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Current Council Agenda and Past Meeting Information

 

REDEVELOPMENT AGENCY 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

RECOMMENDATION
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.

PREVIOUS ACTION
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.

BACKGROUND
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 and recorded.

FISCAL IMPACT
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.

Attachments:
Resolution
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 business; and

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 Guidelines; and

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 following vote:

INDUSTRIAL LEASE

by and between

The Redevelopment Agency of the City of Brentwood

"LANDLORD"

and

Pct Enterprises, Inc., dba Precision Cabinets and Trim
"TENANT"

INDUSTRIAL LEASE

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").

1.2. Premises.

(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 Date").
1.4. Rent.
(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 paragraph (b).
(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 Lease.
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 following address:
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 subsection 1.3.
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. Term.
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 Exhibit C.
4. Rent.
4.1. Rent.
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 Building;
(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. Use.
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 consent.
(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 Tenant Entities.
(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 Applicable Requirements.
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 repairs.
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 the Premises.
(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 damage.
(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 expenses.
(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 deems adequate.
(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 below.
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 destruction.
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 Tenant's request.
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.
11. Utilities.
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 subletting.
(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 consideration.
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 creditors;
(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 consent; and
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 this Lease.
(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 surrender.
(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 such notice.
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 understandings.
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 delivering notices.
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 Lease.
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 Premises.
(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 or maps.
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 and Tenant.
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, respectively.
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 this transaction.
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 and Exhibits.
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 the Premises.
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 the contrary.
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 byproducts thereof.
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 invitees.
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 this Lease.
The parties to this Lease have executed this Lease as of the date first written above.
Landlord: Tenant:
Redevelopment Agency of the City of Brentwood, a public body
By:
Donna Landeros, Executive Director

ATTEST:

Margaret Wimberly, Agency Secretary

APPROVED AS TO FORM:

Damien Brower, General Counsel Pct Enterprises, Inc. a California corporation, dba Precision Cabinets and Trim

By:
Name:
Its:

EXHIBIT A
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

EXHIBIT B
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 the same.
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 Premises.
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 purposes.
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 Regulations.
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 agency.
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 the same.
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 parking stall.
3. All directional signs and arrows must be observed.
4. The speed limit within all parking areas shall be five (5) miles per hour.
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 Regulations.
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 other tenants.
14. Tenant shall not service, maintain, or repair vehicles on the Premises, in the Building, or in the Common Areas.

EXHIBIT C
COMMENCEMENT DATE CERTIFICATE
LANDLORD: Redevelopment Agency of the City of Brentwood
TENANT:
LEASE DATE: ,
PREMISES:

Tenant accepts the Premises as being in the condition required under the Lease.
The Commencement Date of the Lease is , .
The Expiration Date of the Lease is , .

Landlord:
Tenant:
Redevelopment Agency of the City of Brentwood, a public body
By:
Donna Landeros, Executive Director Pct Enterprises, Inc. a California corporation, dba Precision Cabinets and Trim

By:
Name:
Its:

EXHIBIT D
WIRING FLOOR PLAN
To be provided by Tenant upon execution of this agreement.

EXHIBIT E
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, repaired.
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 walls.
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.

EXHIBIT F
REQUIRED INFORMATION
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 controlling.
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 Expiration Date.
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 Consideration.
III. Escrow
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 Escrow Holder.
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 Trim
By:
Title:

"TENANT"

REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, a public body
By:
Donna Landeros, Executive Director

"LANDLORD"

ATTEST:
______________________________________
Margaret Wimberly, Agency Secretary

APPROVED AS TO FORM:
______________________________________
Damien Brower, General Counsel

ATTACHMENT NO. 1

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov