HomeMy WebLinkAbout1998-10-27; City Council; 14913; APPROVAL OF LEASE AGREEMENT, CONTRACT WITH SPACE CONSULTANT AND APPROPRIATING FUNDS FOR THE CITY DEVELOPMENT AND ADMINISTRATION FACILITY1 a BILL FlTV OF CARLSBAD -AGE 3 r"ps .I
TITLE:
AB#& APPROVAL OF LEASE AGREEMENT, CONTRACT
CITY ATTYA WITH SPACE CONSULTANT AND APPROPRIATING MTG. 10127198
DEPT Hd. -
I DEPT. FIN 1 FUNDS FOR THE CITY DEVELOPMENT AND
ADMINISTRATION FACILITY I cm MGG
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RECOMMENDED ACTION:
Approve Resolution No.?8*3 approving a lease agreement and an extension and amendrr
space planning agreement and appropriating funds.
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ITEM EXPLANATION:
In the 1998-99 Capital Improvement Program (CIP), Council approved the lease/purch:
building to provide additional offices for City staff. The purpose of the building is to improve (
service by providing a single location in which the needs of the development and business cc
can be met. The consolidation of City offices will also benefit the City internally by providil
communication between departments and less commute time for meetings.
Under Council direction, staff has been negotiating the lease/purchase of a building in the
Research Center over the past couple months. The negotiations are now complete and t
agreement is presented in this agenda bill for Council's approval.
The lease is for a 68,000 square foot building in the Carlsbad Research Center on Faraday
The lease term is ten years with a monthly payment of $74,816.50, which commences t~
following the issuance of the Certificate of Occupancy. The rental payment includes
improvement allowance of $1,650,000. The cost of improvements in excess of this amou
paid by the City. The City has an option to purchase the building between the twelfth an1
fourth month of the lease at a price of $9.1 million.
The developer was ready to begin construction of the shell building when they began ne!
with the City. During those negotiations, staff recommended and Council approvc
modifications to the original plans for the building in order to enhance the functionality of th
The lease contains a payment to the owner of $20,000 due upon commencement of the
compensation for the delay and changes to the construction schedule.
The lease agreement also commits the City to completing its space planning by December 1
that the developer can complete the tenant improvements on a timely basis and completi , building will not be further delayed. If the City does not meet this obligation, a delay penalty
into effect equaling $200 per business day for the first 10 days and then $500 per busi
~ thereafter, up to a maximum of $20,000. Staff is confident that the space planning will be
time and no delay penalty will be paid.
Space planning requires a number of steps including determining the amount of space n
each department and where they should be located as well as designing the architectural d
furniture plans. The City hired Interior Resource, Incorporated (IR2) to begin to define
space needs to insure that the building the City is leasing is adequz e. 0 :.*
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Page 2 of Agenda Bill # .t; %3 e
Staff would now like to amend and extend the initial contract to allow space planning work to
through completion of the building. The scope of the contract is detailed in the attached propc
,. amendment will allow for additional programming work, plus preparation of the schematic des
design development drawings for the interior of the building. In addition, the space planners
with the lessor's architect during the construction process and oversee the interior work and fu
installation to ensure adherence to design intent.
FISCAL IMPACT:
Total costs for the project are estimated as shown below:
I tern Amount
Modifications to shell building
Tenant improvement upgrades
Construction delay payment
Space planninghterior design
Furnishings
Phonekomputer lines
Moving costs
Systems allowance
Contingencies
Total
385,500
829,400
20,000
138,000
2,000,000
100,000
100,000
336,000
4,101,900
193,000
Lease payments will begin no earlier than June 1, 1999 at the rate of $74,816.50 per mon
-lease payments have been scheduled in the C1.P at -$930,000 per..year from the Public .Faci
fund which is sufficient to cover the annual lease payments. If Council chooses to ex
purchase option, the City may purchase the building one year from the lease commence1
(estimated at July 1, 2000) at a price of $9.1 million. Public Facilities fees would be us
purchase.
There was $100,000 appropriated this year from Public Facilities fees for the project. The fl to enable staff to begin the space planning and site location search. It was not known at that
the space requirements were or how soon we would be able to find a suitable location. SI
requesting an appropriation of $2,001,900 from Public Facilities fees to pay for the improv
the building. An additional appropriation of $2 million will be needed in the future to p'
furniture and equipment to put into the facility. Staff will return at a later date to appropriate
for the furniture and equipment. There are sufficient balances available from Public Faciliti
the requested appropriation.
EXHIBITS:
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I. Resolution No. approving a lease agreement and an extension and amendment
planning agreement and appropriating funds.
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Page 3 of Agenda Bill # 0 0
2. Lease agreement between Faraday Business Plaza, LLC and the City of Carlsbad
3. Extension and Amendment No. 1 to Agreement with IR2 Interior Resource, Inc.
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1 11 RESOLUTION NO. 98-357
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A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF CARLSBAD, CALIFORNIA,
APPROVING LEASE AGREEMENT AND
EXTENSION AND AMENDMENT OF SPACE
PLANNING AGREEMENT AND APPROPRIATING
FUNDS
WHEREAS, the 1998-99 Capital Improvement Program
(CIP) contains fimds for the lease/purchase of a building to provide
additional offices for City staff from the Public Facilities Fees fund; and,
11 WHEREAS, the purpose of the building is to improve
12 customer service by providing a single location in which the needs of the
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development and business community can be met and to improve internal
communications; and,
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WHEREAS, under Council direction, staff has been
negotiating the lease/purchase of a building in the Carlsbad Research Center
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agreement acceptable to City staff and to the lessor has been drafted; and 20
WHEREAS, the negotiations are now complete and a lease
WHEREAS, the City has previously contracted with Interior 21
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Resource, Incorporated (IR’) to define the City’s space needs; and,
WHEREAS, the City needs additional services fi-om the
space planner to complete the programming work, prepare the schematic
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27 during the construction process and oversee the interior work and furnishings
designs and design development drawings, work with the lessor’s architect
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NOW, THEREFORE, BE IT RESOLVED by the City
Council of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the lease agreement between the City of Carlsbad
and Faraday Business Plaza, LLC is hereby approved and
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the Mayor is authorized to execute said agreement.
3. That the Extension and Amendment No. 1 to agreement
with R2 Interior Resource, Inc. is hereby approved and
the Mayor is authorized to execute said amendment and
extension.
4. That $2,001,900 is hereby appropriated from the Public
Facilities Fees fund to the project account.
PASSED, APPROVED, AND ADOPTED at a regular
meeting of the Carlsbad City Council held on the 27th day of
October , 1998 by the following vote, to wit:
AYES: Council Members Lewis, Nygaard, Kulchin an
NOES: None
ABSENT: Council
ATTEST:
URQ-
ALETHA L. RAUTENKRANZ, City derk (SEAL)
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w- &a* AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAUCOMMERCIAL SINGLE-TENANT LEASE - I
(DO NOT USETHIS FORM FOR MULTI-TENANT BUILDINGS)
1. Basic Provisions ("Basic Provisions")
1 .l Parties: This Lease ('Lease'), dated for reference purposes only (@!!f- R \s * 'euL.
1tv Companv r
("I
1.2 Premlses: That certain real propert , including all improvements therein or to be provided by Lessor under tht
by and between FARADAY RIJSINESS PLAZA, LT,C, a California timi6ed
and -theROFAD
. .. """_"""""""
(collectively the "Parties:' or indvidually a "Party").
this Lease, and commonly known as 1635 Faraday Avenue, Carlsbad, CA
located in the County 01 S AN I7 T F.GQ , State of CAT.TFC)RNTA
and generally described as (describe brielly the nature 01 the property and. il applicable. the "Proiect", if the property Is loci
a Project)
_THE PRE-G&JJ llF,~CErRFr! TFl EYflTnTT "A" FTEPETn, UH- _THWREDET~JJ[B~JEQ~. ("Premises"). (See also Pa
1.3 Term: TEN I 1 0) years and zgul monllis ("Original Term") COfninenCing LSeeBdderic
("Commencement Date") and ending __ Ten--L_10 1Yegrs therw("Explratton Date"). (See also Pa
r . . """_" __ ""__ .."__"_" "._ .."." ~, - 1.5 Base Rent: Sm-0 per month ("Base Rent"). payable on Ihe ' F T R ST
each month commencing I See Adde.nh!m 5 1 (Cornmemen t DR te 1 (See also Pa Zlf this box is checked, there are provisions in this Lease lor the ease Rent to be adjusted.
1.6 Base Rent Pald Upon Execution: $ none - as Base Rent for the period .. " """ """ , - 1.8 Agreed Use: c i tV Admj.nLs.LrA.tian . (See also R
1.9 Insuring Party. Lessor is the "lnsurlng Party" unless otherwise staled herein. (See also Paragraph 8)
1.10 Real Estate Brokers: (See also Paragraph 15)
(a) Represenlatlon: The lollowlng real estate brokers (collectively, the "Brokers") and brokerage relalionships
transaction (check appliibie boxes): a
0 represents Lessor exclusively ("Lessor'!
U represents Lessee exclusively ("Lessee's E
represents both Lessor and Lessee ("Dual
(b) Payment to Brokers: Upon execution and delivery 01 lhis Lease by bolh Parties. Lessor shall pay to
the fee agreed to in their separate written agreement (or il lhere is no such agreement. the sum 01 . . 96 of the total - for the brokerage services rmdBmd by said Broker).
- 1.12 Addenda and Exhlbils. Altached hereto is an Addendum or Addenda consisting of Paragraphs 2.3 thro
and Exhibits , all of which constitute a part of
2. Premlsss.
2.1 Letling. Lessor hereby leases lo Lessee. and Lessee hereby leases lrom Lessor, the Premises, for Ihe term. at th
Upon all Of the terms. covenants and mditions sel lorlh In lhis Lease. Unless othenvlse provtded herein, any statement of size SI Lease, Or that may have been used in calculating rental. is an approxtmation which the Partles agree is reasonable and the rental b
2.2 Condition. Lessor shall deliver IhB Premises Io Lessee broom clean and free of debris on the Commencement daft
cblaiflad by Lessee withiin thirty (30) days following the Start Dale, warrants that the existing electrical, ptumbing, fire sprinkler, tigh kssession Date. whiir lint mrs ("Start Date"). and, so long as the required service contracts described in Paragraph 7.1
Wntilhg and air conditioning systems ("HVAC). loading doars, it any, and all other such elements in the Premises, othe
foundalion of any buiDdfngs m Ihe Premises (Ihe "8uilding") shall be free of material delecls. II a noncompliance with said warri
CMIStNcted by Lessee. shall be in gcd operating Condttion on said date and lhal the structural elements of the rml. beari
d the Star( Date, Lessor shall. as Lessor's sole obligalton wilh respect to such matler. except as olhemise provided in this Lease, I f=ip( Of Wrillen notice lrom Lessee setting forth wlth speciliclty the nature and extent of such non-compliance, rectib same at Less If. afiW the Start Date. Lessee does not give Lessor written notie of any non-compliance wlth this warranty within: (i) one year as '
Of the rOOf and the Structural portions of the rod, lotrndations and bearing walls, (ii) SIX (6) monrhs as to the HVAC systems. (iii) Ih
as 10 the remaining systems and other elements 01 the Bullding. correctton 01 such non-compliance shall be the obligation of Lesse sde cost and expense.
***2.3 Compllance. Lessor warrants that the improvements on the Premises comply with all applicable laws, covenants or record, building codes, regulations and ordinances ("Applicable Requirements") in ellect on the Start Date. Said warranty doe!
Ihe usB IO which Lessee will put the Premises or to any Alterations or Ulility lnslallalions (as defined in Paragraph 7.3(a)) made by Lessee. NOTE Lessee is respnsible lor determining whether or not the zoning is appropriate for Lessee's intended use, and that past uses 01 the Premlses may no longer be allowed. II Ihe Premises do not comply with said warranty. Lessor shall, excep provided. promptly alter receipt of wrttten no!ie Irom Lessee selling lorth wllh specilicily Ihe nature and extent of such nonsom(
following the Start Date, correction of that nonzomptiance shall be the obligation of Lessee at Lessee's sole cost ad expense. If
the same at Lessor's expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty wilhin :
lo require during the term of thls Lease the construction 01 an addilion to or an alteration 01 the Building. the remedialion Oh
Requirements are herealter changed (as opposed to being in existence at the Slarl Date, which Is addressed in Paragraph 6.2b
cost of such work as Iollws:
Substance, or the reinlorcement or other physical modilication 01 the Building ("Capital Expendllure"), Lessor and Lessep.sh'
*** Modified per Addendum '6
Q1997 - American lnduslrlal Real Estato Assoclatlon
is not subject to revision whelher of not Ihe aclual size is mare of less.
PAGE 1 Initials
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- mandated seismic modiIications). then Lessor -shall - (b) If such Capltal Expenditlrre is MI the restrtl of the specific: and unique me 01 the Premlses by Lessee (such as. gove
w provided, however, that 11 such Capllal Expenditure is reqwred durmg the last two years of this Lease or iI Lessor r pay for such costs w
determines that it is not economically kaslMe to pay 11s share thereof, Lessor shall haw the option to lerminate this Lease up00 ninet) phrwriiten notice to Lessee unless Lessee notilies Lessor, In writing, within len (10) day8 alter receipt of Lessor's termination nolica It will pay lor such Capilal Expenditure. I1 Lessor does not elect lo terminate. and lails to lender ils share 01 any such Capital Expenditu may advance such funds and dedm same, wth tnteresl. from Rent until Lessor's share ol such costs have been fully paid. If Lesse to linance Lessof's share, or it the balance 01 the Renl due and payable lor Ihe remainder 01 lhls Lease Is not Sulliient to lulb reimbu on an offset basis. Lessee shalt have Ihe nght lo termmate 111ts Lease upon thirty (30) days writlen notice lo Lessor.
unexpected. and new Applicable Reqtllrements. If the Capllal Expenditures are Inslead trwred by Lessee as a mSUll of an actual a (c) Nolwithslandlng the above, the provisions concerning Capltal Expenditures are Intended to appty onb to noc
change in use. change in intensity 01 use, or modiflcalion lo the Premises then. and in lhel event, Lessee shall be lully respmsiMe 1
thereof, and Lessee shall no1 have any rqht lo terminale t111s Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) It has been advtsed hy Lessor andw Brokers to satlsfy Itself wllh
cmp//am@ wjlh AppllcaMe pequirements), and lheir suilabllily lor Lessee's lnlended use, (b) Lessee has made such investigation E
Iha candillon 01 the Premises (mncluding In11 no1 limlled IO the electrical, HVAC ad llre sprlnkler systems. securlly. envrronmenlal a:
necessary with rehence to such matlers and assumes all responsihility lherefor as the same relate la ifS QcCUpt7w d he Ple (c) neither Lessor, Lessor's agenls, nor any Broker has made any oral or written represenlalions or warranties with respect lo sald rn than as Set forth in this Lease. In addilron. Lessor acknwledps that: (a) Broker has made no represenlallons. prmlses or concerning Lessee's abillly lo honor !he Lease or s~tlI~1)ilily lo ocalpy llie Premises, and (b) I1 Is Lessor's sole responslbillty 10 1w
financial capabllily andfor suitaMlily of all proposed tenanls.
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- 3. Term.
3.1 Tam. The Commencement Date. Expiralion Date and Original Term of thls Lease are as specified in Paragraph 1.3.
Base Rent shall be abaled lor the period 01 stlcll early possession. All ollier terms 01 this Lease (inchrding bot not limited to the ol
3.2 Early Possesslan. II Lessee totally or partially occupies the Premises prior to the Commencement Date, Ihe oMig;
pay Real Properly Taxes and msurance premanns and to mamlaln 1110 I'romises) shall, Iwwover, tm m ellect during sudh perlod. An\ possess!on slial' no1 allect the Expiratmi Dalo.
ohtigalion 10 provide evidence d insurance (Pararpph R.5). f'ondlng ckliwtry of stch ewdence, Lessee shall be requlred to perk 3.4 Lessee Compllancs. Lessor shall no1 he rqctirod to lclxlor possosslon of Ihe Premises to Lessee unlll Lessee cOml
"obligations under thls Lease Imm and alter the Start Dale, inciudiy llle payment of Rent, nalwilhslanding Lessor's eleclion passession pending receipt d such evidence d insurance. 1
4. Rent.
4.1. Rent Deflned. An monetary ohlitions of Lessco In t.ossor Irnrlor Iho torms 01 this Leaso (oxcopl lor the Sectrrily deemed to be rent ("Renl").
deduction (except 85 spea'fically permtlted in Illis Leaso). 011 or bnforo 1110 day on which 11 is due. Ran1 lor any period dttrmg the 4.2 Payment. Lessee shalt cause paymenl 01 nenl to ho recoivod ly Lessor in lawful money d the United Stales. wilh
which is for less than one (1) ltrtl calendar month slmtl bo prflralml Ilasotl tlpm Ihe actllal mlmher ol days 01 said monlh. Payment
Acceptance d a payment which is less lhan llie amount ttm clue SlIiIlt not 110 a watvor ol I.ossor's firjhls Io Ihe balance 01 SWh Ran
be made to Lessor at its address slated horain nr In SIIC~I nllror porsnns or place RS Lessoc may trm lime to time ttesqnal
01 Lessor's endorsemen1 01 a heck s la11
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Rent as the inilial Sew
-business d Lessee or necessary. In LeSeM's chenge in conlrol d L iudgment, sgnificantly
""( N"rrmr. ," - -" ,...-... .-. -.., .. -...-- - - , ,
; PAGE 2 lntllals %
FOR
6. USE.
6.1 "+e &p ~s.g and ocnyy the Premises oniy tor llle Agreed U any DIher legal use which is reasmaMy con there@ and foc no ,ter purpose. Lessee shall not USE or permlt the use ot the Pre 4D in a manner that is unlawlul. creates damag
OT a nuisance, or that di8twt.s wrws andlac ccalpanls d, or causes damage to neighboring properties. Lessor shall not unreasonably
01 delay 11s cfklsentto any dttm request lor a modification 01 the Agreed Use, so locy 8s Ihe same will no1 hpair Ihe structural lnlegrl
improvements on the premtsea or me mechanicat or ebctrrat systenls therein. ii el&s to witw consent, ~e- shall wUun liw, (5) Iwsit\ess clays allor such roqtast glve wntton nolltmlm 01 same, which no1
indude an explanation 01 Leds objections lo Itre chango m 11~0.
- ., ./ - 6.2 Hazardous Substancea.
substance, or waste whose presence. use, manulacture. disposal, transportation. or release, eilher by ltsell or in combination wl
(a) Reportable Uses Requlre Consent. The term "Hazardous Substance" as used In lhls Lease shall mean any
malerials expected to be on the Premises, is either: (i) potenllalty inittrious lo the public health, Safely Or welfare, the environmer Preinises, (li) regulated or monitored by any governmenla1 authorlty, or (iii) a basls for polential llabilily Of Lessor to any governmental or third parry under any applicable stalule or common law theory. Hazardous Substances shall include, but not be limiled to. hydro petroleum. gasollne, andlor crude oil or any products, by-products or tractions thereof. Lessee shall no1 engage in any actm in r Premises which constitutes a Reportable Use of Hazardous Subslances without the express prior Written consent of Lessor 81 complianca (at Lessee's expense) with all Applicable Requiremenls. "Reportable Use"shall mean (i) the installation or use Of any below ground storage tank, (ii) the generation. possession. storage, use, transportation, or disposal of a Hazardous Subslance that ri permit lrom. or wilh respect 10 Mi a report, notice. regislratlon or LXlsiness plan Is required to be lilad wilh. any governmental aulhori (jii) (he presence 81 the premises of a Hazardoos Substance wtlh respect 10 which any Applicable AeqUirementS requtres that a notice
\Q pnons antering or occupying Ihe Premises or neiglltwring properlies. Nolwllhslandfn!l Ihe lOtecJoing, Lessee may Use W ordi
cuslamary malerials reasonably requtred IO be used In [he nornlal cotlrse 01 Ihe Agreed Use, 90 lmcJ 89 such Us8 is in COmQllaW' Applicable Requirements, is not a Reporlahle Use. and cloes not expose Ihe Premises or neighboring properly lo any meaningf contamination or damage or expose Lessor to any llab8llly lherelor. In addilion, Lessor may condition its consent to any Reportable \ receiving such addilional assurances as Lessor reasonably deems necessary 10 protect itsell, the public, Ihe Premises andlor the en% - against damage, contamination, injury and/or liability, including. b~t not limited to. Ihe installation (an! remova1,on or before Lease exp termination) 01 protective mcdificattons (such as concrete oncasonlcnts)-.
(b) Duly lo Inform Lessor. If Lessae knows. or has reasmrahte cause to belleve, lhat a Hazardous Substance has co - located in. on, under or abmt the Premises, other than as provialsly consonled to by Lessor, Lessee shall Immediately give writler
such fact 10 Lessor. and provide Lessor w11l1 a cnpy 01 any report. nolee. claim or other documentation whch It has concernlq (he pr such Hazardous Subslance.
(c) Lessee Remedlatlon. Lessee shall no1 cause or permil any Hazardous Strhslance to be splned or released In. on. aboul the Premises (including lhrafgh the plumhing or sanllary sewer system) and shall promplhl, at Lessee's expense, take all inv
the maintenance, security and/or monitoring 01 the Premises or neghboring properties. Ihal was caused or malerially contributed to t
andlor remedial action reesonaMy recommended, whether or MI formally ordered or requlred, lor the cleanup 01 any contamlnallon I
party.
or pertaining lo or inwklng any Hazardous Subslance brouglrt onto the Premises during the term of lhis Lease, by or lor Lessee, 01
(d) Lessee Indemnlflcatlon. Lessee shall indemnily, dolend and hdd Lessor, its agents, employees, lenders and grou
if any, harmless lrom and against any and all loss 01 rents and/or damages. liahililies, jtdgmenls. claims, expenses, penallies, and
and consullanls' lees arising out ol or Involving any tlazartlotrs St~t~stanco broughl onto the Premises by Or lor Lessee, or any t
(provided. howsvar. that Lessee shall have IK) liahllily trntlcr Ihls Loase with respect lo unclergrotmd migration 01 any Hazardous : under the Premises Iran adjacent proport1o.s). I.ossoo's tJJiga~la~s s1kN iIEIlK10. lwrt no1 IN) lindmt to. the ellecls 01 any contammatla lo person, property or tlie envtronlnetrt crentocl or sutloroct by 1.cssoo. ant1 llte cost nl Immsl@ntkwr. removal. remedlatbm. restoral abatement. and shall survive the exwratton or termination ol this Leaso. No termlnatlon, cancellallon or release agreement enten Lessor and Lessee shall release Lessee from Its ohllgatlons tinder this Lease wilh respect lo Hazardous Subslanca
Speciltcally So agreed by Lessof In wrlllng at the tlmo of such agreement.
(e) Lessor lndernnlflcallon. Lessor and ils s11Ccos51~9 anrl assip3s sllal Inrlomnily, delond. reimtnlrse and hold 1
emplwees and lenders. harmless Iran nt~rl agnitlsl ally a~rtl all anvirc!mcnlal tl;iln(?gos, inclatling Ill0 cos1 01 rotnecllfllion, which 811
"reSUll 01 Hazardous Subslances on tlie Prensses prtor to tho Start Onlo or whicl~ aro caused by ItleJrrrnegiigence or willfut mia
Lessor. ils agenls or employees. Lessor's oliignlions. RS anti wlron rcqllirctl hy Ill0 Applicable I4equirements. shall include, hul no1 "lo, the cost 01 hvestigalion, removal, remerlialm, roslnralm ancllor al,aleinclil, am1 shaH SIH~ Itre expiration or termlnallon of thl:
required by governmental enlitkw havhg it~riltlon with respect In the existence ol Hazardous Subslances ~1 the Premises prior 11
(I) Investlgallons and Remedlallons. Lessor shall retain tho rcs~sihilily and pay for any investigatins or remedialion
Ihe Premises, in which event Lestas shall be responsthie lor such payment. Lessee shall cooparale lully in any such activrties at the
Date, UnleSS sudl remediati - is required as a result 01 Lessee's use (incltditlg 'Alleralins'. as delined in paragraph 7.3(a;
Lessor. itxhiding allowing Lam and LesWs agents Io have reasonable access to the Premises at reasonable times in order 1, Lessots investigative and remedial respons&iiilies.
(9) Lessorfermlnatlon Opllon. If a Hazardous Strhstance Condilii nccurs during the term of this Lease, unless Lesst
this LmSB shall mlimue h lull force and ellact. In11 subiect to Lessor's riihts Ilnder Paragraph 6.2(d) and Paragraph 13). Lessor may, responsible therelor (In whlch case Lessoe shall make the lnvestqatlon and remediation thereof required by the Applicable Require
Wlh. eilher (i) hstiple and remerllale such Hazardous Suhslance Cmdilion, tf required. as smn as reasonably posslble expense, in whch even1 this Lease shall continue in full lorce and elfecl, or (ii) 11 the estimated cos1 to remediate such condition exce
Lessor 01 knowledge 01 Ihe occ(~rrence of s1ic11 I Iazardola Sut)slance Concttlion. 01 Lessor's desire to terminate this Lease as 01 tht (12) limes the lhen mlhty Base Rent or $lIM.OIM, whictiever is greater. glve written nntica to Lessee, within thirty (30) days aftel
give written notice to Lessof of Lessee's mmilmenl In pay the amollnl by which the cnsl nl the ramedialmn 01 such Hazardous
(60) days lollowing the date 01 stlch notice. In the event Lessor elects to gwe a tormination nolice, Lessee may. wtlhin ten (10) days
Condition exceeds an amml equal lo twelve (12) Ilnies tlre then monlhly Base Rent or $lOO.fNIO, whichever is greater. Lessee st
Continue In lull locce and elfecl, arwl Lessor sl~all proceott lo make such remetliathn as soon as reamat* posstlle alter the req Le!Eor with said funds or salislactory assoramx Ihoreol wtltlin thaly (30) days lollowing steli commitment. In such event, this I
tetminate as ot the date specrlied 111 Lessor's noleo ot Iurnvioali. are aMlilaMe. It Lessee does not give such notice and prowle the reqcsred Ittnds or assurance tlweol within 1118 time provided; this
***6.3 Lesrw's Compllance wllh Applicable Requlrements. Excepl as otherwise provided in this Lease, Lessee shall, -Sole expense, fully, dilfgenlly and in a limely manner, materially comply with all Applicallle Reqwremenls. the reqtnrements 01 any af
insurance undemriter or rahg bureau, 4 whch relate in any mi
days alter receipt Of LesWs wntlen request. provide Lessor mlh coptes o! all permits and olher dccumenls. and olher iniormatiar
Lessee's complii with any AppliiMe Requlrements spocilied hy Lossof. and shall immeclialely 11p recetpl. nolily Lessor In 1
copies ot any documents icrvo(ved) d any threatener( or accclat dainl. notice. citation. warnmg, complaint or report fmrtaining to or il
lailure d Lessee or the Premises to comply wtlh any ApplcalJe neqtliremonts.
***6.4 Inapecllon; Compliance. Lessor and Lessor's "Lender (as delinecl In Paragraph 30 helow) and consultants shall h:
of the Premises and lor verifytnrj compliance ly Lessee with this Lease. The cost 01 any such inspectlons shall be paid b *ess
to enter Inlo Premises at any Itme. in the case of an emergency, and otherwise at reasonable tlmes. lor the purpose 01 InspeCIlng 11
vlolalidn 01 Applicable Requirements, or a conlamlnation IS lotmd to exist - In such case. Lessee shall 111m reqtroslteinllwmo I.ossor lor the cost 01 sllcll inspectlons. so to
-Premises. wtthaut regard 10 whether said rsq~nremen~s are now in ellecl or hecome elleclive atler the Slarl Dale. Lessee shall, wil
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-is reasonably related to the violalion or contammalton. %
rAGE n t"l,l,,, &
FORk
7. Maintena a epalrs, Ullllty Installations; Trade Fixtures and Alteration
7.1 Lessee's Obtlgalions. e
(a) In General. Subw to the provisions 01 Paragraph 2.2 [Condition). 2.3 (Compliance). 6.3 (Lessee's Compliance wilh
VI.$ Premises. Utility Installalions. and Alterations in good order, condltion and repair (whether or not Ihe portton of the PremlSeS fequirll R8qUiremefltS). 7.2 (Lessor's obygalions). 9 (Damage or Destruction). and 14 (Condemnallon). Lessee shall. at Lessee's Sole exps
result of Lessee's use. -, Ihe elemenls or Ihe age 01 such portion 01 the Premises), including, but not limited 10. all eqr facilities. such as plumbmg, heatmg. ventilaling. air-condilionlng. eiectrral. lighling lacilities.~. fire PrOteCti' - lixtures. walls (interior and exterior), loundations, ceilings. roofs. floors. windows. doors. plate glass, skylighls. landscaping. driiewa bts. fences. retaining walls, signs, sidewalks and parkways tocaled in. on, or adjacent to the Premlses. Lessee, in keeplng the Premi: order. condilion and repair, shall exercise and perform good mamtenance practlces. specilicatly including the procurement and main
Ihe service contracts required by Paragraph 7.l(b) below. Lessee's obligatlons shalt include reslorations. replacements or rene necessary lo keep the Premises and all Improvements Ihereon or a part lher In good order, condilion and slate of repair. Lessee S the term 01 lhis Lease, keep Ihe exterior appearance 01 the Building m $ L condilion consistent with the exterlor appearan
similar lacllilies of comparable age alld size 10 the wchly, mcludmg, Wllelt flCceSsilQ!, 1110 eXtCfiOr repainting 01 Ihe Bullding.
(bl Service Contracts. Lessee shall, al Lessee's sole expense, procure and maintain conlracls. wilh copies to Lessor. ir
form and substance lor. and wllh contractors speclaliztng and experlenced in Ihe malnlenance of the following equipment and im ('8aslc Elements'). il any. il and when installed on the Premlses: (I) HVAC equipment. -.. : v systems, includmg lire alarm and/or smoke deteclron, (IV) tandscaptng and irrigation syslerns, (v) roof covering and dram. (VI) drb , [lii) lire e
- parking lots. (vi) dartfiefs (viii) basic ulility feed to the perrmelbl dl In4 BUilflJng, and (11) any Oh3f quipmen(, if rQa$onablY requlrec
(c) Replacement Sublect to Lessee's inttemrtllication of Lessor as seI lorth in Paragraph 8.7 below, and without relie, ol liability resulting from Lessee's lahire to exerclse and pertorm good nlaintenance practices. 11 Ihe Sasz Elements d Paragraph 7.l(b) cannot be repaired other lhan at a cost whch IS in excess 01 5096 01 the cost 01 replacing such Baslc Elefflenl:
pay. each month during the remainder 01 the term 01 lhls Lease. on the date on wheh Rase Rent is due. an amount equal to th Basic Elements shall be replaced by Lessor, and Ihe cost tlrereol s11aIt be prorated between the Parties and Lessee shall only be
multiplying Ihe cos1 of such replacement by a Iractlon, tlre nunrerator of wlilcli is one. and the denommator 01 which IS the number
thereol (including interest on the unan,ortlzed balance as is Illen commercially reasonable in the ludgmenl 01 Lessor's accountants),
Ihe useful life 01 such replacement as such usehtl llle is specllied pursuanl to Federal income tax regulattons or guidelmes for
reserving the right to prepay its obtqatlon at any Itme. - 14 (Condemnation). it is Intended by the Partles hereto that Lessor have no obligalion. in any manner whatsoever. to repalr and 7.2 Lessor's Obligatlons. Subject to the provisions 01 Paragraphs 2.2 {Condition). 2.3 (Compliance). 9 (Damage or OeS
Premises. or the equipment therein. all of which obligations are intended to be that 01 Ihe Lessee. It is the lotention of Ihe Parties I'
01 this Lease govern the respective obligatlons ol the Partles as to mamtenance and repair 01 the Premises, -
- or the means of repairing the same. are reasonably or readily accessiMe to Lessee. and whether or not the need for such repairs 01
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7.3 Utility lnstallatlons; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility lnstallatlons" relers to all llmr and window coverings, air panels, electrical distributlon. securlty and llre protecllon systems. conlmuntcation systems. tightino fixtures. HVAC equipment. p
fencing in or on the Premlses. The lernl "Trade Fixtures" sllall nrean Lcssoe's macltmery and equipmenl thal can be removed
material damage to the Premises. The term "Alterations" sttall mean any mcdilication 01 the improvements. other than Utillly Ir
Trade Fixtures. whelher by addition or deletion. "Lessee Owned Alterations andlor Utillty Installations" are delined as Alte
ulility tnsWalmns to Itre Premlses wilhoul Lessor's prlor wrdten consent. Lessee may. lawever. nmke nof"rWlUfal ulilily lflSfa interior d the Premises (excluding the rml) mthout such consent bul upon nolice lo Lessor, as long as they are not vislbte lrom Ii
not involve punctimng, relocating or removing IIIe rwl or any exrstlng walls, and the cclmtdalive cost thereol durtng this Lease as e not exceed $50.000 in the aggregate or $ tO.Oo0 in any one year.
(b) Consent. Any Alterations or Utility Installations that Lessee shalt desire to make and which require the consent shall be presented to Lessor in written Iorm wilh detailed plans. Consent shall be deerned conditioned upon Lessee's (i) acqulring
and (iii) compliance wilh all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. I
governmental permtts, (ii) furnishing Lessormth copies of both Ihe permlts and Ihe plans and specifications prior to commenceme
lumish Lessor with as-built planr and ~itiis. - Ulilily lnslallalions made by Lessee lhal are no1 yet Owned by Lessor ptrrstlanl Io Paragraph 7.4W Lessee shall not make any
- or Utility Installations shall be !Momled in a workmanlike manner with good and sullicienl materials. Lessee shall promptfy up
- *** (c) indemnificalion. Lessee shall pay, when due. all claims for tabor or materials furnished or alleged to have bec
or for Lessee at or lor use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien agalns or any interest therein. Lessee shalt g'va Lessor no1 less lhan ten (IO) days' notice prior to the commencement of any work in, 1
demand, then Lessee shall. at its sole expense delend and protect itsell. Lessor and the Premises against the same and shall
Premises. and Lessor shall have the right to post notices ot non-responsibility, If Lessee shall contest the validily 01 any Suc
any such adverse judgment thal may be rendered thereon belore the enlorcement thereol. I1 Lessor shall require, Lessee shall I
bond in an amount equal to one and one-hall ttmes the amoclcrt 01 such contested lien. clalm or demand. indemnifying Lessor lor the same. If Lessor elects to participate in any such acllon, Lessee shalt pay Lessor's attorneys' lees and costs.
7.4 Ownershlp; Removal: Surrender; and Restoration.
(a) Ownership. Subjecl to Lessor's righl to require removal or elect ownership as hereinafter provided. all Alteral
Installations made by Lessee shalt be the property 01 Lessee, but considered a part 01 Ihe Premises. Lessor may, at any lime to be the owner 01 all or any specilied part of the Lessee Owned Alleratiions and Ulility Installations. Unless olherwts6 Paragraph 7.4(b) herd. all Lessee Owned Alterations and Ulllity Installations shall, at the expiration or terminallon Of this Lea properv d Lessor and be surrendered by Lessee wIth Ihe Premises.
(b) Removal. By delivery to Lessee of written nolice from Lessor nol,&kkm ninety (90) - -10 Ihe end of the term of this Lease. Lessor may reqtrrre thal any or all Lessee Owned Alleralions or Utllihl Inslaltalions be expiration or lerminatlon of lhis Lease. Lessor may require the removal at any lime 01 all or any part of any Lessee Owned Alll
Installations made without the required consent.
the improvements, parts and surfaces thereof broom clean and tree ol debris, and in good opefaling order, condilion and state C
(c) SunanderRlestoralIon. Lessee shall surrender the Premises by the Expiralion Date or any earlier terminatih
wear and tear excepted. 'Ordinary wear and tear shall not include any damage or deterioration that would have been P" maintenance practice. Lessee shall repair any damage occasioned by the installation. maintenance or removal of Trade Fixture$ Alterations andor Utility Installalions. lurnishlngs, and equipment as welt as the removal of any storage tank installed bv Or for removal, replacement, or remediation 01 any soll. materlal or groundwater contaminated by Lessee. Trade Fixtures shall re Lessee and shall be removed by Lessee. The failure by Lessee to tlmely vacate the Premises pursuant 10 lhis ParaW
express written consent 01 Lessor shall constitule a holdover under the provisions of Paragraph 26 be:=.
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d
PAGE 4 Initialsu I
8. lnsumn~emnity. 0
8.1 PayEnt For Insurance. Lessee shall pay lor all insurance required ux Paragraph 8 except to the exlent of the cos to liabili lnwrance carried by Lessor under Paragraph 8.2(b) in excess of 62.ooO.ooO per occurrence. Premiums lor policy periods ( prior to or extending beyond Vu, Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Less6 yithin ten (10) days lollowing recepl of an hoiie. *** 8.2 Llablllty Insurance.
and Lessor against claims for bodily iniury, personal injury and property damage based upon or arising out Of the ownership, use. 0
(a) Canled by Lessee. Lessee shall obtain and keep in force a Commercial General Llability Policy Of Insurance prOb - maintenance of the Premises and all areas appurtenant Iherelo. Such insurance shall be on an occurrence basis providing Single Ill in an amount not less than $2.000.000 per occurrence with an "Addillanal Insured-Managers or Lessors 01 Premises Endors
-Poky 7 shall include coverage lor Ilabtl
shall not. however. limit Ihe tiabllity 01 Lessee nor relieve Lessee 01 any obligalion hereunder. All insurance carried by Lessee shal under this Lease as an 'insured conlract' lor the performance 01 Lessee's indemnily obligattons under this Lease. The limils Of sa
Io and not conlrtbulory with any slmllar insurance carrted by Lessor. whose Insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a). in addillon IO. and r Ihe insurance requlred to be maintained by Lessee. Lessee shalt no1 be named as an addttional insured therein.
8.3 Property Insurance - Euildlng, Improvements and Rentat Value.
(a) Euitdtng and Improvements.~lS?~~Par(y shall ohlain and keep in force a policy or policies in Ihe name Ol - loss payaMe to Lessor, any groundlessor. and lo any Lender(s) tnsurmg toss or damage to the Premises. The amounl Of such ins be equal to the lull replacement cost 01 the Premlses, as the same shall exist from time to tlme. or the amount requtred by any Le no event more lhan the commercially reasonable and available insurable value thereof. p
m. I1 the coverage IS avatlable and commerclally approprlate. such policy or policies shall insure agalnst ell risks 01 dlrect I
01 any Applicable Requirements requirfng the upgradtng. demolition. reconstruction or replacement of any portion of the Premises or damage (except the perils of llood and/or earthquake unless requlred by a Lender), including coverage for debris removal and the
01 a covered loss. Said policy or policies shall also contam an agreed valuation provision in lieu of any coinsurance clause, waiver 01
and inllalim guard protection causing an increase in the annual properly insurance coverage amount by a lactor 01 not less lhan US. Department of Labor Consumer Price Index lor All Urban Consumers lor the city nearest to where the Premtses are loca
deductible amount in the event of an Insured Loss. insurance Coverage has a deductible clause. the deducllble amount shall not exceed S-er occurrence. and Lessee shall be li,
*** (b) Rental Value. The Insuring Party shall obtain and keep in lorce a polky or policies in'lhe name of Lessor with lo
Lessor and any Lender, insurtng the loss 01 the lull Rent for one (1) year. Said insurance shalt provlde that In the event the Lease
-
!+OO -
by reason 01 an insured loss, the period of indemnity lor such coverage shall be extended beyond the date of ,the completion
replacemen1 01 lhe Premises, lo provide for one lull yeark loss of Rent from Ihe dale 01 any such toss. Said insurance shall conk
otherwise payable by Lessee, lor the next twelve (12) monlh perlott. Lessee shalt be IiMe for any deductlbte amount in Ihe even1
valualton provision in lieu of any cotnsurance clause, and [he amount 01 coverage shell be adjusted annually to reflect the pr - - 8.4 Lessee's Propertyleuslness Interruption Insurance.
(a) Properly Damage. Lessee shall ohlain and maintain insurance coverage on all of Lessee's personal properly, Tr -and Lessee Owned Alleralions and Utility Installations. Such Insurance shall be lull replacement cost coverage with a deductible of I
a ssee Owned Alterations and Utilily Installations. Lessee shall provide Lessor with wntten evidence that such insurance is i
Sm occurrence. The proceeds lrom any such insurance shall be used by Lessee tor the replacement of personal properly. T
*** (b) Buslness Interruption. Lessee shall Obtain and maintain loss 01 income and extra expense insurance in am
Lessee or attributable to prevention of access to the Premises as a resutt 01 such perils. reifnburse Lessee tor direct or indirect loss 01 earnings attrtbutaWe to all perlls commonly insured against by prudent lessees tn thl
(c) No Representation of Adequate Coverage. Lessor makes no represenlation that the limits or lorms of coverage specilied herein are adequate to cover Lessee's prqerty. business operations or obligations under this Lease.
8.5 Insurance Polkka. Insurance required herein shall be by companies duly tensed or admitted to transacl busines
where the Premises are located, and maintaining during Ihe pori term a 'General Pdlcyhotders Rating' of at least B+, V. as s6
anything which invalidates the required insurance policies. Lessee shall, pri lo the Start Date, deliver to Lessor cerltlied copies
most current issue of %est's Insurance Guide'. or such other rattng as may be required by a Lender. Lessee shall not do or perm
such insurance or certificates evidencing the exlstence and amounts ol the required insurance. No such policy shall be cancetal
policies, furnish Lessor with evldence 01 renewals or "insurance bmders' evictendng renewal thereof. or Lessor may order such ir to modifkalion except alter thirty (30) days prmr wrttten notice lo Lessor. Lessee shall, at toast thirty (30) days prior to the explr
charge the cost thereof to Lessee. which ammtnt shall be payable by Lessee to Lessor upon demand. Such policies shall be 101
least one year, or the kngth of the remaining term of this Lease. whichever is less. I1 either Parly shall fail lo procure and maintain I
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required lo be carried by it, Vle olher Parly may, bul shall no1 be required lo, procure and mainlain the same,
-. -
8.7 Indemnity. Except (or Lessor's gweenegligence or willful misconduct, Lessee shaH indemnily, protect. defend and 1
-(he Premises, LessM and its agents, Lessots master or ground lessor, partners and Lenders, from and againsl any and all claims
and/rdamages. liens, judgments, penalties, attorneys'and consultants' fees, expenses and/or liabtlities arising out 01, involving. or with, the usf~ and/or occupancy 01 the Premises by Lessee. II any action or proceeding is brought against Lessor by reason loregoing maners. Lessee shall ~~pon notice delend the same at Lessee's expense- cooperate with Le e in such de nse ess(N neeq not have I SI aid any such claim . r er 0 be getended r indemn1lled.
an - 8.8 Exm21?11o? ~~~s~?~m~~~~t~~e~s~'s~~~~~ &le e for or Injury w,"i'P€' or damaie 1. Io%i%r%dtt&&f% wares, or other property of Lessee, Lessee's employees. contractors, invitees, customers, or any other person in or aboul Ihe Premises.
-defects of pipes, fire sptinklers, wires. appliances. ptumhtng. HVAC or Ii$tiq fixtures, or from any other cause. whether the
damage or injury is caused by or results trom lire. steam, electricity, gas, water or rain, or lrom the breakage. leakage. obstru
damage results lrom conditions artsing upon the Premises or upon other portions of the Building of which the Premises are a Part sources or places. Lessor shall not be liable lor any damages arising from any act or neglecl of any other tenant Of LessN. NI Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for iniUrY to Lessee's business Or f
income or profit therefrom.
9. Damage or Oestrucllon.
9.1 Deflnlllons.
".
Owned Alterations and Utllity Installations, which can reasonably be repaired in six (6) months Of less Ifom the date Of the
(a) "Premlses Partial Damage" shall mean damage or destruction to the improvements 0n the Premise ?4i
PAGE 5 In ME2 la s
FOn
or Total. Lessor shall Lessee in wntmg within lhirry (30) days lrom the dale 01 lhe d or destruction as to whether or no1 the dan 0 e (b) "Premises Total Deslrucllun" shall mean damage or destruction lo Ihe Premises. other than Lessee Owned A Utitily Instaltations and Trade Fixlures, which cannot reasonabiy be repaired in six (6) months or less lrom the dale 01 the damage I
Lessor shafl mfify Lessee in wrifing within thirfy (30) days lrom the date of the damage or destruction as to whether Or not the dan or Tolal.
(c) 'Insured Lor$' shalt mean damage or destruction to improvements on the Premises, other than Lessee Owned p Uliliiy Installations and Trade Fixtures. which was caused by an event required 10 be covered by the insurance dembed in Par; irrespeclive of any deductible amounts or coverage limils involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the improvemenls owned by Lessor at the lime Of I1
. to their condition existing immediately prior thereto. Including deniolitlon. debris removal and upgradlng required by the Operation
(e) "Hazardous Substance Condition" shall mean the Occtrrrence or discovery of a condition involving Ihe Pre:
9.2 Partial Damage - Insured Loss. II a Premises Partial Damage that is an Insured Loss occurs. then Lessor sha
posslble and this Lease shall continue in full force and ellect: provided. however. lhal Lessee shall, a1 LBSSOI'S eleCli0n. make th( damage or destruction the total cost to repalr 01 whlch IS $tO.OoO or less. and. in such event. Lessor shall make any applica
proceeds available to Lessee on a reasonable bass lor that purpase. Nolwillistanding Ihe loregoing, it Ihe required insurance Wi
as to Ihe deductible which is Lessee's responsabitrty) as and when required to complete said repalrs. In the event. however. such or the msurance proceeds are not sulltclent to ellect such repair. ltie Insuring Party shall promptly conlrlbute the shortage In Pro
due lo Ihe tact that. hy reason of the tmque nature 01 the improvements. lull reptacelnenl cost insuranca coverage was no1 reasonable and available. Lessor shall have no obhgalion to pay lor the shortage in insurance proceeds or to fully restore Ihe unla the Premtses unless Lessee provides Lessor wrlh Ihe funds to cover same, or adequate assurance thereol. wlthin ten (10) days fol of wrillen notice 01 such shortage and request therelor. If Lessor receives said lunds or adequate assurance lhereol wilhin sail
Requirements. and mthout deduction lor depreciation.
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a). in, on. or under the PfemlSeS.
expense, repalr such damage (but not Lessee's Trade Fixtures or Lessee Owned Alleralions and Ulllity Installations) as Soon i
pericd, the party responsible lor making the repairs shall complete them as soon as reasonably possible and lhis Lease shall remi
lo: (i) make such restoralion and repair as is commerclally reasonable with Lessor paying any shortage in proceeds, in whch Ci
any lunds contributed by Lessee to repalr any such damage or destruction. Premtses Partial Oamage due to flood or earthquake SI shall remain in lull lorce and ellect; or (ci) have this Lease termtnate thlrty (30) days therealter. Lessee shall not be entitled lo rein
to Paragraph 9.3. nolwlthstanding that there may he some Insurance coverage. but the ne1 proceeds 01 any such insurance e available lor the repairs 11 made by eiltier Party.
or willlul act of Lessee (in which even1 Lessee shall make the repairs at Lessee's expense), Lessor may ellher: (i) repair such da 9.3 Partlal Oamage -Uninsured Loss. I1 a Prenirses Partial Daniacjo tliat is not an Insured Loss occurs. unless caused
Written Mtkx to Lessee wlthin thlrty (30) (lays atlcr recefpt by Lessor 01 knowledgo 01 Ihe occurrerice 01 such damage. Such 181
as reasonably possible at Lessor's expense, tn whtcti event thrs Lease sliall continue In fllll lorce and ettect. or (ii) termlnate lhis L
be eltective sixty (60) days lollowing the date 01 stcli nollce. 111 lhe event Lessor elects lo terlnlnate Itits Lease, Lessee shall have
without reinibursement lrom Lessor. Lessee shall provlde Lessor with said lunds or satislactory assurance thereol wtthin thirty len (10) days alter receipt 01 the terminalion notice to grve wrltten notice to Lessor 01 Lessee's commitment to pay lor the repair 01
Soon as reasonably possible after the reqclrred funds are avadabte. If Lessee does not make the required cammitmont. this Lease making Such commitment. In such event Ihts Lease shall contlnue in lull lorce and ellect. and Lessor shall proceed lo make s
as 01 Ihe date specilied in the terniinallon notre. - . 9.4 Total Oestrucllon. Notwithstanding any otlier provision tiereof. it a Premises Total Destruction occurs. this Lease ! imme
Lessor shall have the rtght lo recover Lessor's damages lrom Lessee, except as provided in Paragraph 8.6. _Ln_... II tlie damage or deslruclion was caused by the gross negligence or w~lllul miscond
exceeds one (1) months Base Renl. whelher or not an Insured Loss, Lessor may terminate lhis Lease ellective sixty (60) days loll 9.5 Oamage Near End of Term. ll at any lime during the last six (6) months 01 this Lease there is damage lor which thc
Of mrrence 01 such damage by giving a wrillen terminalion notice lo Lessee within thirty (30) days alter the date of OCCUI damage. Nolwithslandq the toregoing, if Lessee a1 Ihat lime has an exercisable oplion lo extend this Lease or lo purchase the I Lessee may preserw, lhis Lease by, (a) exercising such option and (b) providing Lessor will1 any shortage in*insurance proceed:
assurance thereof) needed to make the repairs on or belore the earlier 01 (i) the date which is ten days alter Lessee's receipt 01 L
and elfecl. If such funds or assurance are not received, Lessor may nevertheless elect by written not1ce to Lessee wlthln ten (10) d
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nolice purporling lo terminate mis Lease, of (ii) Ihe day prior lo the dale upon which sucli oplion expires. II Lessee duly exercisl during Such period and provides Lsssor Wh lunds (or adeqmle assurance Ihereof) lo cover any shortage in insurance proceed:
at Lessor's commercially reasamble expense, repalr such damage as soon as reasonaMy possible and thus Lease shall contin
and effect. If Lessee lads to exercise such option ad provide such lunds or assurance during such period. then this Lease sha the dale specilied in Ihe lermination notice atd Lessee's opl~on Shall be extingtrislred.
***9.6 Abalement of Renl; Lessee's Renredles.
which Lessee is no1 responsible under this Lease. the Rent payable by Lessee lor the period required lor the repair. remediatior
(a) Abalement. In the event ot Premlses Partial Damage or Premises Total Destruction or a Hazardous Substanc
Of Such damage shall be abated in proportion to Ihe degree lo which Lessee's use 01 the Premises is impalred, - p. All other obligations 01 Lessee hereunder shall be performed by Lessee, and Lessol liability for any such damage, destruclion. remedialloo, repair or restoration except as provlded herein.
(b) Remedies. I1 Lessor shall be obligated lo repair or restore the Premises and does not commence. in a !
meaningful way. such repair or restoralim within nrnety (90) days atler such obligation shall accrue, Lessee may, at any til commencamenl ot such repair or restoration. gwe wrllten notice to Lessor and to any Lenders 01 which Lessee has actual noli ekllon to terminale this Lease on a date two1 less than sixty (60) days lotlowing the giving of such nolice. It Lessee gives such I
repair OT reSloration is commenced wilhin said lhirty (30) days, lhis Lease shall continue in full lorce and effect. "Commence" st rapair Or restoration is not commenced wilhin thirty (30) days therealter, this Lease shall terminale as of the date specified in sa
the uncondiliil aulhorizalion of Ihe preparalion of the required plans, or the beginning of the actual work On Ihe Premises, Occurs. - 9.7 Tenlnallon-Advance Payments, Upon lerminalion 01 lhis Lease pursuant lo Paragraph 6.2(g) or Paragraph adjustment shall be made concerning advance Base Renl and any other advance payments made by Lessee to Lessor. +ssssd
-10. Aeel Property Taxes.
estate. general, special. ordinary or exlraordilrary. or rental levy or tax (other than inherdance. personal income Or eSlale taxes
10.1 Dettnllton ol"Reat Properly Taxes." As tlserl herein, the term "Real Proporty Tares" shat1 include any lorm 01 a:
b6nd; and/or license lee imposed upon or levled againsl any legal or equitable interest 01 Lessor in the Premises, Lessor's right therefrom, and/or Lessor's business of leasing. by any auttiorbty having the direct or indirect power to tax and where the fw
PAGE 6 tnili @
wilh reference I bs uikli address and where Ihe proceeds 50 generaled are 1 plied by Ihe city. county or other local laxi
Of a jutisdiction within which the Premises are located. The term "Real Property e es" shalt also include any lax. fee. IW, ass chefge. W any increasB theren. imPOsed by reason Of events occurring durmg the lerm 01 lhis Lease. including but nol llm!ted to.
wilh reference I bs uikli address and where Ihe proceeds 50 generaled are 1 plied by Ihe city. county or other local laxi
Of a jutisdiction within which the Premises are located. The term "Real Property e es" shalt also include any lax. fee. IW, ass chefge. W any increasB theren. imPOsed by reason Of events occurring durmg the lerm 01 lhis Lease. including but nol llm!ted to. the ownership d the Premises.
10.2
(a) Payment olTaxes. Lessee shall pay the Real Property Taxes applicable IO Ihe Premises during the term of lhis Lea to Paragraph 10.2(b), all such payments shall be made al least ten (10) days prior to any delinquency dale. Lessee shall PrMpIly IUI
with salislactory evidence that such taxes have been pald. If any such taxes shall cover any pertod of time pflOr 10 Or after the t terminallon of lhis Lease. Lessee's share of swh laxes shall be prorated lo cover only Il1at portion of the tax blll applicable IO the pel Lease is in ellect. and Lessor shall reimtxlrse Lessee lor any overpayment. I1 Lessee shall lail to pay any requlred Real Properly Ti shall have the right lo pay Ihe same, and Lessee shall relmburse Lessor therefor upon demand.
(b) Advance Payment. In Ihe event Lessee incurs a late charge on any Rent paymenl. Lessor may, at Lessofs opt1
the current Real Property Taxes, and require lhal such laxes be paid in advance to Lessor by Lessee, either: (I) in a lump sum am( the installment due, at least twenty (20) days prlor lo the applicable delinquency dale, or (ii) monlhly in advance wilh Ihe paymen1
installment of taxes divided by the number 01 mcnlhs remalning belore the monlh in which said installmen\ becomes delinquen(. wh clenl. (f Lessor e/ec[s 10 require payment monlhly in advance, IDQ monthly payment shall be an amount equal to the amount 01 11
amount of (he applicable lax bill is known, the amount 01 such equal monthly advance payments Shall be adlusted as rewed I(
shall pay Lessor, upon demand, such additional sums as are necessary lo pay Such obligalions. All moneys paid 10 Lessor under lh
funds needed to pay the applicable laxes. I1 Ihe amount collecled by Lessor is insufficient IO pay such Real Propefly Taxes when
may be inlermingled wilh other moneys 01 Lessor and shall not bear interest. In the even1 01 a Breach by Lessee in the ped01
oMigations under lhis Lease, lhen any balance of funds paid lo Lessor under Ihe provisions 01 lhis Paragraph may at the option 1 Irealed as an addillonal Securily Oeposlt.
10.3 Joint Assessment. II the Premises are not separately assessed, Lessee's liabilily shall be an equitable PrOpOrtiO~
Property Taxes lor all ot the land and tmprovements Included wllhln the tax parcel assessed, such proportion to be concluslvek c Lessor from the respective valuations asslgned in lhe assessor's work sheets or such olher inlormation as may be reaSOnaMy av
Alterations. Utility Inslallations. Trade Fixtures, lurnlshlngs. equlpmenl and all personal property 01 Lessee. When possible. Lesse 10.4 Personal Properly Taxes. Lessee shall pay, prior Io delinquency. all taxes assessed against and levied upon LC
wilh LeSSOr'S reat properly, Lessee shall pay Lessor the laxes allrlbulable lo Lessee's property wtlhin ten (10) days alter recell such properly to be assessed and billed separately lrom Ihe real property 01 Lessor. II any of Lessee's said personal properly shal
statement.
Premises. togelher wilt1 any laxes Ihereon. If any such servlces are not separately metered to Lessee, Lessee shall pay a reasonat
11. Utllltles. Lessee shall pay lor all waler. gas. heat, light. power. telephone. trash disposal and other utililies and services s
to be determined by Lessor. 01 all charges jolntly melered.
12. Asslgnment and Sublelting.
12.1 Lessor's Consent Required. -
twenly-live percent (25%) or more 01 Ihe wling conlrol 01 Lessee shall constitule a change in control lor this purpose. (b) A change in the control of Lessee shall constitule an assignment requiring consent The Iransfer, on a cumul
(c) The involvement 01 Lessee or its assets in any transactiocl. or series of transacfions (by way of merger, sal
financing, transfer, leveraged buyout or olhewlse). whether or not a tormal assignmenl or hypolhecalion 01 lhis Lease or LC
Worth as it Was represenled at the time 01 the execullm 01 (his Lease or at lhe lime of I- most recent assignment IO whit
cansenled. or as il exists immedlalety prior Io said transaclion or transaclions constiluling such reduclion. whichever was or is gr considered an assignment of this Lease lo which Lessor may wlhhold its consent. "Net Worth of Lessee" shall mean Ihe net w
occurs. which resulls or will result in a reducllon 01 Ihe Net Worh 01 Lessee by an amnl cjrealer lhan IwenlpfiW percent (25:
*&xcluding any guaranlors) estabiished under generally accepted accounting principles.
(e) Lessee's remedy for any breach d Paragraph 12.1 by Lessor shall be limited to compensatory damages andlor i'
disapproval of an assignment. Neilher a delay in Ihe approval or disapproval of such assignment nor Ihe acceptance 01 Rent shall canslilule a waiver or estoppel of Lessor's right to exercise its remedies lor Lessee's Oelalllt or Breach.
be deemed lo have assumed and agreed to conlorm and comply with each and wry term, covenant. condition and obligal (0 Any assignee of. or sublessee uncler, this Lease shall. by reason of accepling such assignment or entering inlc
ObSeWed or performed by Lessee durq the lerm 01 said assignment or sublease. other than swh Qtdigalions as are COnlraW 1, with PrDviSions 01 an assignment or sublease to whzh Lessor has specilial!y WfIWnted lo in Writing.
12.3 AddltlonalTerms and Conditlons Appllcable to Subletting. The Idlawing terms and condilions shall aPPb 10 i
therein: Lessee 01 all or any par1 of the Premises and shall be deemed included in all subieases under lhis Lease whether or not expres
colted such Rent and apply same toward Lessee's obligations under this Cease: provided, however. that Unttl a Breach S
*** (a) Lessee hereby assigns and transfers lo Lesor all of Lessee's Interest In all Rent payable on any sublease.
performance of Lessee's obligations. Lessee may collect said Rent. Lessor shall not. by reason 01 the loregoing Or any as:
eublease, nor by reason 01 the collection 01 Rent, be deemed liable lo the sublessee lor any laitwe of Lessee to Pedorm and
01 Lessee's obligations to such sublessee. a
PAGE 7 lnilvyh -
lif
- undertake the dialis of me ?lublesscr under such sublease from the time of the exercise of said option to the exptration of such [b) In Ihe mt d a Breach by Lessee, Lessor may, at its option. require sublessee to attorn to Lessor. in which event Lt
Defaults or Breaches d such wt$essor.
provided. however. Lessor shall not be liable for any prepaid rents 01 security deposit pad by such sublessee lo such sublessor or fc
(c) Any matter requiring the consent 01 the sublessor under a sublease shall alSO require the consent of Lessor.
(e) Lessor shall deliver a copy of any notice of Default of Breach by Lessee IO Ihe sublessee, who Shall have the right
- (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior Written consent.
-Default 01 Lessee within the grace perid. ir any. specrtiea m such notice. Z
13. Defaull; Breach: Remedies.
conditions or rules under this Lease. A "Breach" IS defined as Ihe wcurrence of one or more of the lollowrng Defaults, and the bib to cure such Default wlfhin any applicable grace period:
or where the coverage of the property Insurance descrtbed In Paragraph 0.3 15 jeopardized as a resutl thereol. or wtthout providing (a) The abandonment 01 the Premises: or the vacating 01 the Premises wilhoctl providing a commercially reasonable leve
assurances to mlnitnize potential vandallsm.
(b) The failure 01 Lessee to make any payment d Rent or any Security Deposit roquired to be made by Lessee hereunc - Io Lessor or to a third party. when due. to provide reasonable evldence 01 insurance or surety bond, or to lutl~ll any obligauon unde which endangers or lllreatens tlfe or property. where sucti tailure conltnues tor a period ofA )buStneSS days lollowtng Wrilli - Lessee. te710 1
(c) The failure by Lessee to provide (i) reasonable written evidence 01 compliance wilh Applicable Requirements. (ii) Contracts, (iii) the rescission 01 an unauthorlzed assignment or sublettmg. (iv) a Estoppel Cerlilicate. (v) a requested subordination. I
concerning any guaranty andlor Guarantor. (vu) any ctocumenf requested under Paraqraph 42 (easements). or lviii) any other docu inlormatmn whch Lessor may reasonably require of Lessee under the terms of this Lease, where any stxh tailure continues for a
(10) days lotlowing wrttten notice to Lessee.
(d) A Detault by Lessee as to the terms. covenants, conditions or provisions of this Lease. or of the rules ad Paragraph 40 hereof, other than tliose descrtbed to subparagraphs 13,1(a). fb) or [c). above. where such Default conttnues for a PC (30) days aller written notice; provlded. however. that 11 the nature of Lessee's Detault is such that mere than thirty (30) days arc
diligently prosecutes such cure to completion. required lor its cure, then it shall not be deemed to be a Oreach 11 Lessee commences such cure within said thtrty (30) day period a!
cfedilofs; (ji) beconling a "deblor"as &lined in 11 U.S.C. 9 101 of any succassof Slalule lherelo (Unless, in Ihe case 01 a Pelitlor
(e) The mcurrence ol any 01 Ihe following events: (i) the making 01 any general arrangknent or assignment for I
Lessee. the Same 1s dismissed wilhm sixty (60) days); (iii) the appotntment of a trustee or receiver to take possession 01 subs1 Lessee's assets located at Ihe Premises or of Lessee's inlerest in 111s Lease. where possession is not restored lo Lessee within thi or [iv) the attachment. execution or other tc~dicut seizure of stlbstnnttatly all ol Lessee's assets localed al the Premises or 01 Lesse' this Lease, where such seizure is not discharged wtthin thirty (30) days: provided. however. in Ihe event that any pm
subparagraph (e) is contrary to any applibte law, strcl~ provisioo shall bo 01 110 lorce or eltect. and not alfecl the valilty 01 tl provislons.
13.1 befault; Breach. A nOelaull" is delined as a lailure by Iha lessee lo COmply with Or pedorm anY Of the terms.
(f) The discovery that any financial statement 01 Lessee or 01 any Guarantor given to Lessof was materially false.
(9) If Ihe performance of Lessee's obligations under lhis Lease is guaranteed: (i) the deafh 01 a Guarantor, (ii) the tel Guarantor's liability with respect to this Lease other than in accordance wilh the lerms ol such guaranty. (iii) a Guarantor's becon or the subject 01 a bankruptcy liling. (i) a Guarantor's relusal lo honof the guaranly. or (v) a Guarantor's breach 01 its guaranty ob anticipatory basis. and Lessee's failure. within sixty (60) days lollowing written notice of any Such event. lo provide wrillen alternati or securily, which. when coupled wilh the then exislig resources 01 Lessee, equals or exceeds the combined linancial resources c the Guarantors that existed at the ti of executm ol tlus Lease.
Of an emergency. with1 nolice), Lesm may, at its option, perform such duly or obligalion on Lessee's behalf, inkludmg but not 13.2 Remedies. If Lm fRjls lo perform any ol its allirmative duties or obliqalions, wilhin ten (10) days.alter written noti'
oblainmg of reasonably requirsdbonds. insurance poliues. or governmental licenses. permits or approvals. The costs and expens' performance by Lessor shall bs due and payable by Lessee upon receipt ot invoice therefor. If any check given to Lessor by Le
check. In the event af a Breach, Lessar may, with of without furlher notce or demand, and w1th011t limiting Lessor in the exetclsa be honored by Ihe bank upon WMCh it is drawn. Lessoc. at its oplion. may require all ltrture payments lo be made by Lessee to t
remedy which Lessor may have by ream ol such Breach: *** (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall
which had been earned at the time 01 termination; (ii) the worth at the time of award of the amount by which the unpaid rent whi Lessee shall immedialely surrender possession to Lessor. In such event Lessor shall be entitled to recover lrom Lessee: (i) th
avoided; (iii) (he worth at the lime of award of Ihe amount by which tile unyld renl lor the balance of the term alter the time ol been earned alter termination until the time of award exceeds the ammt 01 such renlal loss lhat the Lessee proves could have be
Ihe amount 01 3~h fenla1 bs lhal Ihe Lessee proves could he reasonably avoided; and (iv) any other amounl necessary to corn1
for aU the detriment proximatety caused by the Lessee's lailure 10 perform its obligalions under this Lease Of which in (he ordi things wauld be Mefy lo result Ihereffom, including bul no1 limiled Io the cost 01 recovering possesion d the Premises. expen: indudiig necessary remtion and alleration of Ihe Premises, reasonable allorneys' fees, and that portion d any leasing CMnI Lessor in conneciion wilh lhis Lease applicable lo the unexpired term of lhis Lease. The worth at the time ol award of the amoul pmvision (ii) of lha immedlalely preceding senlence shall be computed by discwnling such awn1 at the discount rate of the F
Caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragraph 12. If I~fmInaliOn Bank Of Ihe Dislricl withh which the Premises are located at the time of award plus one percent (1%). Elforts by Lessor 10 mil
oblalnad through the provisiil remedy of unlawful detainer, Lessor shall have the right lo recover in such prading aW U
damages as are recweraMe therein. or Lesm may reserve the right to recwr all of any part therm1 in a Separate Suil. 11 a n period required undar Paragraph 13.1 was not previously given. a notice to pay rent or quil. or to perform or qua given 10 LS unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, Me amk grace pel Paragraph 13.1 and the unlawful delainer statclte shall nmconccrrrently. and the failure of Lessee lo cure the OefaUlt within th lwo such grace periods shall constitute both an unlawful delainer and a Breach 01 this Lease entitling Lessor 10 the remedies Prt
Lease andlor by said statute.
(b) Conllnue the Lease and Lessee's ri[)f\t lo possession and recover Ihe Rent as it becomes dm. In which event Le! or assign, subw onry to reasonabte liitatlons. ACIS 01 maintenance, eltorts to relet. and/or the appointment 01 a receier to pro interests. shall no1 conslitute a terminallon 01 the Lessee's rqht lo possession.
located. The expiration or lerminalioo of this Lease andlor the.termination of Lessee's rlght to possession shall not relieve Les
(c) Pursue any other remedy now or herealter available under the laws or judicial decisions Of Ihe Slate wherein 1
PAGE 8 Initials
/ hil @
under any We ovisions 01 this Lease as to matters occurring or accruing du e term hereof or by reason of Lessee's Occl
Ihe Premises. e e
13.3 Inducement Racspfum. Any agreemen1 lor free or abaled renl Or olher charges, Or for Ihe $Wing 01 Paying bv Less0 Lessee of any cash or other bonos. ihducernent or consderation for Lessee's entering into lhis Lease. a11 of which coocessions are h referred to as "Inducement pft)vlaions,"shafl be deem& condilined upon Lessee's lull and failhlul performance of all 01 the terms. (
arid candilions of lhis Lease. Upan Breach 01 this Lease by Lessee. any such Inducement Provision shall automatically be deemed del
LaSSOr under such an tnaucement Provision shalt b% Immediately due and payable by Lessee to Leswr. notwithstanding any subseo
this Lease and of no turther force or eflect, and any rent. olher charge. bonus. inducement or consideralion theretofore abated. given I
Of said Breach by Lessee. The acceptance by lessor 01 rent or the cure of the Breach which initiated the operation 01 this paragrap be deemed a waiver by Lessor 01 the provtsions 01 this paragraph unless speaticatly so stated in wrillng by Lessor at the tirr acceptance. *** 13,4 La19 Charges. Lessee hereby acknowledges thal late payment by Lessee 01 Rent will cause Lessor to incur
contemplated by lhis Lease, the exacl amount of which will be extremely dilliult 1b %.!e!k%n. Such cash indude, hut aN not
processing and accounting charges. and late charges which may be impased upon Lessor by any Lender. Accordingly. if any Renl S received by Lessor wilhin live (5) days aller such amount shall be due, then. wlthout any requirement for notice lo Lessee, Lessee s Lessor a one-time late charge equal to ten percent (10%) of each such overdue amount. The parties hereby agree that such I,
represents a fair and reasonable eslimate of the costs Lessor will incur by reason of such late payment. Acceptance 01 such late Lessor shall in no even1 conslitute a waiver of Lessee's Delault or Breach with respect to such overdue amount. nor prevent the axel of the olher righls and remedies granted hereunder. In the event that a tale charge is payable hereunder, whether or not collected. f COnSeCuti instaltments 01 Base Rent. then notwtthstanding any provision of this Lease to the contrary, Base Renl shall. at Less become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder. other lhan late charges. not received by Les?.or,wbduMUa
from (the thirty4irst (3tst) day alter tt was due p 7 -("Interest") charged shalt be equal to the prime rate reported in the Wall Street Journal as published closest prior lo Ihe date wh' w but shalt not exceed the maximtrm rate allowed by law. lnleresl IS payable in addition to the potential late charge in Paragraph 13.4. *** 13.6 Breach by Lessor.
(a) Netlce of Breach. Lessor shall not be deemed in breach 01 lhis Lease unloss Lessor fails wlhin a f~~maMe lime
days after receipt by Lessor. and any Lender whose name and address shall have been lurnished Lessee in writlng lor such purpos an obtigation required 10 be performed by Lessor. FQI purposes 01 tnts Paragraph, a reasonable lame shalt in no event be less tha
notICe SpeCifylng wherein such obligation 01 Lessor has no1 been perlormed; provided, however, that il lhe nature 01 Lessor's obiig;
lhal more than thirly (30) days are reasonably required tor its pedormance. then Lessor shall not be In breach il performance is
wlthin such thtrty (30) day period and therealter dlllgently pursued to complelion.
days after receipt of said notice, or if havlng commenced said cure they do not diligently pursue it to completion. then Lessee may (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach wilt
said breach a1 Lessee's expense and olfset lrom Rent an amount equal to the greater 01 one month's Base Rent or the Security I
IO pay an excess of such expense under protest. reservtng Lessee's right to reimbursement lrom Lessor. Lessee shall documen
said Cure and supply said documentation to Lessor.
exercise Of said power (collectively "Condemnation"). lhls Lease shall terminate as to the part taken as 01 the date the condemr
14. Condemnation. II the Premises or any portion thereof are taken under (he power of eminent domain or sold under the
takes tille or possession. whjchever lirst occurs. ll more than ten percent (10%) of any building potlion 01 the premises. or me
oplion. lo be exercised in writing within len (IO) days aller Lessor shall have given Lessee written nolie 01 such taking (of in th
live percent (25%) 01 the land area portion 01 the premlses not occupied hy any building. is taken by Condemnation. Lessee ma)
such nolice, wilhin ten (IO) days alter the condemning authority shall have taken possession) lerminate this Lease as 01 the date the authority lakes such possession. I1 Lessee does not terminale thm Lease in accordance wlth the foregoing. this Lease shall rema! and ellecl as to the portion 01 the Premises remaining. except that llre Base Rent shall be reduced in proportion to the reduction II
be made as compensation lor diminution in valire 01 llle leasehold. llre value 01 the part takon. or lor severance damages: provic Premises caused by such Condemnation. Condemnation awards andlor payments shall be the property 01 Lessor. whether sucl
that Lessee shall be entitled to any campensation for Lessee's relocalion expenses. loss of bustness goodwill and/or Trade Fix regard to whether or not this Lease is tetmiMled pursuant lo the provisions of lhis Paragraph. All Alteralions and Utility lnstalla
and all compensalion which is peyebie therelor. In the event that this Lease is not terminated by reason of the Condemnation. Less the Premises by Lessee. for p~poses of Condemnation only. shall be considered the property of the Lessee and Lessee shall be I
any damage to the Premises cmu8ed by such Condemnali.
- p within thirty (30) days lollowing the date on which it was due l, shall bl
15. Brokerst Fee.
otherwise agree in wriling. Lessor agrees that (a) 11 Lessee exercises any Opiion. (b) if Lessee acquires any righls IO Ihe PIel 15.1 Additional Commlsslon. In addition to the payments owed pursuant to Paragraph 1.10 above. and unless Lessor a1
premises owned by Lessor and localed wilhin Ihe same Proiect, rf any. wilhin whch the Premises is located. (c) if Lessee remains 01 the Premises, with the consent 01 Lessor, alter the expiration of this Lease, or (d) if Base Renl is increased, whelher by agreeme 01 an escalation clause herein, then, Lessor shall pay Brokers a lee in accordance with the schedule of said Brokers in eltact at execution 01 this Lease.
15.2 Aslumptlon of Obllgatlons. Any buyer or transferee of Lessor's Inlerest in lhis Lease shall be deemed lo have ass
OMiialion hereunder. Each Broker shall be a third party beneficiary of the provisions 01 Paragraphs 1.10, 15.22 and 31. If LeS lo a 8roker any amounts due as and for commissions pertaining to lhis Lease when due, then such amounts shall accrue fntere
has had no dealings with any person, firm. broker or tinder (other than the Brokers. if any) in connection with this Lease, and Ih, 15.3 Repmentatlons and lndemnitles of Broker Relatlonshlps. Lessee and Lessor each represent and warrant to
man sa& named Emken is entitled to any commission or finder's fee in conneclion herewith. Lessee and Lessor do each h indemnify, protect. defend and hold the other harmless lrom and against liability lor compensation or charges which My be Chin unnamed broker, tinder or other similar party by reason of any dealings or actions 01 the indemnifying Party. including any C
allorneys' lees reasonably incurred with respect thereto.
16. Estoppel Certlflcates.
Pa*") execute, acknow(edge and deliver to the Requesli Party a statement in wrili In lorm similar 10 the then most CUI
(a) Each Party (as 'Responding Party") shalt within ten (10) days after written notice from the other Party (th
CerJiflcate"1orm published by Ihe American Industrial Real Estate Association, plus such additional Information, Confirmalion an
as may be reasonably requested by the Requesting Party. (b) If Ihe Responding party shall lail lo execule or deliver Ihe Estoppel Cerllfiite wilhin such ten day Perid, the f
may execute an E~IW Certircate staling that (i) the Lease 19 in (UII force and elfect wihxd modilicalion except as may t~t the Requesting Party. (ii) (here are no uncured defaults in 108 Requesting Paws perfocmance, and (W if Lessor is the Requ mare lhan one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely Upon the Re Estoppel Certificate, and the Responding Party shall be eslopped from denying the truth of the facts contained h said CertifiC;
PAGE 9 Initial
1 d
-I
Owner shall qb. liam for any act or omission ol any prm lessor or wrlh res events occurring prlor lo acquisition 01 OH
subject to any 81s w delemes which Lessee might have againsl any prlor leSS rn iii) be bound by prepayment 01 more than c rent.
30.3 Non-Olsturbamu. With respecl to Security Devices entered into by Lessor alter the execution 01 this Le subordinallon o( this Lmm shall be sublect to recelving a commercially reasonable nondisturbance agreement (a "Nor Agreement") frm the Le&tr which NmDisturbance Agreement provides that Lessee's possession 01 the Premises. and this LI any options to extend the term hereof, will not be dislurbed so long as Lessee is no1 in Breach hereol and attorns Io the recor Premlses. Further, within sixty (60) days after the execution of lhis Lease. Lessor shall use tts commercially reasonable elforts tc Disturbance Agreement lrom the hdder 01 any pre-exlstlng Securlty Device which is secured by the Premises. In the event that LC to provide the Non-Disturbance Agreement wlthin sald slxty (60) days. lhen Lessee may, a1 Lessee's option. directly Conlad Less1 allempl lo nepiale lor the execllllon and dellvery 01 a Non-Distwbance Agreement.
provjded, however, ha!, upon wr\{lefl feqclesl lrom lessor 01 a Lander in conneclion wilt1 a sak, (inancinq orrelina~tng of the Prl
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be e~lecliue wilhaul Ihe eXeCUliOn Of any lulll
and Lessor shall execute such further wrliings as may be reasonably requtred Io separately documenl any subadmalton, atlofnm Disturbance Agreement provtded for herein. *** 31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises to enforce (he IemS here rlghts hereunder, the Prevailing Parly (as hereafter delmed) in any such proceeding. action. or appeal thereon. shall be entltla
lo decislon or judgment. The term. "Prevaillng Party" shalt include, wilhout limitation. a Parly of Broker who substantially ob1 attorneys' lees. Such lees may be awarded in the same suit or recovered in a separale sult. whether or not such action Or pfWee
claim or defense. The attorneys' lees award shalt not be computed in accordance with any court fee schedule, but shall be I
Ihe reliel sought, as the case may be, whether by compromise, settlement. Iudgment. or the abandonment by the other Party
reimburse all attorneys' fees reasonably incurred. In addllton. Lessor shall be entitled to attorneys' fees. costs and expenses preparatlon and service 01 notices 01 Default and consultations In connection therewith. whether or not a legal action is subsequel in conneclion with such Oefautt or resulting Breach.
***32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premise! the case 01 an emergency. and otherwise at reasonable tlmes for the purpose of showing the same lo prospecllve purchas
lessees, and making such alterations. repalrs. improvements or addltlons to the Premlses as Lessor may deem necessary. A
shall be without abatement 01 rent or liahltlty to Lessee. Lessor may at any time place on the Premises any ordlnary "For Sale" s may during the last six (6) monlhs ol Ihe lernl tlerwl place 011 Ihe Premrses any ordtnary "For Lease" slgns. Lessee may at ar or about the Premlses any ordinary "For Sublease" sqn. - 33. Auctions. Lessee shalt not conduct. nor permit to he conrttsted. any auclion II~O~ the Premises without Lessor's prior - 34. Signs. Except lor ordinary 'For Sublease' slgns. Lessee shall not place any slgn upon the Premises without Less consent. All signs must comply with all Appllcable Aequlrements.
35. Termination; Merger. Unless specilically slaled orherwise in writing by Lessor, the volunlary or other surrender 01 this L
the mutual termination or cancellation hereol. or a termlnatlon hereol by Lessor for Breach by Lessee, shall automatically termlni - or lesser eslale in (he Premises; provided, however, lhal Lessor may elect to continue any one of all exisling SUblenaWies. &a
*** 36. COnSefltS. Except as otherwise provided herein, wherever in this Lease the consenlot a Party is required lo an act h
Party. such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including
COnSenl. including but not limited to consenls to an assignment. a subletting or the presence or use 01 a Hazardous Substance architects'. attorneys'. engineen'and other consuttants'lees) incurred in the consideration of, or response to, a request by Less*
Lessee upon receipt 01 an imice and supporting documentation therefor. Lessor's consent to any act, assignment or su
-existing Delault or Breach, except as may be otherwise specilically stated in writing by Lessor at the time 01 such consent. &h4
COflStilUlB an acknowledgment that no Oetattlt or Breach by Lessee 01 this Lease exists, nor shall such consent be deemed a H
- with any determination made by the other hereitcrcter and reasonabiy requests the reasons lor such determination, the deterr
furnish ils reasons in writi ond h reasanetb detail within ten (10) business days lollowing such request.. ,
38. Ouiet Possession. Subiect to payment by Lessee of the Rent and performance of all of the covenants. conditions i
the term hereof.
Less8es part lo be obssrved and performed under thls Lease, Lessee shall have quiet possession and quiet enjoyment of thc
39. Opllons.
39.1 Oefinlllon. "0plion"shafl mean: (a) Ihe right to extend the term ol or renew lhis Lease or to exlend or renew any
has on other property d L="; (b) the rqht of first refusal or lirst olfer to lease either the Premises or olher property 01 LeS purchase w he right ol first refusal to purchase the Premises or olher properly of Lessor. - -
exercised unless the prior Options have been vattdty exercised.
39.4 Effect ot Oefaull on Optlons.
continuing until said DelaclH 1s cured. (ii) during the period 01 limo any Rent IS unpaid (without regard to whether notice therec (a) Lessee shall have no right lo exercise an Opliin: (i) during the period commencing with the giving 01 am/ no
(iii) during the lime Lessee is in Breactl 01 ltiis Lease. or (iv) in Ihe event Ihat Lessee has been given three (3) or more I Default. whether M not the Delatrlts are cured, during the twelve (12) nlonth period immedialely preceding the exercise of It
@)The period of time within which an Option may be exercised shall not be extended or enlarged by reason of I -
L
40. Multiple Buildings. 11 the Premises are a part of a group 01 buildings controfled b~ Lessor. Lessee agrees tha
reasonaMe rules and regulations which Lessor may make from time to time lor the managemenl, safely, and care Of said P
PAGE 11 Initial I 1
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the care and cleanliness ol the grounds and including the parking, loading and uoloadlng 01 vehicles. and mat Lessee will p common expenses incurred in conneclion Iherewilh.
41. Security Measures. Lessee hereby acknowledges that lhe rental payable lo Lessor hereunder does not indude the co!
PrOleCt@n of the Premises, Lessee, ils agents and invitees and thew property lrom the acts 01 third partles. or olher security measures. ad lhat Lessor shall have no obligatton whatsoever to provide same. Lessee assumes all re!
42. Reservations. Lessor remves to ilsetl the right. from lime to time. to grant. without the cmsent or joinder 01 Lessee rgls and d&albos Iht Lessor deems necessary, alld 10 cause ltle mm"tOn 01 plrcel nlaPs and reslrict~ons. so long a5
rights. dedicatiocis. maps and restrictions do no1 utireasonably itrlerlere wllh he IISC at lhe Premises by bssee. lessee a d@mnenls reasonably requesled by Lessor to elfectuate any such easement rights. dedication. map or restrrcttons.
43. Performance Under Protest. II a1 any lime a dispute shall arise as Io any amotml or sum of money to be paid by one under the pmwsims hereof, Ihe Parly against whom the obligatlon to pay tl1a money is asserled shall have the right to rnak prOleS1' and such payment shalt not be regarded as a volunlary paymenl and there shall survive Ihe righl on Ihe part of MII
suit for recovery 01 such sum. I1 il sllall be adludqed lliat Illere was no legal ol)ligalion 011 tlin part of said Party lo pay SKI tlcereol. said Party shall be entltled Io recover such sutn or so tnttctl lllcrcof as it was no1 legally requtrect to pay.
44. Authorfty. II either Party herelo is a corporalion. Irust. linliled liability conrpany. parlnership. or similar entity. each tn this Lease on behalf 01 such enlily represents and warrants Ihat he or she is duly aulhorized to execule and deliver this Lease I
party shall. ' ' ' request, deliver to the other party satislactory evidence of such authortty.
the lypewritlen or handwritlen provisions. 45. Con,-lhe prinled provisions 01 lhis Lease and the lypewritlen or handwritten provisions sha
46. Offer. Preparalion Of this Lease by either Party or their agent and sl~hmission 01 same lo Ihe other Party shall not be d lease Io Ihe other Party. This Lease is not Intended to be binding until execuled and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only tn writing. signed hy tho Parlies in inlerest a1 the time 01 Ihe modilic they do not malerially change Lessee's oblqalions Iierecmtfer. Lessee agrees to make such reasonable non-monetary mc Lease as may be reasonably requtred by a Lender 111 connectton wttli llle obtaming 01 normal linancing or relinancmg of the I
and several responsibtbty to comply wtlli the le1 111s of IIIIS Lease. 48. Multiple Parties. If me lhan one person or enlily is named herein as eifllef LffSSOr or Lessee, such mulliPle Parlit - -
LESSOR AND LESSEE HAVE CAREFULLY ~EAO ANO REVIEWEO wIs LEASE AND EKII TE~M AND ~nov~stw CONTAINED HEREIN. AND ey THE LEASE YcOw THEIR INFORMED AN0 VOLUNTARY COMENI IIIEHEIO IHE PAflllES HEREBY AGREE TlW. AT THE TIME THIS LEASE IS EXECU
THIS LEASE ARE COMMERCIALLY REASONABLE AP11) tFFECTUAIE IHE INlENr AN0 PUHPOSE Of LESSOFI AN0 LESSEE WlIH RESPECT TO THE
ATCEYTIQY; NO REPRESENTATION OR RECOMMENOATION IS MADE E1 TllE AMERICAN IN0USTRIA.L REAL ESTATE ASSOWATION OR BY AtlY E
LEGAL SUFFICIENCY. LEGAL EFFECT, OR TAX CONSEOUENCES OF TIIIS LEASE OR TttE TRANSACTION TO WHICH IT RELATES. THE PARTIES A
1. SEEK ADVICE OF COUNSEL ASTOTHE LEGAL ANDTAX CONSEQUENCES OFTHIS LEASE. 2. RETAIN APPROPRIATE COIISULTANTSTO REVIEW AND INVESTIGATE TIIE CONDITION OFlItE PREMISES. SAID INVESTU;ATION SHOULD BE LIUITEDTOTHE POSSIBLE PRESENCE OF IIAZAROOUS SIfflSTANCES. THE ZONItIG OFTHE PHEMISES.TIIE STRUCTURAL INTEGRITY,THE I ROOF AN0 OPERATING SYSTEMS, AH0 7NE SUlTABlLllY OF ItIE PREMISES FOR LESSEES INrENUED USE.
W4RNlNoh IFTHE PREMISES IS LOCATED IN A STATE OTltER TIIAN CALIFORNIA. CERTAIN PROVISKH(S OFTIIE LEASE MAY NEEDTO BE RE WITHTHE LAWS OFTHE STATE IN WtIICHTl(E PHEYISES IS LOCAIEO.
lied ahow (heir res
RY: . . "- "" ____
Name Printed: _.___
Tillo:
By:
NamsPht . By:
Name Primed:
Title:
AddlQS.9:
Telephane.(7b0)_flfG - 2R?O
Facsimile:( 1
Federal IO No.
NOTE: These Ions are olten mdilied to meet cl1angirq reqtliremenls of law and irldustry needs. Always write or call I are ulilizing the mosl current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION. 700 So. Flower S Los Angeles, California 90017. (213) 687.8777. Fax No. (213 687-8616
PAGE 12 FI
bCopyrlght 1997 - By Amerlcan Industrial Real Estate Asroctallon. All rlghla reserved. No part of llless works may be reproduced in any form wilhoul permlSSlOn tn Writing.
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ADDENDUM TO LEASE
This Addendum to Lease ("Addendum") modifies and amends the Lease Agreement
entered into by and between Faraday Business Plaza, as Lessor, and the City of Carlsbad, as
Lessee, for the premises commonly known as 163 5 Faraday Avenue, Carlsbad, CA, entered into
onm ) d; , 1998.
Addendum 2.3. The period during which Lessee may give Lessor a notice of a non-
compliance with Lessor's warranty is extended from six (6) months to twelve (12) months. The
provisions of this Section 2.3 applies to ail Tenant Improvements constructed by Lessor on behalf
of Lessee.
Addendum 2.3(a). All references to "six (6) months' Base Rent" shall be changed to "one (1)
month's Base Rent".
Addendum 6.3. The first reference to "Applicable Requirements" shall be changed to
"Applicable Governmental Requirements". All later references to "Applicable Requirements"
shall be changed to "Applicable Governmental or Insurance Requirements".
Addendum 6.4. Except in an emergency, "reasonable times" shall mean any time upon fortJ
eight (48) hours' written notice.
Addendum 8.2. The following shall be added as the last sentence to Section 8.2: "Any suck
insurance may be under a blanket policy insuring other locations owned or leased by Lessee,
provided that the Premises covered by this Lease are specifically identified as included under that
Policy. Lessor acknowledges that Lessee is self-insured for claims up to $500,000.".
Addendum 8.3 (b). This Section 8.3(b) shall not apply to Lessee the City of Carlsbad or any
Sublessee thereof, but shall apply and be enforceable only to and against any assignee of the City
of Carlsbad.
Addendum 8.4 (b). This Section 8.4(b) shall not apply to Lessee the City of Carlsbad or any
Sublessee thereof, but shall apply and be enforceable only to and against any assignee of the City
of Carlsbad.
Addendum 9.6 (b). Lessor's obligation to "commence" shall be sixty (60) days, in lieu of nine
(90) days. The last sentence shall be deleted and replaced with the following: "'Commence' shai
mean the submission of applications and plans with the required governmental agencies necessar
to grant approval of such restoration or construction, or the beginning of actual work OR the
Premises.
Addendum 12.1 (a). Section 12.1 (a) shall be deleted in its entirety, and shall be replaced with
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Faraday Business Plaza
Lease Addendum
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the following: "(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
or encumber (collectively 'assign or assignment') or sublet all or any part of Lessee's interest in
this Lease or in the Premises without Lessor's prior written consent. Lessor shall only be required
to grant written consent following Lessee's written request for any such assignment, which
written request shall include (i) a detailed description of the proposed assignee, including the legal
composition of the assignee, (ii) a detailed description of the proposed use of the Premises by the
assignee, (iii) a detailed description of any proposed physical modifications of the Premises, and
(iv) financial statements for the prior two (2) years of the assignee and any proposed guarantor of
such assignee's obligations. Lessor shall be deemed to have approved a written request to assign,
encumber, or sublet Lessee's interest in this Lease if a written notice of disapproval, or
conditional disapproval pending hnher review of any proposed assignees' financial condition or
use of the Premises, is not delivered to Lessee within ten (10) working days of Lessor's receipt of
any such written request.
Lessor shall not unreasonably deny any such assignment. However, any such denial of a
proposed assignment shall not be unreasonable if, in the opinion of Lessor or any lender of
Lessor, (i) the proposed use of the Premises by the proposed assignee will, or'is likely to cause
damage, wear and tear, or destruction to the Premises greater than Lessee's use would cause
through the end of the Term, or (ii) the proposed assignee has a rating of less than an "A" rating
of, and any of the two calendar years immediately preceding the year of the proposed assignment.
The provisions of this paragraph shall apply to any the proposed initial assignment, and any
proposed assignment from the initial assignee to any subsequent proposed assignee.
Addendum 12.1 (a). The Section 12.1 (d) shall be stricken in its entirety, and shall be replaced
as follows: I' 12.1 (d) An assignment or subletting without Lessor's consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1.(c), or, after the giving of ten (IO)
days' written notice thereof to Lessee, a noncurable Breach. If Lessor elects to treat such
unapproved assignment or subletting as a noncurable Breach, Lessor may terminate this Lease.
Addendum 12.2 (a). The Section 12.2 (a) shall be stricken in its entirety, and shall be replaced
as follows: I' 12.2 (a) Regardless of Lessor's consent, any assignment or subletting shall not (i) be
effective without the express written assumption by such assignee or sublessee of the accrued and
continuing obligations of Lessee under this Lease, and (ii) relieve Lessee of its obligations under this Lease which have accrued prior to the effective date of the assignment. by approved
assignment shall release Lessee of any krther obligation under this Lease as of the date of
execution of an assignment and assumption agreement of the Lease by such proposed assignee.
Addendum 12.2 (e). The Section 12.2 (e) shall be stricken in its entirety, and shall be replaced
as follows: "12.2 (e) Accompanying any written request for Lessor to consent to an assignment,
' Lessee will provide a check in the sum of $1.000, to be used as a retainer by Lessor to pay for
Lessor's reasonable, actual costs in evaluating the proposed assignee, and to pay for Lessor's
reasonable, actual legal fees incurred in the reviewing and drafting of legaI documents required f
the proposed assignment. Any amounts not expended shall be returned to Lessee. If Lessor
issued by Standard & Poor's Ratings Group, or any successor organization thereof, for the yew
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Lease Addendum
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incurs reasonable costs in addition to the initial retainer paid, Lessee shall pay to Lessor the
amount thereof within twenty (20) days following Lessor's submission of an invoice thereof to
Lessee. If the proposed assignment is not approved by Lessor, Lessee shall not be responsible for
legal fees incurred by Lessor.
Addendum 12.3 (a). All rights of Lessor in this Section 12.3 (a) shall apply to a monetary
Breach only. The last two (2) sentences of this Section 12.3 (a) are deleted in their entirety.
Addendum 13.4. The reference to five (5) days shall be changed to ten (10) days. The
reference to ten (IO) percent shall be changed to five (5) percent.
Addendurn 13,6, All references to thirty (30) days shali be replaced with "ten (10)'' days,
Addendum 26. The reference to one hundred fifty (1 50) percent shall be changed to "one
hundred ten (1 10) percent".
Addendum 32. Lessor's right to place "for sale" and "for lease" signs on the Premises shal!
be limited to the last six (6) months of the Term. Except in the event of an emergency, Lessor's
right to enter the Premises shall be conditioned upon Lessor giving Lessee 48 hours' written
notice.
Addendum 50. Ontion(s1 to Extend the Term.
50.1. Number and Term. Lessee may, at Lessee's option ("Lessee's Option"), extend thl
Initial Term of this Lease for two (2) periods of five (5) years each (the "Extension Term"),
subject to all the provisions of this Lease. The Extension Term shall commence at the expiration
of the Initial Term, or the previous Extension Term, as the case may be, and shall terminate on th
last day of the Extension Term, unless sooner terminated as provided herein. After the exercise (
an option to extend, all references in this Lease to the "Term" shall be considered to mean the
Term as extended, and all references to termination or to the end shall be considered to mean the
termination or end of the Extension Term.
50.2. Method of Exercise of Option. Lessee may exercise Lessee's Option by giving
Lessor written notice thereof (the "Option Notice") no later than one hundred and eighty (180)
days prior to the expiration of the Term, or the Extension Term, as applicable.
50.3. Calculation of Rent at Beginning of Each ODtion Period. At the beginning of eac
Option Period, the Minimum Rent shall be adjusted either pursuant to the agreement of the
Parties, or if there is no agreement as per the arbitration provisions below. However, unless
agreed to by the Parties, in no event shall the annual Minimum Rent be less than the annual
Minimum Rent for the year immediately preceding the Option Period.
50.3.1. The Parties shall have thirty (30) days &er Lessor receives the
option notice in which to agree on the Minimum Rent during the extended term. If the Parties
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Faraday Business Plaza
Lease Addendum
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agree on the Minimum Rent for the extended term during that period, they shall immediately
execute an amendment .to this Lease Agreement stating the Minimum Rent.
50.3,2. If the Parties are unable to agree on the Minimum Rent for the extended
term within the initial thirty (30) day period, then within ten (IO) days after the expiration of that
period each Party, at its cost and by giving notice to the other Party, shall appoint a real estate
appraiser with at least 5 years' full-time commercial appraisal experience in the area in which the
Premises are located to appraise and set the Minimum Rent for the extended term. If a Party does not appoint an appraiser within ten (10) days after the other Party has given notice of the name of
ifs appraisef, the single appraiser appointed shall be the sole appraiser and shall set the Minimum
Rent for the extended term. If the two appraisers are appointed by the Parties as stated in this
paragraph, they shall meet promptly and attempt to set the Minimum Rent for the extended term.
If they are unable to agree within twenty (20) days after the second appraiser has been appointed,
they shall attempt to elect a third appraiser meeting the qualifications stated in this paragraph
within ten (1 0) days after the last day the two appraisers are given to set the Minimum Rent. If
they are unable to agree on the third appraiser, either of the Parties to this Lease Agreement, by
giving ten (1 0) days' notice to the other party, can file a petition with the American Arbitration
Association solely for the purpose of selecting a third appraiser who meets the qualifications
stated in this paragraph. Each Party shall bear half the cost of the American Arbitration
Association appointing the third appraiser and of paying the third appraiser's fee. The third
appraiser, however selected, shall be a person who has not previously acted in any capacity for
either Party.
50.3.3. Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers shall set the Minimum Rent for the extended term. If a majority of the
appraisers are unable to set the Minimum Rent within the stipulated period oftime, the three
appraisals shall be added together and their total divided by three; the resulting quotient shall be
the Minimum Rent for the Premises during the extended term.
50.3.4. In setting the Minimum Rent for the extended term, the appraiser o
appraisers shall consider the use to which the Premises are restricted under this Lease Agreement
and shall not consider the highest and best use for the Premises.
50.3.5. If, however, the low appraisal andor the high appraisal is or are
more than twenty (20) percent lower and/or higher than the middle appraisal, the low appraisal
and/or the high appraisal shall be disregarded. If only one appraisal is disregarded, the remaining
two appraisals'shall be added together and their total divided by two; the resulting quotient shall
be the Minimum Rent for the Premises during the extended term. If both the low appraisal and tt
high appraisal are disregarded as stated in this paragraph, the middle appraisal shall be the
Minimum Rent for the Premises during the extended term.
50.3.6. After the Minimum Rent for the extended term has been set, the
appraisers shall immediately notifjr the Patties. If Lessee objects to the Mhimum Rent that has
been set, Lessee shall have the right to have this lease expire at the end of the term. Lessee's
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Lease Addendum
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election to allow this Lease to expire at the end of the Initial Tenn or any prior extension thereof
must be exercised within thirty (30) days after receipt of notice from the appraisers of the
Minimum Rent for the extended term. If Lessee does not exercise its election within the thirty
(30) day period, the Lease shall terminate at the expiration of the Term.
Addendum 51. Commencement Date. The Commencement Date shall be fourteen (14)
days following the date a Certificate of Occupancy is issued for the Premises, but not earlier than
June I, 1999. In the event Lessor has not obtained a Certificate of Occupancy by October 1,
1999, Lessee may, at Lessee's option, terminate this Lease by giving Lessor written notice of
Lessee's intent to so terminate, in which event Lessee and Lessor shall both be discharged from
all obligations under this Lease to each other. However, in the event Lessee fails to provide
Lessor with space plan requirements as set forth in Addendum 53. below (hereinafter "Space
Plan"), then the October 1, 1999 date shown above shall be extended the same number of days
Lessee fails to provide to Lessor the Space Plan as set in Addendum 53. below. Within thirty (30)
days following the Commencement Date, Lessor and Lessee shall both execute a commencement
date memorandum, setting forth the Commencement Date, the Termination Date, which shall be
the termination of the tenth calendar year following the Commencement Date, the annual Base
Rent, and the fact that this Lease is in full force and effect.
Addendum 52. Cl1nnees to Shell Building. The Premises will be improved by a shell
building (the "Shell Building") in accordance with the plans and specifications dated March 20,
1998, prepared by the Smith Consulting Architects ("Original Building Plans"). Lessor will cause
to be prepared additional plans (the "Modified Plans") to modi@ the Shell Building as generally
set forth in Exhibit "B" attached hereto.
52. I. PreDaration of the Modified Plans. No later than November 1, 1998, Lessor shall
deliver to Lessee, for Lessee's reasonable approval, the Modified Plans. Within twenty (20) days
following Lessor's delivery of the Modified Plans to Lessee, Lessee shall either (i) approve same,
or (ii) deliver to Lessor a detailed list of items Lessee is objecting to, along with suggested
alternatives for any item or items objected to. Lessor and Lessee shall thereafter have twenty (20'
days to reach agreement on the Modified Plans, with Lessor and Lessee acknowledging their
acceptance thereto in writing. If Lessor and Lessee fail to acknowledge their acceptance of the
Modified Plans within such time period, either Patty may terminate this Lease by giving written
claims or obligations to the other arising out of this Lease.
notice thereof to the other Party, and upon such termination neither Party shall have any fUrther
52.2. ' Costs of Construction. By its acceptance of the Modified Plans, Lessee agrees to
pay to Lessor, Lessor's reasonable costs of all work of designing, engineering, permitting, and
constructing the Premises in accordance to the Modified Plans ("Additional Work Costs"),
incurred in addition to the cost of construction of the Premises in accordance with the Original
Building Plans. However, in the event the Additional Work Costs exceed the total sum of Two
Hundred Ninety Six Thousand, Six Hundred Ninety Seven Dollars ($296,697), then Lessor shall
pay any amounts in excess of that sum. Lessor shall provide Lessee with a detailed cost sheet
setting forth the Additional Work Costs incurred by Lessor (with copies of all invoices fiom
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Faraday Business Plaza
Lease Addendum Page - 5 - mi
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Lessor's architect and contractor(s), verifying the actual costs for the Additional Work Costs),
and Lessee shall pay to Lessor such sum on the Commencement Date, but no earlier than thirty
(30) days following Lessee's receipt of such cost sheet.
52.3. Reimbursement for Construction Delav. In addition to any other payments set
forth in this Lease, Lessee will pay to Lessor, to compensate Lessor for the delay in construction
resulting from the modification of the Premises as set forth in the Modified Plans, the sum of
Twenty Thousand Dollars ($20,000). Lessee shall pay to Lessor this $20,000 sum on the
Commencement Date.
Adderidurn 53. Saace Plan.
53.1. SDace Plan. Lessee will provide Lessor's architect, with a set of plans and
specifications, hereinafter referred to as the "Space Plan", no later than December 1, 1998. The
Space Plan will set forth Lessee's requirements for the development criteria, dimensions, and
general interior layout of the Premises.
53.2. Lessee' Failure to Timelv Complv. In the event Lessee fails to provide to
Lessor's architect the Space Pian as set forth in Addendum 53.1. above, Lessee shall pay to
Lessor a Delay Cost Reimbursement ("Delay Cost Reimbursement") as follows:
53.2. I . For the first ten (1 0) business days following December 1, 1998, the sua
of Two Hundred Dollars ($200) per business day.
53.2.2. Beginning with the eleventh (1 lth.) business day following December 1,
1998, the sum of Five Hundred Dollars ($500) per business day.
53.2.3. "Business day" as used in this Section 53.2 is defined as every day excep
Saturday, Sunday and federal or state legal holidays.
53.2.4. Lessee's obligation to pay Lessor the Delay Cost Reimbursement is
preconditioned upon Lessor providing to Lessee, on or before November IS, 1998, a letter from
Lessor's architect, setting forth what items or specifications are required by the architect to
complete the Space Plan.
53.2.5. Notwithstanding Addendum 53.2. above, the December 1, 1998 date by
which Lessee is obligated to deliver the Space Plan shall be extended, on a day by day basis, for
each day Lessor fails to deliver to Lessee the Modified Plan as required by Addendum 52.1 aboq
53.2.6 Notwithstanding anything to the contrary above, in the event the
Commencement Date of this Lease is on or before July 1, 1999, Lessee's obligation to pay to
Lessor the Delay Cost Reimbursement shall be waived.
/I
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Addendum 54. Lessee Imnrovement Construction and Allowance.
54.1. Creation of the TI Drawings. Lessor, through Lessor's architect, shall cause to be
created the plans and specifications ('IT1 Drawings") for the tenant improvements to the Premises
("Tenant Improvements").
54. I. I. Upon Lessee hrnishing to Lessor's architect the Space Plan, Lessee shall
confer with Lessor's architect to discuss and select specific material types or styles for items such
as flooring, carpeting, wallpaper, drapes, interior door styles, moldings, fixtures, and other items
Lessee desires to use for its tenant improvements. Lessor's architect shall work with Lessee to
provide approximate pricing and cost estimates associated with various Tenant Improvement
options which are suggested by Lessee. Based on the Space Plan and the consultations between
Lessee and Lessor's architect, Lessor's architect shall prepare an initial set of TI Drawings and
deliver same to Lessee no later than January IO, 1999.
54. I .2. Within twenty (20) days following Lessor's delivery of the TI Drawings to
Lessee, Lessee shall either (i) approve same, or (ii) deliver to Lessor a detailed list of items Lessee
is objecting to, along with suggested alternatives for any item or items objected to. Lessor and
Lessee shall thereafter reach agreement on the TI Drawings no later than February 15, 1999, with
Lessor and Lessee acknowledging their acceptance thereto in writing. If Lessor and Lessee fail to
acknowledge their acceptance of the TI Drawings within such time period (or if Lessee fails to
provide sufficient consultation with Lessor's architect for same to prepare the initial set of TI
Drawings), either Party may terminate this Lease by giving written notice thereof to the other
Party, and upon such termination neither Party shall have any hrther claims or obligations to the
other arising out of this Lease.
54.2. Tenant Improvement Construction. Lessor shall construct, or cause to be
constructed, the Tenant lmprovements according to the plans and specifications of the TI
Drawings. All Tenant Improvement construction will be performed diligently, in a first-class
manner, and in compliance with all applicable laws, ordinances, regulations, and rules of any
public authority having jurisdiction over the Premises.
.'
54.3. Costs of Lessee Improvements. Lessor is leasing the Premises to Lessee as a cor€
shell building. All costs of Tenant Improvements, including the cost to prepare the architectural
drawings and amendments thereof, fees for permits, applications, inspections, and the actual cost
of construction (including interior walls, doors, appliances, fixtures, flooring, carpeting, the
elevator(s), and all other matters not normally considered as a part ofa core, shell building
(hereinafter collectively "Tenant Improvement Costs"), shall be paid by Lessee, subject to Lessor
granting Lessee a Tenant Improvement allowance ("TI Allowance") in the total sum equal to the
Tenant Improvement Costs, or One Million, Six Hundred and Fifty Thousand Dollars
($1,650,000), whichever is higher.
The following costs will be paid for by Lessor and are not Tenant Improvement Costs:
Lessor's legal fees, bonding costs, construction insurance requirements, contract administration,
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per diem and travel -expenses, and general overhead costs not directly attributable to the
construction of the Tenant Improvements.
54.4. Detailed Invoices for Tenant TmDrovement Costs. Thirty (30) days following the
beginning of constkction of the Tenant Improvements, and every thirtieth (30th.) day thereafter,
Lessor shall hrnish Lessee with a continuing invoice for all Tenant Improvement Costs. Upon
completing the Tenant Improvements, and in no event later than the Commencement Date, Lessor M// &mifh f~ Lessee a derailed billing for all Tenant Improvement Costs incurred by Lessor.
54.5. Lessee's Payment of Tenant ImDrovement Costs. On the Commencement Date, or
thirty (30) days following Lessee's receipt of the billing for all Tenant Improvements Costs as set
forth in Addendum 54.4 above, whichever is later, Lessee will pay to Lessor the total of all
Tenant Improvement Costs REASONABLY INCURRED, less the TI Allowance.
54.6. "Punch List" followinr! completion of Tenant Imurovements. Within fourteen (14)
days following the Commencement Date, Lessee shall conduct an inspection of the Premises, and
prepare and deliver to Lessor a "Punch List" of all Tenant Improvement matters Lessee deems
incomplete or unsatisfactory. Within fourteen (14) days following receipt of thehnch List,
Lessor shall complete the matters reasonably set forth in the Punch List, at which time Lessee
shall conduct a follow-up inspection to review the items previously set forth in the Punch List.
Lessee shall indicate its acceptance of any Punch List matters Lessee deems satisfied.
54.7. OwnershiD of Tenant Jmurovements. Lessor and Lessee shall have the following rights and responsibilities with resard to ownership of improvements and personal propeq:
54.7. I . During the Lease Term and any extension thereof, title to Improvements
on the Real Property sl~all be owned by Lessee until expiration of the Term or sooner
termination of this Lease.
54.7.2. At the expiration of the Term or sooner termination of this Lease, the
Improvements shall, without compensation to Lessee, then automatically and without an!
act of Lessee or any third party become Lessor's property. Lessee shall maintain the
Improvements in good condition, reasonable wear and tear excepted, through the Term.
54.7.3. All machines, equipment, material, appliances, personal property and
fixtures, other than the Tenant Improvements themselves, installed or placed by Lessee or any
sub-Lessees on the Premises following the Commencement Date, shall remain the property of
Lessee or sub-Lessee, respectively, and shall not be deemed to be af€ixed to the Improvements,
except that heating, ventilation and air conditioning systems, permanently installed as part of anc
an integral part of the Improvements, shall remain a part of the Improvements and be deemed
affixed to the Improvements.
Addendum 55. An~rud Adjustment of Base Rent. The annual Base Rent specified in
Section 1 .S of the Lease herein shall be increased at the beginning of the thirteenth (13th.) monl
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Faraday Business Plaza
Lease Addendurn
Page - 8 - M
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following the Commencement Date, and every twelve (12) month period of the Term (and any
extension periods thereof) thereafter, by Three and One Half percentage points (3.5%) over the
annual Base Rent immediately preceding such rent adjustment.
Addendum 56. Option to Purchase Premises. Lessee shall have one (1) option to
purchase the Premises, and all real propeny and rights therein on which the Premises are situated
("Option"), by givins Lessor notice of Lessee's intent to exercise the Option, no earlier than
months following the Lease Commencement Date, The total purchase price of the Property shall
be Nine Million, One Hundred Thousand Dollars ($9,100,000) The purchase of the Property shall
be on the terms and conditions set forth in the Purchase and Sale Agreement, a copy of which is
attached hereto as Exhibit "C" ("Purchase Agreement"). Within five (5) days following Lessee
giving of the notice to Lessor, Lessor and Lessee shall deliver to Escrow Agent named therein an
original, hlly executed, Purchase Agreement. Lessee's Option is personal to Lessee or to any
Assignee of Lessee's interest under this Lease which has been approved by Lessor. In no event is
the Option transferrable or assignable to any person or entity which is not an approved Assignee
as provided in this Lease Agreement, or other than specifically set forth above. Lessor and Lessee
shall remain obtigated under the terms of this Lease until the Close of Escrow as defined in the
Purchase Agreement, at which time this Lease, and all obligations of the Parties as Lessor and
Lessee under the Lease, shall automatically terminate. Lessee hereby agrees to subordinate its
interests in and to the Option to any Security Device in the same manner as set forth in Section
30. of the Lease, and all matters relating to subordination, attornment and non-disturbance set
forth in Section 30. shall be made applicable to any subordination, attornment and non-
disturbance as same relates to the Option granted herein.
Addendum 57. Attorney's Fees Provisions Not Amticable to Citv of Carlsbad. The
following Sections or provisions in the Lease which provide for the payment of, or a payment of,
Carlsbad, but shall be ti.11ly applicable and in full force and effect to any assignee or subsequent
assignee of Lessee City of Carlsbad's interest in this Lease:
twelve (I 2) months following the Lease Caftlmeneement Date, and no later than twenty four (24)
. Lessor's reasonable attorney's fees, shall not be applicable to the initial Lessee, the City of
e Section 7.3(c), last sentence; - Section 13.2(a), middle of paragraph stating "reasonable attorney's fees"; - Section 3 1 ;
- Section 36. pertaining to the word "attorneys'".
Addendum 58. Madifications / Strikeouts of Main Lease Aweement. For purposes ol
convenience only, and not for purpose of setting or imparting any meaning or intent in this Lease
the Parties have crossed out provisions in the Lease the Parties deemed inapplicable or
undesirable. A strikeout in the Lease shall have the effect as if such matter does not appear on tl
lease, and shall not convey any meaning or intent for any purposes.
End of Addendum]
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Faraday Business Plaza
Lease Addendum
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EXHIBIT A
(To Faraday Business Plaza Lease)
Legal Description
"""""""""""" """"""""""""
PARCEL A:
LOT 106 OF CARLSBAD TRACT NO. 85-24 UNIT 5 CARLSBAD RESEARCH CENTER, IN TI- CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING 1
MAp THEREOF NO. 12815, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SA
DIEGO COUNTY, MAY 16,199 1 a
PARCEL B:
A NON-EXCLUSIVE EASEMENT FOR VEHICULAR AND PEDESTRIAN ACCESS, INGRE
AND EGRESS OVER, ALONG, ACROSS AND THROUGH THE NORTHWESTERLY 30 FEET (
CARLSBAD RESEARCH CENTER, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEG
STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 12815 FILED IN THE OFFIi
OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON MAY 16,1991.
THE NORTHEASTERLY 200 FEET OF LOT 107 OF CARLSBAD TRACT NO 85-24 UNIT
(B
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EXHIBIT B
(to Faraday Business Plaza Lease)
Changes to Shell Building
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1. ARCHITECTURAL AND ENGINEERING COSTS: $57,740
A. Architecture $ 35,000
B. Structural Engineering 15,000
C. Electrical Engineering 4,200
D. Mechanical Engineering 1,440
E. Landscape Architecture 2,100
Source: Smith Consulting Architects memorandum dated 9/30/98
2. CONSTRUCTION COSTS: $277,397
A. Modification of Building $ 103,247
B. Reconfigure Site Plan 25,650
C. Emergency Generator * 89,100
D. Monument sign 16,200
E. Storefront Entry, North -0-
F. Storefront Entry, South -0-
G. Elevator 43,200
Source: Smith Consulting Architects memorandum dated 8/21/98
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EXHIBtT C
(to Faraday Business Plaza Lease)
Purchase and gale Agreemenf
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PURCHASE AGREEMENT
AND
ESCROW INSTRUCTIONS
FARADAY BUSINESS CENTER
CARLSBAD, SAN DEGO COUNTY, CA
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Section
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
INDEX
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
Page
Recitals .........................................................
Definitions ......................................................
Agreement of Sale, Purchase Price and Payment * I I .... a I . o . , . I .... I ......
Opening of Escrow; Additional Escrow Instructions .......................
The Closing Date; Termination Rights .................................
Conditions Precedent to Closing ......................................
Pre-Closing Obligations and Covenants ................................
Representations and Warranties of Seller and Purchaser ....................
Post-Closing Obligations of Buyer and Seller ............................
.............................................. Deliveries to Escrow
Prorations, Fees and Deposits ..... : ..................................
The Closing .....................................................
Failure of Escrow to Close and Remedies ...............................
.............................................. Additional Provisions
EXHIBITS
Exhibit A - Legal Description of the Property
Exhibit B - Seller’s Deed
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Purchase Agreement
and
Escrow Instructions
This Purchase Agreement and Escrow Instructions (the “Agreement”) is entered into at
Sari Diego, California, on (insert date of exercise of Option) , 1998 (the ‘‘Effective Date”)
between FARADAY BUSINESS PLAZA, LLC, a California limited liability company (the
“Selle?’), and the CITY OF CARLSBAD, a , (the “Purchaser”), with
reference to the recitals set forth in Section 1 below and constitutes (i) a contract for purchase
and sale between the parties, and (ii) escrow instructions to Commonwealth Land Title
Company, 1455 Frazee Road, San Diego, California, 92108, (the “Escrow Agent”), the consent
of which appears at the end of this Agreement.
For good and valuable consideration, the receipt and adequacy of which is acknowledged,
Seller and Purchaser (collectively the “Parties“) agree as follows:
Section 1. Recitals
1.1 Seller owns certain developed real property in the County of San Diego, State of California, commonly known as 1635 Faraday Avenue, Carlsbad, California, more specifically
described in attached Exhibit “A” (the “Property”).
1.2 Purchaser desires to purchase the Property, and Seller desires to sell the Property
on the terms and conditions set forth in this Purchase Agreement. The term “Property” also
includes all easements, interests and rights appurtenant to the Property, together with all
contractual rights, land use entitlements and other intangible rights relating to the Property.
1.3 Purchaser is purchasing the Property pursuant to Purchaser’s exercise of an option
to purchase the Property granted from Seller to Purchaser in a !ease agreement dated October
From the date set forth in the Lease Ageement as the Commencement Date, Purchaser has been
in actual, exclusive possession of the Property.
d 1998 (“Lease Ageement”), through which Purchaser has leased the Property from Seller.
1.4 Pursuant to the Lease Agreement, Purchaser has made certain decisions relating to the design of the shell of the building on the Property, and Purchaser has made all decisions
relating to the interior, tenant improvement related design of the building on the Property. Prior
to the Closing, Purchaser has investigated, and will continue to investigate and review to its
satisfaction, all facts and circumstances deemed necessary by it relating to the physical, legal,
environmental, land use and developmental condition of the Property and the economic burdens
and feasibility of developing the Property for the purposes envisioned by Purchaser. Except as
expressly provided in this Agreement, Purchaser will accept and acquire the Property in an “AS-
IS-WHERE-IS” condition.
1.5 Seller may seek to qualifjl this transaction as a time delayed tax deferred exchange
under Section 103 1 of the Internal Revenue Code of 1986, as amended.
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Section 2. Definitidns:
Unless the context otherwise indicates, whenever used in this Agreement, the following
capitalized terms shall have the following meanings:
2.1 "Agreement" is defined as this agreement executed by Seller and Purchaser, and all
Exhibits attached hereto.
2.2 "Business Day" shall be any day other than a Saturday, Sunday or legal national
holiday.
2.3 "Cash" means immediately available finds consisting of either (i) United States
currency, (ii) a cashier's or certified check(s) currently dated, issued by a bank or savings and loan
with offices in California, payable to the required payee, and honored upon presentation for
payment, or (iii) an amount credited by wire-transfer into the required payee's bank account.
2.4 "City" means the City of Carlsbad, California.
2.5 "Close of Escrow;-Closing; Closing Date" is defined in Section 5.1.
2.6 "County" means the County of San Diego.
2.7 "Deposit" is defined in Section 3.2.1.
2.8 "Effective Date" is the date first written above.
2.9 "Environmental Laws" are defined in Section 8.2.3.2.
2.10 "Escrow Agent" is First American Title Company, located at 1455 Frazee Road,
San Dieso, California 92 1 OS.
2.11 "Hazardous Materials" is defined in Section 8.2.3.2.
2.12 "Opening of Escrow" is defined in Section 4.1.
2.13 ."Permitted Exceptions" is defined in Section 6.1.4.
2.14 "Preliminary Report" is defined in Section 6.1.3.
2.15 "Property" is defined in Section I. 1.
2.16 "Purchaser" is the City of Carlsbad, a
2.17 "Purchase Price" is defined in Section 3.1.
2.18 "Review Documents" is defined in Section 7.5.
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2.19 "Title Insurer" is defined in Section 6.1.3.
2,2f) "Title Policy" is defined in Section 6.1.4.
Section 3. Aareernent of Purchase and Sale. Purchase Price and Pavment.
3.1 Purchase Price. On the terms set forth in this Agreement,. Seller agrees to sell
and Purchaser agrees to purchase the Property, free and clear of all liens and encumbrances
except for the Permitted Exceptions and except for the leasehold interest of the current tenant
located therein, through Escrow, for a purchase price of Nine Million, One Hundred Thousand
Dollars ($9,100,000) (the "Purchase Price").
3.2 Deuosit of Purchase Price. The Purchase Price shall be deposited in Escrow as
follows and paid to Seller at Closing:
3.2.1 Upon the Opening of Escrow, Purchaser shall deliver to Escrow Agent
a deposit (the "Deposit") of One Hundred Thousand Dollars ($lOO,OOO) in Cash.
3.2.2 On or before 1:OO p.m. on the Business Day immediately preceding
the Closing Date, Purchaser shall deliver to Escrow Agent Cash in the amount of the balance
of the Purchase Price.
3.3 Deposit of Funds. All funds delivered by Purchaser to Escrow Agent shall be
deposited in a federally insured interest bearing account. All interest earned on the funds shall accrue to the benefit of Purchaser.
3.4 Failure of Escrow to Close. If the transaction fails to close, Purchaser's
Deposit, plus accrued interest, shail be returned to Purchaser or distributed to Seller as
liquidated damages in accordance with the provisions of Section 13. of this Agreement.
Section 4. ODeninP of Escrow: Additional Escrow Tnstructions.
4.1 Ooening of Escrow. Within two (2) Business Days following execution of this
Agreement, the Parties shall deliver to Escrow Agent a duplicate original of this Agreement,
which shall serve as escrow instructions for this transaction. Escrbw Agent shall indicate its
consent and agreement to act as Escrow Agent by executing the Consent of Escrow Agent at
the end hereof. The term "Opening of Escrow" shall mean the date Escrow Agent executes
such Consent.
4.2 Additional Escrow Instructions. Seller and Purchaser shall execute additional
escrow instructions reasonably required by Escrow Agent to consummate this transaction.
Such additional escrow instructions shall not modify the provisions of this Agreement, unless
such modifications are specifically identified as such and are initialed by Seller and Purchaser
Escrow Agent shall not be liable for any of its acts or omissions unless the same shall
constitute negligence or willful misconduct.
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Section 5. The Closing Date: Termination Rights.
5.1 CtosingDate. The date for the Closing of Escrow is sometimes referred to
herein as the "Closing Date". The Closing Date for this transaction shall be on or before the
thirtieth (30th.) day following the Opening of Escrow, or the next business day thereafter,
unless extended by written instructions executed by Purchaser and Seller prior to such date.
As used herein, the terms "Closing" or "CIose of Escrow" shall mean the date Seller's Deed is
recorded with the County Recorder of San Diego County.
5.2 Termination Rights. If the Close of Escrow does not occur on the Closing
Date, a party who is not then in default hereunder shall have the right to terminate this
Agreement and Escrow by delivering a written notice of such termination to the other party
and Escrow Agent.
Section 6. conditions Precedent to Closing.
6.1 Conditions to Obligations to Purchaser. Purchaser's; obligation to purchase the
Property is conditioned upon satisfaction of each of the following conditions, all or any of
which may be waived by Purchaser:
6.1.1 Representations and Warranties True at Closing. The representations
and warranties made by Seller in this Agreement shall be true and correct in all material
respects at the Closing, with the same effect as if such representations and warranties had been
made on and as of such date.
6.1.2 Obliyations Performed by Seller. Seller shall have performed all
material obligations required to be performed by it hereunder on or before the Closing.
6.1.3 Approval of Title Report. No later than ten (10) days following
Opening of Escrow, Seller shall deliver to Purchaser a Preliminary Report, including copies c
ail matters deemed an "Exception" to title therein (the "Preliminary Report"), dated no earlier
than Opening of Escrow, issued by First American Title Insurance Company (the "Title
Insurer"). On or before the twentieth (20th.) day following its receipt of the Preliminary
Report, Purchaser sllall have approved the Preliminary Report. If Purchaser gives written
notice to Setter disapproving any exception prior to the expiration of such twenty (20) day
period, Seller'shall have ten (10) days following Seller's receipt of Purchaser's objections to
give written notice to Purchaser agreeing to eliminate such disapproved exception prior to the
Close of Escrow. If Seller fails to give such notice or delivers a notice that it will not cure
certain disapproved Exceptions, Purchaser may either terminate this transaction or waive its
disapproval of the Exceptions which Seller has not agreed to cure by written notice delivered
to Seller within seven (7) days following the earlier of the expiration of Seller's ten (10) day
period or Seller's delivery of written notice to Purchaser.
6.1.4 Title Policy. As of the Close of Escrow, the Title Insurer shall issue, t
be committed to issue, to Purchaser a CLTA Standard Coverage Policy of Title Insurance or
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if requested by Purchaser, an ALTA Owner's Extended Coverage Policy of Title Insurance
(the "Title Policy"), with liability in the amount of the Purchase Price, insuring that fee title to
the Property vests in Purchaser, subject only to the following permitted exceptions (the
"Permitted Exceptions"): (i) then current, non-delinquent real estate taxes, assessments,
bonds and other governmental or quasi-governmental charges applicable to the Property; (ii)
the lien of supplemental taxes assessed pursuant to Chapter 3.5, commencing with Section 75,
of the California Revenue & Taxation Code; (iii) the exceptions set forth in the Preliminary
Report which are approved or waived by Purchaser and such additional exceptions, if any, as
may be set forth in a Supplement to the Preliminary Report thereafter issued by the Title
Insurer and approved by Purchaser; (iv) any other exceptions to title created or approved in
writing by Purchaser; and (v) all matters excepted or excluded from coverage by the printed
terms of the standard form Title Policy.
6.1.5 General Feasibilitv Approval. On or before the thirtieth (30th.) day
followine Opening of Escrow, Purchaser shall have approved the physical, environmental,
legal, developmental and land use condition of the Property and the economic burdens and
feasibility of the Property for the purposes envisioned by Purchaser.
u
6.2 Conditions to Obligations of Seller. Seller's obligation to sell the Property is
expressly conditioned upon satisfaction of each of the following conditions, all or any of which
may be waived by Seller:
6.2.1 Representations and Warranties True at Closing. The representations
and warranties made by Purchaser in this Agreement shall be true and correct in all material
respects at the Closing, with the same effect as if such representations and warranties had been
made on and as of such date.
6.2.3 Obligations Performed bv Purchaser. Purchaser shall have performed all
material obligations required to be performed by it hereunder on or before the Closing.
6.3 Satisfaction of Conditions; Right - to Terminate. Purchaser and Seller each
agrees to proceed with diligence and good faith to satisfy the conditions set forth herein on its
part to be satisfied. Except as specifically otherwise provided herein, in any instance where
the approval or disapproval of a condition by Purchaser or Seller is required to be given by a
specified date, such approval or disapproval shall be evidenced by a written notice delivered ta
the other party and the failure of Purchaser or Seller to give such written notice of approval or
disapproval by such date shall constitute a disapproval by Purchaser or Seller, as the case may
be, and a failure to satisfy the condition precedent. If any condition set forth in Section 6.1 or
6.2 above is neither satisfied nor waived in the manner specified, at party who is not then in
default hereunder shall have the right to terminate this Agreement and this Escrow by delivery
of written termination notice to the other party and Escrow Agent. The right to terminate shal
be optional, not mandatory, and shall cease as to each condition if the condition is satisfied or
waived prior to the delivery of written termination notice to the other party and Escrow Agent
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Section 7. Pre-Closing Obligations and Covenants.
7. I Escrow Agent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in this paragraph.
7.2 Inspection and Testing Bv Purchaser. Purchaser and its employees, agents or
independent contractors may conduct such inspections, reviews, examinations and tests upon
the Property as Purchaser deems necessary or desirable to investigate the physical condition
and the developmental and economic feasibility of the Property for the purposes envisioned by
Purchaser. Such inspections, reviews, examinations and tests shall be conducted at Purchaser's $91~ CQS~ and expense. Purchaser shall indemnify and hold Seller, its members and
their respective officers, directors, employees, agents, managers, shareholders, attorneys,
representatives and successors in interest, and the Property harmless from and against any
mechanic's liens or claims of lien or claims of injury to person or property resulting from the
activities conducted by Purchaser or its agents or contractors relating to the Property.
Promptly following the completion of its activities on the Property, Purchaser, at its sole cost
and expense, shall return the Property as nearly as is practicable to its present physical
condition and shall repair any physical damage resulting from its activities thereon. The
obligations of Purchaser set forth in this provision shall survive the termination of this
Agreement.
7.3 Contact With Governmental Aoencies and Other Persons. If Purchaser is the
original Lessee under the Lease Agreement, the provisions of this sub-section shall not apply.
During the term of Escrow, Purchaser and its employees, agents or independent contractors
shall have the right to (i) meet with all City, County, district, and other governmental entities
arrangements in connection with or relating to the Property; and (ii) discuss with any such
entities, agencies, or persons the terms of this Agreement, the terms of any contractual
arrangements relating to the Property entered into by Seller or the prior owners of the
Property, provided that any fees required to be paid to such persons or agencies shall be paid
by Purchaser.. Purchaser shall not represent itself as an agent or employee of Seller, and shall
fully disclose to any such governmental entities and agencies that Purchaser is the prospective
purchaser of the Property.
and agencies and with all persons or other entities with whom Seller or others have Contractual
7.4 Delivery of Documents. Reports and Information Rimding ProDerty. On or
before the fifth (5th.) day following Opening of Escrow, Purchaser shall submit to Seller a
written list of those documents Purchaser desires to review in contemplation of Purchaser's
General Feasibility Approval set forth in Section 6.1.5 above (the "Review Documents").
Within ten (10) days following its receipt of Purchaser's list of the desired Review Documents
Seller shall deliver to Purchaser those review documents in Seller's possession. If requested
by Purchaser, Seller will contact the professionals who prepared the Review Documents and
authorize such persons to discuss the contents of the plans and reports with Purchaser;
provided that any fees required to be paid to such persons shall be paid by Purchaser. As
more fully set forth in Section 9.2 of this Agreement, Purchaser acknowledges that Seller
makes no representation or warranty as to the accuracy or completeness of the other Review
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Documents or any additional information cotnmunicated to Purchaser by the persons who
prepared the Review Documents.
Section 8. Representations and Warranties of Seller and Purchaser
8.1 Escrow Agent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in this paragraph.
8.2 Representations and Warranties of Seller. As used in this Agreement, the
phrase "to Seller's knowledge* or other references to Seller's knowledge shall mean the actual
knowledge of Seller. The phrase "to Seller's knowledge" shall not imply that Seller has
conducted a due diligence investigation with respect to the subject matter covered by the
representation in which the phrase appears. Seller makes the following representations and
warranties to Purchaser:
8.2.1 Organization and Standing. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of California.
8.2.2 Authoritv. This Agreement and all documents executed or to be
executed in connection with this Agreement have been or will be duly authorized, executed
and delivered, and each constitutes or shall constitute a legal, valid and binding agreement
enforceable against Seller in accordance with its terms. No consents, orders or approvals of
Agreement or the transfer of the Property to Purchaser. The transfer of the Property to
Purchaser will not breach any contract, mortgage, deed of trust or other obligation of Seller.
any person that have not been obtained are required in connection with the execution of this
8.2.3 Hazardous Materials.
8.2.3.1 Except as to anything caused by Purchaser or subtenants
of Purchaser, to Seller's knowledge, (i) the Seller's Property does not contain or incorporate
and is not threatened with contamination from Hazardous Materials; (ii) the Seller's Property
has never been used in connection with the handling, storage or disposal of Hazardous
Materials; (iii) there have been no releases and there are no threatened releases of Hazardous
Materials on, under, in or about the Seller's Property; (iv) all current and past uses of the
Property comply with applicable Environmental Laws; and (v) no' governmental authority hz
notified Seller of the need to take any remedial or corrective action under Environmental Law
with respect to any Hazardous Materials on, under, in or about the Seller's Property.
8.2.3.2 Definition of Hazardous Materials and Environmental
Laws. As used in this Agreement, the term "Hazardous Materials" means any substance that
is now or may hereafter be regulated as a toxic or hazardous waste or substance under
applicable federal, state or local statute, rule, regulation, ordinance, order, action, policy or
common law (hereafter collectively referred to as "Environmental Laws") and shall include,
without limitation, any substance: (i) the presence of which requires investigation,
remediation or disclosure under any Environmental Law; (ii) which is or becomes defined as
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hazardous waste, hazardous substance, pollutant or contaminant under any Environmental
Law; (iii) which is toxic, explosive, corrosive, tlammable, infectious, radioactive.
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or instrumentality of
the United States, the State of California or any political subdivision thereof; (iv) the presence
of which on the Property causes or threatens to cause a nuisance upon the Watt Homes Los or
to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons
on or about the Property: (v) the presence of which on adjacent properties would constitute a
trespass; (vi) which contains gasoline, diesel fuel or other petroleum hydrocarbons; (vii)
which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam
insulation; or (viii) which contains radon gas.
8.2.4 Litigation. Seller has received no notice of any pending or threatened
litigation, administrative proceeding, or other lesa1 or governmental action with respect to the
Property.
8.2.5 Possession. Except as to Purchaser or subtenants of Purchaser, to Seller's
knowledge, as of Close of Escrow there are no parties in possession of any portion of the
Property as lessees, tenants at sufferance, or trespassers.
8.2.6 Condemnation. Seller has received no written notice of any pending or
threatened condemnation affecting the Property, or any part thereof, nor to Seller's actual
knowledge is any such condemnation proceeding contemplated by any governmental authority.
8.2.7 Other Options. There is no right of first refusal, option to purchase,
Purchase Agreement or other prior right of any party to purchase any portion of the Property,
either recorded or unrecorded, superior in right to that of Purchaser pursuant to this Purchase
Agreement.
8.3 Reoresentations and Warranties of Purchaser. Purchaser makes the following
representations and warranties to Seller:
8.3.1 Purchaser Status. Purchaser has undertaken all actions legally required
for Purchaser to consummate this transaction, and has the legal right and ability to purchase
the Properry.
8.3,.2 Authority. This Agreement and all documents executed or to be
executed in connection with this Agreement have been or will be duly authorized, executed
and delivered, and each constitutes or shall constitute a legal, valid and binding agreement
enforceable against Purchaser in accordance with its terms. No consents, orders or approvals
of any person that have not been obtained are required in connection with the execution of this
Agreement or the transfer of the Property to Purchaser.
8.3.3 Purchaser's Exuertise. Purchaser has the expertise and ability to perform
its obligations pursuant to this Agreement in a timely manner and in accordance with the
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requirements of this Agreement.
Section 9. "AS-IS" Condition. Release of Claims and Indemnitv Agreement.
9. f Escrow Asent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in this paragraph.
9.2 " AS-1s" Condition of Propertv. Purchaser acknowledges that it will investigate
and review to its satisfaction all facts and circumstances deemed necessary by it relating to the
physical, environmental, legal, land use and developmental condition of the Property and the economic burdens and feasibility of developing the Property for the purposes envisioned by Purchaser. Purchaser will not rely upon the accuracy or completeness of information
contained in any reports or other information relating to the Property delivered to it by Seller,
including the Review Documents. Purchaser acknowledges that it has not been induced by or
relied upon any representation, warranty or statement, whether express or implied, made by
Seller or any asent, employee or other representative of Seller or by any broker or any other
person representing or purporting to represenr Seller, which is not expressly set forth in this
Agreement. Subject to the express representations and warranties of Seller set forth in Section
8.2 of this Agreement and Seller's obligation to improve the Property to a Finished Lot
condition, Purchaser agrees that it will purchase and acquire the Property at Closing in an
"AS-IS, WHERE-IS" condition and "WITH ALL FAULTS," known and unknown, and
without any representation or warranty, expressed, implied or statutory. Purchaser
acknowledges that Seller makes no warranty that the Property are fit for any particular
purpose.
Section 10. Deliveries to Escrow.
IO. 1 Deliveries by Seller. Seller shall deliver to Escrow Agent, in time for delivery
at or before the Closing Date, the following:
10.1.1 A Grant Deed in the form attached hereto as Exhibit "B" (the "Seller's
Deed") conveying Seller's entire interest in Property to Purchaser, executed and acknowledged
by Seller and/or such other persons as the Title Insurer may require in order to issue the Title
Policy.
10.1.2 A duly executed and acknowledged Certificate of Non-Foreign Status
certifying that Seller is not a foreign person or a foreign corporation as defined in the Foreign
Investment and Real Property Tax Act, in a form satisfactory to Purchaser and Escrow Agent
and in full compliance with the requirements of such Act.
10.1.3 A duly executed Withholding Exemption Certificate (California
Franchise Tax Board Form 590) establishing to the satisfaction of Purchaser and Escrow Agent
that the withholding requirements of the California Revenue and Taxation Code are not
applicable to this transaction.
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10.1.4 Such other documents as Purchaser or Escrow Agent reasonably
requires for the consummation of this transaction.
10.2 Deliveries bv Purchaser. Purchaser shall deliver to Escrow Agent, in time for
delivery at or before the Closing Dace, the following:
10.2.1 Cash in the amount of the balance of the Purchase Price not previously
deposited in Escrow by Purchaser, together with such additional amounts as required to be
paid by Purchaser under this Agreement for prorations, fees and costs.
102.2 A duly executed Preliminary Change of Ownership Report form.
10.2.3 Such other documents as Seller or Escrow Agent reasonably requires
for the consummation of this transaction.
10.3 Failure to Make Deliveries. The failure of Purchaser or Seller to make, or
cause to be made, any delivery described in Section 10.1 or 10.2 above on or before the date
such delivery is required to be made shall constitute a materia1 breach of this Agreement by
Purchaser or Seller, as the case may be, unless such deiivery is excused by reason of a default
by the other Party.
Section 11. Prorations. Fees and DeDosits.
The following prorations and deductions described in this provision shall be made by
Escrow Agent as of the Close of Escrow. Any amounts due from Seller shall be deducted
from the proceeds payable to Seller. Any amounts due from Purchaser shall be deposited by
Purchaser into Escrow before the Close of Escrow. All prorations shall be made on the basis
of a thirty (30) day month.
11.1 All real property taxes and assessments payable with respect to the Property
shall be prorated based upon the latest tax bill.
11.2 Prepaid Rent from Purchaser to Seller.
11.3 Such additional items, if any, as are typically prorated between Purchasers and
sellers in real property transactions in San Diego County. Such proration may occur at or
following the Closing. Escrow Agent is not to be concerned with any such proration unless it
receives additional written instructions from the parties.
11.4 Seller shall pay (i) Documentary Transfer Tax in the amount Escrow Agent
determines to be required by law, (ii) the premium for a standard CLTA policy of title
insurance, (iii) one half of Escrow Agent’s fee, and (iv) the usual seller’s document drafting
and recording charges.
11.5 Purchaser shall pay (i) one half of Escrow Agent’s fee, (ii) the additional
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premium charged by the Title Insurer to issue an ALTA extended coverage policy of title
insurance, and (iii) the usual purchaser’s document drafting and recording charges.
Section 12. The Closing.
12.1 Escrow Agent shall close Escrow on the Closing Date by (i) filing for record
Seller’s Deed and immediately thereafter such other documents, if any, as may be required to
be recorded by the terms of this Agreement or as the Title Insurer may require in order to
issue the Title Policy, and (ii) delivering funds and documents as set forth in Section 12.3
below, IF AND ONLY IF each of the following conditions has been satisfied:
12.1.1 All funds and documents described in Section 10 have been delivered
to Escrow Agent.
12.1.2 Escrow Agent has obtained from the Title Insurer either the Title
Policy, or the commitment of the Title Insurer to issue the Title Policy, required by Section
6.1.4.
12.2 If the conditions set forth in Section 12.1 above become satisfied at a date earlier
than the Closing Date, Escrow Agent shall close Escrow in the manner described in Section
12.1 above as of such earlier date if so instructed by the Parties. If Escrow Agent cannot close
the Escrow on or before the Closing Date, it will, nevertheless, close the same when all
conditions have been satisfied or waived, notwithstanding that one or more of such conditions
has not been timely performed, unless after said date and prior to the Closing, Escrow Agent
receives a written notice to terminate the Escrow and this Agreement from a party who at the
time such notice is delivered is not in default hereunder. If Escrow closes pursuant to lhis ’
provision at a date earlier or later than the Closing Date set forth in Section 5.1, then such
earlier or later date shall be deemed the Closing Date for all purposes under this Agreement.
12.3 Escrow Agent shall deliver funds and documents as follows:
12.3.1 Escrow Agent shall cause the County Recorder of San Diego County to
mail Seller’s Deed (and each other document which is herein required to be, or by general
usage is, recorded) after recordation to Purchaser, beneficiary, or such other person (i)
acquiring rights under said document, or (ii) for whose benefit said document was acquired.
12.3.2 Escrow Agent shall, following the Close of Escrow, deliver to
Purchaser and Seller a copy (conformed to show recording date) of Seller’s Deed, and Escrow
Agent shall deliver the Title Policy to Purchaser.
12.3.3 Escrow Agent shall, at Close of Escrow, deliver to Purchaser,
Purchaser’s funds remaining after the payment of all fees and prorations, as instructed by
Purchaser prior to Close of Escrow.
/I
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Section 13. Failure of Escrow to Close and Remedies.
13.1 If Escrow fails to close and such failure does not constitute a breach of this
Agreement by either party, then Purchaser or Seller, as the case may be, shall have the
immediate right to terminate this Agreement, each party shall be entitled to the immediate
return of all funds and documents previously deposited by it, and, except as expressly provided
herein, the parties shall have no further liabilities to each other relating to the transactions
described in this Agreement. Purchaser and Seller each shall pay one-half (M) of all escrow
and title charges if escrow fails to close pursuant to this provision.
Section 14. Additional Provisions.
14.1 Autharitv to Sign. For any act or action, including any amendments to Escrow or
this Purchase Agreement, if any, required to be authorized by Seller, Purchaser and Escrow
Holder are authorized to accept the signature of William A. Shirley to act on behalf of Seller. For
any act or action, including any amendments to Escrow or this Contract, if any, required to be
authorized by Purchaser, Seller and Escrow Holder are authorized to accept and may rely upon,
the signature of to act on behalf of Purchaser.
14.2 Rieht to Exchanpe. Seller shall have the right to elect to effect a tax deferred
exchange under Section 103 1 of the Internal Revenue Code at any time during the Escrow
period or, if an exchange cannot be accomplished within the term of the Escrow, Seller shall
have the right to enter into a delayed exchange transaction to be consummated following the
Close of Escrow. As an accommodation to Seller, Purchaser agrees to cooperate with Seller to
accomplish an exchange, provided the following terms and conditions are satisfied:
14.2.1 At least five (5) days prior to the Closing Date, Seller shall give
written notice to Purchaser that it has arranged such an exchange and the terms, thereof. As
soon as reasonably possible thereafter, Seller and Purchaser, and such other parties as may be
necessary to effect the exchange, shall execute any and all documents satisfactory to the parties
and their respective legal counsel which are reasonably necessary to effect the exchange.
14.2.2 Purchaser shall not be required to take title to any exchange property,
nor shall Purchaser incur any.additiona1 liabilities, potential liabilities, expenses or costs as a
result of or connected with the exchange. Seller agrees to indemnify, defend and hold
Purchaser harmless from any liabilities, damages, or costs that may arise from Purchaser’s
cooperation in the exchange.
14.2.3 Seller and Purchaser agree that the consummation of the sales
transaction between Purchaser and the Seller is not predicated or conditioned on completion of
an exchange. In no event shall the Closing Date of this transaction be extended if Seller is
unable to arrange an acceptable co.ncurrent or delayed exchange by the scheduled Closing
Date.
14.3 Possession. Exclusive possession of the Property, subject to any subleases or
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assi-pnents ganted by Purchaser, shall be delivered to Purchaser at the Close of Escrow.
14.4 Brokers. Seller has employed the brokerage services of Business Real Estate
Brokerage Company located in San Diego, California, and will be solely responsible for the
payment any codssion to same pursuant to an independent listing agreement. Seller warrants
that Seiler has not employed any other broker or agent which will make any claim on Purchaser
' for any brokerage commissions, and Seller will hold Purchaser harmless, including reasonable
attorney's fees incurred in the defense of same, from any claims for commissions against
Purchaser resulting fiom Seller's actions. Purchaser warrants that Purchaser has not employed
any broker or agent which will make any claim on Seller for any brokerage commissions, and
Purchaser will hold Seller harmless, including reasonable attorney's fees incurred in the defense of
same, from any claims for commissions against Seller resulting kom Purchaser's actions.
14.5 Attornev Fees. In the event of any "Legal Proceeding" arising out of this
Agreement, the "Prevailing Party" in such action shall have the right to recover reasonable
attorney's fees and costs from the non-prevailing Party or Parties, to be fixed by the court in the
same action. The term "Legal Proceeding" shall include, but is not limited to, appeals from a
lower court judgment as well as proceedings in the Federal Bankruptcy Court ("Bankruptcy
Court"), whether or not they are adversary.proceedings or contested matters. The "Prevailing
Party" (a) as used in the context of proceedings in the Bankruptcy Court, shall mean the
non-bankrupt Party which are reasonably necessary to protect its rights under this Agreement;
and (b) as used in the context of proceedings in any court other than the Bankruptcy Court, shall
mean the Party that prevails in obtaining a remedy or relief which most nearly reflects the remedy
or relief which the Party sought (e.g., the Prevailins Party may be a Party which is ordered to pay
$100.00 where the obligation to pay 580.00 was undisputed and the claiming Party claimed that it
was entitled to S~,OOO.OO).
prevailing party in an adversary proceeding or contested matter, or any other actions taken by the
14.6 Notices. All notices to be _given under this Purchase Agreement shall be in
writing and sent by:
14.6.1 certified mail, return receipt requested, in which case notice shall be
deemed delivered one business days after deposit, postage prepaid in the United States Mail; or .
14.6.2 a nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) business day after deposit with that courier.
14.6.3 AI1 notices shall be sent to the following persons at the following
addresses:
To Seller: attn: William A. Shirley with copy to:
FPLRADAY BUSMSS PLAZA, LLC Dietmar E. Schott, Esq.
8799 Balboa Avenue, Ste. 270 8799 Balboa Ave., Ste. 265
San Diego, CA 92 123 San Diego, CA 92 123
tel. (6 19) 265-890 1 tel. (619) 514-4225 fax. (6 19) 265-0337 fax. (619) 268-0337
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To Purchaser: attn;
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92005
tel. (760)
fax. (760)
with copy to:
or to such other address as the Parties may designate by written notice to the other.
14.7 Entire Purchase Acreernent. This Purchase Ageement contains the entire ’
Purchase Agreement between the Parties and shall not be modified in any manner except by an
instrument in writing executed by the parties or their respective successors in interest.
z
14.8 Severabilitv. If any term or provision of this Purchase Agreement shall, to any
extent, be held invalid or unenforceable, the remainder of this Purchase Agreement shall not be
affected.
14.9 Waivers. A waiver or breach of covenant or provision in this Purchase Agreement
shail not be deemed a waiver of any other covenant or provision in this Purchase Agreement, and
no waiver shall be valid unless in writing and executed by the waiving party. An extension of time
for performance of any obli,oation or act shall not be deemed an extension of the time for
performance of any other obligation or act.
14.10 Construction. The section headings and captions of this Purchase Agreement are,
and the arrangement of this instrument is, for the sole convenience of the parties to this Purchase
Agreement, and no third party shall have any rights against any Party pursuant to this Purchase
Agreement. The section headings. captions. and arrangement of this instrument do not in any way
singular form shall include plural, and vice versa. This Purchase Agreement shall not be construed
as if it had been prepared by one of the parties, but rather as if both parties have prepared it.
Unless otherwise indicated, all references to sections are to this Purchase Agreement. All exhibits
referred to in this Purchase Agreement are attached to it and incorporated in it by this reference.
14.1 1 Time of the Essence. Time is of the essence in this Purchase Agreement.
14.12 Successors. This Purchase Agreement shall inure to the benefit of and shall be
binding upon the parties to this Purchase Agreement and their respective heirs, successors, and
assigns.
. affect, limit, amplitjl, or modify the terms and provisions of this Purchase Agreement. The
14.13 Goveminc Law. This contract shall be construed under and in accordance with
the laws of the State of California, and all obligations of the parties created by this contract are
performed in San Diego County, California.
14.14 Equal Intermetation. This Purchase Agreement was prepared through the joint
efforts and/or negotiations of both Parties, and it is intended by the Parties that in the event any
term herein is deemed vague or ambiguous, that such term shall not be interpreted in favor for or
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EXTENSION AND AMENDMENT NO.l TO AGREEMENT
WITH IR21NTERIOR RESOURCE, INC.
This Amendment is entered into and effective as of the day
of , 199 9 amending the agreement dated July 7, 1998 by and
between the City of Carlsbad, a municipal corporation, hereinafter referred to as "City",
and IR2 Interior Resource, Inc., hereinafter referred to as, "Contractor" for interior
design services.
RECITALS
WHEREAS, the City and Contractor desire to extend the term of the
agreement dated July 7, 1998 for a period of four months ending on October 7, 1999;
and
WHEREAS, the initial agreement, dated July 7, 1998 identified a scope of
work to perform a space needs assessment for City Hall and Community Development
departments; and
WHEREAS, the parties to this aforementioned agreement desire to alter
the scope of work as follows: to provide additional interior design services includinc
schematic design, design development, interface with architect and oversee interiol
work: and
911 1 19(
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WHEREAS, a supplemental scope of work and fee schedule have been
negotiated and agreed to between the parties hereto, and as shown on Exhibit "A"
Scope of Services and Fee;
NOW, THEREFORE, in consideration of these recitals and the mutual
covenants contained herein, City and Contractor hereby agree as follows:
1. The term of the agreement shall extend to October 7, 1999.
The contract may be extended by the City Manager for one (1) additional one (1) year
period or part thereof, based upon a review of satisfactory performance and the City's
needs, The parties shall prepare extensions in writing indicating effective date and
length of the extended contract.
2. Contractor shall provide services as outlined on the attached Exhibit
"A", phases 1 .O through 4.4.
3. City shall pay Contractor for all work associated with Paragraph 2
above, on a time and materials basis not-to-exceed $1 18,500. Contractor shall provide
City on a monthly basis, copies of invoices sufficiently detailed to include hours
performed, hourly rates, and related activities and costs for approval by City.
4, All other provisions of the aforementioned agreement entered into or
July 7, 1998, by and between City and Contractor shall remain in full force and effect.
9/11/91
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5. All requisite insurance policies to be maintained by the Contractor shall
include coverage for the amended assignment and scope of work for the extension
period.
Acknowledged and Accepted:
CONTRACTOR:
IR2 INTERIOR RESOURCE, INC.
Mayor
ATTEST: k' 9-
ALETHA L. RAUTENkRANZ r
City Clerk
fl& 2q. 197~
DATE J ..
(Proper notarial acknowledgment of execution by Contractor must be attached.)
(President or vice-president and secretary or assistant secretary must sign for corporations. If only one officer signs, the corporation must attach a resolution certified
by the secretary or assistant secretary under carparate seal empowering that officer tC
bind the corporation.)
APPROVED AS TO FORM:
RONALD R. BALL
City Attorney
BY ia-eB. Q.L JANE MOBALDI
Asistad City Attorney
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
County of Sad .n-
On 10fi6~/ ?r , before me, /*d~b 4 MSZ.&w
personally appeared
Name and T& of Officer (e.g.. “Jane Doe. Notary Pubc”)
Z personally known to me
*roved to me on the basis of satisfactory evidence
to be the personm whose namep) is/&
subscribed to the within instrument and
acknowledged to me that M/she/My executed
the same in tdslher/th#f authorized
f
i I
- VICTOR A. MISLEH 5 Commission # 1 167151
My Comm. Expires Jan 1,2002 1 v San Diego Cwnty
Place Notary Seal Above
capacity(ids), and that by t$/her/tt@r signature#) on the instrument the personp), or the entity upon behalf of which the person@) A
OPTlONAf
Though the information below is not required by law, it may prove valuable to persons relying on the document
and could prevent fraudulent removal and reanachment of this form to another document.
Description of Attached Document
Title or Type of Document: A,dhCH.C tb AJ Jk&&d
Document Date: bo! t6/ 4 P/ Number of Pages: \
Signer(s) Other Than Named Above: e
Capacity(ies) Claimed by Signer
1 Corporate Officer - Title(s):
1 Partner - TI Limited C General
1 Attorney in Fact
1 Guardian or Conservator
Signer Is Representing:
0 1997 Natlonal Notary Assoclatlon * 9350 Oe Sot0 Ave.. PO. Box 2402 * Chatsworth. CA 913132402 Prod. No. 5907 Reordec: Call Tdl-Free 1 -800-87&68:
0 - III INTERIOR RESOURCE INCORPORATED
e
9-1 7-98
Proposal
to
City of Carlsbad
Interior Design Services and Relocation Coordination
for
New Administration Facility
ApproximaWy 70,000 s.f and 225 Employees and Support Areas
PROJECT This project encompasses the programming, planning. InUerior Design, document&h ar
implementation phases required to design, document, interface with Architect/Contractorar
occupy the new City of Carlsbad Administrative Facility at Faraday Business Piaza, Lot 10
SCOPE Planning and Interior Design services are outlined in this pfoposal as appropriate for t prqect. All interior design services will be provided by We IR' Project Team as definc
herein. The project will be organized into phases as follows:
1.0 Pmgwmming- Gather detaii infamratian necassary to determine specific spac
requirements to indude SpacelFumiture Standards review, support area design, buil
out requirements. furniture rwse strategy and design preferences.
2.0 Schematic Design- Develop/ refine the Space Plan, develop the Win Concel
determine the architectural details, confirm furniture duedon/ reuse, establi
resources and coordinate schedule to finalize the scope of interim work to
completed.
3.0 Design Development- Prepare Win Devdopment Drawing necessary
communicate scope of the interiors wock @e. design document, furniture pk
furniture specifications, artwodc, plants, etc.).
4.0 Construction Documentd Construction Observation/ Project Implementatic Interface with Architect throughout their preparation of Constructiorr Drawings, C
Permit Process and buildat. Oversee the interiors work and furnishings installatr to ensure adherence to design intent.
5.0 Relacation Caanlinatian - oqanize and manw the relacatian of personnel z
support spaces into the new faci/ity.
6.0 Additional Seririces- Those services not ic?cluded in this proposal but available uj
request.
0 *
PROCEDURE 1 .O Programming
1.1 Project Organization- Identify and organize detailed project requirements, project
- roles/ responsibilities and schedule. A detailed project schedule will be determined for the project in conjunction with City of Carlsbad Project Team and Client's &&fixt,
1.2 Executive Interview - Conduct prqed initiation meeting with Project Team to
determine goals, design direction and project intent (Le. design preferences, fumfium reuse strategy, finish standards, budget, schedule).
1.3 InterviewdSite Evaluatlons- Schedule and conduct department interviews with
department representatives to verify personnel and support needs, interdepartment
affinities and special planning concerns that may affect department layout (Le.; diverse
use, weight load f&m, extensive electrical use, security concerns). Determine
special use area requirements through interview, observation and questionnaires.
Conduct site tours of existing facility with department representatives, if required.
1.4 Inventory- Furniture vendor responsible for Systems Furniture inventory. Verify
existing freestanding furniture and fixtures to be reused. Work with Clty of Carlsbad
to evaluate condition and application of reuse for interiors layout planning anc
documentation purposes. Furniture vendor to conduct Systems Furniture inventg
under direction of IR2. I* to inventory existing free standing furniture to be reused
1.5 Project Budget and Schedule- Assist City of Carlabbad Project Team with interior!
budget and schedule. Determine and identify special planning requirements that ma!
effect budget or schedule such as long lead items and specialty finishes, etc..
I .6 Space Standards- Refine and/or modify Space and Furniture Standards for all jd
functions including support areas, with cansideration of existing standards, existin!
furniture available. budget, ergonomiccorrcems and space constraints. Submit to CIQ
of Carlsbad Project Team for signature approval.
1.7 Electrical/ Equipment Surveys - Survey all shared and general electrical equipmer
needs to establish locationi use, furniture needs, amperaga and application.
1.8 Building Survey- Condud site visit to asse6s new building conditions and take critia site dimensions. Work with Archkt to establish any building/ constraints in planninj
and design. (This activity will occur at a later date when building is complete).
1.9 Revised Space Projections- Refine, and revise existing Space and Personnel pr- per infarmatian gathered in 1 .O Detailed Programming phase
1.10 Block Plans- Develop Block plans locating all departments within building
parameters per square footage requirements identi8ied in item 1.9 and proximtty
requirements determined in initial interviews. Review Mock plans with Clty of
Carlsbad Project Team and Client's Architect for signature and approval prior to
proceeding to 2.0 Design Development.
"s at completion of 1.0 Datdhd prOoMlmrn0 indude pWct schedule, mrk ma s-~m standerds. shared eiedricel equipnd sump, new site burwing my, furniturn
in~~by~,~speCeprolectkns~~~~sgeCe~~~~~~~~~~~
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2.0 Schematic
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.1 1
Design
Building Plans- Obtain from the Client’s Architect, CADD generated plans (
building shell depicting existing shell and building core elements.
Space Plan- Develop Space Plan in conjunction with Architect per revise
space/ personnel projections and approved block plans to illustrate all office!
public spaces, special use and support areas. (This includes approximately
minor revisions). Meet with City of Carisbad Project Team for signatur
approval.
Design Concept - Develop finish and furniture design concept to indud
architectural finishes for walls, floors, millwork, specialty ceilings, 8 fumiturc Present optional concepts (maximum of 3) to City of Carlsbad Project Team fc
approval.
Millwork besian -Lacate and identify all milhmrk requirements. Indicate desi<
details, hardware, and dimensions as necessary to communicate design to Architect for their use in incorporating into Cmstruction Documents.
Furniture/ Equipment Plan- Develop detailed Furniture Plan’ to includ
systems furniture, free standing furniture, critical dimensions, and speciat
furniture items.
Preliminary Electrical Plan- Develop electrical access plan of visual electric
sewice as required to support furniture/ equipment plan to communicate desi<
to Architect for their use in incorporating into ConstrucMn Documents.
Determine Furniture Requirements - Determine furniture requirements
define the final furniture scope to indude furniture ~se strategy and fumitui
budget (i.e.,mod~tions to existing standards; pemnfage ofnew furniture v
rehMhed).
Furniture Selections- seled and recommend furniture options for all ne
furniture requirements. Ptesent to City of earlsbad Project team for revia
and approval prior to final spdfkations.
Furniture Bid - It is Ips understanding that Office Pavillii is the preferrc
vendor. As an add- service I* can work With City of Carisbad
determine furniture bid process induding identification of qualified vendors. C1 of Carisbad to prepare, administer and evaluate furniture. Selection
vendor(s) is responsibility of City of Carlrbad. I* will review bid select1
vendds preliminary spedfications for coordination purposes.
Implementatlon Schedule- Develop detailed phased Schedule 1
Implementation of interiors induding furniture refurbishment phasing, furnit1
installation and project contingendes. I* will review bid of selected vendc
preliminary specmcations for coordination purposes.
Arhnorlc and Plants- Develop an Artwork, Plants and Signage program
include selection and placement of art and piants.
D~I~WEIMS 8t -*tion oi 2.0 oorign Dwefopmmt induds design wncept, fumh specifications and review, refined bwQeV sctmduk, meeting minutes and status repotis.
page 3
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3.0 Design Development
3.1 Design Documents- Develop Design documents to indicate all necessary
. information for interior portion of Construction Engineering and Documentation b
Architect. Design document to include dimensioned floor plans, finishes, millwor
elevations, and notes necessary to depict build-out requirements. Submit approve
plans to Architect for their use in incorporating interior information into Constructio
Documents to include;
3.1.1 Architectural Finish Plan- Develop architectural finish plan to indude locatioc
application and speufication of all interior finishes.
3.1.2 ElecMcal Plan- Prepare a final electrical plan indicating locations of a elements and components of the visual electrical service for workstation powe cable feeds and general shared equipment . Final Electrical Plans to b
reviewed with City of Carisbad Ptqject Team prior to submitting to Architect fc
engineering documents and irnpkmenfation by others. IRZ not responsible fc
planning of cabling specidty amas.
3.1.3 Data/Telecommunications Plan- Assist City of Carlsbad Project Team an
their Data/Telecommunicatiorrs Consultant in the preparation of a fin;
Data/T'decommunications Plan depictiig locations of all data an
telecommunication outlets. Submit plan to City of Carlsbad for their use i
coordinating with Datal Telecommunications Consultant.
3.1.4 Engineering Consultant Interlace- AssisQ Architect with communicatia
regarding engineering drawings as necessary, to ensure design intent an
project schedule adherence. Architect shall provide mechanical, plumbiry
electrid and structural engineering services, as required, by the project.
3.2 Furniture Installation Plan- Work with furniture vendor for their pre&tion of fin;
scale, CAD0 generated furniture installation plan, (in Autocad rWmat), depictin
location of all furniture in private offices and open plan areas. Final Furniture Pla
to be reviewed by City of Usbad Project Team for signature approval.
3.3 Furniture SpecMcationr/ Review- Prepare descriptive furniture specification of 5
approved new furniture items. Review with furniture vendors for their use i
preparing detailed Furniture Specikations of ail furniture to indude description!
finishes, upholstery and spedfication detailed as required to ensure adherence 1
design intent contract for, purchase and install the product. (Note: IRt n msponsihk Ibr accuracy of furniture vendors specr'tications.)
3.4 Art and Plants Plans - Provide plans locating and identrfying all art woTJ( and plan
lccatima as necessary to ubtain bids for such items. City of Carlsbad to preparc
administer and evaluate bids.
3.5 Design Reviewhpproval- Win Development Documents outlined above will t
submitted to Clty of Carlsbad Project Team fur review and signature approv:
Based upon approved Design Development Drawings and incorporation of ar
revisions requested by Clty of Carlsbad, IR* will coordinate with Architectur
services (N.I.C.), as required, to assist in the preparation of Construction Documen
(N.I.C.)consisting of drawings, specmCations and information necessary
communicate the requirements for the interior design. NOTE Paect Manageme
services, Architectural/ Engineering services and Relocation Coordination servicl
p-4
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am not included in this scope and are not a part of this proposal.
mhm&s at ~amp(etion d3.0 Design Development include findpm/;rninaryp/ans (finish Nan, electrm
plan, daw phone plan, furnitwe plan, and fumhm Speciiications) for submittal to Anmect for fine
- construction drawings.
4.0 Construction Documents/ Construction Observation/ Project Implementation
4.1 Interiors Representationl Consultant Coordination- Assist City of Carlsbat
Project Team in Project Coordination required and as representative of the interio,
design and furniture planning. IR* shall meet with City of Carlsbad Project Tearr
(maximum of 8 construction job sbe meetings @ 1.5 hrs. each) and vendors tc
review schedules, identify critical dates and times and resolve any schedule
discrepancies, as required. IR' is not responsible for performance of othe,
consultants retained by City of Catisbad for the interiiors work.
4.2 Furniture Installation Coordination- Assist ClgC of Carlsbad during fumiturr
installation phase to ensure adherence to design intent. Participate in fumiturc
issues.
&/ivera&s at cornpietion d 10 PW- hnpkmenbtlon include site visit mpats. arehitectore, ~punchffsf~ticf?~~~~~~.
punch lists to identify all concerns and track resolution of all furniture installatior
4.3 Construction Documents Review- Assist Clty of Carlsbad Project Team and
Client's Architect with the review and apprwal of the final construction documents
4.4 Value Engineering- lR2 will participate up to 6 hours of value enginwing (cos
adjustments) in cooperation with the City of Carisbad & Client's Architect.
5.0 Relocation Coordinstlon- N.1.C
5.7 Move Plan - Devehp review and thdze a movephn with City of Carisbad Pmja
Manager conskMng departmenfbcatrons in the new andexisting facilities, optimun
sequence ofmoves, furniture muse strategy, support mquhnmnts, rekded group
and operational needs. Confirm bgMcs, phasing and timing with departmer; managers and rehation TBSWTCBS.
5.2 mmyee Relocatfon DaWase-UevekJp an Emcdayee Database to include allstar
and support requirements as I twlafes to move. Identify current locations
destination locations, equipment, phone extenstons# Move coordnafm, etc.
5.3 MOWRFP- evel lop requests fw Pmposak for Mover services based on scope an
requinements ofthe move. AdminMer bid, Bsscmjlafe responses, summarize result
and make recommendations.
5.4 Equipment Relocatfort- Identify exisfing equipment, (Le. copiers, facsimij
machines, eft.)# which requires twbcation by OrRSMe vendor. Work with Projec Manager to coordinafe relocation to infegmte with+ general move.
5.5 Tagging System- Oevelop tagging system that identifies furniture and boxes b,
move number and indicates the room number of destination.
page 5
L 0 0
5.6 Relocation Plan- Develop detailed relcation plans to be provided to all members c
Move Team that provide all necessary plan information to communicate the moves
5.7 Refuhlshment- Coodinate refurbishment of existing product, as required, to inciud
- SpeCificatiOnS for eiectroStatiC painting, reupholstery, retrofit and/or refinishing.
5.8 o!bllhfbfi klfflffiS- 8ChedUk and Condud odenfafion meetings with staff i
facilitate both the relocation pn>cess and the operations transition into the new mfjor
Develop employee packets to include staff packing instnrctions and actual destinatic
labels.
5.0 Mavw Winattan- olltline kverm&emeds to include scope of work, schedule
responsibilities and conditions for pricing. Assist in the coordination, contracting an
supervision of mover to insure that mover satisfadory complies with their contrac
Work with Movers to determine standadized cdor coded tagging system for 6
existing tbmiture and equipment Tag existing furniture and equipment to insure prop
destination placement.
5.10 Speciatiy Am Packing Plans- Develop packingpians to assist in the handling of ti
rooms and any other areas wiul specialized packing requirements.
5.7 1 Mover Surveys- Conduct site suwp with movers to orient the Mover's fleM
supetvisorfs) to the van';bus mination and destination buildings focusing on accBs and any other physical conditions that mQht impede the relocation.
5.12 Field Coordination- Conduct pre-move site checks to insure that the facility an
furnishings will be protected hum potential damage by the Movers. Oversee move
to verify status, schedule andplacement. Interface with Movers, City of Catfsbad an
any pq*ect consultants to Eden@ amems end mWe any problems.
5.13 Past-Move Assistance- Ptwide post- move assMance induding punch lists with
Movers, other consuttants, and City of Catfsbad to Mentify all post-move
concerns and determine resdufion for 811 items. SUppod City of Catfsbad in the
timely msdution of all relocation related problem.
6.0 Additional Senricer- The Mbwing services am mi 8 pad of this pruposal but will b
pmposeci and are available upon request by City of Catfsbad Pruject Team.
6.7 PmjWConsfruction Management
6.2 Custom Design Furniture/ Millwork
6.3 Computer Room DesignlDocumentatEon
6.4 TelephOndCabling CuodinaW Consultatkon
6.5 Furniture Bid Package and Administnh
SCHEDULE A final, mutually agreed upon, project schedule will be adopted at the project initiation
IR*-lnterior Resource, Inc. Project Team will endeavor Uo expedite the Completion Of eac
task to meet all interim and final target dates.
Page 6
4 0 0
- City of Carlsbad
November 2, 1998
Faraday Business Plaza, LLC
William A. Shirley, Managing Member
1947 Camnio Vida Roble, Suite 104
Carlsbad, CA 92008
RE: LEASE AGREEMENT FOR PREMISES AT 1635 FARADAY AVENUE
Enclosed for your files are copies of Agenda Bill No. 14,913 and Resolution No. 98-357
which was approved by the Carlsbad City Council on October 27, 1998. Also .enclosed
is a copy of the signed lease agreement for 1635 Faraday Avenue, Carlsbad, CA.
If you have questions regarding the extension and amendment to the City’s original
agreement with your company, please call Ms. Lisa Hildabrand, at (760) 434-2867.
&-9+
Kathleen D. Shoup
Sr. Office Specialist
1200 Carlsbad Village Drive 0 Carlsbad, CA 92008-1 989 (760) 434-280E
z 0 ‘d)
- City of Ca.rlsbad
November 2,1998
IR2 Interior Resources, Inc.
Kristine O’Hollearn, President
1500 State Street, Suite 230
San Diego, CA 92101
RE: EXTENSION &AMENDMENT OF EXISTING AGREEMENT
Enclosed for your files are copies of Agenda Bill No. 14,913 and Resolution No. 98-357
which was approved by the Carlsbad City Council on October 27, 1998. Also enclosed
is a copy of the signed Extension and Amendment No. 1 to Agreement with lR2 Interior
Resource, Inc.
If you have questions regarding the extension and amendment to the City’s original
agreement with your company, please call Ms. Lisa Hildabrand, at (760) 434-2867.
Kathleen D. Shoup
Sr. Office Specialist
1200 Carlsbad Village Drive * Carlsbad, CA 92008-1989 * (760) 434-280