California-Walnut Creek-1536 Cypress Street Lease - Vasconi/Belka Partnership and KLP Properties Inc.
COMMERCIAL LEASE
Dated: December 28, 1995
BETWEEN PETER VASCONI and THE "JAMES AND MAURA BELKA
TRUST" U/A/D DECEMBER 12, 1989, AS TO THE SURVIVOR'S
TRUST, dba VASCONI/BELKA PARTNERSHIP and
KLP PROPERTIES, INC., A California S Corporation
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TABLE OF CONTENT
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1. PARTIES 1
2. PREMISES 1
3. TERM 1
4. DELAY IN POSSESSION 1
5. EARLY POSSESSION 2
6. PAYMENT OF RENTS, REAL PROPERTY TAXES AND ASSESSMENTS 2
7. LATE CHARGES 3
8. BAD CHECK CHARGE 3
9. SECURITY DEPOSIT 3
10. PERSONAL PROPERTY TAXES 5
11. UTILITY AND ALLIED SERVICES 5
12. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE COSTS 5
13. INTEREST ON DELINQUENT RENT, PERSONAL PROPERTY TAXES AND PUBLIC
LIABILITY AND PROPERTY DAMAGE INSURANCE COSTS 5
14. USE OF PREMISES 5
15. CONDITION OF PREMISES 5
16. REPAIRS AND MAINTENANCE 6
17. INITIAL REMODELING AND RENOVATION WORK TO PREMISES BY LESSEE 7
18. SUBSEQUENT ALTERATIONS AND ADDITIONS 9
19. LESSOR'S ACCESS 11
20. SIGNS 11
21. ASSIGNMENT & SUBLETTING 11
22. EXEMPTION OF LESSOR FROM LIABILITY 12
23. INDEMNITY 13
24. EARTHQUAKE AND WATER DAMAGE 13
25. SECURITY MEASURES 14
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i.
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26. COMPLIANCE WITH ALL LAWS AND REGULATIONS - NUISANCES 14
27. LESSEE NOT TO SUFFER LIENS 14
28. PUBLIC LIABILITY, PROPERTY DAMAGE, PLATE, DOOR AND
WINDOW GLASS AND WORKERS' COMPENSATION INSURANCE
TO BE MAINTAINED BY LESSEE 14
29. FIRE, CASUALTY AND EXTENDED COVERAGE INSURANCE 15
30. DAMAGE OR DESTRUCTION - OBLIGATIONS TO RESTORE, ECT. 19
31. SURRENDER UPON TERMINATION 19
32. HOLDING OVER 20
33. DEFAULT 20
34. CONDEMNATION 22
35. NOTICES 25
36. SALE OF PREMISES 25
37. SUBORDINATION 26
38. PERSONAL PROPERTY LEFT ON PREMISES AT LEASE TERMINATION 26
39. BREACH OF SECURITY 26
40. ATTORNEY'S FEES AND COSTS 27
41. RIGHT OF FIRST REFUSAL TO PURCHASE PREMISES 27
42. OPTION TO EXTEND TERM OF LEASE 27
43. LEASE GUARANTEE 28
44. BROKER'S FEE 28
45. MISCELLANEOUS PROVISIONS 28
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ii.
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LEASE
1. PARTIES
This Lease is made this 28th day of December, 1995, between PETER
VASCONI and THE "JAMES AND MAURA ANNE BELKA TRUST" U/A/D December 12, 1984, as
to The Survivor's Trust, dba VASCONI/BELKA PARTNERSHIP, hereinafter called
"Lessor" and KLP PROPERTIES, INC., a California S Corporation, hereinafter
called "Lessee".
2. PREMISES
Lessor, for and in consideration of the rents, covenants and agreements
hereinafter contained on the part and on behalf of the Lessee to be paid, kept
and performed, does hereby lease and demise unto said Lessee, and said Lessee
does hereby hire and rent from said Lessor, the following described premises
situated in the City of Walnut Creek, County of Contra Costa, State of
California, commonly known as 1536 Cypress Street, Walnut Creek, California,
(A.P.N. 178-172-005-5) being a commercial building consisting of approximately
7800 square feet, plus mezzanine, and adjacent vehicle parking area.
3. TERM
The term of this Lease shall be for 180 months commencing upon the
opening of the first business to occupy the premises, or thirty days after
receipt of certificate of occupancy for the premises from the City of Walnut
Creek, whichever is the first to occur. In no event shall the Lease term
commence later than August 1, 1996. Notwithstanding the foregoing, Lessee shall
have the right to terminate the Lease by written notice to Lessor if all
required governmental approvals and permits for implementation of the
contemplated renovation, building improvements and subletting of the premises
are not fully issued by March 31, 1996. If Lessee does not exercise its right to
terminate the Lease by May 1, 1996, it shall have waived its right to do so and
the Lease shall become fully binding upon Lessee, with a Lease term commencing
as hereinabove provided.
4. DELAY IN POSSESSION
Notwithstanding said commencement date, if for any reason Lessor cannot
deliver possession of the premises to Lessee at the time of execution of this
Lease, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof, provided, however, that if Lessor shall not have
delivered possession of the premises by January 1, 1996, the aforementioned
commencement date shall be deferred for the number of days possession of the
premises to Lessee has been delayed beyond January 1, 1996; provided further,
if Lessor has not delivered possession of the premises by March 1, 1996, Lessee
may, at Lessee's option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the parties shall be discharged
from all obligations hereunder and any of Lessee's deposits, other than the
option consideration payments, shall be refunded to Lessee; provided further,
however, that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect.
1.
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5. EARLY POSSESSION
If Lessee occupies the premises prior to said commencement date, such
occupancy shall be subject to all provisions hereof except for the payment of
rent. Such occupancy shall not advance the termination date.
6. PAYMENT OF RENTS, REAL PROPERTY TAXES AND ASSESSMENTS
(a) Minimum Cash Rental. Lessee shall pay to Lessor as minimum monthly
rent, without deduction, setoff, prior notice, or demand, the sum of Ten
Thousand Eight Hundred Thirty-Three Dollars and 33/100 ($10,833.33) per month,
($130,000.00 per year), which sum is subject to adjustment as provided in
subparagraph (b) below, in advance, on the first (1st) day of each month,
commencing with the first day of the lease term, (see Paragraph 3.) and
continuing during the term. Lessor acknowledges payment by Lessee upon execution
of this Lease of an additional Five Thousand Eight Hundred Thirty-Three Dollars
and 33/100 ($5,833.33) which together with Lessee's Five Thousand Dollar
($5,000.00) option consideration shall constitute payment in full of the first
full months rent of the Lease term. Lessee shall pay prorated rent at the rate
of Three Hundred Sixty-One Dollars and 11/100 Dollars ($361.11) per day for each
day of any partial month of the Lease term. All rents shall be paid to Lessor at
the address to which notices to Lessor are given.
(b) Cost of Living Adjustment. The minimum monthly rent provided for in
subparagraph (a) above shall be subject to adjustment at the end of the fifth
year of the term and every five years thereafter (hereinafter "Adjustment Date")
as follows:
(1) The base for computing the adjustment is the United States
Bureau of Labor Statistics Consumer Price Index for all urban consumers for the
San Francisco-Oakland, California area (hereinafter "Index") which is in effect
on the date of the commencement of the term ("Beginning Index"). The Index most
immediately preceding the Adjustment Date in question ("Extension Index") is to
be used in determining the amount of the adjustment. If the Extension Index has
increased over the Beginning Index, the minimum monthly rent for the following
sixty (60) month period (until the next rent adjustment) shall be set by
multiplying the minimum monthly rent set forth in subparagraph (a) above by a
fraction, the numerator of which is the Extension Index and the denominator of
which is the Beginning Index. The minimum monthly rent shall, at each Adjustment
Date, be increased, regardless of the Index, no more than fifteen percent (15%)
for any given five (5) year adjustment period.
(2) On adjustment of the minimum monthly rent as provided in
this Lease, the parties shall immediately execute an amendment to this Lease
stating the new minimum monthly rent.
(3) If the Index has changed so that the base year differs from
that in effect when the term commences, 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.
2.
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(c) Lessee to Pay All Real Property Taxes and Assessments on Leased
Lands and Improvements. Lessee shall pay before delinquency all real property
taxes and assessments levied or assessed against the leased premises and
improvements thereon during the term hereof, except that as to any fiscal tax
year in which this lease shall commence, if such commencement shall occur after
the commencement of such fiscal tax year and except as to any fiscal tax year in
which this lease shall expire or otherwise terminate if such expiration or
termination shall occur before the expiration of such fiscal tax year, then
Lessee's obligations hereunder shall be limited to its pro rata share of such
taxes. As to any assessments levied or assessed by special improvement districts
that provide for bonds to be issued thereon with principal and interest thereon
payable in installments, Lessee shall only be required to pay the amount of such
installments as they shall become due from time to time.
7. 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 and
impractical 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 ten (10) days after such amount shall be due
then without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to five percent (5%) of such overdue amount which may be
treated as additional rent. 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. The ten (10) day period is not a grace period. Lessor may
make written demand for any rent unpaid on the second day of the month. The late
charge shall be in addition to all other remedies available to Lessor. In the
event that a late charge is payable hereunder, whether or not collected for
three (3) consecutive installments of rent then rent shall, in the discretion of
Lessor, become due and payable upon written advance notice to Lessee quarterly
in advance rather than monthly notwithstanding any other provision of this Lease
to the contrary.
8. BAD CHECK CHARGE
In the event rent is tendered by check which is, for any reason,
dishonored by the maker's financial institution, Lessee shall pay to Lessor
Fifty Dollars ($50.00) as reimbursement to Lessor for administrative expense in
processing such dishonored check. This charge shall be deemed additional rent
and shall be in addition to all other remedies available to Lessor.
9. SECURITY DEPOSIT
Within ten days of receipt by Lessee of design review approval from the
City of Walnut Creek of Lessee's contemplated building improvements. Lessee
shall pay Lessor as a Security Deposit the sum of Eleven Thousand Dollars
($11,000.00), as security for the full and faithful performance by the Lessee of
3.
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the terms, conditions and covenants of this Lease. Lessee and Lessor agree that
the following disposition shall apply to the Security Deposit:
(a) Lessor can maintain the Security Deposit separate and apart from
Lessor's general funds or can commingle the security deposit with Lessor's
general and other funds.
(b) Lessor shall not be required to pay Lessee interest on the Security
Deposit.
(c) Lessor's obligation with respect to the Security Deposit are those
of a debtor and not a trustee.
(d) If at any time while Lessor is holding the Security Deposit Lessee
shall be in default in the payment of rent or any portion thereof, or of any
sums expressly constituting additional rent, Lessor may appropriate and apply
any portion of the Security Deposit as may be necessary to the payment of
overdue rent or other sums expressly constituting additional rent.
(e) If at any time while Lessor is holding the Security Deposit Lessee
should fail to repair any damage to the premises leased or any part of the
common portions of the complex caused by such Lessee or his agent, employees,
invitees or other visitors through lack of ordinary care for a period of greater
than thirty (30) days after written demand to make such repairs is served on
Lessee by Lessor, then Lessor may appropriate and apply any portion of the
Security Deposit as may be reasonably necessary to fund the repair.
(f) Lessee agrees to restore the Security Deposit to its original amount
should resort to funds be required by Lessor. Refusal to restore such amount
within 15 days after written demand shall constitute a default of this Lease.
(g) Lessor agrees to hold such Security Deposit for Lessee, free from
the claim of any creditor of Lessee except a trustee in bankruptcy.
(h) Should Lessor transfer his interest under the Lease in any manner,
he or his agent shall do one of the following acts, either of which shall
relieve him of further liability with respect to such deposit:
(1) Transfer the portion of such deposit remaining after any
lawful deductions, as above, to his successor in interest, and thereafter notify
the Lessee by registered mail at the address under this Lease on such transfer,
and of the transferee's name and address. On receipt of such remaining deposit,
the successor in interest of Lessor shall have all rights and obligations of
Lessor holding such deposit with respect to such deposit.
(2) Return the portion of such deposit remaining after any
lawful deductions as above have been made.
(i) At the end of the first full twelve (12) months of the Lease term if
there are no existing defaults in Lessee's obligations under the terms and
provisions of this Lease, Lessor shall refund to Lessee the Eleven Thousand
Dollar ($11,000.00) Security Deposit, without interest, and no further Security
Deposit shall be required of Lessee.
4.
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10. PERSONAL PROPERTY TAXES
Lessee shall pay, before delinquency, all taxes attributable to Lessee's
personal property.
11. UTILITY AND ALLIED SERVICES
Lessee shall promptly pay for all heat, electric light and power,
telephone, gas, water, garbage, cable-vision and all other services of
whatsoever kind or nature furnished to or used or consumed in or about the
demised premises by Lessee during the term hereof.
12. PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE COSTS
Lessee shall promptly pay all premiums or other costs and expenses for
maintaining public liability and property damage insurance as required under the
provisions of Paragraphs 28 and 29 hereof.
13. INTEREST ON DELINQUENT RENT, PERSONAL PROPERTY TAXES AND PUBLIC LIABILITY
AND PROPERTY DAMAGE INSURANCE COSTS
Any rent, personal property taxes and insurance charges owing by Lessee
hereunder not paid when the same shall become due and subsequently paid by
Lessor, shall bear interest from the date the same has been paid by Lessor until
Lessor is reimburse by Lessee at the rate of ten percent (10%) per annum.
14. USE OF PREMISES
The demised premises are leased to Lessee to serve as the location for
one or more commercial retail or wholesale businesses, including food services
and restaurants, compatible with the uses permitted for the premises by
applicable ordinances and regulations of the City of Walnut Creek. Lessee agrees
not to use or permit said demised premises to be used for any other purpose or
purposes, without Lessor's prior written consent. Lessee agrees to see that all
licenses required by any governmental entity in connection with all uses of the
premises are acquired and maintained during such uses. Lessee shall not do,
bring or keep anything in or about the premises that will cause a cancellation
of any insurance covering the building in which the premises are located.
Lessee agrees not to use or permit to be used, stored, transported to,
or maintained on, for however briefly, any "hazardous waste" or "hazardous
substance" as defined in accordance with the California Health and Safety Code
and/or any federal statute as well as any state or federal judicial decision.
Lessee shall not perform any act or carry on any practices that may
injure the building premises or be a nuisance or menace to adjoining property
owners.
15. CONDITION OF PREMISES
Lessee has thoroughly inspected the premises. Except as otherwise
provided in this Lease, Lessee hereby accepts the premises "as is" in their
condition existing as of the Lease commencement date or the date that Lessee
takes possession of the premises, whichever is earlier, subject to all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the premises, and any covenants or
restrictions of record and accepts this
5.
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Lease subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto Lessee acknowledges that neither Lessor nor Lessor's agent has
made any representation or warranty as to the present or future suitability of
the premises for the conduct of Lessee's business.
Lessee acknowledges its awareness of the presence of asbestos and PCB in
the building floor tiles and ceiling and elsewhere which Lessee shall cause to
be removed in compliance with applicable regulations during Lessee's remodeling
of the building, and that the building structure may require seismic upgrades in
order to effect the improvements Lessee wishes to make to the property. Except
as above stated, Lessor has no knowledge of any other hazardous substances
located within, upon, or under the premises at the time of execution of this
Lease. Lessee has had a one hundred sixty-five (165) day option period in which
to conduct its due diligence feasibility study of the Lessor's premises, is
satisfied with the results of such study, and with full knowledge thereof enters
into this Lease. If at any time hazardous materials are discovered upon, within,
or below the premises, and it is determined that such hazardous materials are
not a result of Lessee's conduct or the conduct of Lessee's sublessees, Lessor,
at Lessor's expense, shall take all steps necessary to promptly remove or
otherwise abate or cause responsible third parties to remove or otherwise abate,
such hazardous materials in accordance with all rules, regulations, and laws,
using its best efforts not to materially interfere with the conduct of the
business of Lessee, or Lessee's sublessees, during such removal or abatement
process. Should such removal or abatement process prevent or delay Lessee's
operation of business in the Premises, rent shall be proportionately abated
during such time. Likewise, it shall be the responsibility of Lessee to take all
steps, at Lessee's expense, to promptly remove or otherwise abate any such
hazardous materials brought to the premises as a result of Lessee's conduct or
the conduct of Lessee's sublessees.
16. REPAIRS AND MAINTENANCE
Except as provided in Paragraphs 30 and 34 herein, [DESTRUCTION AND
CONDEMNATION CLAUSES] Lessee, at Lessee's cost, shall maintain the premises and
every part thereof in good order, condition, and repair at all times, structural
and nonstructural. Lessee shall not cause or permit any Hazardous Substance to
be spilled or released in, on, under or about the premises, (except during the
removal of asbestos which will be totally removed from the premises), including
through the plumbing or sanitary sewer system, and shall promptly at Lessee's
expense take all investigatory and/or remedial action reasonably recommended,
whether or not formally ordered or required, for the clean up of any
contamination of and for the maintenance, security, and/or monitoring of the
premises, the elements surrounding same, or neighboring properties that was
caused or materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance and/or storage tank brought on to the premises by or for
Lessee, or under its control. Lessor shall not have any responsibility to
maintain or repair the premises. Lessee waives the provisions of Civil Code
Sections 1941 and 1942 with respect to Lessor's obligations for tenant ability
of the premises and Lessee's right to make repairs and deduct the expenses of
such repairs from rent. It was intended by the parties hereto that Lessor shall
have no obligation in any manner whatsoever to repair or maintain the premises,
the improvements located thereon, or the equipment therein, whether structural
or nonstructural, all of which obligations are intended to be that of Lessee,
unless
6.
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specifically made the responsibility of Lessor by other provisions of this
Lease.
17. INITIAL REMODELING AND RENOVATION WORK TO PREMISES BY LESSEE
(a) The parties acknowledge that Lessee shall undertake substantial
remodeling and renovation work to the premises subject to Lessor's prior
approval of the plans, specifications, and architect's drawings for such work.
Before commencing any such work, Lessor may require Lessee to obtain corporate
surety bonds in compliance with Subparagraph 17 (e) hereof. Form and content of
such bonds shall be subject to reasonable approval of Lessor, or Lessor's
attorney.
(b) Conditions Precedent to Construction. Before the aforementioned
remodeling and renovation construction is commenced on the premises and before
any building materials have been delivered to the premises by Lessee or under
Lessee's authority, Lessee shall comply with all the following conditions or
procure Lessor's written waiver thereof, as specified in a waiver issued by
Lessor.
(c) Preliminary Plans and Specifications. Lessee shall deliver to Lessor
for Lessor's approval (which approval is not to be unreasonably withheld) two
(2) sets of preliminary construction plans and specifications prepared by
Lessee's architect, and such additional consultants and such additional
engineers or other consultants retained by him or Lessee. With the plans, Lessee
shall deliver to Lessor the certificate of the person or persons who prepared
the plans and specifications and permitting Lessor to use the plans without
payment for purposes relevant to and consistent with this lease.
(d) Lessor's Approval of General Contractor. Lessee shall furnish Lessor
with a true copy of Lessee's contract with the general contractor, and with
evidence of the general contractor's financial condition for Lessor's approval.
The contract shall give Lessor the right but not the obligation to assume
Lessee's obligations and rights under the contract if Lessee should default.
Lessor shall not act unreasonably in disapproving the financial
condition of Lessee's contractor and may only disapprove such general
contractor's financial condition in the event Lessor is in the possession of
substantial and credible evidence that such general contractor is not
financially responsible. In the event Lessor shall disapprove the financial
responsibility of the proposed general contractor for Lessee, Lessor shall give
written notice thereof to Lessee within ten (10) working days following delivery
to Lessor of a copy of the contract and shall specify in said notice the grounds
for disapproval.
(e) Corporate Surety Bonds for Faithful Performance And Insuring Work
Against Liens for Labor and Materials. If reasonably required by Lessor pursuant
to subparagraph (a) hereof, before commencing any of said work, Lessee shall
deliver to Lessor a good and sufficient faithful performance bond in the amount
of 100% of the contract price guaranteeing faithful performance and completing
of the improvement work called for in said contract; and a corporate surety bond
in the amount of 100% of the contract price insuring the work of such contract
and the leased lands against liens for labor, materials and services. All bonds
called for herein to be issued by a responsible surety company licensed to do
business
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in the State of California and approved by Lessor's attorney. Lessee to pay the
cost and expenses for obtaining such required bonds.
All such bonds shall expressly provide that:
(1) The construction work shall be effected by the general
contractor, or on its default by the surety;
(2) In default of such completion and payment, such part of the
amount of the bond as shall be required to complete the work shall be
paid to Lessor as liquidated and agreed damages for the nonperformance
of Lessee's agreements, it being agreed that the exact amount of
Lessor's damages is difficult and impractical to ascertain; and
(3) That the surety will defend and indemnify Lessor against all
loss, cost, damages, expenses and liabilities arising out of or
connected with the work of improvement.
All such bonds shall remain in effect until the entire cost of
the work shall have been paid in full and the new improvements shall have been
fully completed and insured as provided in this lease.
The foregoing bond requirements will be waived if Lessor has
approved of Lessee's general contractor, and the builder's control/voucher
system to be used by the construction funds lender is also approved by Lessor,
which approvals will not be unreasonably withheld.
(f) Required Governmental Permits. Lessee shall procure and deliver to
Lessor at Lessee's expense evidence of compliance with all then applicable
codes, ordinances, regulations, and requirements for permits and approvals,
including but not restricted to grading permits, building permits, zoning and
planning requirements, ADA regulations and approvals from various governmental
agencies and bodies having jurisdiction.
(g) Builder's Risk and Other Insurance. Lessee shall deliver to Lessor:
(1) Certificates of Insurance evidencing coverage for "builder's risk"; (2)
evidence of workmen's compensation insurance covering all persons employed in
connection with the work in respect to whom death or bodily injury claims could
be asserted against Lessor or the premises; and (3) evidence that Lessee has
paid or caused to be paid all premiums for the coverage described herein,
sufficient to assure maintenance of all insurance above during the anticipated
course of the work. Lessee shall maintain, keep in force, and pay all premiums
required to maintain and keep in force all insurance above at all times during
which such work is in progress.
(h) Protection of Lessor Against Costs or Claims. Lessee shall pay or
cause to be paid the total cost and expense of all works of improvement, as that
phrase is defined in the Mechanics' Lien Law in effect at the place of
construction when the work begins. No such payment shall be construed as rent.
Lessee shall not suffer or permit to be enforced against the premises or any
part of it any mechanic's, materialman's, contractor's or subcontractor's lien
arising from any work of improvement, however it may arise. However, Lessee may
in good faith and at Lessee's own expense contest the validity of any such
asserted lien, claim or demand
8.
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provided Lessee has furnished the bond required in California Civil Code Section
3143 (or any comparable statute hereafter enacted for providing a bond freeing
the premises from the effect of such a lien claim), or other mutually agreed
upon security.
Lessee shall defend and indemnify Lessor against all liability
and loss of any type arising out of work performed on the premises by Lessee,
together with reasonable attorneys' fees and all costs and expenses incurred by
Lessor in negotiating, settling, defending or otherwise protecting against such
claims.
(i) Lessor's Right to Discharge Liens, If Lessee does not cause to be
recorded the bond described in California Civil Code Section 3143 or otherwise
protect the property under any alternative or successor statute, and a final
judgment has been rendered against Lessee by a court of competent jurisdiction
for the foreclosure of a mechanic's, materialman's, contractor's or
subcontractor's lien claim, and if Lessee fails to stay the execution of the
judgment by lawful means or to pay the judgment, Lessor shall have the right,
but not the duty, to pay or otherwise discharge, stay or prevent the execution
of any such judgment or lien or both. Lessee shall reimburse Lessor for all sums
paid by Lessor under this paragraph, together with all Lessor's reasonable
attorneys' fees and costs, plus interest on those sums, fees, and costs at the
rate of twelve percent (12%) per year from the date of payment until the date of
reimbursement.
(j) Notice of Completion. On completion of any substantial work of
improvement during the term, Lessee shall file or cause to be filed a notice of
completion. Lessee hereby appoints Lessor 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.
(k) Notice of Change In Plans And Specifications. On completion of any
work of improvement, Lessee shall give Lessor notice of all changes in plans and
specifications made during the course of the work and shall at the same time and
in the same manner supply Lessor with "as built" drawings accurately reflecting
all such changes. Lessor acknowledges that it is common practice in the
construction industry to make numerous changes during the course of construction
on substantial projects. Changes that do not substantially or materially alter
plans and specifications previously approved by Lessor do not constitute a
breach of Lessee's obligations.
(l) Fees and Permits. All fees and permits associated with the
remodeling, renovation, and construction of the building premises and any
subsequent additions, alterations, or repairs thereto, (including but not
limited to architectural and engineering fees, construction and building
permits, central sanitation and health department fees), shall be paid by
Lessee.
18. SUBSEQUENT ALTERATIONS AND ADDITIONS
(a) For any additional work subsequent to the initial remodeling and
renovation, and construction work as hereinabove described, Lessee shall not,
without Lessor's prior written consent, make any additional structural
alterations, improvements, or additions in, on or about the premises, exceeding
Fifty Thousand Dollars ($50,000.00) per project during the term of this Lease.
Additionally, Lessee shall make
9.
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no subsequent change or alteration to the exterior of the building which would
significantly alter the building's appearance without Lessor's prior written
consent, which consent shall not be unreasonably withheld. Lessor may require
that Lessee remove any or all of said alterations, improvements, or additions
that require Lessor's approval, at the expiration of the term, and restore the
premises to their prior condition if such alterations did not receive the prior
approval of Lessor. Lessor may require Lessee to provide Lessor at Lessee's sole
cost and expense a lien and completion bond in an amount equal to 100% of the
estimated cost of such subsequent alterations, improvements or additions to
insure Lessor against any liability for mechanic's and materialmen's liens and
to insure completion of the work, or such other mutually agreed upon security.
(b) Any alterations, improvements, additions or Utility Installations in
or about the premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form with proposed
detailed plans. If Lessor shall give its consent, the consent shall be deemed
conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishings of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner. Lessor's consent shall not be
unreasonably withheld.
(c) Lessee shall pay when due all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in the premises and Lessor shall have the right to post notices of
non-responsibility in or on the premises as provided by law. If Lessee shall, in
good faith, contest the validity of any such lien, claim or demand, then Lessee
shall, at its sole expense defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the premises upon the condition
that if Lessor shall require, Lessee shall furnish to Lessor a surety bond, or
other mutually agreed upon security, satisfactory to Lessor in an amount equal
to such contested lien claim or demand indemnifying Lessor against liability for
the same and holding the premises free from the effect of such lien or claim. In
addition, Lessor may require Lessee to pay Lessor's attorneys fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.
(d) Unless Lessor requires their removal as set forth above, all
alterations, improvements, additions anti Utility Installations which may be
made on the premises shall become the property of Lessor and remain upon and be
surrendered with the premises at the expiration of the term. Notwithstanding the
provisions of this paragraph, Lessee's machinery and equipment and additional
trade fixtures, other than that which is affixed to the premises so that it
cannot be removed without material damage to the premises shall remain the
property of Lessee and may be removed by Lessee subject to the provisions of
this lease.
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19. LESSOR'S ACCESS
(a) Lessor and Lessor's agents shall have the right to enter the
premises without notice in case of an emergency, upon court order or when Lessee
has abandoned or surrendered the premises. Lessor and Lessor's agents shall have
the right to enter the premises upon reasonable notice, with entrance during
normal business hours from 8:00 a.m., to 6:00 p.m., Monday through Saturday,
holidays excepted, to make necessary or agreed repairs, decorations, alterations
or improvements, supply necessary or agreed services or exhibit the premises to
prospective or actual purchasers, mortgagees, tenants, workmen or contractors,
or for the purpose of inspecting the premises for compliance with the lease.
Twenty-four hours shall be presumed to be reasonable notice.
(b) Lessor may at any time place on or about the premises any ordinary
"For Sale" signs and Lessor may at any time during the last 120 days of the term
hereof place on or about the premises any ordinary "For Lease" signs, all
without rebate of rent or liability to Lessee. Placement of such signs shall not
unreasonably interfere with the signs of Lessee or its sublessees, or restrict
access to the premises.
20. SIGNS
Lessee shall have the right to install all signage allowed and/or
approved by the City of Walnut Creek. Lessee shall be responsible for the
design, permitting, installation, and cost of all signs. Upon request by Lessor,
Lessee shall remove all signs affixed to the building premises at the expiration
of the Lease, including any option period.
21. ASSIGNMENT & SUBLETTING
(a) No assignment of the Lease shall occur until Lessee has completed
the initial remodeling and renovation work and at least sixty percent (60%) of
the premises are occupied with such tenants being open for business, and the
entire premises are free of all liens for labor and materials and service,
including claims of liens of the general contractor and all subcontractors
arising out of the renovation and remodeling work. After the foregoing
conditions have been met, Lessee may assign the Lease, provided the following
criteria is met: (1) assignee's proposed use of the premises is approved by the
City of Walnut Creek; (2) if the assignment occurs during the first ten (10)
years of the initial Lease term, the Lease guarantors shall remain in place for
the balance of the initial Lease term, and (3) the proposed assignee has
comparable financial strength and similar experience in the development and
management of commercial real estate as Lessee/Assignor. Notwithstanding the
above, Lessee may assign this Lease to Gary L. Patterson, or Gaylon C.
Patterson, at any time, provided the corporation Lessee KLP PROPERTIES, INC.
then executes the Guaranty attached hereto becoming an additional guarantor of
Lessee's obligations hereunder.
(b) Conditions Precedent to Assignment: The following are conditions
precedent to Lessee's right of assignment:
(1) Lessee shall give Lessor reasonable notice of the proposed
assignment with appropriate documentation as evidence that the proposed assignee
qualifies as permitted assignee.
(2) The proposed assignee shall, in recordable form,
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expressly assume all the covenants and conditions of this Lease.
(3) Lessee shall pay to Lessor, Lessor's reasonable costs and
expenses (including legal and accounting fees) incurred by it to enable Lessor
adequately to investigate the proposed assignee's qualifications as a permitted
assignee.
(c) Right to Sublet. Lessee shall have the absolute right to sublet all
or any part or parts of the premises or the improvements or both, and to assign,
encumber, extend, or renew any Sublease, provided the following provisions are
complied with:
(1) Subject to Guarantors' rights to cure any default of Lessee
under the terms of the Lease and to thereupon become substituted as Lessee
hereunder, each Sublease shall contain a provision requiring Sublessee to attorn
to Lessor, 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, and Lessee and
Guarantors fail to cure such default as provided for in the Lease, as if Lessor
or said other persons were named as the Sublessor to said Sublessee and if the
Sublessee is notified of Lessee's uncured default and instructed to make
Sublessee's rental payments to Lessor or leasehold mortgagee or designated
person as in this paragraph. If Sublessee is not in default, the Sublease shall
continue with the same force and effect as if Lessor and Sublessee had entered
into a lease on the same provisions as those contained in the Sublease subject
however to all the terms and provisions of this master Lease, and a provision to
this effect shall be contained in each Sublease.
Notwithstanding the foregoing, Lessor shall not notify any
Sublessee of any default by Lessee of this Lease, or require Sublessee to attorn
to Lessor, or other designated person as in this paragraph, or request Sublessee
to make any payment of rent directly to Lessor, until such time has passed, as
provided for in the Lease, for Lessee and/or Guarantors to cure any such
default.
(2) Lessee shall, promptly after execution of each sublease,
notify Lessor of the name and mailing address of the sublessee and shall, on
demand, permit Lessor to examine and copy the sublease.
(3) Lessee shall not accept, directly or indirectly, more than
six (6) months' prepaid rent from any sublessee.
(4) Each such sublease shall provide that the sublessee is not
to use or permit the use of the premises for any purpose contrary to the
provisions of this lease.
(5) Notwithstanding the foregoing, no sublease shall be made by
Lessee which would involve any uses prohibited by the provisions of this lease
or the ordinances, resolutions, and regulations of the City of Walnut Creek.
(d) Lessee and guarantor shall remain primarily liable under the lease
to Lessor, notwithstanding any subletting of the premises or a portion thereof.
22. EXEMPTION OF LESSOR FROM LIABILITY
Lessee hereby agrees that Lessor shall not be liable for
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injury to Lessee's business or any loss of income therefrom or for damage to the
person or equipment, goods, wares, merchandise or other property of Lessee,
Lessee's employees, invitees, customers, or any other person in or about the
premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents or contractors whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the premises or upon other portions of the building of which the premises are a
part or from other sources or places and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible to Lessee.
Lessor shall not be liable for any damage arising from any act or neglect of any
other tenant, if any, of the building in which the premises are located.
Notwithstanding the foregoing, Lessor shall be responsible for damages resulting
from its willful acts and those willful acts of its agents, employees and
contractors, and its negligent acts and those negligent acts of its agents,
employees and contractors occurring while such parties or any them are within or
upon the subject premises.
23. INDEMNITY
Lessee shall indemnify and hold harmless Lessor from and against any and
all claims arising from Lessee's use of the premises, or from the conduct of
Lessee's business or from any activity, work or things done, permitted or
suffered by Lessee in or about the premises or elsewhere and shall further
indemnify and hold harmless Lessor from and against any and all claims arising
from any breach or default in the performance of any obligation on Lessee's part
to be performed under the terms of this Lease, or arising from any negligence of
the Lessee, or any of Lessee's agents, contractors, or employees, and from and
against all costs, attorney's fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon and in
case any action or proceeding be brought against Lessor by reason of any such
claim, Lessee upon notice from Lessor shall defend the same at Lessee's expense
by counsel satisfactory to Lessor. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property or injury
to persons, in, upon or about the premises arising from any negligence or
willful misconduct of Lessee, Lessee's agents, employees, guests and invitees,
and Lessee hereby waives all claims in respect thereof against Lessor.
Notwithstanding the foregoing, Lessor shall indemnify and hold harmless Lessee
from any damages resulting from Lessor's willful acts and those willful acts of
its agents, employees and contractors, and its negligent acts and those
negligent acts of its agents, employees end contractors occurring while such
parties or any them are within or upon the subject premises.
24. EARTHQUAKE AND WATER DAMAGE
It is understood and agreed that the Lessor shall not be held liable for
any damages to any equipment, goods, property, or effects in, or upon, the
herein demised premises during the term of this Lease caused by earthquake or by
water from any source whatsoever.
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25. SECURITY MEASURES
Lessee hereby acknowledges that the rental payable to Lessor hereunder
does not include the cost of guard service or other security measures, and that
Lessor shall have no obligation whatsoever to provide same. Lessee assumes all
responsibility for the protection of Lessee, its agents and invitees and
sublessees from acts of third parties.
26. COMPLIANCE WITH ALL LAWS AND REGULATIONS - NUISANCES
Lessee shall not maintain or suffer or permit to be maintained on the
demised premises any nuisances nor permit the demised premises to be used in
whole or in part, during the term of this lease, for any purpose or use in
violation of any laws, ordinances, rules or regulations of any public authority
applicable thereto; and Lessee agrees at all times during the term hereof, to
keep and maintain the demised premises in a clean, tidy and sanitary manner and
condition and in compliance with any and all statutes, laws, rules, regulations
and ordinances applicable thereto.
27. LESSEE NOT TO SUFFER LIENS
Lessee agrees not to permit or suffer any lien to attach to or encumber
the demised premises or any part or portion thereof during the term hereof.
28. PUBLIC LIABILITY, PROPERTY DAMAGE, PLATE, DOOR AND WINDOW GLASS AND WORKERS'
COMPENSATION INSURANCE TO BE MAINTAINED BY LESSEE
Lessee shall at its own cost and expense take out, maintain, keep in
full force and effect throughout the term hereof, in a reputable insurance
company or companies authorized to engage in such business in the State of
California, (or in the State Workers' Compensation Insurance Fund as to
workmen's compensation insurance) the following insurance:
(a) Policy of Public Liability and Property Damage Insurance with a
single combined liability limit of not less than $2,000,000, and property damage
limits of not less than $500,000 insuring against all liability of Lessee and
its authorized representatives arising out of and in connection with Lessee's
use or occupancy of the leasehold premises. All public liability insurance and
property damage insurance shall insure performance by Lessee of the indemnity
provisions of Paragraph 23. Both parties shall be named as additional insureds,
and the policy shall contain cross-liability endorsements. Not more frequently
than every three (3) years throughout the term and any extended term hereof, if
in the considered opinion of Lessor's insurance broker the amount of such
coverage is not adequate, Lessee shall increase the coverage to such amount as
Lessor's insurance broker shall reasonably deem adequate. Coverage hereunder
shall include, but not necessarily be limited to, premises/operations liability
coverage, personal injury liability coverage, contractual liability coverage and
broad form property damage liability coverage.
(b) Glass Insurance - Jointly insuring Lessor and Lessee against all
loss or damage to plate, window, skylights and door glass, and specifying
coverage for replacement of all stained glass leaded windows on the premises, if
any.
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(c) Workers' Compensation Insurance insuring the Lessee as employer
against liability for injury or death to employees of Lessee, if Lessee has any
employees to which such insurance would be applicable.
All such policies shall be nonassessable and shall contain language, to
the extent obtainable, to the effect that: (i) any loss be payable
notwithstanding any act or negligence of Lessor that might otherwise result in
the forfeiture of the insurance; (ii) the insurer waives the right of
subrogation against Lessor and against Lessor's agents and representatives;
(iii) the policies are primary and noncontributing with any insurance that may
be carried by Lessor; and (iv) they cannot be cancelled or materially changed
except after ten (10) days' written notice by the insurer to the Lessor or
Lessor's designated representative. Lessee shall furnish Lessor with copies of
all such required insurance policies promptly upon receipt of them or with
certificates evidencing such insurance. Lessee agrees that if for any reason
such insurance is not in full force and effect, then, in such event, Lessor may
obtain the necessary insurance, pay the premium thereon and the repayment
thereof shall be deemed additional rent payable as such on the next date upon
which rent becomes due.
(d) Lessee shall, prior to opening business in the premises, furnish
from the insurers providing the above-referred to coverage, certificates of such
coverage evidencing the existence and amounts of such insurance.
29. FIRE, CASUALTY AND EXTENDED COVERAGE INSURANCE
(a) Lessee's Obligations To Insure Its Fixtures And Equipment. On the
commencement of and throughout the term hereof Lessee shall take out and
maintain on all of its trade fixtures, appliances and equipment in and on the
premises, a policy or policies of fire insurance with standard extended coverage
and vandalism and malicious mischief endorsements to one hundred percent (100%)
of their full replacement value. In event of loss or damage, the proceeds from
any such policy or policies shall be used by Lessee for the replacement of the
Lessee's personal property and/or the repair or replacement of the Lessee's
trade fixtures, machinery and equipment so insured, in the event this lease is
to continue in existence under the provisions of Paragraph 30, otherwise if said
lease is terminated, to be paid to Lessee.
(b) Fire And Extended Coverage - Lessee's Duty to Keep Building and All
Improvements Insured. Throughout the term hereof, Lessee shall at its own cost
and expense keep or cause to be kept insured for the mutual benefit of Lessor
and Lessee, the building and all improvements located on or appurtenant to the
premises against loss or damage by fire and such other risks as are now or
hereafter included in an extended coverage endorsement in common use for
commercial structures, including vandalism and malicious mischief. The amount of
the insurance shall be sufficient to prevent either Lessor or Lessee from
becoming a coinsurer under the provisions of the policies, but in no event shall
the amount be less than ninety percent (90%) of the then actual replacement
cost, excluding costs of replacing excavations and foundations but without
deduction for depreciation (herein called full insurable value). Lessor shall
not carry any insurance the effect of which would be to reduce the protection or
payment to Lessee under any insurance that this lease obligates Lessee to carry.
If any dispute arises between the parties hereto whether the amount of insurance
complies with the above cannot be resolved by
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agreement, Lessor may, not more often than once every thirty-six (36) months,
require Lessee to obtain the estimates from three (3) responsible insurance
companies qualified to sell insurance in California for the full insurable value
of the premises. The arithmetical mean of such estimates shall be deemed to be
the full insurable value of the premises. Lessee may include the holder of any
mortgage of the leasehold as a loss payee.
(c) Lessor's Option to Maintain Earthquake Insurance. Lessor in its sole
discretion may elect to place earthquake insurance upon the Premises to the
extent of its insurable value, in which event Lessee shall, pay upon request
Three Thousand Dollars ($3,000.00) annually toward the premium costs for such
insurance, with Lessee's Three Thousand Dollars ($3,000.00) contribution to be
increased annually in proportion to a cost of living adjustment pursuant to the
Index described in paragraph 6(b) hereof, not to exceed 3% per year.
(d) Proceeds of Fire and Extended Coverage Insurance. Lessor shall, at
Lessee's cost and expense, cooperate fully with Lessee to obtain the largest
possible recovery, and all policies of fire and extended coverage insurance
required by Paragraph 29(a) shall provide that the proceeds shall-be-paid as
provided in Paragraph(s) (c) and (d) hereof.
The proceeds shall be deemed to be held in trust by the recipient
to the uses and purposes prescribed by this lease.
Payments of proceeds for repair, restoration, or reconstruction of
improvements shall be made periodically on architects' certificates until the
work is completed and accepted.
Any insurance proceeds remaining after complying with the provisions
of this lease relating to maintenance, repair and reconstruction of improvements
shall be the Lessee's sole property.
(e) Payment Dependent on Major Versus Minor Damage. If the proceeds do
not exceed twenty percent (20%) of the fair market value of said building and
its improvements and fixtures, immediately prior to its damage or destruction,
all the proceeds shall be adjusted by and paid to Lessee and shall be applied by
Lessee for the repair, restoration, or reconstruction of any improvements
damaged or destroyed by the casualty giving rise to the insurance claim. If the
proceeds exceed that measure, all the proceeds shall be adjusted by Lessor and
Lessee and shall be deposited with an institutional Trust Department with
offices in the San Francisco/Oakland Bay Area, as escrow holder to be disbursed
in the same manner as if the proceeds were a construction loan from an
institutional lender to Lessee made under the provisions of this lease. A
different procedure, as may be required by the leasehold improvement lender, may
be substituted for the foregoing, provided the insurance proceeds are committed
to paying for the cost of repairing the damage to the premises. Lessee shall pay
all escrow fees and charges. The escrow holder in the collection and
disbursement of said insurance proceeds shall be governed by the following
provisions:
(1) Subject to any other conditions contained in this lease,
escrow holder shall first use the proceeds from any policy insuring a casualty
to the improvements for the repair, restoration, alteration, or reconstruction
of the improvements (hereafter called "the work") as provided by this lease.
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(2) Escrow holder shall pay out the proceeds from time to time
to persons furnishing labor or materials or both, including architects' fees and
contractor's compensation, for the work. Payment shall be made on vouchers
approved by a licensed architect or engineer approved by the leasehold mortgagee
and employed by Lessee. If the escrow holder determines, in its reasonable
discretion, that such vouchers are being improperly approved by the architect or
engineer, or if no architect or engineer is appointed as above, the escrow
holder may appoint an architect or engineer to act as above, and shall pay the
appointee out of the proceeds.
(3) After completion of the work and after payment and
discharge of all cost of the work and within 15 days after written demand on
escrow holder and notice to leasehold mortgagee, accompanied by reasonable proof
of completion and payment, escrow holder shall deliver any proceeds remaining in
its hands to the leasehold mortgagee to be applied in reduction of the
indebtedness secured by the leasehold mortgage if so required by the leasehold
mortgagee.
(4) Within 20 days after escrow holder's notice to Lessee of any
amount by which the insurance proceeds are insufficient to pay the actual cost
of the work due to the policy deductible, Lessee shall deposit the amount of
such deductible with escrow holder.
(5) Lessee shall pay all actual costs and charges of escrow
holder.
Any insurance proceeds remaining after complying with the
provisions of this lease relating to maintenance repair, and reconstruction of
improvements shall be the Lessee's sole property except as otherwise provided in
any leasehold mortgage thereon.
(f) Policy Form. Content Insurer. All insurance required by express
provisions of this lease shall be issued by insurance companies authorized to do
business in the State of California, with a financial rating of at least A+
status as rated in the most recent edition of Best's Insurance Reports. All such
policies shall be nonassessable and shall contain language, to the extent
obtainable, to the effect that (1) any loss be payable notwithstanding any
negligence of Lessor that might otherwise result in a forfeiture of the
insurance, (2) the insurer waives the right of subrogation against Lessor and
against Lessor's agents and representatives, (3) the policies are primary and
noncontributing with any insurance that may be carried by Lessor, and (4) they
cannot be canceled or materially changed except after ten (10) days' notice by
the insurer to Lessor or Lessor's designated representative. Lessee shall
furnish Lessor with copies of all such policies promptly on receipt of them, or
with certificates evidencing the insurance. Before commencement of the lease,
Lessee shall furnish Lessor with binders representing all insurance required by
this Lease. At the expiration of the term, Lessor shall reimburse Lessee pro
rata for all prepaid premiums on insurance required to be maintained by Lessee,
and Lessee shall assign all Lessee's right, title and interest in that insurance
to Lessor. Lessee may effect for its own account any insurance not required
under this Lease. Lessee may provide by blanket insurance covering the premises
and any other location or locations any insurance required or permitted under
this lease provided that the protection afforded thereunder to Lessor and to
Lessee as to the premises leased under this lease, as called
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for under the provisions of this Article 13, is not reduced.
In case this Lease is terminated, the insurance policies and all
rights and entitlements under it shall be assigned to Lessor at Lessor's
election.
(g) Failure to Maintain Insurance; Proof of Compliance. Lessee shall
deliver to Lessor, in the manner required for notices, copies or certificates of
all insurance policies required by this lease, within the following time limits:
For insurance required at possession of the premises by Lessee,
at least ten (10) days prior to the commencement of such possession.
For insurance becoming required at a later date, at least ten
(10) days before the requirement takes effect, or as soon thereafter as the
requirement, if new, takes effect.
For any renewal or replacement of a policy already in existence,
at least ten (10) days before expiration or other termination of the existing
policy.
If Lessee fails or refuses to procure or to maintain insurance
as required by this lease or fails or refuses to furnish Lessor with required
proof that the insurance has been procured and is in force and paid for, Lessor
shall have the right, at Lessor's election and ten (10) days' notice, to procure
and maintain such insurance. The premiums paid by Lessor shall be treated as
added rent due from Lessee with interest at twelve percent (12%) to be paid on
the premiums when paid. Lessor shall give prompt notice of the payment of such
premiums, stating the amounts paid and the names of the insurer or insurers, and
interest shall run from the date of the notice.
(h) Waiver of Subrogation. The parties release each other, and their
respective authorized representatives, from any claims for damage to any person
or to the premises that are caused by or result from risks fully insured against
under any insurance policies carried by the parties and in force at the time of
any such damage.
Each party shall make all reasonable effort to cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy. Neither party shall be liable to the other for any
damage caused by fire or any of the risks insured against under any insurance
policy required by this lease. If any insurance policy cannot be obtained with a
waiver of subrogation, or is obtainable only by the payment of an additional
premium charge above that charged by insurance companies issuing policies
without waiver of subrogation, the party undertaking to obtain the insurance
shall notify the other party of this fact. The other party shall have a period
of 15 days after receiving the notice either to place the insurance with a
company that is reasonably satisfactory to the other party and that will carry
the insurance with a waiver of subrogation, or to agree to pay the additional
premium if such a policy is obtainable at additional cost. If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium charged, the other party is
relieved of the obligation to obtain a waiver of subrogation rights with respect
to the particular insurance involved.
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30. DAMAGE OR DESTRUCTION - OBLIGATIONS TO RESTORE, ETC.
(a) If the premises shall be damaged or destroyed by a risk not covered
and insured against by fire, earthquake (if in place), and extended casualty
insurance Lessor shall forthwith and with due diligence repair, rebuild and/or
restore the same unless the then cost of such repairs and/or reconstruction
shall amount to ten percent (10%) or more of the then replacement value of the
building and/or improvement damaged or destroyed, in which latter event Lessor
shall have the option (giving notice thereof to Lessee within fifteen (15) days
after ascertaining the repairs, rebuilding and/or restoration costs and
replacement value) whether to terminate this Lease or to proceed with the
reconstruction; provided, however, should Lessor elect to terminate this Lease,
Lessee shall have the option within fifteen (15) days after Lessor's notice to
terminate this Lease, to elect to pay to Lessor at the time Lessee notifies
Lessor of its election herein the difference between ten percent (10%) of the
then replacement value of the building and/or improvement damaged or destroyed
and the actual cost to Lessor in repairing, rebuilding and/or restoring the
building and other improvements, in which event Lessor shall forthwith commence
said repairs, rebuilding and reconstruction and diligently and continuously
proceed to completion. It is agreed that the amount payable by Lessor under
these provisions shall be the only monies to be paid by Lessor with respect to
such work of restoration, and shall not be payable by Lessor until Lessee shall
have paid to Lessor its required contribution to the costs and expenses thereof.
If Lessor elects to terminate this Lease, and if Lessee does not elect to
contribute toward the cost of reconstruction within the time and manner provided
herein, this lease shall forthwith terminate and the parties shall be relieved
of further liability hereunder.
(b) Waiver of Civil Code Sections. In respect to any damage or
destruction to the premises under the terms of this paragraph, the provisions of
Section 1932, Subdivision 2, and of Section 1933, Subdivision 4 of the Civil
Code of the State of California are waived by Lessee.
(c) Loss During Last Part of Term. In the event material damage or
destruction to the premises shall occur during the last six (6) months of the
term of this lease or of any extended term, Lessor or Lessee may terminate this
Lease by notice to the other given not more than fifteen (15) days after the
damage or destruction, provided, however, in the event the damage or destruction
shall occur during the last six (6) months of the term, and if Lessee is given
by the terms hereof an option to extend this lease and exercises said option
within fifteen (15) days following the damage or destruction, then Lessor shall
repair, rebuild and/or restore the premises as provided in subparagraph (a) of
this paragraph. Should this Lease not be terminated as provided in this
subparagraph, then this Lease shall continue in full force and effect.
31. SURRENDER UPON TERMINATION
At the expiration of the term of this Lease, or upon the earlier
termination thereof for any reason, the Lessee shall quit and surrender said
leased premises and personal property to the Lessor in as good state and
condition as said premises and personal property are in when possession thereof
is given to the Lessee, reasonable wear and tear and damage by the elements
excepted, and the Lessor shall thereupon have the
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right to enter upon and take possession of said premises and said leased
personal property.
32. HOLDING OVER
Should the Lessee hold over said demised premises with Lessor's consent
after this Lease is terminated, or upon the expiration of the term thereof, such
holding over shall be deemed merely a tenancy from month to month and at a
monthly rental equal to the rental in effect just prior to expiration of the
lease term increased by twenty percent (20%), payable monthly in advance, but
otherwise on the same terms and conditions as herein provided.
If Lessee has an option to extend the Lease term, exercises the same,
and holds over after the expiration of said extended term, then Lessee's
possession shall also be deemed merely a month to month tenancy at a monthly
rental equal to the rent in effect just prior to expiration of the extended term
increased by twenty percent (20%).
33. DEFAULT
(a) Lessee's Default. The occurrence of any of the following shall
constitute a default by Lessee:
(1) Failure to pay rent or any other payment required of Lessee
when due, if the failure continues for three (3) days after written notice has
been given to Lessee.
(2) Failure to perform any other provision of this Lease if the
failure to perform is not cured within fifteen (15) days after written notice
has been given to Lessee. If the default cannot reasonably be cured within
fifteen (15) days, Lessee shall not be in default of this Lease if Lessee
commences to cure the default within the 15-day period and diligently and in
good faith continues to cure the default.
(3) The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any successor in interest of Lessee
or any guarantor of Lessee's obligation hereunder, was materially false.
(4) The filing of a petition in bankruptcy by any guarantor of
Lessee's obligations hereunder and the failure within thirty (30) days after
written notice from Lessor to Lessee to provide the substitute guarantor of
Lessee's obligation hereunder reasonably satisfactory to Lessor.
Notices given under this paragraph shall be in written form and
shall specify the alleged default and shall demand that 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.
(b) Lessor's Remedies. Lessor shall have the following remedies if
Lessee commits a default. These remedies are not exclusive: they are cumulative
in addition to any remedies now or later allowed by law:
(1) Lessor can continue this Lease in full force and effect, and
the Lease will continue in effect as long as Lessor does not terminate Lessee's
right to possession, and Lessor shall have the right to collect rent when due.
During the
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period Lessee is in default, Lessor 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 Lessor for all costs Lessor incurs in reletting the premises,
including without limitation, broker's commissions, reasonable expense 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 Lessor the rent due under this Lease on the dates the rent is due,
less the rent Lessor receives from any reletting. No act by Lessor allowed by
this paragraph shall terminate this Lease unless Lessor notifies Lessee that
Lessor elects to terminate this Lease. After Lessee's default and for as long as
Lessor does not terminate Lessee's right to possession of the premises, if
Lessee obtains Lessor's consent, Lessee shall have the right to assign or sublet
its interest in this Lease, but Lessee shall not be released from liability.
Lessor's consent to a proposed assignment or subletting shall not be
unreasonably withheld.
(2) Lessor can terminate Lessee's right to possession of the
premises at any time. No act by Lessor other than giving notice to Lessee shall
terminate this Lease. Act of maintenance, efforts to relet the premises, or the
appointment of a receiver on Lessor's initiative to protect Lessor's interest
under this Lease shall not constitute a termination of Lessee's right to
possession. On termination, Lessor, has the right to recover from Lessee:
(i) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of termination of this Lease;
(ii) The worth, at the time of the award, of the amount
by which the unpaid rent that would have been earned after the date of
termination of this Lease until the time of award exceeds the amount of the loss
of rent that Lessee proves could have been reasonably avoided:
(iii) The worth, at the time of the award, of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of the loss of rent that Lessee proves could have been
reasonably avoided; and
(iv) Any other amount, the court costs, necessary to
compensate Lessor for all detriment proximately caused by Lessee's default.
"The worth, at the time of the award," as used in (i) and (ii)
of this paragraph, is to be computed by allowing interest at the maximum rate an
individual is permitted by law to charge. "The worth, at the time of the award,"
as referred to in (iii) of this paragraph, 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%).
(c) Appointment of Receiver. If Lessee is in default of this Lease,
Lessor shall have the right to have a receiver appointed to collect rent and
conduct Lessee's business. Neither the filing of a petition for the appointment
of a receiver nor the appointment itself shall constitute an election by Lessor
to terminate this Lease.
(d) Lessor's Right to Cure Lessee's Default. Lessor, at any time after
Lessee commits a default, can cure the default at Lessee's cost. If Lessor at
any time, by reason of Lessee's
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default, pays any sum or does any act that requires the payment of any sum, the
sum paid by Lessor shall be due immediately from Lessee to Lessor at the time
the sum is paid, and if paid at a later date shall bear interest at the maximum
rate an individual is permitted by law to charge from the date the sum is paid
by Lessor until Lessor is reimbursed by Lessee. The sum, together with interest
on it, shall be additional rent.
(e) Lessee's Right to Cure Lessor's Default. Lessor shall be in default
of this Lease if it fails or refuses to perform any provision of this Lease that
it is obligated to perform if the failure to perform is not cured within thirty
(30) days after notice of default has been given by Lessee to Lessor. If the
default cannot reasonably be cured within thirty (30) days, Lessor shall not be
in default of this Lease if Lessor commences to cure the default within the
thirty-day period and diligently and in good faith continues to cure the
default.
Lessee at any time after Lessor commits a default can cure the default
at Lessor's cost. If Lessee at any time, by reason of Lessor's default, pays any
sum or does any act that requires the payment of any sum, the sum paid by Lessee
shall be due immediately from Lessor to Lessee at the time the sum is paid, and
if paid at a later date shall bear interest at the maximum rate an individual is
permitted by law to charge from the date the sum is paid by Lessee until Lessee
is reimbursed by Lessor.
(f) Limitation of Lessor's Liability. If Lessor is in default of this
Lease, and as a consequence Lessee recovers a money judgment against Lessor, the
judgment shall be satisfied only out of the proceeds of sale received on
execution of the judgment and levy against the right, title and interest of
Lessor in the building, other improvements, and land of which the premises are
a part, and out of rent or other income from such real property receivable by
Lessor or out of the consideration received by Lessor from the sale or other
disposition of all or any part of Lessor's right, title and interest in the
building, other improvements, and land of which the premises are a part, and
neither Lessor nor any of the partners comprising the partnership designated as
Lessor shall be personally liable for any deficiency.
(g) Nondisturbance of Sublessee. Notwithstanding the foregoing, any
Sublessee who continues to perform all of its Sublease obligations can remain in
possession of subleased premises and upon notice from Lessor of Lessee's
default, and subject to Lessee's and Guarantors' rights to cure any default
under the terms of the Lease, shall pay its Sublease rent directly to Lessor. In
the event that Lessee defaults in its performance of this Lease such that
Lessee's rights under the Lease are terminated, and Sublessee attorns to all
provisions of this Lease, Sublessee shall have all the rights of Lessee herein,
including the rights to exercise the options to extend the Lease term as
provided in Section 42 of the Lease. Provided however, that the rent payable
shall be the greater of that called for in either this Lease or the Sublease.
34. CONDEMNATION
(a) Effective Total Condemnation.
(1) In the event that there shall be a total taking of the
leased premises during the Lease term, or any extension thereof, under the power
of eminent domain, the leasehold estate hereby created shall cease and terminate
as of the date
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actual physical possession of the leased premises is taken by the condemnor.
(2) All compensation and damages awarded for such total taking
shall belong to and be the sole property of Lessor, and Lessee shall have no
claim thereto and hereby irrevocably assigns and transfers to Lessor any right
they might have to compensation or damages to which they may become entitled;
provided, however, that Lessee shall be entitled to receive any award made for
the taking of or damage to Lessee's trade fixtures and any improvements made by
Lessee to the leased premises which Lessee would have had, but for the
condemnation, the right to remove on expiration or sooner termination of this
Lease. In addition, Lessee shall be entitled to receive seventy-five percent
(75%) of any award made for the taking or condemnation of other improvements on
the leased premises provided, however, that if the condemnation or taking shall
occur during the last five (5) years of the lease term, including any extension
thereof, Lessee's compensation for the taking or condemnation of the improvement
shall be reduced by twenty percent (20%) for each full year (and in proportion
for a fraction of a year) that elapses from the first day of said five (5) year
period to the date of such vesting of title or taking of possession. If the
value of the improvements have been determined by a court or a jury determining
the compensation to be paid by the condemning authority in the proceedings
pursuant to which the leased premises have been taken or condemned, the value so
determined shall be conclusive upon Lessor and Lessee. If such improvement value
has not been separately determined, such value shall be fixed by agreement
between Lessor and Lessee. In the event that Lessor and Lessee are unable to
agree, the controversy shall be resolved by Lessor and Lessee agreeing on an
appraiser who shall be a member of the American Institute of Real Estate
Appraisers. In the event that Lessor or Lessee are unable to agree on said
appraiser, each party shall select an appraiser who is a member of the American
Institute of Real Estate Appraisers. The two appraisers shall then select a
third appraiser who shall also be a member of the American Institute of Real
Estate Appraisers. The decision on the value of the improvements made by two of
said three appraisers shall be final and binding on Lessor and Lessee. Each
party hereby consents to the entry of judgment by any court having jurisdiction
in accordance with the decision of said appraisers.
(3) Notwithstanding the foregoing, Lessee shall be entitled to
any sum attributable to the excess of the market value of the premises,
exclusive of Lessee's improvements or alterations for which Lessee is otherwise
compensated under this section, for the remainder of the Lease term including
renewal options, over the present value at the date of taking of the minimum
monthly rent payable for the remainder of such Lease term.
(4) On termination of this Lease by a total taking of the leased
premises under the power of eminent domain, all rentals and other charges
payable by Lessee to or on behalf of Lessor under the provisions of this Lease
shall be paid up to the date on which actual physical possession of the leased
premises shall be taken by the condemnor, and the parties hereto shall
thereafter be released from any further liability in relation thereto.
(b) Effective Partial Condemnation.
(1) In the event that there shall be a partial taking
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of the leased premises during the Lease term or any extension thereof under the
power of eminent domain, this Lease shall terminate as to the portion of the
leased premises so taken on the date when actual physical possession of said
portion is taken by the condemnor, but this Lease shall, at Lessor's option,
continue in force and effect as to the remainder of the leased premises provided
the remainder is suitable for Lessee's business purposes, and provided further
that the rental payable by Lessee for the balance of said term shall be abated
in the ratio that the square footage of floor space of the leased premises taken
bears to the total floor space of the leased premises occupied by Lessee at the
time of such taking. Notwithstanding the foregoing, all parties to this Lease
reserve their respective rights under California Code of Civil Procedure Section
1265.130 to have a court terminate the Lease in the event of a substantial
partial taking.
(2) On such partial condemnation as in this subsection provided,
all compensation and damages awarded for such partial taking shall belong to and
be the sole property of Lessor, and Lessee shall have no claim thereto and
hereby irrevocably assigns and transfers to Lessor any right they may have to
compensation or damages for property condemned; provided, however, that Lessee
shall be entitled to receive any award made for the taking of or damage to
Lessee's trade fixtures and any improvements made by Lessee to the leased
premises which Lessee would have, but for the condemnation, the right to remove
on expiration or sooner termination of this Lease. In addition, Lessee shall be
entitled to receive seventy-five percent (75%) of any award made for the taking
or condemnation of other improvements on the leased premises provided, however,
that if the condemnation or taking shall occur during the last five (5) years of
the lease term, including any extension thereof, Lessee's compensation for the
taking or condemnation of the improvement shall be reduced by twenty percent
(20%) for each full (and in proportion for a fraction of a year) that elapses
from the first day of said five (5) year period to the date of such vesting of
title or taking of possession. If the value of the improvements have been
determined by a court or a jury determining the compensation to be paid by the
condemning authority in the proceedings pursuant to which the leased premises
have been taken or condemned, the value so determined shall be conclusive upon
Lessor and Lessee. If such improvement value has not been separately determined,
such value shall be fixed by agreement between Lessor and Lessee. In the event
that Lessor and Lessee are unable to agree, the controversy shall be resolved
by Lessor and Lessee agreeing on an appraiser who shall be a member of the
American Institute of Real Estate Appraisers. In the event that Lessor or Lessee
are unable to agree on said appraiser, each party shall select an appraiser who
is a member of the American Institute of Real Estate Appraisers. The two
appraisers shall then select a third appraiser who shall also be a member of the
American Institute of Real Estate Appraisers. The decision on the value of the
improvements made by two of said three appraisers shall be final and binding on
Lessor and Lessee. Each party hereby consents to the entry of judgment by any
court having jurisdiction in accordance with the decision of said appraisers.
(3) Notwithstanding the foregoing, Lessee shall be entitled to
any sum attributable to the excess of the market value of the premises,
exclusive of Lessee's improvements or alterations for which Lessee is otherwise
compensated under this paragraph, for the remainder of the Lease term including
renewal options, over the present value at the date of taking
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of the minimum monthly rent payable for the remainder of such Lease term.
(4) On termination of this Lease in whole or in part as herein
provided, all rentals and other charges payable by Lessee to or on behalf of
Lessor hereunder shall be paid up to the date on which actual physical
possession shall be taken by the condemnor and in the event that the Lease is
totally terminated, the parties hereto shall thereafter be released from all
further liability in relation thereto, and in the event that the Lease is only
partially terminated, Lessee shall thereafter be liable only for that portion of
rent required for the balance of the Lease term as in this subsection provided.
35. NOTICES
In the event that any notice is to be given under this Lease by either
party hereto to the other, either expressly required to be given in writing, or
such notice as such party may desire to give, such notice may be given by either
personally delivering the same to the other or by mailing such notice by
certified or registered mail with return receipt requested thereon, in a sealed
envelope with all postage and certification charges thereon prepaid, addressed
as follows:
If to Lessor: Vasconi/Belka Partnership
2068 Salvio Street
Concord, CA 94520
or to such other address as Lessor may hereafter notify Lessee in writing.
If to Lessee: KLP Properties, Inc.
1343 Locust Street, Suite 203
Walnut Creek, CA 94596
or to such other address as Lessee may hereafter notify Lessor in writing.
If to Guarantors: Gaylon C. Patteron and
Gary L. Patterson
1343 Locust Street, Suite 203
Walnut Creek, CA 94596
or to such other address as Guarantors may hereafter notify Lessor in writing.
The expiration of two (2) days following the deposit of such notice in a
United States Post Office as herein provided, postage prepaid, shall constitute
said notice, and the time of performance of any act or obligation required to be
made after said notice under the terms of this Lease, shall commence to run from
the date of the deposit of said notice in a United States post office in the
State of California.
36. SALE OF PREMISES
If Lessor sells or transfers all or any portion of the building, other
improvements, and land on which the premises are situated, Lessor on
consummation of the sale or transfer, shall be released from any liability
thereafter accruing under this Lease if Lessor's successor has assumed in
writing, for the benefit of Lessee, Lessor's obligations under this Lease.
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37. SUBORDINATION
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation or security now or
hereafter placed upon the real property of which the premises are a part and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to
execute such documents within 10 days after written demand shall constitute a
material default by Lessee hereunder, or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph.
38. PERSONAL PROPERTY LEFT ON PREMISES AT LEASE TERMINATION
On expiration of the term of this Lease, or upon the earlier termination
thereof for any reason, Lessor can elect to retain or dispose of in any manner,
any of Lessee's personal property or equipment that Lessee does not remove from
the premises by giving at least five (5) days notice to Lessee. Title to any
such personal property that Lessor elects to retain or dispose of shall vest in
Lessor. Lessee waives any and all claims against Lessor for any damage to Lessee
resulting from Lessor's retention or disposition of such personal property
items. Lessee shall be liable to Lessor for all of Lessor's costs and expenses
for storing, removing, and disposing of any of Lessee's personal property left
on the premises. Lessor shall be entitled to charge reasonable rental for the
storage of any personal property and equipment left on the premises by Lessee
whether claimed to be the property of Lessee or others. However, no such charge
shall be made if Lessor assumes ownership of such personal property.
39. BREACH OF SECURITY
Lessee shall be solely and exclusively responsible for the security of
the premises and shall be solely and exclusively liable to Lessor for any and
all damages resulting from any breach of security including property damage and
personal liability, whether caused by burglary, robbery or such other breaches
of security and specifically including any damage due to any break-ins through
the roof. Lessee further agrees to waive any rights against Lessor by way of
subrogation on behalf of Lessee's insurance carrier in the event of any such
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security breach, such waiver to extend to Lessor's insurance carrier.
40. ATTORNEY'S FEES AND COSTS
If either party is required to employ the services of an attorney to
enforce any of the terms and conditions of this Lease, prevailing party shall be
entitled to recover from the other all reasonable costs and fees incurred in
connection with the employment of such attorney including, but not limited to,
all costs incurred in connection with any action or proceeding or any post
judgment proceeding.
41. RIGHT OF FIRST REFUSAL TO PURCHASE PREMISES
Lessee shall have a right of first refusal to purchase the premises from
Lessor during the initial Lease term and any extension thereof on the following
basis: in the event Lessor receives a bona fide offer to purchase the premises
from any third party, which the Lessor is prepared to accept, Lessee shall have
fifteen (15) calendar days from the date Lessor notifies Lessee in writing of
its planned acceptance, accompanied by a copy of the Purchase Agreement, in
which to agree to purchase the premises upon the same terms and conditions as
the offer from the third party. If Lessee does not indicate its agreement within
said fifteen (15) day period, Lessor thereafter shall have the right to sell and
convey the premises to a third party on the same terms as stated in the Notice.
Lessee's right of first refusal shall not apply to a transfer between
any of those persons who constitute Lessor and the blood relatives within the
third degree of any of those persons, either outright or in trust, or to a legal
entity, (i.e., partnership, corporation, trust, limited liability company, or a
like entity) where the majority interest is owned by all or some of those
persons who constitute Lessor.
42. OPTION TO EXTEND TERM OF LEASE
Lessee shall have an option to extend the initial Lease term for three
(3) additional periods of five (5) years each, and one (1) final period of four
(4) years each, all to run consecutively. Such option may be exercised only in
the event that Lessee is not in default in the performance of any of Lessee's
obligations under the Lease and by the giving of written notice of exercise of
option to Lessor at least one hundred eighty (180) days prior to the expiration
of the initial Lease term, or any subsequent extended terms. The option granted
herein may not be exercised or be assigned voluntarily or involuntarily by or to
any person or entity other than Lessee, or an approved assignee. It is
specifically agreed that the option granted herein to Lessee is not assignable
separate and apart from this lease. In no event may Lessee exercise the option
hereunder where Lessee has received three (3) or more notices of default for
nonpayment of rent or two (2) notices of default for breach of other Lease
obligations during the initial term hereof.
If during the initial fifteen (15) year Lease Term the CPI increase is
no more than sixty percent (60%), then the minimum base rent for the first five
(5) year option period shall be determined by applying the full CPI increase
during the initial Lease term to the minimum base rent for the first year of the
initial Lease term, provided further that in no event
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shall the minimum base rent increase for the first option period be less than
forty-five percent (45%) of the minimum base rent for the first year of the
initial Lease term. If the CPI increases sixty percent (60%) or more during the
initial Lease term, then the minimum base rent for the first five (5) year
option period shall be determined by (1) applying the full CPI increase to the
minimum base rent for the first year of the initial Lease term, but in no event
shall the minimum base rent increase for the first option period exceed
seventy-five percent (75%) of the minimum base rent for the first year of the
initial Lease term, or (2) at Lessee's option, seeking and allowing an
arbitration to determine "fair market rent" for comparable leased properties in
Alameda and Contra Costa Counties, taking into consideration Lessee's investment
in and development of tenant and structural improvements to the premises.
Minimum base rent for subsequent option periods will be adjusted in accordance
with the percentage increase in the CPI index, as provided for in Paragraph 6.
hereof, with a fifteen percent (15%) maximum increase for any five (5) year
adjustment period.
43. LEASE GUARANTEE
This Lease is subject to a guarantee of Lessee's full performance of all
Lessee's obligations under such Lease, by Gaylon C. Patterson and Gary L.
Patterson, the form of such guarantee being attached hereto and made a part
hereof. Either or both Guarantors shall have the right to assume the position of
Lessee and its obligations, in the event Lessee defaults on the terms of the
Lease and Guarantors are required to cure such default, provided the Guarantors
take all required steps, as provided in accordance with applicable statutes and
any written agreement between Lessee and Guarantors, to replace the Lessee as a
lessee under this Lease, in which case Lessor shall acknowledge the Guarantor as
the Lessee for the balance of the Lease term and any extensions thereof. In the
event that Lessee defaults in the performance of any of the terms and conditions
hereof, Lessor shall give written notice of such default to Guarantors, at the
address and in the manner specified for giving notice in the Lease. Guarantors
shall have the right to cure any such default within ten (10) days following the
expiration of any time frames provided for Lessee's cure of such default under
the Lease, and upon Guarantors' cure of any such default, Guarantors shall have
the right, at Guarantors' option, to assume the position and obligations of
Lessee and to become substituted Lessee under the Lease.
44. BROKER'S FEES
Lessor agrees to pay Gary L. Patterson ("broker") or his designee a
leasing commission of Fifty Thousand Dollars ($50,000.00) for brokerage services
rendered, payable one-half (1/2) at the time of commencement of the initial
Lease term and the receipt by Lessor of the first full monthly payment of rent,
and the remaining one-half (1/2) within six (6) months thereafter, provided the
Lease then remains in full force and effect without default.
45. MISCELLANEOUS PROVISIONS
(a) Paragraph Headings. The paragraph and subparagraph headings of this
lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part of this Lease.
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(b) Integrated Agreement, Modification. This Lease contains all of the
agreements and conditions made between the parties hereto and may not be
modified orally or in any other manner than by an agreement in writing signed by
all of the parties to this Lease or their respective successors in interest.
(c) Time of Essence. Time is of the essence of each term and provision
of this Lease.
(d) All Required Payments Are Additional Rent. Except as otherwise
expressly stated, each payment required to be made by Lessee shall be in
addition to and not in substitution for other payments to be made by Lessee and
all such payments shall be deemed to be additional rental.
(e) Separability. The invalidity or illegality of any provision shall
not affect the remainder of this Lease.
(f) Duration of Obligations. Unless otherwise stated in particular
provisions of this Lease, an obligation resulting from the Lease or from the
relationship created by the Lease, is coterminous with the Lease, except that
defaults occurring during the term of this Lease are actionable until the
expiration of the period of the applicable statute of limitations.
(g) Limitation of Actions. Any claim, demand, right or defense of any
kind by Lessee which is based upon or arises out of any connection with this
Lease or the negotiations prior to its execution, shall be barred unless Lessee
commences an action thereon, or interposes in a legal proceeding a defense by
reason thereof, within twelve (12) months after the date of the inaction or
omission or the date of the occurrence of the event or the discovery thereof by
Lessee, or of the action to which the claim, demand, right or defense relates,
whichever applies.
(h) WAIVER OF RIGHT TO TRIAL BY JURY. LESSOR AND LESSEE HEREBY WAIVE
THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND/OR HEARING BROUGHT
BY EITHER LESSOR AGAINST LESSEE OR LESSEE AGAINST LESSOR ON ANY MATTER
WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE
RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF THE PREMISES, OR
ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW,
STATUTE OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN EFFECT.
(i) Joint and Several Liability. In the event two or more persons or
entities execute this Lease as "Lessee", then the obligation of each such person
shall be joint and several.
(j) Guarantor. In the event that there is a guarantor of this Lease,
said guarantor shall have the same obligations as Lessee under this Lease. In
the event the guarantor files a petition in bankruptcy in any court, Lessor, in
Lessor's sole discretion, may terminate this Lease pursuant to the provisions of
paragraph 33(a)(4) unless Lessee, within thirty (30) days after notification
from Lessor, provides a new guarantor satisfactory to Lessor.
(k) Covenants or Conditions. All the agreements in this Lease upon the
part of Lessee, whether technically covenants or conditions, shall be deemed
conditions for the purpose hereof.
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(1) Authority. If Lessee is a corporation, trust or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
(m) Waivers. No waiver by Lessor of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other then the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
(n) Words. Whenever the singular is used in this Lease, the same shall
include the plural when required by the context, and the masculine gender shall
include the feminine and neuter genders, and the word "person" shall include
corporation, firm and association. If there is more than one Lessee, the
obligations of this Lease shall be joint and several.
(o) California Law. This Lease shall be governed and interpreted solely
by the laws of the State of California.
(p) Heirs. Etc. This Lease shall be binding upon the successors,
administrators and assigns of the respective parties hereto.
(q) Exhibits. All exhibits, if any, that are attached to this Lease are
hereby incorporated into the body of this Lease.
IN WITNESS WHEREOF the Lessor and Lessee have hereunto executed this
Lease in triplicate in Contra Costa County, California, the day and year first
above written.
/s/ PETER VASCONI
----------------------------------------------
PETER VASCONI
THE "JAMES AND MAURA ANNE BELKA TRUST",
U/A/D December 12, 1984, as to The Survivor's
Trust,
/s/ JAMES A. BELKA
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By: JAMES A. BELKA
/s/ MICHAEL JAMES BELKA
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By: MICHAEL JAMES BELKA, Co-Trustees
dba VASCONI/BELKA PARTNERSHIP,
"Lessor"
KPL PROPERTIES, INC
/s/ GARY PATTERSON
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By: GARY PATTERSON
"Lessee"
30.