AGENDA ITEM NO. 37
Meeting Date: December 13, 2005
Subject/Title: Adopt a resolution authorizing the Executive Director to
execute an Industrial Lease and Option to Purchase Agreement with Precision
Cabinets, L.C., for 400 Guthrie Lane and to execute such other documents as
may be needed to complete the transaction.
Prepared by: Linda Maurer, Economic Development Manager
Gina Rozenski, Redevelopment Manager
Submitted by: Howard Sword, Community Development Director
Adopt a resolution authorizing the Executive Director to execute an
Industrial Lease and Option to Purchase Agreement with Precision Cabinets,
L.C., for 400 Guthrie Lane and to execute such other documents as may be
needed to complete the transaction.
On November 8, 2005, a joint meeting of the Council and the Agency was held
in which two actions were taken. The first action was City Council
Resolution No. 2005-261 to transfer the ownership of 9100 Brentwood
Boulevard to the Redevelopment Agency. The second action was Redevelopment
Agency Resolution No. 102 for the acceptance of the transfer of 9100
Brentwood Boulevard to the Agency.
Notices of the time and place of this public hearing were published in a
newspaper of general circulation once a week for two weeks.
In September 2005, City staff began discussions with Precision Cabinets, a
local cabinet manufacturer, regarding their need to secure expansion space
for their business. Precision Cabinets employs nearly 300 workers with a
large percentage living in Brentwood. Of the nearly 300 jobs, approximately
30 percent are front office administrative, technical and sales jobs.
Precision is also a significant business contributor to the City’s sales tax
revenue. Precision Cabinet is a valued local business.
During our initial discussions, staff learned that the company was
considering relocating a portion of their operations outside the City of
Brentwood. Because the City Council has outlined business retention as a
stated goal in its Two-Year Plan, and because the Redevelopment Agency
adopted a goal to encourage the expansion of local commercial opportunities
within the Merged Redevelopment Project Areas through business retention and
expansion programs, staff began working with Precision to identify a local
solution for their expansion needs.
Following a series of discussions to outline their current and future needs
for expansion, it was determined that the most appropriate solution was the
Agency-owned industrial building located at 400 Guthrie Lane. This 20,277
square foot building sits adjacent to the new police headquarters and was
part of the City’s acquisition of the U.S Print property in September 2003.
The following are some highlights of the lease agreement with the option to
purchase (Exhibit A of attached lease).
Precision Cabinets and the Redevelopment Agency will enter into a
three-year lease agreement-purchase option.
The lease would take effect on March 1, 2006.
Precision Cabinets intends to lease the entire building in phases, taking
one-third of the structure in year one (6,759 sf), two-thirds in year two
(13,518 sf) and the entire building in year three (20,277 sf). A phasing
plan is attached (Exhibit B of attached lease).
The lease price is $.65 per square foot, triple net (NNN). This lease rate
does not include any tax liabilities, property insurance, and utilities.
At the end of the three-year lease, or any earlier agreeable timetable,
Precision Cabinets will have the option to purchase the building at its fair
market value, as determined by an appraisal of the structure.
Agency staff will begin work immediately to subdivide the parcel to
prepare the property for future sale of 400 Guthrie Lane. This will allow
the western portion of the property, where the Police Facility is located,
to be re-conveyed back to the City from the Agency in a few months.
There are several reasons why the current space needs of Precision Cabinets
is a good fit with the building at 400 Guthrie Lane. First is the existing
parking constraints allow for only a portion of the building to be leased at
this time. There is not sufficient parking available to lease the entire
building based on the City’s parking requirements. Second is the lease
arrangement itself, rather than an immediate sale. The building at 400
Guthrie Lane is not yet subdivided from the police facility, and therefore a
sale of the property is not yet feasible until the subdivision is completed
There is a positive fiscal impact resulting from the approval of the
lease/purchase option with Precision Cabinets. For year one, the expected
lease revenues will be $52,728 ($4,394 per month); in year two, $105,444
($8,787 per month); and year three, $158,160 ($13,180 per month). The
anticipated lease revenues over the three-year period amount to $316,332.
If Precision Cabinets exercises the option to purchase, the Agency will fund
the commission of the land appraisal and legal costs to prepare the sale
agreement. The sales price shall be determined by an appraisal of the
property. Future sales negotiations will be discussed with the Agency prior
to proceeding, and a future request to authorize the Executive Director to
execute sales agreements and grant deeds will be brought to the Agency for
consideration and action.
The future lease revenues and sales proceeds will be shared between the City
and Agency in proportions that will reimburse the Agency for its direct and
indirect expenses, including staff time and administrative overhead based on
the 2005/06 Cost Allocation Plan.
Industrial Lease and Option to Purchase Agreement
RESOLUTION NO. RA
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD APPROVING AN
INDUSTRIAL LEASE AND OPTION TO PURCHASE AGREEMENT BETWEEN THE REDEVELOPMENT
AGENCY OF THE CITY OF BRENTWOOD AND PRECISION CABINETS, L.C.
WHEREAS, the City Council of the City of Brentwood ("City") approved and
adopted the Redevelopment Plan for the Brentwood Redevelopment Project
("Project") on July 13, 1982, by Ordinance No. 333, as amended; and
WHEREAS, the Redevelopment Agency of the City of Brentwood ("Agency") is
carrying out the Redevelopment Plan and, in connection therewith, adopted an
Implementation Plan for the Project on March 8, 2005, by Resolution No.
RDA-97 in accordance with Health and Safety Code Section 33490; and
WHEREAS, Precision Cabinets, L.C. (“Precision”) employs nearly 300 workers
of which a large percentage lives in Brentwood, and Precision is a
significant business contributor to the City’s sales tax revenue; and
WHEREAS, Precision desires to retain its existing custom cabinet
manufacturing business location in Harvest Business Park within the Project
area and desires to expand its current business operations in Brentwood; and
WHEREAS, the Agency desires to eliminate physical and economic blight
conditions by the re-use of the vacant, under-utilized building at 400
Guthrie Lane, desires to create jobs and increase sales tax generation,
desires to provide development opportunities, and encourages private
re-investment through business retention and expansion programs; and
WHEREAS, the Agency has prepared an Industrial Lease and Option to Purchase
Agreement between the Agency and Precision, pursuant to which the Agency
proposes to lease to Precision a building of approximately 20,277 square
feet and adjacent parking areas at 400 Guthrie Lane (“Site”) located within
the Project area for the purposes of expanding and retaining Precision’s
WHEREAS, the Agency has determined that the approval of the proposed
Industrial Lease and Option to Purchase Agreement is categorically exempt
from the provisions of the California Environmental Quality Act (“CEQA”)
under Section 15301, Existing Facilities, of the Guidelines for the
California Environmental Quality Act (the “Guidelines”) and a notice of
exemption will be prepared; and
WHEREAS, notice of the public hearing and the availability of the Industrial
Lease and Option to Purchase Agreement were published on November 25, 2005
and December 2, 2005 in the Brentwood Press, a newspaper of general
circulation in the City of Brentwood, as required by Section 33431 of the
Community Redevelopment Law.
NOW, THEREFORE, be it resolved by the Redevelopment Agency of the City of
Brentwood as follows:
1. The Agency hereby determines that approval of the proposed Industrial
Lease Agreement is categorically exempt under Section 15301 of the CEQA
2. The Agency hereby approves the Industrial Lease and Option to Purchase
Agreement in the form attached hereto, together with such minor technical
and clarifying revisions as shall be approved by the Executive Director and
Agency Counsel. The Agency hereby authorizes the Executive Director to
execute the final Industrial Lease and Option to Purchase Agreement on
behalf of the Agency and to take all further actions reasonably necessary to
carry out the provisions of the Industrial Lease and Option to Purchase
Agreement, including preparation of minor subdivision maps.
PASSED, ADOPTED AND APPROVED by the Redevelopment Agency of the City of
Brentwood at its regular meeting on the 13th of December 2005 by the
by and between
The Redevelopment Agency of the City of Brentwood
Pct Enterprises, Inc., dba Precision Cabinets and Trim
1. Basic Provisions.
1.1. Parties. This lease ("Lease") dated ______________________, 2006, is
made by and between The Redevelopment Agency of the City of Brentwood, a
public body ("Landlord") and Pct Enterprises, Inc., a California
corporation, dba Precision Cabinets and Trim ("Tenant").
(a) The premises ("Premises"), which are the subject of this Lease, are
located in the Merged Brentwood Redevelopment Project (the "Project") and
subject to the Redevelopment Plan for the Project adopted by the City
Council by Ordinance No. 333, on July 13, 1982, as amended. The premises
consist of all or a portion of the building ("Building") located at 400
Guthrie Lane, Brentwood, California, as set forth below. The Building
consists of approximately 20,277 square feet. During the first twelve (12)
months of the term of this Lease, the Premises shall consist of not less
than 6,759 square feet of the Building as shown in the diagram of the
Building attached hereto as Exhibit A and incorporated herein by this
reference. During the second twelve (12) months of the term of this Lease,
the Premises shall consist of not less than 13,518 square feet of the
Building as shown in Exhibit A. During the third and final twelve (12)
months of the term of this Lease, the Premises shall consist of the entire
Building, or approximately 20,277 square feet.
Tenant shall have nonexclusive rights to the Common Areas (as defined in
subsection 2.2) but shall not have any rights to the roof, exterior walls,
or utility raceways of the Building.
1.3. Term/Early Possession.
The term of the lease shall be 3 years and 0 months ("Term") commencing
March 1, 2006 ("Commencement Date") and ending March 31, 2008 ("Expiration
(a) During the first twelve (12) months of the term of this Lease, Tenant
shall pay a monthly rent ("Rent") of $4,394. If Tenant uses more than 6,759
square feet during this period, Tenant shall pay rent as provided in
(b) During the second twelve (12) months of the term of this Lease, Tenant
shall pay a Rent of $8,787 per month. If tenant uses more than 13,518 square
feet during this period, Tenant shall pay rent as provided in paragraph (c).
(c) During the third and final twelve (12) months of the term of this Lease,
Tenant shall pay Rent of $13,180 per month.
1.5. Tenant's Share. ("Tenant's Share ")
(a) Shall be 34% of the Common Area Operating Expenses and 34% of the
Building Operating Expenses (as those terms are defined in subsections
4.2(a) and 4.2(b), respectively for the first 12 months of the term of this
Lease. If the Tenant uses more than 6,759 square feet during this period,
Tenant’s Share shall be the share as provided in paragraph (b).
(b) Shall be 67% of the Common Area Operating Expenses and 67% of the
Building Operating Expenses (as those terms are defined in subsections
4.2(a) and 4.2(b), respectively for the second 12 months of the term of this
Lease. If the Tenant uses more than 13,518 square feet during this period,
Tenant’s Share shall be the share as provided in paragraph (c).
(c) Shall be 100% of the Common Area Operating Expenses and 100% of the
Building Operating Expenses (as those terms are defined in subsections
4.2(a) and 4.2(b), respectively for the third 12 months of the term of this
1.6. Security Deposit. $20,000 ("Security Deposit").
1.7. Permitted Use. ("Permitted Use"): Manufacture of custom cabinetry but
only to the extent permitted by applicable agencies and governmental
authorities having jurisdiction.
1.8. Real Estate Brokers. Landlord and Tenant each represent that they have
employed no broker or finder in connection with this Lease and covenant that
they will indemnify each other of and from any claims of brokers or finders
in connection with this Lease.
1.9. Addenda. Attached are the following Addenda, all of which constitute a
part of this Lease:
Option to Purchase Addendum to Lease
1.10. Exhibits. Attached are the following Exhibits, all of which constitute
a part of this Lease:
Exhibit A: Description of Premises
Exhibit B: Rules and Regulations
Exhibit C: Commencement Date Certificate
Exhibit D: Wiring Floor Plan
Exhibit E: Move Out Standards
Exhibit F: Required Information for a Request for an Assignment or Sublease
of this Lease
Exhibit G: Sign Criteria
1.11. Addresses for Rent Payments and Notices.
(a) Address for Rent Payments. All amounts payable by Tenant to Landlord
shall, until further notice from Landlord, be paid to Landlord at the
150 City Park Way
Attn.: Finance Director
Brentwood, CA 94513-2057
(b) Address for Notices to Landlord.
Redevelopment Agency of the City of Brentwood
Attn.: Howard Sword
150 City Park Way
Brentwood, CA 94513-2057
with a copy to:
City of Brentwood Property Management
Parks and Recreation Department
Attn.: Ken DeSilva
150 City Park Way
Brentwood, CA 94513-2057
(c) Address for Notices to Tenant.
To the Premises
2. Premises, Parking and Common Areas.
2.1. Leasing; Condition of the Premises. Landlord leases to Tenant and
Tenant leases from Landlord the Premises for the Term upon all of the
provisions in this Lease, unless the Term shall sooner terminate as provided
in this Lease. The date on which the Term shall commence and terminate are
set forth as the Commencement Date and Expiration Date, respectively, in
Tenant has inspected, or has had the opportunity to inspect, the Premises
itself or by consultants, engineers, architects and any other persons which
Tenant so desires, and Tenant (i) acknowledges that the Premises is suitable
for its Permitted Use and (ii) accepts the Premises in its condition
existing on the Commencement Date, AS IS, without representation or warranty
of any kind from Landlord, express or implied; and Tenant further
acknowledges that Landlord has no obligation to make any repairs,
modifications or improvements of any kind or nature to the Premises except
as may be expressly provided in this Lease. Tenant takes possession of any
and all furniture, fixtures, equipment and/or tenant improvements (the
"FF&E") constructed or installed in the Premises by Landlord and/or prior
occupants strictly on an AS IS basis, without reliance on any representation
or warranty whatsoever, express or implied, of Landlord or any other party
regarding the ownership, construction, fitness, condition or suitability for
Tenant's purposes of any such FF&E.
Tenant will erect a chain link fence or similar barrier around the portion
of floor area of the Building constituting the Premises and separating the
Premises from the remainder of the Building, if any. Landlord will
separately secure and be responsible for any personal property stored in the
Building outside the Premises.
2.2. Common Areas - Definition. "Common Areas" are all areas and facilities
outside the Premises that are provided and designated by Landlord from time
to time, for the general nonexclusive use of Landlord, Tenant and Tenant
Entities (as defined in subsection 16.27). Common Areas includes a common
driveway, perimeter walkways, loading areas and grounds.
2.3. Common Areas - Tenant's Rights. Landlord grants to Tenant, for the
benefit of Tenant and Tenant Entities during the Term, the nonexclusive
right to use, in common with others entitled to such use, the Common Areas
as they exist from time to time, subject to any rights, powers and
privileges reserved by Landlord under the terms of this Lease or under the
terms of any rules and regulations or covenants, conditions and restrictions
governing the use of the Project.
2.4. Common Areas - Rules and Regulations. Landlord shall have the exclusive
control and management of the Common Areas and shall have the right, from
time to time, to establish, modify, amend and enforce rules and regulations
("Rules and Regulations"). Tenant will abide by, and cause Tenant Entities
to abide by, all Rules and Regulations. The current Rules and Regulations
are provided in attached Exhibit B. Landlord shall not be responsible to
Tenant for the noncompliance with the Rules and Regulations by other tenants
of the Project.
2.5. Common Area - Changes. Landlord shall have the right, in Landlord's
sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without limitation,
changes in the locations, sizes, shapes and number of driveways, entrances,
parking spaces, parking areas, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available;
(c) To designate other land to be a part of the Common Areas;
(d) To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas as Landlord may, in the exercise of sound
business judgment, deem to be appropriate.
2.6. Vehicle Parking. Tenant shall be entitled to park on those areas
designated from time to time by Landlord for parking. The parking spaces
shall be used for parking by vehicles no larger than full-size passenger
automobiles or pick-up trucks (collectively, "Permitted Size Vehicles").
Vehicles other than Permitted Size Vehicles shall be parked and loaded or
unloaded as directed by Landlord in the Rules and Regulations.
3.1. Term. The Term is specified in subsection 1.3.
3.2. Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord
shall not be subject to any liability therefor, nor shall such failure
affect the validity of this Lease, the obligations of Tenant in this Lease
or extend the Term. In such case, Tenant shall not, except as otherwise
provided in this Lease, be obligated to pay Rent or perform any other
obligation of Tenant until Landlord delivers possession of the Premises to
Tenant, unless such delay is caused by Tenant or any Tenant Entities.
3.3. Commencement Date Certificate. At the request of Landlord, Tenant shall
execute and deliver to Landlord a certificate in the form of attached
Tenant shall pay to Landlord Rent as set forth in subsection 1.4 and other
monetary obligations of Tenant to Landlord under the terms of this Lease
(such other monetary obligations are referred to as "Additional Rent") in
lawful money of the United States, without offset or deduction, in advance
on or before the first day of each month. Rent and Additional Rent
(collectively, "Rent") for any period during the Term which is for less than
one full month shall be prorated based upon the actual number of days of the
month involved. Payment of Rent shall be made to Landlord at its address
stated in subsection 1.12 of this Lease.
4.2. Operating Expenses. Tenant shall pay to Landlord on the first day of
each month during the Term, in addition to Rent, one twelfth (1/12) of
Tenant's Share of Common Area Operating Expenses and Tenant's Share of
Building Operating Expenses, based on landlord's good faith estimate of such
expenses, and in accordance with the following provisions:
(a) The term "Common Area Operating Expenses" shall include, without
limitation, the cost of obtaining and maintaining public liability, property
damage, earthquake, flood and other forms of insurance that Landlord
maintains for the Building, and any deductible portion of any insured loss.
(b) The term "Building Operating Expenses" shall mean all costs and expenses
incurred by Landlord, in its sole discretion, in connection with the
operation, maintenance, repair, restoration, replacement and/or renewal of
the Building, its components, and all surrounding areas, including, without
limitation, parking lots. Such costs and expenses shall include, without
limitation, costs and expenses incurred by Landlord to maintain, repair,
replace, restore and/or renew any of the following: HVAC equipment; exterior
paint; roofs; fire detection systems, including sprinkler systems; asphalt
paving; bumpers; striping; driveways; lighting systems; lighting fixtures;
signs; perimeter walls; retaining walls and sidewalks. In addition, such
costs and expenses shall include, without limitation, any and all charges
and/or fees for services furnished to the Building, including sweeping;
removal of trash, rubbish and other refuse; real property taxes paid by
Landlord under Section 10 of this Lease; amounts necessary to establish
reasonable reserves for maintenance, repair, restoration, replacement and/or
renewal of improvements, equipment and supplies; costs of compliance with
laws, rules and regulations enacted or adopted after the date of this Lease;
employment of such personnel as Landlord, in its sole discretion, deems
reasonably necessary to direct parking and police the Building and
surrounding areas; salaries and wages paid in connection with the operation,
maintenance, repair, restoration, replacement and/or renewal of the Building
and surrounding areas; all amounts expended by Landlord on bookkeeping,
accounting and legal services provided in connection with the operation,
maintenance, repair, restoration, replacement and/or renewal of the Building
and surrounding areas; environmental monitoring and insurance programs; and
any other item(s) reasonably necessary, in Landlord's sole discretion, to
properly operate, maintain, repair, restore, replace and/or renew the
Building, including a management fee sufficient to cover Landlord's
management, overhead and administrative expenses. Notwithstanding the
foregoing, Tenant shall contract directly for its utility services,
including electricity, gas and water service, as well as with a waste
management company and pay for its own trash removal service.
Landlord shall use standard accounting practices consistently applied as
determined by Landlord and Landlord shall allocate costs and expenses among
buildings (and surrounding areas) in the Project and among the Building
Operating Expenses and Common Area Operating Expenses fairly based on
Landlord's reasonable judgment. Any such allocation made by Landlord shall
be conclusive and binding on Tenant, absent manifest error shown by clear
and convincing evidence.
(c) Notwithstanding the foregoing, "Common Area Operating Expenses" and
"Building Operating Expenses" shall not include the following:
(1) legal fees, brokerage commissions, advertising costs and other related
expenses incurred in connection with the leasing of the Premises or the
(2) costs of repairs, restoration, replacements or other work occasioned by
fire, windstorm or other casualty and either (i) payable by insurance
required to be carried by Landlord under this Lease, or (ii) otherwise paid
by insurance then in effect obtained by Landlord, except that the cost of
any deductible shall be included;
(3) costs incurred (less costs of recovery) for any items to the extent such
amounts are, in Landlord's reasonable judgment, recoverable by Landlord
under a manufacturer's, materialman's, vendor's or contractor's warranty;
(4) wages, salaries benefits, perquisites and compensation paid or given to
employees of Landlord;
(5) Landlord's general overhead and administrative expenses not related to
the Premises or Building;
(6) payments of principal or interest on any mortgage or other encumbrance
including points, commissions and legal fees associated with financing;
(7) the cost of any service provided to Tenant or other tenants or occupants
of the Building or Project for which Landlord is directly reimbursed;
(8) charitable or political contributions; and
(9) interest, penalties or other costs arising out of Landlord's failure to
make timely payments of its obligations.
(10) The cost of maintaining landscaping, planters and irrigation systems.
(d) Notwithstanding anything to the contrary in this Lease, all costs
incurred in connection with the replacement of the roof of the Building or a
portion thereof ("Roof Replacement Work") shall be evenly allocated (without
interest) on a monthly basis over the useful life of the roof which is
agreed by the parties to be twenty (20) years. In addition, all costs
incurred in connection with the replacement of any HVAC unit on the Building
("HVAC Replacement Work") shall be evenly allocated (without interest) on a
monthly basis over the useful life of the HVAC unit which is agreed by the
parties to be fifteen (15) years. Tenant shall, within five (5) days of
receiving any invoice from Landlord, pay to Landlord its allocated share of
the cost of the Roof Replacement Work or HVAC Replacement Work. Tenant's
allocated share of the cost of the Roof Replacement Work or HVAC Replacement
Work shall be computed based upon the number of months of the Term. A
hypothetical example of the computation of Tenant's allocated share of the
cost of the HVAC Replacement Work is provided below:
Hypothetical Example of Computation of Tenant's share of the cost of the
HVAC Replacement Work:
Lease Term (in Months): 36 Months
HVAC Replacement Cost: $3,500.00
HVAC Replacement Cost per Month (assuming a 15-year period): $19.44
Tenant's Share of the Cost of the HVAC Replacement Work: $700.00
The decision as to when the roof requires replacement and when an HVAC unit
requires replacement and the specification for any such work shall be
determined by Landlord in its sole and absolute discretion and the roof
replacement work and/or HVAC replacement work shall not commence until
Landlord receives the required payment from Tenant. In the event of an early
termination of this Lease, no sums paid by Tenant to Landlord as provided in
this subsection 4.2(d) shall be rebated to Tenant.
(e) Tenant shall pay monthly, in advance, on the same day that Rent is due,
Tenant's Share of Common Area Operating Expenses and Tenant's Share of
Building Operating Expenses. Landlord shall deliver to Tenant within ninety
(90) days after the expiration of each calendar year (or such reasonable
time period that Landlord shall select) a reasonably detailed statement
showing Tenant's Share of such expenses incurred during the preceding year.
If Tenant's estimated payments under this subsection 4.2 during the
preceding year exceed Tenant's Share of Common Area Operating Expenses
and/or Tenant's Share of Building Operating Expenses as indicated on the
statement, Tenant shall be credited the amount of such overpayment against
Tenant's Share of expenses next becoming due. If Tenant's estimated payments
under this subsection 4.2 during such preceding year were less than Tenant's
Share of Common Area Operating Expenses and/or Tenant's Share of Building
Operating Expenses as indicated on the statement, Tenant shall pay to
Landlord the amount of the deficiency within ten (10) days after delivery by
Landlord to Tenant of the statement. At any time, Landlord may adjust the
amount of the estimated Tenant's Share of Common Area Operating Expenses
and/or Tenant's Share of Building Operating Expenses to reflect Landlord's
estimate of such expenses for the year. Landlord shall keep or cause to be
kept books covering Common Area Operating Expenses and Building Operating
Expenses and showing the method of calculating Tenant's Share of such
expenses, and the allocation of costs and expenses among buildings
(including the areas surrounding such buildings) and shall preserve for at
least twelve (12) months after the close of each calendar year all vouchers,
invoices, statements or payroll records and other papers evidencing such
costs and expenses for that calendar year. Tenant, within 120 days after
receiving the statement from Landlord and through any certified public
accountant designated by it that is compensated on an hourly basis only,
shall have the right to examine and/or audit the documents mentioned above
evidencing such costs and expenses for the previous calendar year, during
reasonable business hours, not more frequently than once during any calendar
year and at the office of the management company for the Project.
5. Security Deposit.
Tenant shall deposit with Landlord upon Tenant's execution of this Lease the
Security Deposit specified in subsection 1.6 as security for Tenant's
faithful performance of Tenant's obligations. If Tenant fails to pay Rent or
if there is another Event of Default (as defined in subsection 13.1),
Landlord may use the Security Deposit for the payment of any amount due
Landlord or to reimburse or compensate Landlord for any liability, cost,
expense, loss or damage (including attorneys' fees) that Landlord may suffer
or incur by reason of an Event of Default. Tenant shall on demand pay to
Landlord the amount so used or applied so as to restore the Security Deposit
to the full amount required by this Lease. Landlord shall not be required to
keep all or any part of the Security Deposit separate from its general
accounts. Landlord shall, within a reasonable period of time after the
Expiration Date or earlier termination of this Lease and after Tenant has
vacated the Premises, return to Tenant that portion of the Security Deposit
not used or applied by Landlord. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Tenant.
If Tenant exercises the option to purchase the Building as set forth in the
Option to Purchase Addendum, any remaining portion of the Security Deposit
held by Landlord shall be applied to the purchase price.
6.1. Permitted Use. Tenant shall use and occupy the Premises only for the
Permitted Use and for no other use without Landlord's consent, which consent
may be granted or withheld in Landlord's sole discretion. Tenant shall not
commit any nuisance, permit the emission of any objectionable noise or odor,
suffer any waste, make any use of the Premises which is contrary to any law
or ordinance or which will invalidate or increase the premiums for any of
Landlord's insurance. Under no circumstances shall the right granted in this
Lease to use the Common Areas be deemed to include the right to store any
property, temporarily or permanently, in the Common Areas. Any such storage
shall be permitted only by the prior consent of Landlord and such consent
may be revoked at any time. If any unauthorized storage shall occur or if
Tenant shall violate any covenants applicable to the Premises, Landlord
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to
Tenant, which cost shall be immediately payable upon demand by Landlord.
6.2. Hazardous Substances.
(a) Reportable Uses Require Consent. Tenant shall not engage in any activity
in, on, under or about the Premises which constitutes a Reportable Use of
Hazardous Substances without the express prior consent of Landlord (which
may be granted or denied in Landlord's sole discretion) and compliance in a
timely manner (at Tenant's sole cost and expense) with all Applicable
Requirements. The terms "Reportable Use", "Hazardous Substance" and
"Applicable Requirements" are defined in subsection 16.27. Notwithstanding
the foregoing, Tenant may, without Landlord's prior consent, but upon notice
to Landlord and in compliance with all Applicable Requirements, use any
ordinary and customary materials reasonably required to be used by Tenant in
the normal course of the Permitted Use, so long as such use is not a
Reportable Use and does not expose the Premises or neighboring properties to
any meaningful risk of contamination or damage, or expose Landlord to any
liability therefor. Notwithstanding any contrary provision of this Lease,
Tenant shall not be responsible for (i) any remediation of any Hazardous
Substance, (ii) notification of Landlord of the presence on the Premises of
any Hazardous Substance, or (iii) the indemnification of Landlord from and
against any cost, damages, liability or expense (including, without
limitation, reasonable attorneys' fees and costs) arising out of the
presence on the Premises or the discharge from the Premises of any Hazardous
Substances that, in each case, (x) were present on the Premises prior to the
Commencement Date, (y) were brought on to the Premises by Landlord or
Landlord Entities (as defined in subsection 16.27), or (z) migrated on to
the Premises after the date of this Lease through no fault, act or omission
of Tenant or any Tenant Entities.
(b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause to
believe, that a Hazardous Substance is located in, on, under or about the
Premises or Building, Tenant shall immediately give to Landlord verbal and
follow-up notice, together with a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action or
proceeding given to, or received from, any governmental authority or private
party concerning the presence, spill, release, discharge of or exposure to
such Hazardous Substance. Tenant shall investigate, clean up and otherwise
remediate any spill, release or discharge of Hazardous Substance caused by
the acts or omissions of Tenant, or any Tenant Entities, at Tenant's cost
and expense; such investigation, clean up and remediation to be performed
after Tenant has obtained Landlord's consent, which shall not be
unreasonably withheld; provided, however, that Tenant shall be entitled to
respond immediately to an emergency without first obtaining Landlord's
(c) Indemnification. Tenant shall Hold Harmless (as defined in subsection
16.27) Landlord, Landlord Entities and the Premises of and from any
liability, cost or damage arising out of or involving any Hazardous
Substance on or brought onto the Premises by or for Tenant or by or for any
(d) Inspection. Landlord or its designated representative shall have the
right at all times during the Term to (i) inspect the Premises, (ii) conduct
tests and investigations to determine whether Tenant is in compliance with
the provisions of this subsection 6.2, and (iii) request lists of all
Hazardous Substances used, stored or located in, on, under or about the
Premises, the cost of all such inspections, tests and investigations to be
borne by Tenant, if Landlord reasonably believes they are necessary.
(e) Health and Safety Disclosure. California law requires landlords to
disclose to tenants the existence of certain hazardous materials in the
Premises or the Building. Landlord discloses to Tenant that gasoline and
other automotive fluids are found in the parking areas and may, under some
circumstances, be found within the Building. Cleaning, lubricating and
hydraulic fluids used in the operation and maintenance of the Building may
be found in certain areas of the Building. Building occupants may use
products which contain such hazardous materials. Certain adhesives, paints
and other construction materials and finishes used in portions of the
Building may contain such hazardous materials. Although smoking is
prohibited in the Building, there may, from time to time, be tobacco smoke
exposure in the Building.
6.3. Tenant's Compliance with Requirements. Tenant shall, at Tenant's sole
cost and expense, fully, diligently and in a timely manner comply with all
Applicable Requirements (as defined in subsection 16.27). Tenant shall,
within five (5) days after receipt of Landlord's request, provide Landlord
with copies of all documents and information evidencing Tenant's compliance
with any Applicable Requirements, and shall immediately upon receipt send a
notice to Landlord (with copies of any documents involved) of any threatened
or actual claim, notice, citation, warning, complaint or report pertaining
to or involving failure by Tenant or the Premises to comply with any
7. Maintenance, Repairs, Fixtures and Alterations.
7.1. Tenant's Obligations. Subject to the provisions of subsection 7.2
(Landlord's Obligations), Section 9 (Damage or Destruction) and Section 14
(Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonably or readily accessible to Tenant
and whether or not the need for such repairs occurs as a result of Tenant's
use, any prior use, the elements or the age of such portion of the Premises)
including, without limitation, all equipment or facilities specifically
serving the Premises, such as plumbing, heating, ventilating and air
conditioning systems, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire hose connectors if within the Premises,
fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, warehouse floors, windows, doors, dock doors, plate glass and
skylights, but excluding any items which are the responsibility of Landlord
as provided in subsection 7.2. Tenant's obligations shall include
replacements, restorations or renewals, when necessary, to keep the Premises
and all improvements in good order, condition and state of repair.
Notwithstanding anything to the contrary contained in this Lease, Tenant
will not, nor will it authorize any person to, go onto the roof of the
Building without the prior consent of Landlord. Tenant shall not make any
penetration of the roof of the Building except with (a) the prior approval
of Landlord and (b) in accordance with acceptable roof penetration
practices. Tenant shall be liable to Landlord for any damage to the roof
which results in whole or in part from Tenant's penetration of the roof,
whether with or without the consent of Landlord.
7.2. Landlord's Obligations. Subject to the provisions of Section 6 (Use),
subsection 7.1 (Tenant's Obligations), Section 9 (Damage or Destruction) and
Section 14 (Condemnation), Landlord, at its expense and subject to the
reimbursement requirements of subsection 4.2, shall keep in good order,
condition and state of repair the foundations, exterior walls and other
structural elements of the Building, exterior roof, fire sprinkler and/or
standpipe and hose (if located in the Common Areas) or other automatic fire
extinguishing system including fire alarm and/or smoke detection systems and
equipment, fire hydrants, heating, ventilating and air conditioning systems
servicing the Premises and Building, parking lots, walkways, parkways,
driveways, landscaping, fences, utility systems and Common Areas within the
Project, except to the extent that any repair was caused by the negligent or
intentional acts or omissions of Tenant or any Tenant Entities and Landlord
is unable to collect on any insurance coverage which would reimburse
Landlord for such repair.
7.3. Alterations. Tenant shall not make nor cause to be made any alterations
or installations in, on, under or about the Premises without the consent of
Landlord, which may be given or withheld in Landlord's sole discretion. In
the event that Landlord gives its consent to any alterations or
installations in, on, under or about the Premises, Landlord may condition
such consent in any manner that Landlord deems appropriate.
7.4. Wires and Cabling. Notwithstanding anything to the contrary in this
Lease, with Landlord's prior consent and subject to the requirements set
forth in this Lease, Tenant may, at its sole cost and expense, (i) connect
or obtain data/voice telecommunications services from the Building
communications closet (the "Main Point of Entry"); (ii) connect or install
cabling or wiring for an interior network or an intermediate distribution
facility from the Main Point of Entry; or (iii) connect or install cabling
or wiring for any other purpose in the Premises. Tenant shall be responsible
for all data/voice, telecommunications, interior network or computer cabling
or wiring which are located in the Premises or which exclusively serve the
Premises from the Main Point of Entry, whether or not installed by Tenant
(collectively, the "Wires"). Prior to such installation or connection,
Tenant shall submit (x) a detailed description and diagram of the work or
alteration(s) (the "Wiring Floor Plan") to Landlord, which shall include the
specifications, location and connection to the Main Point of Entry, any
preexisting Wires, and/or Building facilities, (y) any proposed penetrations
in firewalls and (z) the proposed cabling contractor. The Wiring Floor Plan
shall be attached as Exhibit D when Landlord receives and approves such
Wiring Floor Plan. Notwithstanding anything in this Lease to the contrary,
at the Expiration Date or earlier termination of this Lease, Tenant shall
remove any Wires which were installed per the terms of this subsection,
within the Premises or anywhere in the Building outside the Premises,
including, without limitation, the plenums or risers of the Building, and
restore the Premises and the Building to the condition existing prior to the
installation of the Wires. Tenant shall repair any damage caused by the
removal of any Wires. Such removal, repair and restoration shall be
completed by a licensed reputable contractor at Tenant's sole expense. Any
Wires within the Premises or anywhere in the Building outside the Premises
remaining after the Expiration Date or earlier termination of this Lease
will be deemed to have been abandoned and may be removed, appropriated,
sold, stored, destroyed or otherwise disposed of by Landlord without notice
to Tenant or any other person and without obligation to account for them.
Tenant will reimburse Landlord for all costs incurred in connection with the
removal of any such Wires, including, without limitation, the cost of
removing and repairing any damage to the Building or Premises caused by the
removal of any such Wires. Landlord shall have no liability or
responsibility for any direct, indirect, incidental or consequential damages
including, without limitation, damages from loss of profits or loss of data
resulting from failure of cabling infrastructure or network hardware.
7.5. Surrender/Restoration. Tenant shall surrender the Premises by the
Expiration Date or any earlier termination date of this Lease in accordance
with the Move-Out Standards in attached Exhibit E.
7.6. Tenant Waiver. Tenant waives the provisions of California Civil Code
Sections 1932, 1933, 1941, 1942 and 1995.310 and the provisions of
California Code of Civil Procedure Sections 1265.110, 1265.120, 1265.130 and
1265.140 or successor laws now or hereinafter in effect) to make such
8. Insurance; Indemnity.
8.1. Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Landlord under this Section 8 shall be a Common Area
Operating Expense or Building Operating Expense, as determined by Landlord,
and shall be reimbursable by Tenant to Landlord as provided in subsection
4.2. Premiums for policy periods commencing prior to, or extending beyond,
the Term shall be prorated to coincide with the corresponding Commencement
Date and Expiration Date.
8.2. Tenant's Insurance.
(a) At its cost and expense, Tenant shall maintain in full force and effect
during the Term the following insurance coverages insuring against claims
which may arise from or in connection with the Tenant's occupancy and use of
(1) Commercial general liability insurance with minimum limits of $1,000,000
per occurrence and $2,000,000 general aggregate for bodily injury, personal
injury and property damage. Such insurance shall be endorsed to include
Landlord and Landlord Entities as additional insureds, shall be primary and
noncontributory with any Landlord insurance and shall provide severability
of interests between or among insureds.
(2) Workers' compensation insurance with statutory limits and employers
liability with a $1,000,000 per accident limit for bodily injury or disease.
(3) Automobile liability insurance covering all owned, nonowned, and hired
vehicles with a $1,000,000 per accident limit for bodily injury and property
(4) Property insurance against "all risks" at least as broad as the current
ISO Special Form policy, for loss to any tenant improvements or betterments,
floor and wall coverings and personal property on a full insurable
replacement cost basis with no coinsurance clause and business income
insurance covering at least twelve months of loss of income and continuing
(b) Tenant shall deliver to Landlord certificates of insurance reflecting
evidence of all required coverages prior to its initial occupancy of the
Premises and Tenant shall deliver to Landlord, from time to time thereafter
prior to the expiration of the coverage, additional certificates of
insurance so that the certificate of insurance held by Landlord shall, at
all times, reflect evidence of Tenant's current coverage.
(c) If, in the opinion of Landlord's insurance advisor, the amount or scope
of the coverage set forth above is deemed inadequate at any time during the
Term, Tenant shall within five (5) days after notice from Landlord increase
such coverage to such reasonable amounts or scope as Landlord's advisor
(d) All insurance required under subsection 8.2 shall be issued by insurers
licensed to do business in the state in which the Premises are located and
which are rated A:X or better by Best's Key Rating Guide and shall be
endorsed to provide at least 30-days prior notification of cancellation or
material change in coverage to the additional insureds.
(e) Tenant has decided not to obtain earthquake and/or flood insurance for
loss to any Tenant improvements or betterments, floor and wall coverings and
personal property. Tenant will indemnify and hold Landlord harmless for any
damage or claims to the above described property pursuant to Section 8.5
8.3. Landlord's Insurance. Landlord may, but shall not be obligated to,
maintain "all risks" coverage as broad as the current ISO Special Form
policy, including earthquake and flood, commercial general liability
insurance and such other insurance in such amounts and covering such other
liability or hazards as Landlord determines to be appropriate. The amount
and scope of coverage of Landlord's insurance shall be determined by
Landlord from time to time in its sole discretion and shall be subject to
such deductible amounts as Landlord may elect. Notwithstanding the
foregoing, Landlord shall have the right to reduce or terminate any
insurance or coverage at any time.
8.4. Waiver of Subrogation. To the extent permitted by law and with
permission of their insurance carriers, Landlord and Tenant each waive any
right to recover against the other on account of any and all claims Landlord
or Tenant may have against the other with respect to property insurance
actually carried, or required to be carried under this Lease, to the extent
of the proceeds realized from such insurance coverage.
8.5. Indemnity. Except to the extent caused by the gross negligence or
willful misconduct of Landlord, Tenant shall Hold Harmless Landlord,
Landlord Entities and the Premises arising out of or involving:
(a) the use or occupancy of the Premises by Tenant;
(b) any damage to any property (including, without limitation, property of
Landlord or any Landlord Entities) or death, bodily or personal injury to
any person occurring in, on, under or about the Premises or the Building to
the extent that such injury or damage shall be caused by or arise from any
act, neglect, fault or omission by or of Tenant or any Tenant Entities;
(c) any act, omission or neglect of Tenant or any Tenant Entities;
(d) the conduct or management of any work or anything whatsoever done by the
Tenant or any Tenant Entities in, on, under or about the Premises or from
transactions of Tenant or any Tenant Entities concerning the Premises;
(e) Tenant's failure to comply with any and all governmental laws,
ordinances and regulations applicable to the condition or use of the
Premises or its occupancy;
(f) any default on the part of Tenant in the performance in a timely manner
of any provisions of this Lease to be performed by Tenant; and
(g) any and all damage resulting from earthquakes and/or floods; and
The foregoing shall include, without limitation, the defense or pursuit of
any claim or any action or proceeding involved therein, and whether or not
(in the case of claims made against Landlord) litigated and/or reduced to
judgment. In the event any action or proceeding is brought against Landlord
by reason of any of the foregoing matters, Tenant upon notice from Landlord
shall defend Landlord and Landlord Entities at Tenant's expense by counsel
reasonably satisfactory to Landlord, and Landlord shall cooperate with
Tenant in such defense. Landlord need not have first paid any such claim in
order to be so indemnified.
8.6. Exemption of Landlord from Liability. Except to the extent caused by
the gross negligence or willful misconduct of Landlord, neither Landlord nor
Landlord Entities shall be liable for and Tenant waives any claims against
Landlord and Landlord Entities for injury or damage to the person or the
property of Tenant, Tenant Entities or any other person in, on, under or
about the Premises or Building from any cause whatsoever, including, without
limitation, damage or injury which is caused by or results from (i) fire,
steam, electricity, gas, water or rain or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, heating, ventilating, air conditioning or lighting fixtures or
(ii) from the condition of the Premises or other portions of the Building.
Notwithstanding Landlord's gross negligence or default of this Lease,
Landlord shall under no circumstances be liable for (a) injury to Tenant's
business, for any loss of income or profit therefrom or any indirect,
consequential or punitive damages or (b) any damage to property or injury to
persons arising from any act of God or war, violence or insurrection
including, without limitation, those caused by earthquakes, hurricanes,
storms, drought, floods, acts of terrorism and/or riots.
9. Damage or Destruction.
9.1. Destruction of Premises Due to Risk Covered by Insurance. Subject to
the provisions of subsection 9.3 and 9.4, if, during the Term, the Premises
are totally or partially destroyed from a risk covered by insurance in
effect at the time of the destruction, Landlord shall restore the Premises
to substantially the same condition that existed immediately before such
destruction; provided, however, that (i) Landlord's obligations shall not
exceed Landlord's construction obligations at the commencement of the Term;
(ii) the costs to Landlord to restore the Premises shall not exceed the
insurance proceeds for such restoration; and (iii) Landlord's lender, if
any, does not apply the insurance proceeds to reduce the indebtedness of
Landlord to such lender. Tenant shall promptly with reasonable diligence at
its sole cost and expense restore Tenant's improvements and fixtures to
substantially the same condition that existed immediately before such
destruction. Such destruction shall not terminate this Lease. If the
existing laws do not permit the Premises to be restored to substantially the
same condition that existed immediately before destruction, either party can
terminate this Lease by giving notice to the other party. Any reconstruction
work to be done by Tenant shall be carried out in accordance with all
applicable provisions of this Lease.
9.2. Destruction of Premises Due to Risk Not Covered by Insurance. If,
during the Term, the Premises are totally or partially destroyed from a risk
not covered by insurance then in effect, Landlord shall have the election
within thirty (30) days after the date of such destruction to terminate this
Lease or restore the Premises in accordance with the provisions of
subsection 9.1. If Landlord does not elect to restore the Premises within
thirty (30) days after the date of destruction, then Tenant shall have the
right to terminate this Lease within sixty (60) days after the date of
9.3. Destruction to Other Parts of Building. If there is destruction to the
Building from any risk that exceeds thirty-three and 1/3 percent (33-1/3%)
of the then replacement value of the Building, Landlord may elect within
thirty (30) days after the date of such destruction to terminate this Lease
whether or not the Premises are destroyed.
9.4. Destruction During Last Part of Term. If any destruction occurs to the
Premises during the last twelve (12) months of the Term, irrespective of the
extent of the destruction, Landlord may elect to terminate this Lease within
a reasonable time thereafter, otherwise the applicable provisions of
subsections 9.1 or 9.2 shall apply.
9.5. Abatement or Reduction of Rent. In case of destruction to the Premises,
there shall be an abatement or reduction of Rent only between the date of
destruction and the date Landlord substantially completes its reconstruction
obligations based on the extent to which the destruction interferes with
Tenant's use of the Premises, but all other obligations of Tenant under this
Lease shall remain in full force and effect, and Tenant shall continue to
operate its business in the Premises to the extent practicable. Landlord and
Tenant shall cooperate with each other in restoring the Premises and Tenant
shall, upon notice from Landlord, promptly remove, at its sole cost and
expense, such portion or all of Tenant's merchandise, trade fixtures,
equipment and other personal property of Tenant from such portion or all of
the Premises as Landlord shall request.
9.6. Tenant's Remedies. If Landlord is obligated to repair or restore the
Premises under the provisions of this Section 9 and has not commenced, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Tenant may, at
any time prior to the commencement of such repair or restoration, give
notice to Landlord and to any Lenders of which Tenant has actual notice of
Tenant's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Tenant gives such notice to
Landlord and such Lenders and the repair or restoration is not commenced
within thirty (30) days after the effective date of such notice, this Lease
shall terminate as of the date specified in the notice. If Landlord or a
Lender commences the repair or restoration of the Premises within thirty
(30) days after the effective date of such notice, this Lease shall continue
in full force and effect. "Commence" as used in this subsection 9.6 shall
mean either the unconditional authorization of the preparation of the
required plans or the beginning of the actual work on the Premises,
whichever occurs first.
9.7. Inapplicability of Civil Code Sections. Tenant's right to terminate
this Lease in the event of damage or destruction to the Premises, the
Building, the Common Areas or the Project is governed by the terms of this
Lease. Tenant hereby expressly waives the provisions of any and all laws,
whether now or hereafter in force, and whether created by ordinance,
statute, judicial decision, administrative rules or regulations, or
otherwise, that would cause this Lease to be terminated, or give Tenant a
right to terminate this Lease, upon any damage to or destruction of the
Premises, the Building, the Common Areas or the Project.
9.8. Damage Caused by Tenant. Tenant's termination rights under Section 9
shall not apply if the damage to the Premises or Building is the result of
any act or omission of Tenant or of any Tenant Entities ("Tenant Acts"). Any
damage resulting from a Tenant Act shall be promptly repaired by Tenant at
its sole cost and expense, provided that any insurance proceeds received by
Landlord on account of such damage, net of any costs of collection and any
sums expended by Landlord on account of such damage, shall be made available
to Tenant on such terms and conditions as Landlord may reasonably decide.
Landlord at its option may, at Tenant's expense, net of any net insurance
proceeds as described in the preceding sentence, repair any damage caused by
Tenant Acts. Tenant shall continue to pay all Rent and other sums due under
this Lease and shall be liable to Landlord for all damage that Landlord may
sustain resulting from a Tenant Act.
10. Real Property Taxes.
10.1. Payment of Real Property Taxes. Landlord shall pay the Real Property
Taxes due during the Term and, except as otherwise provided in subsection
10.3, such payments shall be a Common Area Operating Expense or a Building
Operating Expense, as determined by Landlord, and shall be reimbursable by
Tenant to Landlord as provided in subsection 4.2.
10.2. Real Property Tax Definition. "Real Property Taxes" is any form of tax
or assessment, general, special, ordinary or extraordinary, imposed or
levied upon (a) the Building, (b) any interest of Landlord in the Building,
(c) Landlord's right to rent or other income from the Building, and/or (d)
Landlord's business of leasing the Premises. Real Property Taxes include (a)
any license fee, commercial rental tax, excise tax, improvement bond or
bonds, levy, assessment, special assessment or tax; (b) any tax or charge
which replaces or is in addition to any of such above-described Real
Property Taxes, and (c) any fees, expenses, or costs (including, without
limitation, attorneys' fees and expert fees) incurred by Landlord in
protesting or contesting any assessments levied, any tax rate or the
assessed value. Real Property Taxes shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in, any applicable laws affecting the Project taking
effect during the Term, including, without limitation, a change in the
ownership of the Building or in the improvements thereon, the execution of
this Lease, or any modification, amendment or transfer of this Lease, and
whether or not contemplated by the parties to this Lease. Real Property
Taxes for tax years commencing prior to, or extending beyond, the Term shall
be prorated to coincide with the corresponding Commencement Date and
Expiration Date. Notwithstanding the foregoing, Real Property Taxes shall
not include franchise, transfer or inheritance taxes, or income taxes
measured by the net income of Landlord from all sources, unless, due to the
change in the method of taxation, any of these taxes are levied or assessed
against Landlord as a substitute for, or as an addition to, in whole or in
part, any other tax that would otherwise constitute a Real Property Tax.
10.3. Additional Improvements. Tenant shall pay to Landlord at the time
Common Area Operating Expenses and Building Operating Expenses are payable
under subsection 4.2, the entirety of any increase in Real Property Taxes if
assessed by reason of improvements placed upon the Premises by Tenant or at
10.4. Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed as reasonably determined by Landlord. Landlord's
reasonable determination of such allocation of Real Property Taxes to Tenant
shall be conclusive.
10.5. Tenant's Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant's improvements, trade
fixtures, furnishings, equipment and all personal property of Tenant
contained in the Premises or stored within the Building or Project.
Tenant shall pay directly for all utilities and services supplied to the
Premises, including, without limitation, electricity, telephone, security,
gas and cleaning of the Premises, together with any taxes thereon. If any
such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Tenant shall pay to Landlord a proportion
as reasonably determined by Landlord of all such charges jointly metered or
billed with other premises in the Building as Building Operating Expenses.
Landlord's reasonable determination of such allocation of charge(s) to
Tenant shall be conclusive.
12. Assignment and Subletting.
12.1. Landlord's Consent Required.
(a) Tenant shall not assign, transfer, mortgage or otherwise transfer or
encumber (collectively, "assign") or sublet all or any part of Tenant's
interest in this Lease or in the Premises without Landlord's prior consent,
which consent shall not be unreasonably withheld. In addition to other
reasonable bases for withholding consent, the withholding of Landlord's
consent to the assignment or subletting shall be deemed to have been
reasonable when based upon: (i) the inability of the assignee or subtenant
to fulfill the Lease terms; (ii) the financial state of the assignee or
subtenant; (iii) the lack of suitability of assignee's or subtenant's
intended use of the Premises; (iv) the business reputation of the assignee
or subtenant; and/or (v) the intended unlawful or undesirable use of the
Premises by the assignee or subtenant. If Tenant shall request Landlord's
consent to assign or sublease the Premises, then each such request for
consent shall be accompanied by the items listed in attached Exhibit F.
(b) Any assignment or sublet shall not release Tenant from its obligations
under this Lease and any such assignment or sublease shall be documented by
written agreement in a form acceptable to Landlord and must provide that
such assignee or subtenant agrees to be bound by all the provisions of this
Lease. Tenant shall not (i) assign, sublet or enter into other arrangements
in which the amounts to be paid by the assignee or subtenant under such
other agreement would be based, in whole or in part, on the income or
profits derived by the business activities of the assignee or subtenant. The
requirements of this subsection 12.1 shall apply to any further assignment
or subleasing by any assignee or subtenant.
(c) In the event of any assignment or subletting, Tenant shall pay to
Landlord a fee of $750.00 to cover Landlord's costs of review, negotiation,
preparation or execution of any documentation regarding such assignment or
(d) If Tenant assigns or sublets all or a part of the Premises, all options
to extend the Term, if any, shall terminate.
(e) Tenant shall provide Landlord prior notice of any sale or transfer,
including transfer by consolidation, merger or reorganization, of the
majority of the voting stock of Tenant and provide Landlord with current
financial information relating to the creditworthiness of Tenant and any
entity resulting from any such consolidation, merger or reorganization.
(f) A change in the control of Tenant shall constitute an assignment
requiring Landlord's consent. The transfer of twenty-five percent (25%) or
more on a cumulative basis in the voting control of Tenant shall constitute
a change in control for this purpose.
(g) If Tenant is a partnership, a transfer of any interest of a general
partner, a withdrawal of any general partner from the partnership, or the
dissolution of the partnership, shall be deemed to be an assignment of this
Lease. If Tenant is a limited liability company, a transfer of any interest
of a manager or managing member, a withdrawal of any manager or managing
member, a transfer of voting control or the dissolution of the limited
liability company, shall be deemed to be an assignment of this Lease.
(h) The involvement of Tenant or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, refinancing,
transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Tenant's assets occurs, which
results or will result in a reduction of the Net Worth of Tenant (as defined
below) by an amount equal to or greater than twenty-five percent (25%) of
such Net Worth of Tenant as it was represented to Landlord at the time of
execution and delivery of this Lease or at the time of the most recent
assignment to which Landlord has consented, or as it exists immediately
prior to such transaction or transactions constituting such reduction, at
whichever time the Net Worth of Tenant was or is greater, shall be
considered an assignment of this Lease by Tenant to which Landlord may
reasonably withhold its consent. "Net Worth of Tenant" shall be the net
worth of Tenant (excluding any Guarantors) established under generally
accepted accounting principles consistently applied.
(i) All subtenants and assignees shall expressly agree in writing to comply
with the provisions in this Lease pertaining to Hazardous Substances.
(j) Tenant waives the provisions of Section 1995.310 of the California Civil
Code, or any similar or successor laws, now or hereafter in effect, and all
other remedies, including, without limitation, any right at law or equity to
terminate this Lease, on its own behalf and, to the extent permitted under
all applicable laws, on behalf of the proposed transferee.
(k) Landlord may terminate this Lease by giving notice of such termination
to Tenant within twenty (20) days after Landlord's receipt of Tenant's
request for approval of an assignment or subletting, but only if Tenant is
proposing an assignment or a subletting of more than seventy percent (70%)
of the Premises for more than fifty percent (50%) of the remaining Term
(excluding option terms). If Landlord elects to terminate this Lease, then
this Lease shall terminate on the date selected by Landlord, but not earlier
than ninety (90) days after Landlord gives its termination notice.
12.2. Allocation of Profit in the Event of an Assignment or Sublease. Any
rent or other consideration Tenant realizes as a result of any assignment or
sublease in excess of the rent payable by Tenant to Landlord hereunder
(prorated to reflect obligations allocable to any portion of the Premises
subleased), after reasonable costs of the assignment or subletting are
deducted, shall be divided and paid twenty-five percent (25%) to Tenant and
seventy-five percent (75%) to Landlord; provided, however, that if Tenant is
in default under this Lease, Landlord shall be entitled to all such excess
13. Default; Remedies.
13.1. Default. The occurrence of any one of the following events shall
constitute an event of default on the part of Tenant ("Event of Default"):
(a) The abandonment of the Premises by Tenant;
(b) Failure to pay any installment of Rent due and payable under this Lease,
including, without limitation, the failure to pay timely any charges in
connection with Tenant's performance of its maintenance and repair
obligations under this Lease, and such failure continues for a period of
five (5) days after notice from the Landlord;
(c) A general assignment by Tenant or any guarantor for the benefit of
(d) The filing of a voluntary petition of bankruptcy by Tenant or any
guarantor; the filing of a voluntary petition for an arrangement; the filing
of a petition, voluntary or involuntary, for reorganization; or the filing
of an involuntary petition by Tenant's creditors or guarantors;
(e) Receivership, attachment, or other judicial seizure of the Premises or
all or substantially all of Tenant's assets on the Premises;
(f) Failure of Tenant to maintain insurance as required by subsection 8.2;
(g) Any breach by Tenant of its covenants under subsection 6.2;
(h) Failure in the performance of any of Tenant's covenants, agreements, or
obligations under this Lease (except those failures specified as Events of
Default in other subsections of this subsection 13.1 which shall be governed
by such other subsections), which failure continues for ten (10) days after
notice from Landlord to Tenant; provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such ten (10)-day period despite reasonable diligence, Tenant shall
not be in default under this subsection unless Tenant fails thereafter to
diligently and continuously prosecute the cure to completion within a
reasonable period of time not to exceed ninety (90) days;
(i) Any transfer of a substantial portion of the assets of Tenant, or any
incurrence of a material obligation by Tenant, unless such transfer or
obligation is undertaken or incurred in the ordinary course of Tenant's
business, or in good faith for equivalent consideration, or with Landlord's
13.2. Remedies. If an Event of Default occurs, Landlord shall have any or
all of the following remedies:
(a) Termination. If an Event of Default occurs, then in addition to any
other remedies available to Landlord at law or in equity and in this Lease,
Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant in this Lease by giving notice of such intention to
terminate. In the event that Landlord shall elect to terminate this Lease
then Landlord may recover from Tenant:
(1) the worth at the time of award of any unpaid Rent which had been earned
at the time of termination; plus
(2) the worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided; plus
(3) subject to the requirements set forth in California Civil Code Section
1951.2(c), the worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including, without limitation, any costs or expenses incurred by
Landlord (A) in retaking possession of the Premises; (B) in maintaining,
repairing, preserving, restoring, replacing and cleaning the Premises or any
portion thereof, including such acts for reletting to a new tenant or
tenants; (C) for leasing commissions; and/or (D) for any other costs
necessary or appropriate to relet the Premises; plus
(5) such reasonable attorneys' fees incurred by Landlord as a result of an
Event of Default, and costs in the event suit is filed by Landlord to
enforce such remedy; and plus
(6) at Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by applicable law. As
used in subsections (i) and (ii) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent
(12%) per annum or the maximum rate permitted by law, whichever is less. As
used in subsection (iii) above, the "worth at the time of award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award, plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179, or under any other present or future law,
in the event Tenant is evicted or Landlord takes possession of the Premises
by reason of any Event of Default.
(b) Inducement Recapture in Event of Default. Any agreement by Landlord for
possession of the Premises without the payment or with the reduced payment
of Rent or other charges or for the giving or paying by Landlord to or for
Tenant of any cash or other bonus, inducement, or consideration for Tenant's
entering into this Lease including, without limitation tenant improvement
allowances and abated Rent, all of which concessions are referred to as
"Inducement Provisions," are conditioned upon Tenant's full and faithful
performance of all of the provisions of this Lease to be performed or
observed by Tenant during the Term. Upon the occurrence of an Event of
Default, any Rent, other charge, bonus, inducement, or consideration abated,
given, or paid by Landlord under such Inducement Provision shall be
immediately due and payable by Tenant to Landlord and recoverable by
Landlord as Additional Rent, notwithstanding any subsequent cure by Tenant.
(c) Continuation of Lease. If an Event of Default occurs, then in addition
to any other remedies available to Landlord at law or in equity and under
this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after an
Event of Default and recover Rent as it becomes due, provided Tenant has the
right to sublet or assign, subject only to reasonable limitations).
(d) Re-entry. If an Event of Default occurs, Landlord shall also have the
right, with or without terminating this Lease, in compliance with applicable
law, to re-enter the Premises and remove all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant which cost shall be
immediately payable upon demand by Landlord.
(e) Reletting. In the event of the abandonment of the Premises by Tenant or
in the event that Landlord shall elect to re-enter or shall take possession
of the Premises pursuant to legal proceeding or pursuant to any notice
provided by law, then if Landlord does not elect to terminate this Lease as
provided in subsection 13.2(a), Landlord may from time to time, without
terminating this Lease, relet the Premises or any part thereof for such term
or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable with the
right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from
such reletting shall be applied in the following order: (i) to reasonable
attorneys' fees incurred by Landlord as a result of an Event of Default and
costs in the event suit is filed by Landlord to enforce such remedies; (ii)
to the payment of any indebtedness other than Rent; (iii) to the payment of
any costs of such reletting; (iv) to the payment of the costs of any
alterations, maintenance and repairs to the Premises; (v) to the payment of
Rent due and unpaid; and (vi) the balance, if any, shall be held by Landlord
and applied in payment of future Rent as the same may become due and
payable. Should that portion of such rentals received from such reletting
during any month, which is applied to the payment of Rent, be less than the
Rent payable during the month by Tenant, then Tenant shall pay such
deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. Tenant shall also pay to Landlord, as soon as determined, any costs
and expenses incurred by Landlord in such reletting or in making such
alterations, or performing any maintenance and repairs not covered by the
rentals received from such reletting.
(f) Termination. No re-entry or taking of possession of the Premises by
Landlord as provided in this Lease shall be construed as an election to
terminate this Lease unless a notice of such intention is given to Tenant or
unless the termination of this Lease is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Event of Default, Landlord may at any time after such
reletting elect to terminate this Lease for any such Event of Default.
(g) WAIVER. Tenant waives any and all rights conferred by Section 3275 of
the Civil Code of California and by Sections 1174(c) and 1179 of the Code of
Civil Procedure of California and any and all other Laws from time to time
in effect during the Term providing that Tenant shall have any right to
redeem, reinstate or restore this Lease following its termination by reason
of AN EVENT OF DEFAULT. Tenant also waives, to the extent permitted by Law,
the right to trial by jury in any litigation arising out of or relating to
(h) No Surrender. No act or conduct of Landlord, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be
or constitute an acceptance of the surrender of the Premises by Tenant prior
to the expiration of the Term, and such acceptance by Landlord of surrender
by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender
of this Lease by Tenant, voluntarily or otherwise, shall not be deemed a
merger unless Landlord elects in writing that such merger take place, but
shall operate as an assignment to Landlord of any and all existing
subleases, or Landlord may, at its option, elect in writing to treat such
surrender as a merger terminating Tenant's estate under this Lease, and
thereupon Landlord may terminate any or all such subleases by notifying the
subtenant of its election to do so within five (5) days after such
(i) Notice Provisions. Any notice given by Landlord as provided in
subsection 13.1 of this Lease shall satisfy the requirements for notice
under California Code of Civil Procedure Section 1161, and Landlord shall
not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding. Should Landlord prepare any notice
to Tenant for failure to pay Rent or perform any other obligation in this
Lease, Tenant shall pay to Landlord, without any further notice from
Landlord, the additional sum of $75.00 which represents a fair and
reasonable estimate of the costs Landlord will incur by reason of preparing
13.3. Late Charges. Tenant acknowledges that late payment by Tenant to
Landlord of Rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, without limitation, processing and accounting charges.
Accordingly, if any installment of Rent or other sum due from Tenant shall
not be received by Landlord or Landlord's designee within five (5) days
after such amount shall be due, then, without any requirement for notice to
Tenant, Tenant shall pay to Landlord a late charge equal to five percent
(5%) of such overdue amount. Such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no
event constitute a waiver of the Event of Default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights
and remedies provided in this Lease or at law or in equity. In the event
that a late charge is payable under this Lease, whether or not collected,
for three (3) consecutive installments of Rent, Rent shall, at Landlord's
option, become due and payable by cashiers check quarterly in advance. In
addition, should Landlord be unable to negotiate any payment made by Tenant
on the first attempt by Landlord, Tenant shall pay to Landlord upon demand
from Landlord a fee of $50.00 per item which represents a fair and
reasonable estimate of the costs Landlord will incur by reason of Landlord's
inability to negotiate such item(s).
13.4. Interest on Past-Due Obligations. In addition to the late charge
provided for in subsection 13.3., any monetary payment due Landlord not
received by Landlord within ten (10) days following the date on which it was
due shall bear interest from the date due at twelve percent (12%) per annum,
but not exceeding the maximum rate allowed by law.
14. Condemnation/Temporary Taking.
14.1. Condemnation. If the Premises or any portion of the Premises are taken
under the power of eminent domain or sold under the threat of exercise of
such power (all of which are called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than twenty-five
percent (25%) of the floor area of the Premises, or a portion of the Common
Areas designated for Tenant's parking, such that the remaining portion does
not provide sufficient required parking under applicable land use and zoning
regulations, is taken by condemnation, Tenant may, at Tenant's option,
within ten (10) days after Landlord shall have given Tenant notice of such
taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession) send a notice to Landlord
electing to terminate this Lease as of the date the condemning authority
takes such possession. If Tenant does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to
the portion of the Premises remaining, except that the Rent and Tenant's
Share shall be reduced in the same proportion as the rentable floor area of
the Premises taken bears to the total rentable floor area of the Premises.
No reduction of Rent or Tenant's Share shall occur if the condemnation does
not apply to any portion of the Premises. Any award for the taking of all or
any part of the Premises under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of
Landlord; provided, however, that Tenant shall be entitled to any
compensation, separately awarded to Tenant, for Tenant's relocation expenses
and/or loss of Tenant's personal property so long as such award does not
reduce the amount awarded to Landlord. In the event that this Lease is not
terminated by reason of such condemnation, Landlord shall, to the extent of
its net severance damages in the condemnation matter, repair any damage to
the Premises caused by such condemning authority. Tenant shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
14.2. Temporary Taking. If all or any portion of the Premises is taken for a
limited period of time, this Lease shall remain in full force and effect and
Tenant shall continue to perform all provisions of this Lease; provided,
however, that the Rent and Tenant's Share shall be reduced during such
limited period of time in proportion to the portion of the Premises that is
rendered untenable and unusable as a result of such temporary taking.
Landlord shall be entitled to the entire award made in connection with any
such temporary taking.
15. Estoppel Certificate and Financial Statements.
15.1. Estoppel Certificate. Each party (referred to as "Responding Party")
shall within ten (10) days after notice from the other party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party
an estoppel certificate in a form reasonably acceptable to Landlord, or any
of Landlord's lenders or any prospective purchasers of the Premises or
Building, plus such additional information, confirmation and statements as
may be reasonably requested by the Requesting Party. If Tenant fails to
deliver an executed and acknowledged estoppel certificate to Landlord,
Tenant authorizes Landlord to act as Tenant's attorney-in-fact in executing
such estoppel certificate or, at Landlord's option, Tenant shall pay a fee
of $500.00 per day ("Estoppel Delay Fee") for each day after the ten (10)
days' notice in which Tenant fails to comply with this requirement.
15.2. Financial Statement. If Landlord desires to finance, refinance or sell
the Building, or any part thereof, Tenant shall deliver to any potential
lender or purchaser designated by Landlord such financial statements of
Tenant as may be reasonably required by such lender or purchaser, including
without limitation Tenant's financial statements for the past three (3)
years. All such financial statements shall be received by Landlord and such
lender or purchaser in confidence.
16. Additional Provisions.
16.1. Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall not affect the
validity of any other provision of this Lease.
16.2. Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by Tenant and
Landlord under this Lease.
16.3. Landlord Liability. The obligations of Landlord do not constitute the
personal obligations of the Landlord Entities. If Landlord shall fail to
perform any covenant, term or condition of this Lease upon Landlord's part
to be performed, Tenant shall be required to deliver to Landlord notice of
the same. If, as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
right, title and interest of Landlord in the Building, and out of Rent from
the Building receivable by Landlord or out of consideration received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title or interest in the Building, and no action for any deficiency
may be sought or obtained by Tenant.
16.4. No Prior or Other Agreements. This Lease contains all agreements
between the parties with respect to any matter mentioned in this Lease, and
supersedes all prior or contemporaneous oral or written agreements or
16.5. Notice Requirements. Except as otherwise specifically stated in this
Lease, all notices, requests, demands, consents and other communications
required or permitted to be given under this Lease shall be in writing and
shall be deemed given upon (i) personal delivery to the addressee; (ii) the
date signed for or refused by recipient when sent via United States Mail,
postage prepaid, certified mail return receipt requested; or (iii) one day
after delivery to a receipt issuing overnight delivery service (e.g. FedEx).
Until notified of a different address(es), as provided herein, all notices
shall be addressed to the parties at the address(es) set forth in subsection
1.12.; except that, upon Tenant taking possession of the Premises, the
Premises shall become Tenant's address for the purpose of mailing or
16.6. Waivers. No waiver by Landlord of an Event of Default shall be deemed
a waiver of any other provision of this Lease or of any subsequent Event of
Default of the same or any other provision of this Lease. In addition the
acceptance by Landlord of any Rent or other payment after it is due, whether
or not a notice of an Event of Default has been served or any action has
been filed by Landlord thereon, shall not be deemed a waiver of Landlord's
rights to proceed on any notice of default or action which has been filed
against Tenant based upon an Event of Default.
16.7. Holdover. Notwithstanding anything in California Civil Code Section
1945 to the contrary, upon the Expiration Date or earlier termination of
this Lease, if Tenant retains possession of the Premises without first
obtaining Landlord's consent, then Tenant's possession shall be deemed a
tenancy at sufferance, all of Tenant's obligations in this Lease shall
continue (except that Rent shall increase as provided below) and Landlord's
acceptance of payment of the increased holdover rent and other charges shall
not constitute a renewal of this Lease, shall not be deemed to waive
Landlord's right of re-entry, and shall not create a month-to-month or any
other periodic tenancy. If Tenants holds over with the consent of Landlord:
(a) the Base Rent payable shall be increased to the greater of the fair
market rental rate for the Premises, as determined by Landlord, or 200% of
the Rent applicable during the month immediately preceding the Expiration
Date or earlier termination of this Lease; and (b) all other terms and
conditions of this Lease shall continue to apply. Tenant shall Hold Harmless
Landlord, Landlord Entities and the Premises arising out of or involving
Tenant's failure to surrender the Premises on the Expiration Date or earlier
termination of this Lease in accordance with the provisions of this Lease.
16.8. Cumulative Remedies. No remedy or election under this Lease shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
16.9. Choice of Law. This Lease shall be governed by the laws of the State
of California. Any litigation between the parties to this Lease concerning
this Lease shall be initiated in Contra Costa County.
16.10. Landlord. The covenants and obligations contained in this Lease on
the part of Landlord are binding on Landlord, its successors and assigns
only during their respective period of ownership of an interest in the
Building. In the event of any transfer or transfers of such title to the
Building, Landlord (and, in the case of any subsequent transfers or
conveyances, the then grantor) shall be concurrently freed and relieved from
and after the date of such transfer or conveyance, without any further
instrument or agreement, of all liability with respect to the performance of
any covenants or obligations on the part of Landlord contained in this Lease
thereafter to be performed.
16.11. Attorneys' Fees and Other Costs. In the event of any action or
proceeding brought by either party against the other under this Lease, the
prevailing party shall be entitled to recover all costs and expenses
including its attorneys' fees in such action or proceeding in such amount as
the court may adjudge reasonable. The prevailing party shall be determined
by the court based upon an assessment of which party's major arguments made
or positions taken in the proceedings could fairly be said to have prevailed
over the other party's major arguments or positions on major disputed issues
in the court's decision. If the party which shall have commenced or
instituted the action, suit or proceeding shall dismiss or discontinue it
without the concurrence of the other party, such other party shall be deemed
the prevailing party.
16.12. Landlord's Access; Showing Premises; Repairs. Landlord and Landlord's
representatives shall have the right to enter the Premises at any time, in
the case of an emergency, and otherwise at reasonable times upon reasonable
advance verbal notice for the purpose of showing the Premises to prospective
purchasers, lenders or tenants, and making such alterations, repairs,
improvements or additions to the Premises or to the Building, as Landlord
may reasonably deem necessary. Landlord may at any time place on or about
the Premises or Building any ordinary "For Sale" signs, and Landlord may at
any time during the last one hundred eighty (180) days of the Term place on
or about the Premises any ordinary "For Lease" signs. Landlord reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Tenant's business; Landlord shall
be entitled to all revenues from such advertising signs. All such activities
of Landlord shall be without abatement of Rent or liability to Tenant.
16.13. Signs. Tenant shall not place any signs at or upon the exterior of
the Premises or the Building, except that Tenant may, with Landlord's prior
consent, install (but not on the roof) such signs as are reasonably required
to advertise Tenant's own business so long as such signs are in a location
designated by Landlord and comply with the provisions of this subsection
16.13. Tenant shall not place any signs on the windows or doors of the
Premises and temporary signs shall not be permitted. Tenant shall submit to
Landlord drawings, plans, specifications and other documents and instruments
depicting and describing any signs proposed by Tenant. All signs shall be
designed, manufactured, installed, maintained, repaired and removed at the
sole cost and expense of Tenant. All signs and the installation of such
signs shall conform to all applicable laws, ordinances, rules, regulations,
covenants, conditions, restrictions and requirements of all governmental
authorities (including, without limitation, state, municipal, county and
Federal governments and their departments, bureaus, boards and officials).
Tenant shall at its sole cost and expense remove all signs placed upon the
Premises or Building prior to the Expiration Date or earlier termination of
this Lease, and shall repair any damage or injury to the Premises or
Building caused thereby. If any signs are not maintained, promptly removed,
or necessary repairs not made, Landlord shall have the right to perform such
work at Tenant's sole cost and expense.
16.14. Termination; Merger. Unless specifically stated otherwise in writing
by Landlord, the voluntary or other surrender of this Lease by Tenant, the
mutual termination or cancellation of this Lease, or a termination of this
Lease by Landlord for an Event of Default, shall automatically terminate any
sublease or lesser estate in the Premises; provided, however, Landlord
shall, in the event of any such surrender, termination or cancellation, have
the option to continue any one or all of any existing subtenancies.
Landlord's failure within ten (10) days following any such event to make an
election to the contrary by notice to the holder of any such lesser interest
shall constitute Landlord's election to have such event constitute the
termination of such interest.
16.15. Quiet Possession. Upon payment by Tenant of the Rent for the Premises
and the performance of all of the provisions of this Lease on Tenant's part
to be observed and performed, Tenant shall have quiet possession of the
Premises for the entire Term, subject to all of the provisions of this
16.16. Subordination; Attornment; Non-Disturbance.
(a) Subordination. This Lease shall be subject and subordinate to any ground
lease, mortgage, deed of trust or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord upon the real
property of which the Premises are a part, to any and all advances made on
the security thereof, and to all renewals, modifications, consolidations,
replacements and extensions of such Mortgage. Any person holding any
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any lender, trustor,
ground lessor or mortgage holder (collectively, "Lender") whose name and
address have previously been furnished in writing to Tenant, notice of a
default by Landlord. Tenant may not exercise any remedies for default by
Landlord unless and until Landlord and the Lender shall have received notice
of such default and a reasonable time (not less than ninety (90) days) shall
thereafter have elapsed without the cure of such default having been
commenced. If any Lender shall elect to have this Lease superior to the lien
of its Mortgage and shall give notice to Tenant, this Lease shall be deemed
prior to such Mortgage. The provisions of a Mortgage relating to the
disposition of condemnation and insurance proceeds shall prevail over any
contrary provisions contained in this Lease.
(b) Attornment. Subject to the nondisturbance provisions of subsection (c)
of this subsection 16.16, Tenant shall attorn to a Lender or any other party
who acquires ownership of the Premises by reason of a foreclosure of a
Mortgage. In the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior landlord or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Tenant might have against any prior landlord or
(iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.
(c) Non-Disturbance. With respect to a Mortgage entered into by Landlord
after the execution of this Lease, Tenant's subordination of this Lease
shall be subject to the Mortgage holder's agreeing, in a form reasonably
acceptable to such Mortgage holder, that Tenant's possession and this Lease
will not be disturbed, subject to subsection 16.16(b), so long as an Event
of Default has not occurred and Tenant attorneys to the record owner of the
(d) Self-Executing. The agreements contained in this subsection 16.16 shall
be effective without the execution of any further documents; provided,
however, that upon notice from Landlord or a Lender in connection with a
sale, financing, or refinancing of the Premises, Tenant and Landlord shall
execute such further writings as may be reasonably required to separately
document any such subordination or nonsubordination, attornment, and/or
nondisturbance agreement, as is provided for in this Lease. Landlord is
irrevocably vested with full power to subordinate this Lease to a Mortgage.
16.17. Security Measures. Tenant acknowledges that the Rent payable to
Landlord does not include the cost of guard service or other security
measures and Landlord has no obligations to provide such services. Tenant
assumes all responsibility for the protection of the Premises, Tenant,
Tenant Entities and their property from the acts of third parties.
16.18. Reservations. Landlord reserves the right to grant such easements
that Landlord deems necessary and to cause the recordation of subdivision or
parcel maps, so long as such easements and maps do not unreasonably
interfere with the use of the Premises by Tenant. Tenant shall sign any
documents reasonably requested by Landlord to effectuate any such easements
16.19. Offer. Preparation of this Lease by either Landlord or Tenant or
Landlord's representative or Tenant's representative and submission of this
Lease to Tenant or Landlord shall not be deemed an offer to lease. This
Lease is not intended to be binding until executed and delivered by Landlord
16.20. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification.
16.21. Multiple Parties. Except as otherwise expressly provided in this
Lease, if more than one person or entity is named as Tenant, the obligations
of such persons or entities shall be the joint and several responsibility of
all persons or entities named in this Lease as such Tenant.
16.22. Authority. Each person signing on behalf of Landlord or Tenant
warrants and represents that she or he is authorized to execute and deliver
this Lease and to make it a binding obligation of Landlord or Tenant,
16.23. Broker's Fees. Tenant represents and warrants that it has dealt with
no broker, agent or other person in connection with this transaction, other
than as named in subsection 1.9, and that no broker, agent or other person
brought about this transaction other than named Broker(s), and Tenant shall
Hold Harmless Landlord, Landlord Entities and the Premises arising out of or
involving any broker, agent or other person claiming a commission or other
form of compensation by virtue of having dealt with Tenant with regard to
16.24. Construction. Neither this Lease nor any Addenda or Exhibit to this
Lease shall be construed for or against either party. Tenant acknowledges
that Tenant has had the opportunity to negotiate this Lease and all Addenda
16.25. Recording. Tenant shall not record this Lease nor a short form
memorandum of this Lease without Landlord's prior consent. Upon any
termination of this Lease, Tenant shall, at Landlord's request, execute,
have acknowledged and deliver to Landlord a quitclaim deed with respect to
16.26. Covenants and Conditions. All provisions of this Lease to be observed
or performed by Tenant are both covenants and conditions.
16.27. Definitions. As used in this Lease, the following words and phrases
shall have the following meanings unless otherwise specifically provided to
Applicable Requirements -- shall mean all laws, rules, regulations,
ordinances, directives, covenants, easements and restrictions of record,
permits, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Landlord's engineers and/or
consultants, relating in any manner to the Premises (including, without
limitation, matters pertaining to (a) industrial hygiene, (b) environmental
conditions in, on, under or about the Premises, including soil and
groundwater conditions, and (c) the, use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage,
spill or release of any Hazardous Substance), now in effect or which may
hereafter come into effect.
Hazardous Substance -- shall mean any product, substance, chemical, material
or waste whose presence, nature, quantity and/or intensity of existence,
use, manufacture, disposal, transportation, spill, release or effect, either
by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety
or welfare, the environment or the Premises; (ii) regulated or monitored by
any governmental authority; or (iii) a basis for potential liability of
Landlord to any governmental agency or third party under any applicable
statute or common law theory. Hazardous Substance shall include, without
limitation, hydrocarbons, petroleum, gasoline, crude oil or any products or
Hold Harmless – to defend and indemnify against and hold harmless from all
liability, losses, penalties, damages, costs, expenses (including, without
limitation, attorneys' fees), causes of action, claims, or judgments arising
out of or related to any damage to any person or property.
Landlord Entities -- Landlord's affiliates, lenders, any ground lessor of
Landlord, as well as the City of Brentwood, and the officers, members,
directors, shareholders, partners, employees, managers, independent
contractors, attorneys and agents of the foregoing.
Reportable Use -- shall mean (i) the installation or use of any above or
below ground storage tank, (ii) the generation, possession, storage, use,
transportation or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business
plan is required to be filed with, any governmental authority, and (iii) the
presence in, on, under or about the Premises of a Hazardous Substance with
respect to which any Applicable Requirements require that a notice be given
to persons entering or occupying the Premises or neighboring properties.
Tenant Entities -- Tenant's employees, agents, contractors, servants,
visitors, suppliers, shippers, subtenants, licensees, representatives,
customers, officers, members, directors, shareholders, partners and/or
16.28. Survival of Obligations. Tenant's obligations under subsections 6.2,
6.3, 7.4 and 8.5 shall survive the Expiration Date or earlier termination of
The parties to this Lease have executed this Lease as of the date first
Redevelopment Agency of the City of Brentwood, a public body
Donna Landeros, Executive Director
Margaret Wimberly, Agency Secretary
APPROVED AS TO FORM:
Damien Brower, General Counsel Pct Enterprises, Inc. a California
corporation, dba Precision Cabinets and Trim
DESCRIPTION OF PREMISES
Building SF: 20,277
Building Address: 400 Guthrie Lane
Building part of a larger parcel with the Police Station. See Attachment No.
1 for map and proposed split.
Access easement for ingress and egress just west of the 400 Guthrie building
RULES AND REGULATIONS
A. General Rules and Regulations. The following rules and regulations govern
the use of the Premises, Building and Common Areas. Tenant will be bound by
such rules and regulations and agrees to cause Tenant Entities to observe
1. Except as specifically provided in this Lease to which these Rules and
Regulations are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of
the Building without the prior consent of Landlord. Landlord will have the
right to remove, at Tenant's expense and without notice, any sign installed
or displayed in violation of this rule. Absolutely no paper or cardboard
signs shall be permitted, even it such signs are posted only on a temporary
basis. All permitted signs are to be in conformance with the Sign Criteria
for the Project.
2. If Landlord objects in writing to any curtains, blinds, shades, screens
or hanging plants or other similar objects attached to or used in connection
with any window or door of the Premises, or placed on any windowsill, which
is visible from the exterior of the Premises, Tenant will immediately
discontinue such use. Tenant shall not place anything against or near glass
partitions or doors or windows which may appear unsightly from outside the
3. Tenant will not obstruct any sidewalks, passages, exits or entrances of
the Building. Landlord will in all cases retain the right to control and
prevent access to the Common Areas of all persons whose presence in the
judgment of Landlord would be prejudicial to the safety, character,
reputation and interest of the Building, provided that nothing contained in
this Lease will be construed to unreasonably prevent such access to persons
with whom any tenant normally deals in the ordinary course of its business,
unless such persons are engaged in illegal or unlawful activities.
4. Landlord expressly reserves the right to absolutely prohibit sales and
displays of products, goods and wares on the Premises. Landlord reserves the
right to restrict and regulate the use of the Common Areas by invitees of
tenants providing services to tenants on a periodic or daily basis including
food and beverage vendors. Such restrictions may include limitations on
time, place, manner and duration of access to a tenant's premises for such
5. Landlord reserves the right to prevent access to the Building in case of
invasion, mob, riot, public excitement or other commotion.
6. If Tenant requires telegraphic, telephonic, burglar alarm, satellite
dishes, antennae or similar services, it will first obtain Landlord's
approval, and comply with Landlord's reasonable rules and requirements
applicable to such services, which may include separate licensing by, and
fees paid to, Landlord.
7. Except as expressly agreed in writing by Landlord, Tenant will not use or
keep in the Premises any kerosene, gasoline or inflammable or combustible
fluid or material other than those limited quantities necessary for the
operation or maintenance of business equipment. Tenant will not use or
permit to be used in the Premises any foul or noxious gas or substance, or
permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of
noise, odors or vibrations, nor will Tenant bring into or keep in or about
the Premises any birds or animals.
8. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
Without the consent of Landlord, Tenant will not use the name of the
Building in connection with or in promoting or advertising the business of
Tenant except as Tenant's address.
9. Tenant will not use the Premises for any business or activity other than
that specifically provided for in this Lease.
10. Except for the ordinary hanging of pictures and wall decorations and
except for improvements approved by Landlord in writing, Tenant will not
mark, drive nails, screw or drill into the partitions, woodwork or plaster
or in any way deface the Premises or any part of the Premises, except in
accordance with the provisions of this Lease pertaining to alterations.
Tenant will not affix any floor covering to the floor of the Premises in any
manner except as approved by Landlord. Tenant shall repair any damage
resulting from noncompliance with this rule.
11. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence of
liquor or drugs or who is in violation of any of these Rules and
12. Tenant will store all of its trash and garbage within its Premises or in
other facilities approved by Landlord. Tenant will not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary
and customary manner of trash and garbage disposal. All garbage and refuse
disposal is to be made in accordance with directions issued from time to
time by Landlord.
13. The Premises will not be used for lodging nor shall the Premises be used
for any improper, immoral or objectionable purpose.
14. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
15. Tenant assumes any and all responsibility for protecting its Premises
from theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises closed.
16. Tenant shall use at Tenant's cost such pest extermination and control
contractor(s) for the Premises as Landlord may direct and at such intervals
as Landlord may reasonably require.
17. To the extent Landlord reasonably deems it necessary to exercise
exclusive control over any portions of the Common Areas, Landlord may do so
subject to reasonable, non-discriminatory additional rules and regulations.
18. Tenant's requirements will be attended to only upon appropriate
application to Landlord's property manager for the Building.
19. Tenant shall not store foods, pallets, drums or any other materials
outside the Premises or in the Common Areas.
20. These Rules and Regulations are in addition to, and will not be
construed to in any way modify or amend, in whole or in part, the provisions
of this Lease. Landlord may waive any one or more of these Rules and
Regulations for the benefit of Tenant.
21. Tenant will not install any guard shack(s), portable restroom
facilities, or similar structure(s) on the Premises.
22. Landlord reserves the right to make such other Rules and Regulations as
in its judgment, may from time to time be needed for safety and security,
for care and cleanliness of the Building and for the preservation of good
order. Tenant shall abide by all the Rules and Regulations stated in this
Exhibit and any additional rules and regulations which are adopted. Tenant
is responsible for the observance of all of the foregoing Rules and
Regulations by Tenant and Tenant Entities.
B. Parking Rules and Regulations. The following rules and regulations govern
the use of the parking areas which serve the Building. Tenant will be bound
by such rules and regulations and agrees to cause Tenant Entities to observe
1. Tenant will not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant Entities to be loaded, unloaded or parked in
areas other than those designated by Landlord for such activities. No
vehicles are to be left in the parking areas overnight and no vehicles are
to be parked in the parking areas other than normally sized passenger
automobiles, motorcycles and pick-up trucks. No extended term storage of
vehicles is permitted.
2. Vehicles must be parked entirely within painted stall lines of a single
3. All directional signs and arrows must be observed.
4. The speed limit within all parking areas shall be five (5) miles per
5. Parking is prohibited:
(a) in areas not striped for parking;
(b) in aisles or on ramps;
(c) where "no parking" signs are posted;
(d) in cross-hatched areas; and
(e) in such other areas as may be designated from time to time by Landlord.
6. Trucks and trailers shall be parked only on concrete aprons. The front
legs of any trailers stored on asphalt shall be placed only upon appropriate
support placed between the trailer legs and the asphalt, so as to protect
the asphalt from damage.
7. Tenant shall not materially or adversely interfere with the other
tenants' use of the dock loading areas, Common Areas or driveways.
8. Landlord reserves the right, without cost or liability to Landlord, to
tow any vehicle if such vehicle's audio theft alarm system remains engaged
for an unreasonable amount of time.
9. Tenant shall not service, maintain or repair vehicles on the Premises, in
the Building, or in the Common Areas. Washing, waxing, or cleaning of any
vehicle in any area is prohibited.
10. Landlord may refuse to permit any person to park in the parking areas
who violates these Rules and Regulations with unreasonable frequency, and
any violation of these Rules and Regulations shall subject the violator's
car to removal, at such car owner's expense. Tenant shall use its best
efforts to acquaint Tenant Entities with these Rules and Regulations.
11. Landlord reserves the right, without cost or liability to Landlord, to
tow any vehicles which are used or parked in violation of these Rules and
12. Landlord reserves the right from time to time to modify and/or adopt
such other reasonable and non-discriminatory rules and regulations for the
parking areas as it deems necessary for the operation of the parking areas.
13. Landlord shall not be liable for, and Tenant shall not assert and waives
any claim for (a) any loss of personal property left in vehicles or left in
the parking areas, and (b) loss or damage to vehicles. Landlord shall not be
liable for the acts and omissions of Landlord's contractors, invitees or
14. Tenant shall not service, maintain, or repair vehicles on the Premises,
in the Building, or in the Common Areas.
COMMENCEMENT DATE CERTIFICATE
LANDLORD: Redevelopment Agency of the City of Brentwood
LEASE DATE: ,
Tenant accepts the Premises as being in the condition required under the
The Commencement Date of the Lease is , .
The Expiration Date of the Lease is , .
Redevelopment Agency of the City of Brentwood, a public body
Donna Landeros, Executive Director Pct Enterprises, Inc. a California
corporation, dba Precision Cabinets and Trim
WIRING FLOOR PLAN
To be provided by Tenant upon execution of this agreement.
MOVE OUT STANDARDS
Before surrendering the Premises, Tenant shall remove all of its personal
property, trade fixtures and such improvements, alterations or additions to
the Premises made by Tenant as may be specified for removal by Landlord and
repair any damage caused by such removal such that the damaged area is
returned to the condition that existed prior to the installation of such
personal property, trade fixtures, improvements, alterations or additions.
Tenant shall, at its sole cost and expense, engage consultant(s) acceptable
to Landlord to oversee the removal if it is deemed necessary by Landlord, in
its sole discretion. Ordinary wear and tear shall not include any damage or
deterioration that would have been prevented by good maintenance practices
or by Tenant timely performing its obligations in this Lease.
If Tenant fails to remove its personal property, trade fixtures,
improvements, alterations or additions upon the Expiration Date or earlier
termination of this Lease, the same shall be deemed abandoned and shall
become the property of Landlord. Notwithstanding the foregoing, Tenant shall
be liable to Landlord for all costs and damages incurred by Landlord in
removing, storing or selling such personal property, trade fixtures,
improvements, alterations or additions and in restoring the Premises to the
condition required as provided in this Lease.
Notwithstanding anything to the contrary in this Lease, Tenant shall
surrender the Premises, at the time of the Expiration Date or earlier
termination of this Lease, in a condition that shall include, without
limitation, the following:
1. Lights: Office, warehouse and exterior lights and ballasts must be fully
operational with all bulbs functioning. Broken light lenses must be replaced
with matching lenses.
2. Dock Levelers & Roll-Up Doors: Must be fully operational. Damaged panels
must be replaced and painted to match. All missing or damaged dock bumpers,
dock levelers, Dok-loks and Dok-lok lights must be replaced.
3. Dock Seals and Awnings: Must be free of damage and tears. Broken
backboards must be repaired. Frames must not be bent.
4. Warehouse Floors and Columns: Must be free of stains and swept with no
racking bolts and other protrusions left in floor. Bolts must be ground down
or removed and patched with an appropriate epoxy filling. Bolts may not be
removed with a torch. Cracks in the floor which are ¼" or greater must be
repaired with an epoxy. Heavily scarred floor seal requires re-sealing.
Damaged or bent columns, bollards, railing, etc. must be repaired.
5. Tenant Installed Equipment & Wiring: Must be removed and space returned
to original condition when originally leased. (Remove air lines, junction
boxes, conduit, etc.) Security systems must be disarmed and removed with
damage, if any, repaired. Phone systems must be removed and damage, if any,
6. Walls: All nails, shelves, toggle bolts must be removed from walls. Holes
must be professionally filled and sanded. Large damaged areas may require
tape, bed and sanding. There may be no holes in either office or warehouse
7. Roof: Any tenant-installed equipment must be removed and roof
penetrations properly repaired by a licensed roofing contractor. If
maintenance of the roof is a Tenant responsibility, then active leaks must
be fixed and the most recent Landlord maintenance and repairs
recommendations must have been completed.
8. Signs: All exterior signs must be removed and holes patched and paint
touched up to match, as necessary. All door and window signs must be removed
and damage, if any, repaired.
9. Heating & Air Conditioning System: If maintenance of the HVAC equipment
is a Tenant responsibility, then a written report from a licensed HVAC
contractor within the last two (2) months of the Term must be provided. The
report must state that all evaporative coolers and/or heaters within the
warehouse are operational and safe and that office HVAC system is also in
good and safe operating condition. All repairs/maintenance identified in the
HVAC report must be completed by Tenant.
10. Painting: All touch up painting must match existing paint. Scarred and
damaged walls and rooms may need to be entirely repainted.
11. Doors: All interior and exterior personnel doors (for office and
warehouse) must be in good appearance and fully operational including
fixtures, door closures, etc. Holes/scars in doors must be repaired and
painted to match. Irreparable holes will require door replacement of
matching and like quality doors.
12. Overall Cleanliness: Clean windows, kitchens and restrooms require full
janitorial attention (i.e., strip/wax floors, sanitize toilets, sinks, clean
under cabinets, exhaust fans must be operational, fixtures must be
operational, etc.), professionally clean carpet, VCT floors require striping
and waxing, and remove any and all debris from office and warehouse areas.
Remove all pallets and debris from exterior of Premises. Debris and trash
may not be stored temporarily outside of the Building. Parking lot must be
swept and dumpster removed. If appropriate, interior pest control treatment
must be completed.
13. Building Systems: All building systems must be in good and safe working
order (i.e., plumbing, electrical, etc.). Provide certification of recent
fire sprinkler inspection by a licensed company, if a Tenant responsibility.
14. Upon Completion: Contact Landlord's property manager to coordinate date
of turning off power, turning in keys, and obtaining final Landlord
inspection of the Premises.
FOR A REQUEST FOR AN ASSIGNMENT OR SUBLEASE OF THIS LEASE
(1) Balance sheets, income statements and tax returns of the proposed
assignee or subtenant for the past three (3) years;
(2) A complete business biography and history of the proposed assignee or
subtenant and its officers, partners and managers, if any;
(3) A statement of the specific uses for which the Premises will be utilized
by the proposed assignee or subtenant;
(4) Preliminary plans prepared by an architect or civil engineers for all
alterations to the Premises that are contemplated to be made by the proposed
assignee or subtenant;
(5) A list prepared by the proposed assignee or subtenant of all buildings
in which the proposed assignee or subtenant has been a tenant during the
past five (5) years, which list shall include the address of each such
building and the last known name, address and telephone number of the
landlord of each such building;
(6) A list prepared by the proposed assignee or subtenant of all lawsuits in
which the proposed assignee or subtenant has been a named party, either as
plaintiff or defendant, during the past three (3) years, which list shall
include the name and location of the court, the case name and case number
and a brief description of the nature of the action;
(7) Written approval of the proposed assignment or sublease and a
reaffirmation of liability, in a form satisfactory to Landlord's counsel,
from all guarantors and previous assignors of this Lease, not previously
expressly released by Landlord, if any; and
(8) Such other information as Landlord may reasonably request.
OPTION TO PURCHASE ADDENDUM TO LEASE
This Addendum to the Lease shall modify, delete and replace certain
provisions of the Lease. Wherever the terms of this Addendum are
inconsistent with the Lease provisions, the terms of this Addendum shall be
I. Parcel Map.
Prior to the first anniversary of the Commencement Date, Landlord, at its
sole cost, shall diligently cause to be prepared, approved by the
appropriate governmental agencies and ready to be recorded a parcel map (the
"Parcel Map") dividing the Property into two (2) parcels as shown on
Attachment No. 1, attached hereto and incorporated herein by this reference,
referred to herein as the "Building Parcel" and the "Police Headquarters
Parcel," respectively. Tenant shall bear all costs of compliance with any
conditions of the Parcel Map.
II. Option to Purchase Building Parcel.
A. Grant of Option. Tenant shall have the right to purchase the Building
Parcel on the terms and conditions set forth in this Addendum.
B. Option Consideration. Tenant's performance of its obligations under the
Lease are the consideration for this Option.
C. Purchase Price. The purchase price for the Building Parcel shall be the
appraised fair market value of the Building Parcel as determined in
accordance with the provisions of this Addendum. The purchase price shall be
paid in cash at close of escrow.
1. Appraisal. At any time during the term of this Lease after approval of
the Parcel Map, but not later than six (6) months prior to the Expiration
Date, Tenant may notify Landlord in writing that it desires to have the fair
market value of the Building Parcel determined by an appraiser in order to
fix the purchase price. Upon receipt of such notice, Landlord and Tenant
shall promptly appoint an appraiser by mutual agreement. Any appraiser
selected pursuant to the terms of this Addendum shall be an MAI appraiser
having not less than ten (10) years' experience appraising industrial
property in Contra Costa County. In the event that the parties are unable to
agree upon the selection of an appraiser within thirty (30) days after
receipt of Tenant's notice, the appraiser shall be selected by the Presiding
Judge of the Superior Court for the County of Contra Costa, upon the
petition of the parties, from a list comprised of four (4) qualified
appraisers, including two (2) appraisers selected by Landlord and two (2)
appraisers selected by Tenant.
2. Instructions to Appraiser. The selected appraiser shall be jointly
instructed by the parties as follows:
The Building Parcel shall be valued based on its current use, only.
D. Exercise. Tenant may unilaterally exercise its right to purchase the
Building Parcel at any time during the term of the Lease after the
determination of the purchase price as set forth in paragraph C, but not
later than sixty (60) days prior to the Expiration Date. Exercise shall be
by written notice to Landlord at least sixty (60) days prior to the
E. Condition of Property. Tenant shall satisfy itself as to the condition of
the Building Parcel, all improvements thereon, and the physical and land use
conditions affecting the property prior to its exercise of the option.
Exercise of the option shall conclusively establish that Tenant has
satisfied itself with respect to the condition of the Building Parcel.
F. Condition of Title. Tenant shall satisfy itself as to the condition of
title to the Building Parcel prior to its exercise of the option. At least
thirty (30) days prior to the exercise of the option, Tenant shall obtain a
preliminary title report from a title company chosen by Landlord and
simultaneously provide a copy of same to Landlord. Tenant shall give
Landlord written notice of any title exceptions which are unacceptable to
Tenant within fifteen (15) days of receipt of the preliminary title report.
Tenant's failure to send such notice within such fifteen (15) day period
shall conclusively establish that Tenant has satisfied itself with respect
to the condition of title to the Building Parcel. If Landlord is unable or
unwilling to agree to remove such exceptions, Landlord shall give Tenant
written notice thereof within ten (10) days after receipt of Tenant's
written notice. Unless Tenant shall agree in writing to waive its objections
to title within five (5) days after receipt of Landlord's written notice,
this option shall then terminate and Landlord shall return any Option
A. Escrow Holder. If Tenant exercises its option to purchase the Building
Parcel, the transaction shall be consummated through an escrow with a title
company chosen by Landlord ("Escrow Holder").
B. Instructions. The escrow instructions given to Escrow Holder shall be
consistent with the terms of this Addendum, and, as between the parties, the
terms of this Addendum shall prevail if there is any inconsistency, unless
the type written rather than the printed portion of the instructions
specifically provide to the contrary.
C. Close of Escrow. Escrow shall close within sixty (60) days after exercise
of the option by Tenant.
D. Costs. Landlord shall pay transfer taxes. Tenant shall pay the cost of
recording the deed and Parcel Map. Landlord and Tenant shall each pay
one-half (1/2) of the cost of the title insurance policy and escrow fees.
Any other costs incurred in this transaction are to be allocated in
accordance with the usual custom of Contra Costa County as determined by
E. Prorations and Lease Termination. Real property taxes and Rent due from
Tenant shall be prorated on the basis of a 30-day month as of the date
escrow closes. The Lease shall terminate as of the close of escrow.
E. Title Insurance. Landlord shall cause Escrow Holder to cause its
underwriter to issue its CLTA policy of title insurance insuring title in
Tenant with liability in the amount of the purchase price, subject to the
forgoing taxes, exceptions and standard printed exceptions.
F. Deed and Cash. Landlord shall cause Escrow Holder to be ready, willing
and able to deliver to Tenant the deed required from Landlord, duly executed
by Landlord and notarized. Tenant shall cause Escrow Holder to be ready,
willing and able to deliver to Landlord the cash required from Tenant.
Pct Enterprises, Inc. a California corporation, dba Precision Cabinets and
REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, a public body
Donna Landeros, Executive Director
Margaret Wimberly, Agency Secretary
APPROVED AS TO FORM:
Damien Brower, General Counsel
ATTACHMENT NO. 1