Code of Civil Procedure
Section 1161.
16.1.1 Tenant shall have a period of ten (10) days from the date of
written notice from Landlord to Tenant within which to cure any default in the
payment of Base Rent.
16.1.2 Tenant shall have a period of thirty (30) days from the date
of written notice from Landlord to Tenant (which notice shall specifically state
the nature of the asserted default) within which to cure any default in the
payment of any monetary obligation of Tenant pursuant to this Lease other than
the payment of Base Rent.
16.1.3 Tenant shall have a period of thirty (30) days from the date
of written notice from Landlord to Tenant (which notice shall specifically state
the nature of the asserted default) within which to cure any nonmonetary default
under this Lease; provided, however, that with respect to any default which
cannot reasonably be cured within thirty (30) days, the default shall not be
deemed to be uncured if Tenant commences to cure within thirty (30) days from
Landlord's notice and thereafter prosecutes diligently and continuously to
completion all acts required to cure the default.
16.1.4 A default by Tenant in the Loan and Security Agreement or
other similar financing agreements between Tenant and General Electric Capital
Corporation ("GECC"), provided that GECC has accelerated the principal, interest
or other obligations under the agreement between Tenant and GECC.
16.2 LANDLORD'S REMEDIES. If Tenant fails to cure a default within the
time allowed, Landlord shall have the following rights and remedies in addition
to any other rights and remedies available to Landlord at law or in equity.
16.2.1 Landlord may, pursuant to Civil Code (S) 1951.4, continue this
Lease in full force and effect, and this Lease will continue in effect so long
as Landlord does not terminate Tenant's right to possession, and Landlord shall
have the right to collect Rent (including, without limitation, Base Rent) as it
becomes due. During the period Tenant is in default, Landlord can enter the
Premises and relet the Premises, or any part of the Premises, to third parties
for Tenant's account. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in reletting the Premises, including without
11
limitation, brokers' commissions, 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. Tenant shall pay to Landlord the
Rent due under this Lease on the dates the Rent is due, less the rental amounts
Landlord receives from any reletting. No act by Landlord allowed by this section
shall terminate this Lease unless Landlord notifies Tenant in writing that
Landlord elects to terminate this Lease. After Tenant's default and for so long
as Landlord does not terminate Tenant's right to possession of the Premises, if
Tenant obtains Landlord's consent, Tenant shall have the right to assign or
sublet its interest in this Lease, but Tenant shall not be released from
liability. Landlord's consent to such a proposed assignment or subletting shall
not be unreasonably withheld. If Landlord elects to relet the Premises as
provided in this section, any rental amounts that Landlord receives from
reletting shall be applied to the payment of: first, any indebtedness from
Tenant to Landlord other than Rent due from Tenant; second, all costs, including
for maintenance incurred by Landlord in reletting; and third, Rent due and
unpaid under this Lease. After deducting the payments referred to in this
section, any sum remaining from the rental amounts Landlord receives from
reletting shall be held by Landlord and applied in payment of future Rent as
Rent becomes due under this Lease. In no event shall Tenant be entitled to any
excess rental received by Landlord. If, on the date Rent is due under this
Lease, the rent received from the reletting is less than the Rent due on that
date, Tenant shall pay to Landlord, in addition to the remaining Rent due, all
costs including for maintenance Landlord incurred in reletting that remain after
applying the rent received from the reletting as provided in this section.
16.2.2 Landlord may, pursuant to Civil Code (S) 1951.2, terminate
Tenant's right to possession of the Premises at any time. No act by Landlord
other than giving express written notice thereof to Tenant shall terminate this
Lease. Acts of maintenance, efforts to relet the Premises, or the appointment
of a receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. Upon
termination of Tenant's right to possession, Landlord has the right to recover
from Tenant: (1) the Worth of the unpaid Rent that had been earned at the time
of termination of Tenant's right to possession; (2) the Worth of the amount by
which the unpaid Rent that would have been earned after the date of termination
until the time of award exceeds the amount of the loss of Rent that Tenant
proves could have been reasonably avoided; (3) the Worth of the amount of the
unpaid Rent that would have been earned after the award throughout the remaining
Term of the Lease to the extent such unpaid Rent exceeds the amount of the loss
of Rent that Tenant proves could have been reasonably avoided; and (4) any other
amount, including but not limited to, expenses incurred to relet the Premises,
court costs, attorneys' fees and collection costs necessary to compensate
Landlord for all detriment caused by Tenant's default. The "Worth", as used
above in (1) and (2) in this subsection is to be computed by allowing interest
at the lesser of ten percent (10%) per annum or the maximum legal interest rate
permitted by law. The "Worth", as used above in (3) in this subsection is to be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of the award, plus one percent (1%).
16.3 LANDLORD'S RIGHT TO CURE DEFAULT. All covenants and agreements to be
performed by Tenant under the terms of this Lease shall be performed by Tenant
at Tenant's sole cost and expense and without any reduction of Rent. If Tenant
shall be in default of its obligations under this Lease to pay any money other
than rental or to perform any other act hereunder, and if such default is not
cured within the applicable grace period (if any) provided in this Section 16,
Landlord may, but shall not be obligated to, make any such payment or perform
any such act on Tenant's part without waiving its rights based upon any default
of Tenant and without releasing Tenant from any of its obligations. All sums so
paid and all costs incurred by Landlord shall be paid to Landlord on demand.
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17. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in default in the
performance of any obligation under this Lease unless and until it has failed to
perform such obligation within thirty (30) days after receipt of written notice
by Tenant to Landlord specifying such failure; provided, however, that if the
nature of Landlord's default is such that more than thirty (30) days are
required for its cure, then Landlord shall not be deemed to be in default if
Landlord meaningfully commences such cure within the thirty (30) day period and
thereafter diligently prosecutes such cure to completion. Tenant agrees to give
any Mortgagee a copy, by registered mail, of any notice of default served upon
Landlord, provided that prior to such notice Tenant has been notified in writing
(by way of Notice of Assignment of Rents and Leases, or otherwise), of the
address of such Mortgagee. Any time during which such Mortgagee may cure
Landlord's default hereunder may, at Tenant's election, run concurrently with
Landlord's time to cure.
18. DAMAGE AND DESTRUCTION
18.1 DAMAGE - INSURED. In the event that the Premises is damaged by fire
or other casualty which is covered under insurance pursuant to the provisions of
Section 11 above, Landlord shall restore such damage provided that: (i)
insurance proceeds are available (inclusive of any deductible amounts) to pay
one hundred percent (100%) of the cost of restoration; and (ii) in the
reasonable judgment of Landlord, the restoration can be completed within three
hundred and sixty (360) days after the date of the damage or casualty under the
laws and regulations of the state, federal, county and municipal authorities
having jurisdiction. The deductible amount of any insurance coverage shall be
paid by Tenant except in the case of flood or earthquake and in such case the
deductible amount in excess of $20,000 per occurrence shall be paid by Landlord.
If such conditions apply so as to require Landlord to restore such damage
pursuant to this Section 18.1, this Lease shall continue in full force and
effect, unless otherwise agreed to in writing by Landlord and Tenant. Tenant
shall be entitled to a proportionate reduction of Rent at all times during which
Tenant's use of the Premises is interrupted, such proportionate reduction to be
based on the extent to which the damage and restoration efforts interfere with
Tenant's business in the Premises. Tenant's right to a reduction of Rent
hereunder shall be Tenant's sole and exclusive remedy in connection with any
such damage.
18.2 DAMAGE - UNINSURED. In the event that the Premises is damaged by a
fire or other casualty and Landlord is not required to restore such damage in
accordance with the provisions of Section 18.1 immediately above, Landlord shall
have the option to either (i) repair or restore such damage, with the Lease
continuing in full force and effect, but Rent to be proportionately abated as
provided in Section 18.1 above; or (ii) give notice to Tenant at any time within
thirty (30) days after the occurrence of such damage terminating this Lease as
of a date to be specified in such notice which date shall not be less than
thirty (30) nor more than sixty (60) days after the date on which such notice of
termination is given. In the event of the giving of such notice of termination,
this Lease shall expire and all interest of Tenant in the Premises shall
terminate on the date so specified in such notice and the Rent, reduced by any
proportionate reduction in Rent as provided for in Section 18.1 above, shall be
paid to the date of such termination. Notwithstanding the foregoing, if Tenant
delivers to Landlord the funds necessary to make up the shortage (or absence) in
insurance proceeds and the restoration can be completed in a three hundred sixty
(360) day period, as reasonably determined by Landlord, Landlord shall restore
the Premises as provided in Section 18.1 above.
18.3 END OF TERM CASUALTY. Notwithstanding the provisions of Sections 18.1
and 18.2 above, either Landlord or Tenant may terminate this Lease if the
Premises is damaged by fire or other casualty (and Landlord's reasonably
estimated cost of restoration of the Premises exceeds ten percent (10%) of the
then
13
replacement value of the Premises) and such damage or casualty occurs during the
last twelve (12) months of the Term of this Lease (or the Term of any renewal
option, if applicable) by giving the other notice thereof at any time within
thirty (30) days following the occurrence of such damage or casualty. Such
notice shall specify the date of such termination which date shall not be less
than thirty (30) nor more than sixty (60) days following the date on which such
notice of termination is given. In the event of the giving of such notice of
termination, this Lease shall expire and all interest of Tenant in the Premises
shall terminate on the date so specified in such notice and the Rent shall be
paid to the date of such termination. Notwithstanding the foregoing to the
contrary, Landlord shall not have the right to terminate this Lease if damage or
casualty occurs during the last twelve (12) months of the Term if Tenant timely
exercises its option to extend the Term pursuant to Section 2.2 of this Lease
within twenty (20) days after the date of such damage or casualty.
18.4 TERMINATION BY TENANT. In the event that the destruction to the
Premises cannot be restored as required herein under applicable laws and
regulations within two hundred seventy (270) days of the damage or casualty,
notwithstanding the availability of insurance proceeds, Tenant shall have the
right to terminate this Lease by giving the Landlord notice thereof within
thirty (30) days of date of the occurrence of such casualty specifying the date
of termination which shall not be less than thirty (30) days nor more than sixty
(60) days following the date on which such notice of termination is given. In
the event of the giving of such notice of termination, this Lease shall expire
and all interest of Tenant in the Premises shall terminate on the date so
specified in such notice and the Rent, reduced by any proportionate reduction in
Rent as provided for in Section 18.1 above, shall be paid to the date of such
termination.
18.5 RESTORATION. Landlord agrees that, in any case in which Landlord is
required to, or otherwise agrees to restore the Premises, that Landlord shall
proceed with due diligence to make all appropriate claims and applications for
the proceeds of insurance and to apply for and obtain all permits necessary for
the restoration of the Premises. Landlord shall restore the Premises to the
condition existing prior to the date of the damage if permitted by applicable
law. Landlord shall not be required to restore alterations made by Tenant,
Tenant's improvements, Tenant's trade fixtures, and Tenant's personal property,
such excluded items being the sole responsibility of Tenant to restore provided,
however, that Landlord shall, to the extent of available insurance proceeds,
restore Tenant Improvements to the Premises made by Tenant.
18.6 WAIVER. Tenant waives the provisions of Civil Code (S)1932(2) and
Civil Code (S)1933(4) with respect to any destruction of the Premises.
19. CONDEMNATION.
19.1 DEFINITIONS. The following definitions shall apply: (1) "CONDEMNATION"
means (a) the exercise of any governmental power of eminent domain, whether by
legal proceedings or otherwise by condemnor, or (b) the voluntary sale or
transfer by Landlord to any condemnor either under threat of condemnation or
while legal proceedings for condemnation are proceeding; (2) "DATE OF TAKING"
means the date the condemnor has right to possession of the property being
condemned; (3) "AWARD" means all compensation, sums or anything of value
awarded, paid or received on a total or partial condemnation; and (4)
"CONDEMNOR" means any public or quasi-public authority, or private corporation
or individual, having power of condemnation.
14
19.2 OBLIGATIONS TO BE GOVERNED BY LEASE. If during the Term of the Lease
there is any Condemnation of all or any part of the Premises, the rights and
obligations of the parties shall be determined strictly pursuant to this Lease.
Each party waives the provisions of Code of Civil Procedure (S)1265.130 allowing
either party to petition the Superior Court to terminate this Lease in the event
of a partial Condemnation of the Premises.
19.3 TOTAL OR PARTIAL TAKING. If the Premises are totally taken by
Condemnation, this Lease shall terminate on the Date of Taking. If any portion
of the Premises is taken by Condemnation, this Lease shall remain in effect,
except that Tenant can elect to terminate this Lease if the remaining portion of
the Premises is rendered unsuitable for Tenant's continued use of the Premises.
If Tenant elects to terminate this Lease, Tenant must exercise its right to
terminate by giving notice to Landlord within thirty (30) days after the nature
and extent of the Condemnation have been finally determined. If Tenant elects
to terminate this Lease, Tenant shall also notify Landlord of the date of
termination, which date shall not be earlier than thirty (30) days nor later
than ninety (90) days after Tenant has notified Landlord of its election to
terminate; except that this Lease shall terminate on the Date of Taking if the
Date of Taking falls on a date before the date of termination as designated by
Tenant. If any portion of the Premises is taken by Condemnation and this Lease
remains in full force and effect, on the Date of Taking the Base Rent shall be
reduced by an amount in the same ratio as the total number of square feet in the
building(s) which are a part of the Premises taken bears to the total number of
square feet in the building(s) which are a part of the Premises immediately
before the Date of Taking. Any Award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Landlord, whether such Award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Tenant
shall be entitled to any compensation separately awarded to Tenant for Tenant's
relocation expenses and/or loss of Tenant's trade fixtures
20. HOLDING OVER. Any holding over after the expiration of the Term shall be a
tenancy from month to month. The terms, covenants and conditions of such tenancy
shall be the same as provided herein, except that the Base Rent shall be one
hundred three percent (103%) of the Base Rent in effect immediately prior to the
commencement of such holding over. Acceptance by Landlord of Rent after such
expiration shall not result in any other tenancy or any renewal of the Term of
this Lease, and the provisions of this section are in addition to and do not
affect Landlord's right of reentry or other rights provided under this Lease or
by applicable law.
21. ESTOPPEL CERTIFICATES. Within ten (10) business days following any written
request which Landlord and Tenant may make from time to time, Tenant or
Landlord, without any charge therefor, shall execute, acknowledge and deliver to
the other a statement certifying: (a) the Commencement Date of this Lease; (b)
the fact that this Lease is unmodified and in full force and effect (or, if
there have been modifications hereto, that this Lease is in full force and
effect, as modified, and stating the date and nature of such modifications); (c)
the date to which the Base Rent and other sums payable under this Lease have
been paid; (d) the fact that there are no current defaults under this Lease by
either Landlord or Tenant except as specified in the statement; and (e) such
other reasonable matters requested by Landlord or Tenant. Landlord and Tenant
intend that any statement delivered pursuant to this Section may be relied upon
by a mortgagee, beneficiary, purchaser or prospective purchaser of the Premises
or any interest therein, or any financial institution, investment banker,
underwriter or the counsel of each of the foregoing, providing credit or seeking
capital for Tenant or Landlord. The failure of Landlord or Tenant to deliver any
such
15
statement within said ten (10) day period shall constitute a material default,
and the defaulting party shall indemnify and hold the other party harmless from
and against any and all liability, loss, cost, damage and expense which such
party may sustain or incur as a result of or in connection with the defaulting
party's failure or delay in delivering such statement.
22. SUBORDINATION AND ATTORNMENT.
22.1 SUBORDINATION. Upon the written request of Landlord or any Mortgagee,
Tenant will in writing subordinate its rights under this Lease to the lien of
any mortgage or deed of trust now or hereafter in force against the Premises,
and to all advances made or hereafter to be made upon the security thereof, and
to all extensions, modifications and renewals thereunder. Tenant shall also,
upon Landlord's request, subordinate its rights hereunder to any ground or
underlying lease which may now exist or hereafter be executed affecting the
Premises and/or the underlying land. Tenant shall have the right to condition
its subordination upon the execution and delivery of an attornment and non-
disturbance agreement, as described in Subsection 22.2, between the Mortgagee or
the lessor under any such ground or underlying lease and Tenant.
22.2 ATTORNMENT AND NON-DISTURBANCE. Upon the written request of the
Landlord or any Mortgagee or any lessor under a ground or underlying lease,
Tenant shall attorn to any such Mortgagee or beneficiary, provided such
Mortgagee or lessor agrees that if Tenant is not in material default under this
Lease, Tenant's possession of the Premises in accordance with the terms of this
Lease shall not be disturbed. Such agreement shall provide, among other things,
(a) that this Lease shall remain in full force and effect, (b) that Tenant pay
rent to said Mortgagee or lessor from the date of said attornment, (c) that said
Mortgagee or lessor shall not be responsible to Tenant under this Lease except
for obligations accruing subsequent to the date of such attornment, and (d) that
Tenant, in the event of foreclosure or a deed in lieu thereof or a termination
of the ground or underlying lease, will enter into and will have the right to, a
new lease with the Mortgagee, lessor or other person having or acquiring title
on the same terms and conditions as this Lease and for the balance of the Term.
22.3 NONMATERIAL AMENDMENTS. If any lender should require any nonmaterial
modification of this Lease as a condition of loans secured by a lien on the
Premises, or the land underlying the Premises, or if any such nonmaterial
modification is required as a condition to a ground or underlying lease, Tenant
will approve and execute any such modifications, promptly after request by
Landlord provided no such modification shall relate to the net effective rent
payable hereunder, the length of the Term or otherwise materially change the
rights or obligations of Landlord or Tenant.
23. WAIVER. If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be deemed
to be a waiver of the term, covenant or condition itself or a waiver of any
subsequent breach of the same or any other term, covenant or condition contained
herein. Furthermore, the acceptance of rent by Landlord shall not constitute a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, regardless of Landlord's knowledge of such preceding breach at the
time Landlord accepts such rent. Failure by either Landlord or Tenant to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or to decrease the right to insist thereafter upon
strict performance by the nonperforming party. Waiver by either party to this
Lease may only be made by a written document signed by the waiving party.
24. ATTORNEYS' FEES. In the event that any action or proceeding (including
arbitration) is brought to
16
enforce or interpret any term, covenant or condition of this Lease on the part
of Landlord or Tenant, the prevailing party in such action or proceeding
(whether after trial or appeal) shall be entitled to recover from the party not
prevailing its expenses therein, including reasonable attorneys' fees and all
allowable costs.
25. NOTICES. All notices, requests or demands to a party hereunder shall be in
writing and shall be given or served upon the other party by personal service,
by certified return receipt requested or registered mail, postage prepaid, or by
Federal Express or other nationally recognized commercial courier, charges
prepaid, addressed as set forth below. Any such notice, demand, request or other
communication shall be deemed to have been given upon the earlier of personal
delivery thereof, three (3) business days after having been mailed as provided
above, or one (1) business day after delivery through a commercial courier, as
the case may be. Notices may be given by facsimile and shall be effective upon
the transmission of such facsimile notice provided that the facsimile notice is
transmitted on a business day and a copy of the facsimile notice together with
evidence of its successful transmission indicating the date and time of
transmission is sent on the day of transmission by recognized overnight carrier
for delivery on the immediately succeeding business day. Each party shall be
entitled to modify its address by notice given in accordance with this Section
25.
If to Landlord: Rosewood Village Associates
P.O. Box 489
Orinda, CA 94563
Attention: Donald V. Strough
FAX: 510-689-2680
If to Tenant: FirstAmerica Automotive, Inc.
100 The Embarcadero, PH
San Francisco, CA 94105
Attn: W. Bruce Bercovich
Fax: 415-512-9277
If to Tenant: California Carriage Limited
(Subsidiary) 1300 Concord Avenue
Concord, CA
Attn: Donald V. Strough
Fax: 510-689-2680
With a copy to: Kay & Merkle
100 The Embarcadero, Penthouse
San Francisco, CA 94105
Attn: W. Bruce Bercovich, Esq.
Fax: 415-512-9277
26. MERGER. Notwithstanding the acquisition (if same should occur) by the same
party of the title and interests of both Landlord and Tenant under this Lease,
there shall not be a merger of the estates of Landlord and Tenant under this
Lease, but instead the separate estates, rights, duties and obligations of
Landlord and Tenant, as existing hereunder, shall remain unextinguished and
continue, separately, in full force and effect until this Lease expires or
otherwise terminates in accordance with the express provisions herein contained.
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27. DEFINED TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in neuter
gender include the feminine and masculine, where applicable. If there is more
than one Tenant, the obligations imposed under this Lease upon Tenant shall be
joint and several. The headings and titles to the sections and paragraphs of
this Lease are used for convenience only and shall have no effect upon the
construction or interpretation of this Lease.
28. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and all of
its provisions. This Lease shall in all respects be governed by and interpreted
in accordance with the laws of the State of California.
29. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 12 and the
limitation expressed below, the terms, covenants and conditions contained herein
shall be binding upon and inure to the benefit of the heirs, successors,
executors, administrators and assigns of the parties hereto. However, the
obligations imposed on Landlord under this Lease shall be binding upon
Landlord's successors and assigns only with respect to obligations arising
during their respective periods of ownership of the Premises.
30. ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all the
agreements of the parties hereto and supersedes any previous negotiations. There
have been no representations made by the Landlord or Tenant or understandings
made between the parties other than those set forth in this Lease and its
exhibits.
31. SEVERABILITY. If any provision of this Lease or the application thereof to
any person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Lease and the application of such provision to other persons
or circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
32. SIGNS. Tenant shall have the exclusive right, at its own cost and expense,
to install and affix to the Premises such signs (the "Signs") as Tenant may
desire. The location, construction, size and appearance of the Signs shall
comply with all applicable laws, ordinances and regulations and the requirements
of any governmental agency or authority having jurisdiction thereof. The Signs
shall remain the property of Tenant and may be removed by Tenant at any time
provided that Tenant, at its expense, shall repair any damage caused by reason
of such removal and shall restore the Premises to its original condition. Tenant
shall, at its own expense, maintain the Signs in good condition and working
order, shall comply with all laws, ordinances and regulations with respect
thereto (including the requirements of any governmental agency or authority
having jurisdiction thereof), and shall pay for all utility service to the
Signs. Upon the expiration of the Term or earlier termination of this Lease, or
upon the vacation of the Premises by Tenant, Tenant shall remove the Signs,
shall repair any damage caused by reason of such removal and shall restore the
Premises to its original condition, all at Tenant's sole cost and expense.
33. RECORDABILITY OF LEASE. Landlord and Tenant agree that a Memorandum of
Lease, in a form reasonably acceptable to both Landlord and Tenant, may be
recorded at the request of either party.
34. CONSTRUCTION. All provisions hereof, whether covenants or conditions, shall
be deemed to be both covenants and conditions. The definitions contained in this
Lease shall be used to interpret the Lease. All rights and remedies of Landlord
and Tenant shall, except as otherwise expressly provided, be cumulative and non-
exclusive of any other remedy at law or in equity.
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35. CONSENT. Whenever in this Lease the consent of a party is required to any
act by or for the other party, such consent shall not be unreasonably withheld
or delayed.
36. LIABILITY TO PERFORM. This Lease and the obligations of Tenant or Landlord
hereunder as the case may be, shall not be affected or impaired because the
other party is unable to fulfill any of its obligations hereunder, other than
the payment of money, or is delayed in doing so, if such inability or delay is
caused by reason of force majeure, strike, labor troubles, acts of God, acts of
government, unavailability of materials or labor, or any other cause beyond the
control of such other party.
37. CORPORATE AUTHORITY. Each individual executing this Lease on behalf of
Tenant, represents and warrants that Tenant is duly incorporated, in good
standing and qualified to do business in California, and that he or she is duly
authorized to execute and deliver this Lease on behalf of Tenant and that he or
she will deliver appropriate certification to that effect if requested.
38. QUIET ENJOYMENT. So long as Tenant is not in default under this Lease,
Tenant shall have quiet enjoyment of the Premises for the Term, subject to all
the terms and conditions of this Lease and all liens and encumbrances prior to
this Lease.
39. WAIVER. As material consideration to Landlord, Tenant agrees that Landlord
shall not be liable to Tenant for any damage to Tenant or Tenant's property from
any cause, except for damages resulting from Landlord's gross negligence or
willful misconduct, and Tenant waives all claims against Landlord for damage to
persons or property arising for any reason, except for damage resulting directly
from Landlord's breach of its express obligations under this Lease which
Landlord has not cured within a reasonable time after written notice of such
breach from Tenant.
40. AMENDMENT. This lease may be modified only in writing, signed by the
parties in interest at the time of the modification.
41. CONSTRUCTION. The Landlord and Tenant acknowledge that each has had its
counsel review this Lease and hereby agree that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Lease or in any amendments
or exhibits hereto.
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Wherefore, Landlord and Tenant enter into this Lease as of the day and year
first above written.
LANDLORD: TENANT:
Rosewood Village Associates, FirstAmerica Automotive, Inc.
a California limited partnership a Delaware corporation
By: Strough 1983 Family Trust,
general partner
By: /s/ Thomas A. Price
____________________________
Thomas A. Price, President
By: /s/ Donald V. Strough
__________________________
Donald V. Strough, Trustee
California Carriage Limited
a California corporation
By: /s/ Linda L. Strough
__________________________
Linda L. Strough, Trustee
By: /s/ Donald V. Strough
_____________________________
Donald V. Strough, President
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