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HomeMy WebLinkAboutMINUTES - 05051998 - C60 TO:x K. BOARD OF SUPERVISORS t3tc FROM: Barton J. Gilbert, Director of General Services Costa DATE: May 5, 1998 County SUBJECT: LEASE WITH OPTION TO PURCHASE FOR PREMISES LOCATED AT 2530 ARNOLD DRIVE, MARTINEZ SPECIFIC REQUESTS OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION I. RECOMMENDATQN APPROVE a Lease with option to purchase, commencing February 1, 1998, with Summit Centre Investors, Inc. For the premises at 2530 Arnold drive, Martinez, under the terms and conditions more particularly set forth in said Lease, and AUTHORIZE the Director of General Services to EXECUTE said Lease on behalf of the County. II. FIN A CIAL IMPACT Payments required are to come from the budgets of the applicable departments, with priority emphasis on consolidation of County operations and relocation of departments from other leased facilities. A specific financing plan will be presented to the Board at the time the purchase option is exercised. III. REASONS FOR RECOMMENDalp On December 16,1997, your Board of Supervisors approved a Letter of Intent, dated December 5, 1997, with Summit Centre Investors, Inc. to lease with option to purchase the premises at 2530 Arnold Drive, Martinez. Approval of this lease fulfills a essential requirement as agreed upon in the Letter of Intent. It is the intention of the County to exercise the purchase option as soon as practicable. Purchase of this facility is consistent with Board policy for the County to have an equity interest in facilities housing ongoing County operations. QQN11NUPQ ON AjjbQdMENT- YEA SIQNKTUpr-. ka RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON 's I 1 APPROVED AS RECOMMENDED OTHER_ VOTE OF SUPERVISORS V/ UNANIMOUS{ABSENT I AYES: NOES: ABSENT: ABSTAIN: 1 HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN MEDIA CONTACT: BARTON J.GILBERT(313-7140) AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. CC: County Administrator(via UM) ATTESTED f County Auditor-Controller(via UM) PHIL A HEL ,CLERK OF THE BOARD OF Lessor(via UM) SUPER ORS AND COUNTY ADMINISTRATOR Health Services Department(via UM) County Counsel(via UM) Risk Management(via UM) Orig:General Services Department-UM BY 4+ DEPUTY Buildings and Grounds(via UM) 303PURBO.498 I=B.dp M382 (10188) C .. LEASE SUMMIT CENTRE INVESTORS, INC. TO CONTRA COSTA COUNTY FOR 2534 ARNOLD DRIVE, MARTINEZ, CALIFORNIA Draft April 3, 1998 wc-2£1852 LEASE TABLE OF CONTENTS SUMMIT CENTRE INVESTORS, INC. TO CONTRA COSTA COUNTY FOR 2530 ARNOLD DRIVE MARTINEZ, CALIFORNIA SECTION A: BASIC TERMS AND CONDITIONS A.1. PARTIES:,... ......... ....................................... ............................ A.2. LEASE OF PREMISES: ................................................... ........ A.3. TERM:....................................................................................... A.4. RENT:...................... ................................................................. A.5. ADDITIONAL RENTAL:.......................................................... A.6. JANITORIAL: ............................................................................ A.7. SERVICES AND UTILITIES:................................................... A.8. MAINTENANCE AND REPAIRS: ................ .......................... A.9. NOTICES: .................................... ............................................ A.10. ATTACHMENTS: ................................................ .................... A.11. WRITTEN AGREEMENT: .............. ................. ................. A.12. TIME IS OF THE ESSENCE..................................................... SECTION B: STANDARD PROVISIONS B.1. HOLDING OVER:.................. .................................................. B.2. USE OF PREMISES:................................................................. 13.3. HOLD HARMLESS: ....................................... .......... B.4. ALTERATIONS, FIXTURES, AND SIGNS: ............................ B.5. DESTRUCTION:....................................................................... B.6. QUIET ENJOYMENT:..... ..................--.................................. B.7. DEFAULTS:.............................................................................. B.8. SURRENDER OF PREMISES: ............ ........... ............—......... B.9. SUCCESSORS AND ASSIGNS: ............. ............... ...............- B.10. SEVERABILITY:...................................................................... B.11. INJUNCTION, INVALIDATION OR DELAY BY COURT..... B.12. WASTE; NUISANCE:...I.......I...—............ ....... ........................ B.13 CONDEMNATION: .......... ........... ................... ......... ........ SECTION C: SPECIAL PROVISIONS C.1. TENANT IMPROVEMENT ALLOWANCE:............................ C.2 CONSTRUCTION OF TENANT IMPROVEMENTS:---. C.3. COMPLETION AND OCCUPANCY:... ................. ........... CA PRIOR POSSESSION: ............ ............................................. C,5 ASSIGNMENT OR SUBLEASE,:..... ............. .......................... C.6 LESSOR'S RIGHT OF ACCESS................................................ C.7. RECOGNITION, SUBORDINATION AND ATTORNMENT:. C.S. TAXES ON COUNTY'S PROPERTY: .... ................................ C.9. PARKING AGREEMENT:.............--....................................... C.10 RULES AND REGULATIONS: ......—...... ......................... ...... C.11 RECORDING:.............. ................................................... C.12 CONDITION OF THE PREMISES: ................. ........................ C.13 OPTION TO PURCHASE: ........................................................ C.14 SURVIVAL OF COVENANTS:.......................... ...... ........ ' C.15 SIGNATURE BLOCK ...... ... .................. ..................... EXHIBITS EXHIBIT A: PREMISES. EXHIBIT B: PARKING AGREEMENT Draft April 3, 1998 we-20852 EXHIBIT C: RULES AND REGULATIONS EXHIBITD: LEGAL DESCRIPTION EXHIBIT'E: PRELIMINARY TITLE REPORT EXHIBIT'F: DEFINITIONS- EXHIBIT G: MEMORANDUM OF LEASE EXHIBIT H: JANITORIAL SERVICES EXHIBIT I: SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT Draft April 3, 1498 we-20852 LEASE 2530 Arnold Drive Martinez, California for Health Services Department SECTION A: BASIC TERMS AND CONDITIONS A.I. PARTIES: Effective as of February 1, 1998, SUMMIT CENTRE INVESTORS, INC., a Delaware Corporation, hereinafter called "LESSOR," and the COUNTY OF CONTRA COSTA, a political subdivision of the State of California, hereinafter called "COUNTY," mutually agree and promise as follows: A.2. LEASE OF PREMISES: LESSOR, for and in consideration of the rents, hereby leases to COUNTY, and COUNTY leases from LESSOR, those certain premises ("Premises") described as follows: Approximately 55,785 square feet of rentable space on the third and fourth floors, being; all of the third and fourth floors, as indicated on the plan attached hereto and made a part hereof as Exhibit A. in the office building known as One Summit Centre located at 2530 Arnold Drive, Martinez, California(the`Building"), together with non-exclusive use of the building parking lot. As part of the consideration for this Lease, the COUNTY will occupy additional space which will become Premises subject to this Lease as provided hereinbelow, which shall be referred to as "Additional Premises." A.3. TERM: The term of this Lease (the "Lease") shall be for ten (10) years and eleven (11) months, commencing February 1, 1998 and ending December 31, 2008. A.4. RENT: COUNTY shall pay to LESSOR as rent for the use of said Premises a rental as shown below("Base Rent"), payable in advance, without any deduction or offset whatsoever. Base Rent shall be paid on or before the tenth day of each month during the term of this Lease. Payments shall be mailed to: Summit Centre Investors, Inc. C/O Jones, Lang, Wooten, P.O. Box 45612, San Francisco, CA 94145. Rent may not be prepaid more than one (1) month in advance.', A. Minimum Rent: Except for Suite 300 as described below, the rent for the Premises, and the Additional Premises, shall be as follows: Monthly Rental Per Period Rentable Square Foot we-20852 -1- Draft April 3, 1998 t 4 April 1, 1998 through April 30, 2002 $1.50 May 1, 2002 through August 31, 2005 $1.60 September 1, 2005 through December 31, 2008 $1.70 B. Minimum Occul2ancy Schedule: COUNTY shall pay rent for the following spaces, whether occupied or not, commencing on the following schedule: Rental Commencement Space Date Ground Floor, minimum of 8,000 rentable July 1, 1998 square feet of Additional Premises in addition to Suites 100 and 190 Third and Fourth floors, total of 55,785 square January 1, 1999 ' feet, including Suite 300 If the COUNTY occupies any Premises or Additional Premises earlier than such scheduled date, rent shall commence in accordance with Subsection A, above, beginning on the date of such occupation. t9 C. Suite 300: COUNTY is presently leasing Suite 300 under a lease dated January 27, 1998 (the"January 27, 1998 Lease"). Upon commencement of this Lease, said January 27, 1998 Lease shall terminate and Suite 300 shall become part of the AdditionalPremises under this Lease. COUNTY shall pay rent for Suite 300 in the amount of$13,500 per month until January 1, 1999. As of January 1, 1999,',the rental for Suite 300 shall be as provided in Subsection A above. COUNTY acknowledges and understands that Suite 300 is "As Is", as defined in Section C.12. A. D. Suite 190: Commencing April 1, 1998, COUNTY may have possession and use of Suite 190, the "Deli", together with the food service equipment, furniture, and fixtures. COUNTY shall accept the suite, food service equipment, furniture and fixtures "As Is". Any repairs or improvements to the space shall be at COUNTY's expense, but funds for such repairs or improvements may be allocated from the COUNTY's share of the total Tenant Improvement Allowance, at COUNTY's option. The COUNTY shall not be liable for rent on account of its occupancy of Suite 190 until December 31, 1999. If COUNTY remains in possession of Suite 190 after December 31, 1999, it shall become Additional'Premises, and rental shall be as provided in Subsection A above. -2- Draft April 3, 1998 we-20852 E. Suite 100: COUNTY is presently leasing Suite 100, containing approximately 4,108 rentable square feet, under a lease dated December 30, 1997. Upon commencement of this Lease, the December 30, 1997 lease for Suite 100 will be terminated, and Suite 100 shall become Additional Premises under this Lease. Base Rent for Suite 100 shall be as provided in Subsection A, above. F. Additional Premises: (1) COUNTY shall lease a minimum of 8,000 rentable square feet of additional space on the first floor other than Suites 100 and 190 (the"Additional First Floor Premises"), prior to July 1, 1998, and shall be liable for rent for the Additional First Floor Premises as of July 1, 1998, regardless of whether COUNTY is occupying this space or whether Tenant Improvements for such space have been completed, in accordance with Subsection B, above. Rental shall be as provided in Subsection A above. This space may be developed from a portion or all of the currently vacant Suites 120, 130, 140 or 195, or any other first floor suite which may come available. Upon the identification of the Additional First Floor Premises the parties shall execute an amendment to this Lease verifying the exact location and size of the Additional First Floor Premises. (2) On written request of COUNTY, LESSOR shall provide any required tenant improvements (the"Tenant Improvements") to the Additional Premises in the manner and with funding as provided hereinbelow. The Additional Premises shall be delivered to COUNTY, with any requested Tenant Improvements substantially completed, defined in Section C.2.C.3. Upon such delivery the Additional Premises shall be subject to the terms of this [,ease. Construction of the Tenant Improvements shall be completed in accordance with the provisions of Sections C.2 and C.3, below. (3) Should COUNTY desire to occupy a portion of the space described hereinabove before July 1, 1998, COUNTY shall give reasonable written notice to LESSOR of its intent. Base Rent shall commence for that portion at the rate provided in Subsection A above unless it has already commenced at such rate in accordance with Subsection B. A.5. ADDITIONAL RENTAL: In addition to the Base Rental as specified i in this Lease, COUNTY agrees to pay to LESSOR(during each calendar year subsequent to the _3_ wc-20852 Draft April 3, 1998 Base Year, as hereinafter defined (the "Base Year"), as additional rent ('Additional Rental") its pro rata share of the total dollar increase, if any, over the Base Year, in Operating Expenses paid or incurred by LESSOR in such year. The Base Year shall be 1998. Base Year expenses shall be determined as if the Building had been rine hundred percent (100%)occupied by the full term of the Base Year. A. Operating Expenses: For the purpose of determining Additional Rental, "Operating Expenses" shall mean all of LESSOR's costs and expenses paid or incurred in operating and maintaining the Property for a particular calendar year or portion thereof as reasonably determined by LESSOR including all additional costs and expenses of operation and maintenance of the Property which LESSOR determines thavit would have paid or incurred during such year if the Building had been one hundred percent (100%) occupied. Operating Expenses shall include without limitation: (i) all general real estate taxes and all special assessments, specifically excluding taxes on change of ownership and penalties assessed on delinquent payment of any taxes; costs and expenses of contesting the validity or amount of real estate taxes; insurance premiums; water, sewer, gas, electrical, heating, lighting, air conditioning, ventilation and other utility charges, including surcharges, and the cost of all license, permit and inspection fees; service and other charges incurred in the operation and maintenance of the elevators and the heating, ventilation and air-conditioning system; cleaning and other janitorial services; tools and supplies; repair costs; landscape maintenance costs; security services; license, permit and inspection fees; management fees, the office rent and wages of employees directly engaged in the maintenance, operation and security of the Property, including taxes and insurance relating thereto; trash removal; cost of all supplies, materials and labor used in the operation, repair, replacement and maintenance of the Property; the cost of all maintenance and service agreements for the Property and the equipment thereon, including, but not limited to, energy management services, window cleaning, floor waxing, services by engineers and gardeners; costs of any additional services not provided to the Property at the commencement of the Lease but thereafter provided by LESSOR at COUNTY'S request; and, in general, all other costs and expenses which would generally be regarded as -4- Draft April 3, 1998 we-20852 operating and maintenance costs and expenses, including those which would normally be amortized over a period not to exceed 5 years. (ii) the cost of any usual and customary capital expenditures made to the Building by LESSOR that are reasonably required for the continued proper operation and maintenance of the Premises as determined by generally accepted accounting principles and practices (except as otherwise provided herein), including, but not limited to, those that reduce operating expenses or that are required under any governmental law or regulation not applicable to the Building or not in effect at the time it was constructed, such cost to be amortized over a reasonable period with a return on capital at the then current interest rate on the unamortized balance or at such higher interest rate as may have been paid by LESSOR on funds borrowed for the purpose of constructing such capital improvements. . Operating Expenses shall not include(i) repairs to or replacements of the structure or structural elements of the Premises, provided that the cost of any such repair or replacement shall be included in Operating Expenses in the following instances: (A) where such repair or replacement is required in order to comply with any laws or insurance requirements, and COUNTY has the responsibility for payment of the costs thereof pursuant to the terms of Subsection^of this Lease; (B) where such repair or replacement is for the purpose of correcting a condition of the Premises in order to comply with a law or insurance requirement and such condition was not a violation of any laws or insurance requirements on the date of this Lease, and such condition is not due to LESSOR'S gross negligence; or(C) if the repair or replacement is requested by COUNTY, whether to effect savings in the future costs of operation of the Premises or otherwise. In addition, any substantially full replacement or overhaul of any"base building" (as that term is used for purposes of engineering and architectural design work) portion of the building systems that would be considered a capital improvement under generally accepted accounting principles and practices (as opposed to any partial replacement, overhaul or repair of any "base building" portion of the building system that is incidental to the ordinary maintenance and operation of the Premises), provided that the costs of any substantially full replacement or overhaul of any "base building" portion of building system shall be included as an operating expense if such replacement or -5- Draft April 3, 1998 we-20852 overhaul is(A) made as a result of any alterations or improvements made by COUNTY (unless such substantially full replacement or overhaul would otherwise be required under the provisions of this Lease to be made at LESSOR'S expense without reimbursement if COUNTY were not making an alteration or improvementand is merely accelerated in time due to COUNTY'S alterations, in which case the cost of such work shall be excluded from Operating Expenses), or(B) required because COUNTY'S use is other than for general office use as presently conducted in comparable premises as of the date of this Lease, or(C) attributable to COUNTY'S gross negligence. (iii) Federal and State taxes imposed upon or measured by the gross receipts or income of LESSOR shall not be considered a part of Operating Expenses unless a future change in the method of taxation causes any franchise, gross receipts, income, profit or other tax to be levied against LESSOR in substitution in whole or in part for or in lieu of or in addition to any tax included as an Operating Expense hereunder. In such event, any such franchise, gross receipts, income, profit or other tax shall (with appropriate adjustments, where necessary) be deemed to be Operating Expenses for the purposes hereof. For the purpose of this Section, payments made by tenants of the Building, either to third parties or to LESSOR, under agreements for direct reimbursement for services (e.g., separately metered utilities, separately contracted janitorial services, property taxes directly reimbursed to LESSOR, etc.) and broker's commissions, expense of remodeling, and like costs of leasing space in the Building shall not be included in Operating Expenses. B, Monthly PAyment of Estimated Additional Rental: COUNTY's proportionate share of Operating Expenses for 1999 and each subsequent calendar year shall be estimated by LESSOR, and written notice thereof shall be given to COUNTY. Upon receipt of said written notice from LESSOR, the estimated Additional Rental shall be due and payable and COUNTY agrees to pay LESSOR each month, at the same time the Base Rental is due, an amount equal to one-twelfth (1/12th) of the estimated annual Additional Rental due. Whenever the costs of any capital improvements, alterations or replacements are included in Operating Expenses pursuant to this Section,,then unless for accounting purposes under generally accepted accounting principles and practices LESSOR would -6- we-20$52 Draft April 3, 1998 Y be permitted to treat the full amount of such costs as expenses allocable to the current year, LESSOR shall be required to pay only the amortized portion of such costs for the calendar year in which such costs were incurred and for any subsequent calendar years during the Lease term, with the period of amortization being calculated on the basis of the useful life of the particular capital improvement, alteration or replacement as reasonably estimated by LESSOR. C. Revisions of Estimated Additional Rental: If real estate taxes, or any portion of Operating Expenses including utility,janitorial or other services, increase during a calendar year, LESSOR may revise the estimated Additional Rental during such year by giving COUNTY written notice to that effect, and thereafter COUNTY agrees to pay LESSOR, in each of the remaining months of such year, an additional amount equal to the amount of such annual increase in the estimated Additional Rental divided by the number of months remaining in such year. D. Annual Adjustment to Additional Rental: After the end of each calendar year, LESSOR shall prepare and deliver to COUNTY a statement showing COUNTY's total amount of Additional Rental Within thirty(30) days after receipt of the aforementioned statement, COUNTY agrees to pay LESSOR, or if COUNTY has overpaid, LESSOR shall credit against the next Additional Rental payment or payments die from COUNTY, as the case may be, the difference between COUNTY's actual Additional Rental due for the preceding calendar year and the estimated Additional Rental paid by COUNTY during such year. Anything herein to the contrary notwithstanding, in no event will the Base Rental provided for in this Lease ever be reduced. A.6. JANITORIAL: LESSOR shall furnish janitorial service, in the manner and to the extent described in Exhibit Ii. The work of the building janitor shall not be hindered by COUNTY. A.7. SERVICES AND UTILITIES. Provided COUNTY is not in default of any term, condition or covenant of the Lease, LESSOR agrees to furnish or cause to be furnished to the Premises gas, water(for drinking, cleaning, and lavatory purposes only), and electricity during the term of this Lease. However, LESSOR shall not bear the utility costs(including meter installation and air-conditioning costs)occasioned by machines of -7- we-20852 Draft April 3, 1998 high electrical consumption. COUNTY shall not install or cause to be installed any utility service meter, electrical panel box, air-conditioning equipment, or any other similar machines of high electrical consumption without the prior express written consent of LESSOR. LESSOR shall furnish tempered and refrigerated water at those points of supply provided for the general use of other tenants in the Building, heated and refrigerated air-conditioning in season (at temperature, in amount and at times considered by LESSOR to be standard or in compliance with any governmental regulations); such service after hours, on Saturday afternoons, Sundays and holidays will be furnished only upon the prior written request of COUNTY who shall bear the entire cost thereof. LESSOR shall furnish routine maintenance, painting and lighting service for all public areas and special service areas of the Building in the manner and to the extent deemed by LESSOR to be standard. COUNTY will pay all telephone charges, including without limitation, connection charges, installation charges, and any labor costs incurred in connection with COUNTY's requirements for such service. LESSOR shall not be liable in damages or otherwise for failure, stoppage or interruption of any service furnished to COUNTY,nor shall the same be construed as an eviction of COUNTY, and shall not, in any instance, give rise to any right by COUNTY to an abatement of rent, or relieve COUNTY from the operation of any covenant or agreement; provided, however, that in the event of any failure, stoppage or interruption thereof, LESSOR shall use reasonable diligence to resume service promptly. Notwithstanding anything hereinabove to the contrary, LESSOR reserves the right from time to time to make reasonable and nondiscriminatory modifications to the above standards for services and utilities. LESSOR shall provide or cause to be provided, cleaning and maintenance of the public portions of the Building, including painting and landscaping surrounding the Building. A.8. MAINTENANCE AND REPAIRS: A. LESSOR shall keep the roof and exterior of the building in good order, condition, and repair and shall maintain the structural integrity of the building, including the exterior doors and their fixtures, closers and hinges, glass and glazing, and all locks and key systems used in the demised Premises. LESSOR may at its option and at the sole cost and expense of COUNTY, repair or replace any damage or injury done to the wc-20852 Draft April:i, 1998 Building or any part thereof, caused by COUNTY, COUNTY's agents, employees, licensees, invitees or visitors; COUNTY shall pay the reasonable cost thereof to LESSOR on demand. COUNTY further agrees to maintain and keep the interior of the Premises in good repair and condition at COUNTY's expense. B. COUNTY shall keep and maintain the interior of the Premises in good order, condition, and repair, but LESSOR shall repair damage to the interior';caused by failure to maintain the exterior in good repair, including damage to the interior caused by roof leaks and/or interior and exterior wall leaks. Unless otherwise expressly stipulated herein, LESSOR.shall not be required to make any improvements or repairs of any kind or character in the Premises during the term of this Lease, except for structural repairs to the outside exterior walls, corridors, windows, roof and other structural elements and equipment of the Building, and such additional maintenance as may be necessary because of damage by persons other than COUNTY, its agents, employees, invitees or visitors. C. LESSOR.shall repair and maintain the electrical, lighting, water, and plumbing systems in good order, condition, and repair. D. LESSOR. shall maintain and repair the heating, ventilating, and air-conditioning systems. E. LESSOR shall maintain the parking lot, landscaping, sprinkler system, and exterior lighting system in good order, condition, and repair. F. COUNTY shall provide and install, at the direction of the Fire',Marshal, the necessary number ofA-B-C fire extinguishers for the Premises at no cost to LESSOR. COUNTY shall thereafter maintain, repair, and replace said extinguishers. G. COUNTY shall not suffer any waste on or to the demised Premises. Fl. LESSOR shalt be responsible for the correction of any code violations which may exist in the Premises; provided, however, that LESSOR shall not be liable for correction of code violations which arise out of and are directly related to a change in COUNTY's occupancy or use of said Premises. A.9. NOTICES: All notices given hereunder shall be in writing and shall be deemed to have been given if personally delivered or deposited in the United States mail i postage prepaid, certified or registered, return receipt requested, and.addressed to the other party as follows or as otherwise designated by written notice hereunder from time to time: -9- we-20852 Draft April 3, 1998 To LESSOR: Summit Centre Investors, Inc. c/o Pohang Steel America 2530 Arnold Drive, Suite 195 Martinez, CA 94553 with a copy to: Morrison & Foerster LLP 101 Ygnacio Valley Road, Suite 450 P.O. Box 8130 Walnut Creek, CA 94596-8130 Attn. Pamela J. Reed, Esq. To COUNTY: Contra Costa County General Services Department Lease Management Division 1220 Morello Avenue, Suite 100 Martinez, CA 94553 A. 10. WRITTEN AGREEMENT: Neither party has relied on any promise or representation not contained in this Lease. All previous conversations, negotiations, and understandings are of no further force or effect. This Lease may be modified only by a writing signed by both parties. The headings of the paragraphs are for convenience only and are not a part of this Lease, nor shall they be considered in construing the intent of this Lease. A.12. TIME IS OF THE ESSENCE of each and all of the terms and provisions of this Lease. SECTION B: STANDARD PROVISIONS B.I. HOLDING OVER: Any holding over after the term of this Lease as provided hereinabove shall be construed to be a tenancy from month to month, subject to the terms of this Lease so far as applicable; provided, however, that monthly rental for such holdover period shall be 125% of the then-applicable rent provided in this Lease. 8.2. USE OF PREMISES: The Premises shall be used during the term for purposes of conducting various general office, administrative, and training fi►nctions of COUNTY. COUNTY will not use, occupy or permit the use of occupancy of the Premises for any purpose which is, directly or indirectly, forbidden by law, ordinance or governmental or municipal regulation or order, or which may be dangerous to life, limb or property; or permit the maintenance of any public or private nuisance; or do or permit any other thing which may disturb the quiet enjoyment of any other tenant of the Building; or keep any . substance, including, but not limited, to Hazardous Substances (as defined herein) on the Premises, or carry on or permit any operation which might emit offensive odors, or cause dangerous or hazardous or other offensive conditions on or around the Premises or other -10- we-20852 Draft April 3, 1998 portions of the Property or use any apparatus which might make undue noise or set up vibrations in the Building, or permit anything to be done which would increase the fire and extended coverage insurance rate on the Building or contents, and if there is any increase in such rate by reason of acts of COUNTY, then COUNTY agrees to pay such increase promptly upon demand by LESSOR. Payment by COUNTY of any such rate increase shall not be a waiver of COUNTY duty to comply herewith. B.3. HOLD HARMLESS: COUNTY agrees to indemnify and hold harmless the LESSOR from the COUNTY's share of any and all claims, costs, and liability for any damage, injury or death of or to any person or the property of any person, including attorneys'fees, arising out of negligent acts, errors or omissions of the COUNTY, its officers or employees. COUNTY shall not be liable in the case of any structural, mechanical or other failure of equipment of the Building; owned and maintained by the LESSOR unless such failure was caused by the negligent acts, errors or omissions of the COUNTY, its officers or employees COUNTY shall not be liable for damage which is attributable, in whole or in part, to the negligence or willful misconduct of LESSOR, which results in damage to any person or property. LESSOR agrees to indemnify and hold harmless the COUNTY from the LESSOR's share of any and all claims, costs, and liability for any damages, injury or death of any person or the property of any person, including attorneys' fees, arising out of negligent acts, errors or omissions of the LESSOR, its agents or employees. BA. ALTERATIONS, FIXTURES, AND SIGNS: COUNTY may make any lawful and proper minor alterations to the Premises, and attach fixtures and signs in or upon the Premises, which shall remain COUNTY property and may be removed therefrom by COUNTY prior to the termination of this Lease. All such signs, alterations, or fixtures must meet with existing code requirements. Prior to commencing construction of any alterations or installation of any signs or fixtures, COUNTY must obtain LESSOR'S prior written approval of the proposed alteration, sign or fixture. In connection therewith, COUNTY must submit to LESSOR reasonable information and pians regarding the proposed alteration, fixture or sign, including without limitation, plans and specifications, if available. All costs and expenses incurred in connection with such alterations, signs or fixtures shall be the responsibility of COUNTY. Any damage to the Premises caused by -1 we-20852 l- Draft April 3, 1998 the construction, installation or removal of such alterations, fixtures or signs, shall be immediately repaired by COUNTY, at COUNTY'S sole cost and expense, and COUNTY shall indemnify and hold LESSOR harmless from any and all damage caused by COUNTY in connection with such construction, installation or removal. If the COUNTY fails to complete any necessary repairs within a reasonable time, repair may be undertaken by LESSOR. If such repairs are undertaken by LESSOR, COUNTY shall reimburse LESSOR for the cost of such repairs immediately upon demand. COUNTY shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for COUNTY. In the event that COUNTY shall not, within ten (10) days following the imposition of any such lien, cause the same io be released of record by payment of posting of a proper bund, LESSOR shall have, in addition to all other remedies provided herein and by law, the right but not the obligation, to cause the same to be released such means as it shall deem proper, including payment of or defense against the claim giving rise to such lien. All sums paid by LESSOR and all expenses incurred by it in'connection therewith shall create automatically an obligation of COUNTY to pay an equivalent amount together with interest at the rate of twelve percent (12%)per annum as Rent. No work which LESSOR permits COUNTY to perform in the Premises shall be deemed to be for the immediate use and benefit of LESSOR so that no mechanics or other lien shall be allowed against the estate of LESSOR by reason of its consent to such work. B.5. DESTRUCTION: A. Destruction Due to (tisk Covered by InsUrance: If, during the term, the Premises or the Building and other improvements in which the Premises are located are totally or partially destroyed from a risk covered by LESSOR's insurance, rendering the Premises totally or partially inaccessible or unusable, LESSOR, upon receiving notice of such damage, shall restore the Premises or the Building and other improvements in which the Premises are located to substantially the same condition as they were in immediately before destruction. [VERIFY THAT THIS IS ALLOWED BY THE LOAN I;yOCUIVI€ENTS1. Such destruction shall not terminate this Lease; however, COUNTY shall be entitled to a proportionate reduction of rent while such repairs are being made, such proportionate reduction to be based upon the extent to which the portion of the -12- Draft Apra 3, 1998 we-20852 Premises unusable by COUNTY bears to the total area of the Premises. If the existing laws do not permit such restoration, either party can terminate this Lease immediately by giving written notice to the other party. If the cost of the restoration exceeds the amount of proceeds received from the LESSOR's insurance, LESSOR can elect to terminate this Lease by giving notice to COUNTY within fifteen (15) days after determining that the restoration cost will exceed the insurance proceeds. If LESSOR.elects to terminate Lease, COUNTY, within fifteen (15) days after receiving LESSOR's notice to terminate, can elect to pay to LESSOR, at the time COUNTY notifies LESSOR of its election, the difference between the amount of insurance proceeds and the cost of restoration, in which case LESSOR shall restore the Premises. LESSOR shall give COUNTY satisfactory evidence that all sums contributed by COUNTY as provided in this paragraph have been expended by LESSOR in paying the cost of restoration. If LESSOR elects to terminate this Lease and COUNTY does not elect to contribute toward the cost of restoration as provided in this paragraph, this Lease shall terminate. 13. Destruction Due to Risk Not Covered by Insurance: If, during the term, the Premises or the Building and other improvements in which the Premises are located are totally destroyed from a risk not covered by the LESSOR's insurance, rendering the Premises totally or partially inaccessible or unusable, LESSOR shall not be rewired to restore the Premises or the Building and other improvements in which the Premises are located, but may restore the Premises to substantially the same condition as prior to the destruction, in LESSOR'S sole discretion. In the event of such restoration, the Lease shall not terminate; however, COUNTY shall be entitled to a proportionate reduction of rent while such repairs are being made, such proportionate reduction to be based upon the extent to which the portion of the Premises unusable by COUNTY bears to the total area of the Premises. If LESSOR chooses not to restore the Premises, either party can terminate this Lease immediately by giving written notice to the other party. ' C. Extent of LESSOR's-Obligation to Restore: If LESSOR is required or elects to restore the Premises as provided above, LESSOR shall not be required to'restore alterations made by COUNTY, COUNTY'S improvements, COUNTY'S trade fixtures, -13- Draft April 3, 1998 we-20852 and COUNTY'S personal property, such excluded items being the sole responsibility of COUNTY to restore. D. Except as provided in Subparagraph E below, if any portion of the Property shall be damaged by fire or other casualty resulting from the fault or negligence of COUNTY, or the agents, employees, licensees, or invitees of COUNTY, such damage shall be repaired by and at the expense of COUNTY under the direction and supervision of LESSOR, and rent shall continue without abatement. E. Waiver Of Subrogation: LESSOR and COUNTY hereby waive any rights each may have against the other, on account of any loss or damage occasioned to LESSOR or COUNTY, as the case may be, their respective property, the Premises, its contents or to the other portion of the Property arising from any risk covered by valid and enforceable fire and extended coverage insurance, to the extent of such coverage. LESSOR and COUNTY each agree to cause an endorsement to be furnished to their respective insurance policies recognizing this waiver of subrogation. B,6. QUIET ENJOYMENT. LESSOR covenants that COUNTY shall at all times during the said term peaceably and quietly have, hold, and enjoy the demised Premises without suit, trouble or hindrance from or on account of LESSOR as long as COUNTY fully performs hereunder. B.7. DEFAULTS: A. Default By Count- 1. ount1. The occurrence of any of the following shall constitute a material default and breach',of this Lease by COUNTY: (a) COUNTY'S failure to pay Base Rent or Additional Rent required to be paid under this Lease if the failure continues for five (5) days after written notice of the failure from LESSOR to COUNTY. If, however, payment is not made within five (5) days after said written notice due to circumstances beyond the reasonable control of the General Services Department of COUNTY or successor department, which circumstances may, without limitation hereby, include the failure of COUNTY to adopt a budget, then COUNTY shall make Such payment within such additional time (but not to exceed a total of sixty (60) days from the DISTRICT's notice to COUNTY of such breach), as is reasonably required to resolve the problems preventing the COUNTY from -14- we-20852 Draft April 3, 1998 making such payment, provided that the COUNTY has commenced with due diligence and dispatch to resolve the circumstances causing the delay in payment and thereafter continues with due diligence and dispatch to resolve the problem and provided further that COUNTY is not refusing to pay with the intention of terminating the Lease. (b) COUNTY'S failure to comply with any other material term or provision of this Lease if such failure continues for thirty(30) days after written notice of the failure from DISTRICT to COUNTY specifying in reasonably sufficient detail the nature of said breach. If the required cure of the noticed default cannot be completed within thirty (30) days, COUNTY's failure to perform shall constitute a default under the Lease unless COUNTY undertakes to cure the failure within thirty (30) days and diligently and continuously attempts to complete the cure as soon as reasonably passible. (c) COUNTY admits in writing that it cannot meet its obligations as they become due; or is declared insolvent according to any law; or assignment of COUNTY's property is made for the benefit of creditors; or a receiver or trustee is appointed for COUNTY or its property; or the interest of COUNTY under this Lease is levied on under execution or other legal process; or any petition is filed by or against COUNTY to declare COUNTY bankrupt or to delay, reduce or modify COUNTY's capital structure (provided that no such levy, execution, legal process or petition filed against!COUNTY shall constitute a breach of this (_,ease if COUNTY shall vigorously contest the same by appropriate proceedings and shall remove or vacate the same within thirty(30) days from the date of its creation,service or filing). (d) The abandonment or vacation of the Premises by COUNTY. COUNTY'S absence from the Premises for thirty (30) consecutive days shallconstitute abandonment. 2. Lessor's Remedies. In the event of any default by COUNTY, LESSOR, at its option, shall have the following remedies, which are not exclusive and are cumulative, in addition to any and all other rights and remedies available at law or in equity: (a) LESSOR can continue this Lease in full force and effect, and the Lease will continue in effect as long as LESSOR does not terminate COUNTY's right to possession, and LESSOR shall have the right to collect rent when due. At any time during the occurrence of an Event of Default, however, LESSOR may terminate the -15- Draft April 3, 1998 we-20852 COUNTY's right to possession of all or any portion of the Premises. In addition, and during the period COUNTY is in default, LESSOR.can enter the Premises and relet all or any part of the Premises to third parties for COUNTY's account, and COUNTY shall vacate any portion of the Premises relet under this Section upon ten (10) days prior written notice. COUNTY shall be liable immediately to LESSOR for all casts LESSOR incurs in reletting any portion of the Premises, including without limitation„broker's commissions, expense of remodeling the Premises required by reletting, and like costs. Reletting can be for a period shorter or longer than the remaining term of this Lease. COUNTY shall pay to LESSOR the rent due under this Lease on the dates the rent is due, less the rent LESSOR receives from any reletting. No act by LESSOR allowed by this paragraph shall"terminate this Lease unless LESSOR notifies COUNTY that LESSOR elects to terminate this Lease. After COUNTY'S default and for as long as LESSOR does not terminate COUNTY's right to possession of the Premises, if COUNTY requests LESSOR's consent to a proposed assignment or subletting, said consent shall not be unreasonably withheld. If LESSOR elects to relet all or any portion of the Premises as provided herein, rent that LESSOR receives from reletting shall be applied to the payment of; First, any indebtedness from COUNTY to LESSOR other than rent due, Second, all costs, including, but not limited to, maintenance, brokerage fees, expenses of remodeling, and like costs, incurred by LESSOR in reletting; Third, rent due and unpaid under this Lease. After deducting the payments referred to above, any sum remaining from the rent LESSOR receives from reletting shall be held by LESSOR and applied in payment of future rent as rent becomes due under this Lease. In no event shall COUNTY be entitled to any excess rent received by LESSOR. If, on the date rent is due under Lease, the rent received from the reletting is less than the rent due on that date, COUNTY shall pay to LESSOR, (i) the remaining rent due, and (ii) all costs, including, but not limited to, maintenance, brokerage fees, expenses of remodeling, and like costs, which LESSOR incurred in reletting the Premises. (b) LESSOR can terminate COUNTY's right to possession of all or any portion of the Premises at any time, by written notice to COUNTY. COUNTY shall -16 we-20852 Draft April 3, 1998 ...........................................................11.1111, ............................................................ ............................................................... . .......................................................... ....................................................... ........................................ ............ vacate such portion of the Premises within ten(10)days after receipt of such notice. No act by LESSOR other than giving written notice to COUNTY shall terminate this Lease. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on LESSOR's initiative to protect LESSOR's interest under this Lease shall not constitute a termination of COUNTY's right to possession. On termination, LESSOR has the right to recover from COUNTY: (i) The worth, at the time of the award, of the unpaid rent that had been earned at the time of termination of this Lease: (ii) The worth, at the time of the award, of the amount by which the unpaid rent that would have been earned after the date of termination of thi's Lease until the time of award exceeds the amount of the loss of rent that COUNTY proves could have been reasonably avoided; (iii) The worth, at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of the loss of rent that COUNTY proves could have been reasonably avoided: and (iv) Any other amount, including reasonable attorneys' fees and court costs, necessary to compensate LESSOR for all detriment proximately caused by COUNTY's default. "The worth, at the time of the award, " as used in (a) and (b) of this paragraph, is to be computed by allowing interest at 10% or the maximum rate an individual is permitted by law to charge, whichever is lower. (c) LESSOR'S Right to Cure COUNTY's Default. LESSOR, in its sole discretion, at any time after COUNTY commits a default, can cure the default at COUNTY'S cost. If LESSOR at any time, by reason of COUNTY'S default, pays any sum or does any act that requires the payment of any sum, the sum paid at a later date shall bear interest at ten percent(10%)from the date the sum is paid by LESSOR until LESSOR is reimbursed by COUNTY. The sum, together with interest on it, shall be additional rent, and COUNTY is obligated to pay such amounts immediately upon demand. (d) In addition, LESSOR may pursue any other remedy now or hereafter available to LESSOR under California law. -17- we-20852 Draft April 3, 1998 ..............................I...... ....... ................................................... ............ ............................. .................. B. DEFAULT BY LESSOR: 1. The occurrence of any one or more of the following events shall constitutela default and breach of this Lease by LESSOR: (a) Failure to fund the construction of Tenant Improvements or to commence construction within [two(2)] months after the date ofCOUNTY's written request to proceed; failure to pursue construction to completion by the Completion Date, absent force majeure(as defined herein). (b) The failure to construct the improvements substantially;in accordance . with plans and specifications approved by the COUNTY. (c) The failure to pay taxes, assessments, construction costs or mortgage interest prior to'delinquency therefor. (d) if during the term: (i) LESSOR shall make an assignment for the benefit of creditors, or (ii) A receiver, liquidator or trustee shall be appointed for the property of LESSOR, or of all or a substantial'portion of the Premises by reason of the insolvency or alleged insolvency of LESSOR. 2. Notice of Default: Notwithstanding anything to the contrary contained herein, LESSOR shall not be considered to be in default under this Lease unless: (a) COUNTY has given LESSOR written notice specifying the default, and (b) LESSOR. has failed for thirty (30) days to cure the default, if it is curable, or to institute and diligently pursue reasonable corrective or ameliorative acts for noncurable defaults. 3. Waiver, Voluntary Acts: No waiver of any default shall constitute a waiver of any other breach or default, whether of the same or any other covenant or condition. No waiver, benefit, privilege or service, voluntarily given or performed by either party shall give the other any contractual right by custom, estoppel or otherwise. 4. COUNTY's Right to Cure: With respect to any default by LESSOR.that would result in underlying liability to the COUNTY or would impair or endanger the safety of the occupants or the public, upon said default continuing for fifteen (15) working days without cure or commencement of the curing by LESSOR, COUNTY shall we-20852 Draft April 3, 1998 have the right to cure such default on the part of LESSOR, and LESSOR shall reimburse COUNTY for the reasonable cost thereof immediately upon demand. In no event shall such amounts be deducted from the rent due LESSOR. COUNTY shall provide LESSOR with reasonable evidence of such cure, including invoices and other relevant documentation, prior to reimbursement. B.B. SURRENDER OF PREMISES: On the last day of the said term, or sooner termination of this Lease, COUNTY will peaceably and quietly leave and surrender to LESSOR these Premises with their appurtenances and fixtures(except signs and fixtures referred to hereinabove) in good order, condition, and repair, reasonable use and wear thereof and damage by earthquake, fire, public calamity, by the elements, by Act of God, or by circumstances over which COUNTY has no control excepted. B.9. SUCCESSORS AND ASSIGNS: The terms and provisions of this Lease shall extend to and be binding upon and inure to the benefit of the heirs, successors, and assigns of the respective parties hereto. B.10. SEVERABILITY: In the event that any provision herein is held to be invalid by any court of competent jurisdiction, the invalidity of any such provision shall not materiallyprejudice either the COUNTY or LESSOR in its respective rights and obligations contained in the valid provisions of this Lease. B.11. INJUNCTION, INVALIDATION OR DELAY BY COURT: In the event the performance ofthis Lease or the approval of plans and specifications or environmental documents is enjoined or invalidated or delayed by a court of competent jurisdiction, COUNTY and LESSOR hereby release each other from any claim, cost, damages or liability which either may assert against the other arising from such injunction, invalidation or delay. B. 12. WASTE, NUISANCE: COUNTY shall not commit, or suffer to be committed, any waste upon the leased Premises, or any nuisance or other act or thing which may disturb the quiet enjoyment of any other Lessee or occupant of the complex in which the leased Premises are located. COUNTY shall conform its use and occupancy of the Premises to the standards and modes of use applicable to a first-class office building. . B. 13. CONDEMNATION: -19- we-20852 Draft April 3, 1998 In the event that all or any part of the Premises or improvements thereto are appropriated by the exercise of the power of eminent domain, COUNTY shall have a compensable interest and a right to share in the condemnation award only to the extent specifically attributable to the value of the improvements made by COUNTY and which COUNTY can remove upon the termination or earlier expiration of the Lease. SECTION C: SPECIAL PROVISIONS C-1. TENANT IMPROVEMENT ALLOWANCE: LESSOR shall make funds available for Tenant Improvements on an as needed basis, not to exceed the amount of $2,276,000, which shall be the total Tenant Improvement Allowance. The Tenant Improvement Allowance shall comprise three different portions: "LESSOR'S Share", "COUNTY's Share", and "Ground Floor Allowance" as provided hereinbelow. These terms are strictly used as points of reference; the Tenant Improvement Allowance may be allocated to any space leased or to be leased, by COUNTY at COUNTY's discretion. However, any improvement cost exceeding the total Tenant Improvement Allowance will be at COUNTY's sole expense. The approval of any contract for Tenant Improvements shall indicate which portions of the cost shall be LESSOR's Share, Tenant's'Share, Ground Floor Allowance, or COUNTY expense. A. LESSOR'S Share: $836,775 (55,785 sq ft x $15.00 per sq ft) shall be initially provided by LESSOR. If the Option to Purchase is exercised by COUNTY, the amount of LESSOR's Share provided by LESSOR shall be repaid to LESSOR at the close of escrow. If the Option to Purchase is not exercised by COUNTY, no reimbursement of LESSOR's Share shall be made. B. COUNTY'S Share: $1,394,625 (55,785 sq ft x $25.00 per sq ft) shall be provided by LESSOR, bearing ten percent (10%) simple interest, which interest shall be paid as additional rent of$11,621.87 per month until one of the following occurs: (a) If the Option to Purchase is exercised, the entire amount of COUNTY's Share,'including accrued and unpaid interest, if any, provided by LESSOR shall be repaid to LESSOR by COUNTY',at close of escrow; (b) If COUNTY does not exercise the Option!to Purchase, the amount of COUNTY's Share provided by LESSOR will be amortized at 10% interest over the remaining term of the Lease, commencing January 1, 2000. C. Ground Floor Tenant Improvement Allowance: LESSOR shall contribute $5.00 per rentable square foot of space leased by COUNTY(other than Suite 100 and the -20- we-20852 Draft April 3, 1998 Deli, Suite 190)on the ground floor. This amount may be applied and used at the COUNTY's discretion and shall not be refunded or amortized. C.2. CONSTRUCTION OF TENANT IMPROVEMENTS: A. Plans: As part of the consideration for this Lease, upon written request by COUNTY, LESSOR agrees to engage one or more architects acceptable to the COUNTY to prepare plans and specifications for the construction of Tenant Improvements required for COUNTY use and occupancy of the Premises. All costs of architectural services shall be paid from LESSOR's share of the Tenant Improvement Allowance. ' It is anticipated that construction of Tenant Improvements will occur in two or more phases. (1) COUNTY, at its option and after consultation with LESSOR prior to LESSOR's engagement of any architects, may determine to provide or contract for plans and specifications for construction of Tenant Improvements, but shall provide LESSOR with reasonable prior notice of such determination. (2) Upon completion of construction documents, the architect shall submit an itemized estimate of all project costs to both COUNTY and LESSOR for approval. After construction documents and associated itemized estimates are reasonably approved by COUNTY, in writing, LESSOR shall proceed with bidding. (3) After final approval of construction documents by COUNTY, LESSOR shall not make or cause to be made any material changes in plans or specifications without the prior written consent of COUNTY. B. Bidding:: (1) LESSOR shall solicit bids from a list of general contractors approved by the COUNTY and obtain at least three bids for each phase of construction. LESSOR shall obtain at least two competitive bids for any specialty trade if requested by COUNTY. LESSOR shall submit all such bids to COUNTY for approval. LESSOR shall make lchanges, additions or deletions upon receipt of written Change Orders from COUNTY and such items shall be charged at direct cost. All costs and expenses incurred in connection with such solicitation shall be reduced from the Tenant Improvement Allowance. (2) Upon receipt of each bid, LESSOR shall analyze the impact of the bids on the estimated cost of design and construction, and submit the analysis to COUNTY for -21- we-20$52 Draft April 3, 1998 approval. Thereafter COUNTY and LESSOR shall jointly determine what, if any, adjustments in the design and construction are required to keep the estimated cost within the Tenant Improvement Allowance. (3) If the Tenant Improvement Allowance is exceeded by the lowest bona fide bid, the COUNTY at its option shall do one of the following: (a) approve the Construction Contract if additional COUNTY funds are available to pay the amount exceeding the Tenant Improvements Allowance, (b) authorize rebidding or renegotiating of the work within a reasonable time, or(c)require the architect to modify the construction documents as necessary to stay within the Tenant Improvement Allowance; provided, however, that the costs of any such modification by the architect 'shall be chargeable against the Tenant Improvement Allowance, C. Construction: (1) LESSOR. shall commence construction within [thirty(30)] calendar days after the last to occur(i) of the issuance of all building permits based upon the approved construction documents, and (ii) receipt of written Notice to Proceed from the COUNTY. The improvements shall be complete, including final inspection and issuance of a Notice of Completion, within the period contemplated by the applicable construction schedule (which schedule shall be agreed to and approved by the parties in advance) subject to farce majeure (defined below) (the"Completion Date'). (2) COUNTY hereby reserves the right to inspect the Premises during construction of improvements as specified herein, upon reasonable prior notice and during normal business hours. The COUNTY will not interfere with LESSOR's work and will notify LESSOR in writing of any requests or recommendations. COUNTY understands that a construction site may be hazardous and assumes all risk of injury to person and/or property in connection with such inspection, and will indemnify and hold harmless LESSOR and LESSOR's employees, affiliates and any related parties for any and all damage incurred in connection with such inspections. LESSOR shall retain the design consultants`,to review customary construction contractor shop drawings and product data submittals. Any costs or expenses incurred by LESSOR in connection with such drawings and submittals, shall be deducted from the Tenant Improvement Allowance. LESSOR shall furnish at least three sets of such drawings and submittals to the -22- we-20852 Draft April 3, 1998 COUNTY. LESSOR shall also retain the design consultants to inspect the improvements during construction as necessary to became familiar with the,progress and quality of the work, to determine if the work is proceeding in accordance with the construction documents, and to guard against defects and deficiencies in the work ofLESSOR's construction contractor(s); provided, however, that any costs and expenses incurred by LESSOR in connection with retaining such design consultant shall be chargeable against the Tenant Improvement Allowance. LESSOR shall keep the COUNTY informed of the progress and quality of the work. (3) In the event the improvements are not substantially completed by the Completion Date, LESSOR shall terminate the construction contract by giving contractor at least ten,(I0)'calendar days prior written notice, and LESSOR shall select another contractor acceptable to the COUNTY to complete the work. Any additional cost incurred in completion'shall be funded from the Tenant Improvement Allowance. Alternatively, COUNTY, at its option, may determine to complete the Tenant Improvements which shall be funded from the'Tenant improvement Allowance. As used herein, "substantial completion" means that the Premises are available for use in COUNTY's normal business operations notwithstanding that certain of the Tenant Improvements remain incomplete or improperly completed (the"Punchlist Items"). LESSOR shall diligently pursue completion of Punchlist Items after the Completion Date. (4) Upon LESSOR'S written request, the dates in this Section C.2 (Construction of Tenant Improvements) shall be extended by the time lost as a result of force majeure; provided such time lost is entirely beyond LESSOR's reasonable control. As used in this Lease, "force Majeure" shall mean (i) acts of God, including, but not limited?.to, earthquakes, floods, fire, weather conditions that are abnormal for a period of time, that LESSOR could not have reasonably foreseen and provided for; (ii) inclement weather; (iii) failure to obtain the necessary materials, tools, implements, and appliances due to governmental acts, restrictions or regulations; (iv) any civil disorders; (v) labor disturbances, strikes, boycotts, lockouts, or similar obstructive action by any person or persons; (vi) shortages of materials or supplies; (vii) damage to work in progress by reason of fire, floods or other casualties; or(viii) vandalism. -23- wc-2(}852 Draft April 3, 1998 L (5) LESSOR. shall comply with the California Labor Code Sections 1720-1861 as they apply to the accomplishment of the Tenant Improvements. In addition, upon request of COUNTY, LESSOR shall disclose fully all information concerning the construction of improvements and shall make all records, contracts, and subcontracts available for COUNTY inspection upon reasonable notice and during normal business hours. C.3. COMPLETION AND OCCUPANCY: The following procedure shall apply for completion and acceptance of the Tenant Improvements, A. Upon LESSOR's completion of any Tenant Improvements, LESSOR. shall provide written notice of completion to the County Lease Manager(the"Notice of Completion"). The COUNTY shall inspect such Tenant Improvements within three(3) business days after receipt of the Notice of Completion, and shall accept or reject such Tenant Improvements within six (6) business days after receipt of such written notice. If COUNTY does not provide such notice within such time, COUNTY shall be deemed to have accepted such Tenant Improvements. B. The sole basis for rejection of any Tenant Improvements shall be material nonconformity with plans and specifications. In the event COUNTY rejects any Tenant Improvements within the applicable time, COUNTY shall provide LESSOR with a reasonably detailed list of the deficient portions or details of the Tenant Improvements. C. LESSOR shall immediately commence to complete or correct the;rejected portion. D. Acceptance of said improvements shall not constitutes a waiver of any warranty of workmanship or material by any contractor for such Tenant Improvements. LESSOR shall not be deemed to make any representations or warranties with respect to workmanship or fitness for purpose, and COUNTY shall look solely to the contractors, subcontractors and materials suppliers for any warranty. LESSOR shall assign to COUNTY any warranties for such work. E. Upon completion and acceptance of Tenant Improvements as provided in Sections C2 and C3 above, COUNTY shall pay LESSOR(directly or reduced from the Tenant Improvement Allowance, at COUNTY's option) for such Tenant Improvements as specified in Section C-1'.B., above. -24- we-20852 Draft Apri13, 1998 ..................................................................11.1111, ..................................................................... ..................................................................... ............................................................... ............................................................ ...................................... CA. PRIOR POSSESSION: COUNTY shall have the right to install fixtures, telephones, and other items required to prepare space for COUNTY's occupancy and to store furniture, supplies, and equipment where such work or storage can be effected without unduly interfering with LESSOR's completion of the improvements. LESSOR shall have no liability or responsibility for any such installation by COUNTY. C.5. ASSIGNMENT OR SUBLEASE: COUNTY shall not have the right to assign this Lease except to the Contra Costa County Public Facilities Corporation, or as otherwise approved by LESSOR in LESSOR'S sole discretion; provided, however, that any such assignment shall not operate to release COUNTY from its obligations under this Lease. COUNTY shall have the right to sublease the Premises or any part(hereof to others upon receiving the prior written consent of LESSOR, which consent may be withheld in Landlord's reasonable discretion. COUNTY shall provide LESSOR with such information regarding such assuming or subletting entity in connection with requesting LESSOR's approval of any assignment or sublease, as LESSOR shall reasonably request. In the case of a sublease to any party that is not a COUNTY department, COUNTY shall pay to LESSOR monthly, together with monthly installments of Base Rent hereunder, seventy five percent (75%)of any sums payable to COUNTY in connection with such sublease in excess of the proportionate amount (on a rentable square footage basis) of Base Rent payable by COUNTY under this Lease for the space covered by such sublease. In the case of an Assignment, COUNTY shall pay to LESSOR, as and when received, seventy five percent (75%)of any transfer or assignment fee, purchase price or other consideration received by COUNTY in connection with the Assignment attributable to the value of this Lease C.6. LESSOR'S RIGHT OF ACCESS: LESSOR or its authorized agents shall at any and all reasonable times have the right to enter the Premises to inspect the same, to supply janitorial service or any other service necessary to be provided hereunder, to repair the Premises or any other portion of the Property all without being deemed guilty of an eviction of COUNTY, and may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, provided that such activity shall not unduly interfere with the business of COUNTY. COUNTY hereby waives any and all claims for damages for any injury or -25- we-20852 Draft April 3, 1998 .............. .............I.....................................''I'll,........ ................................................................. ........ ..............................................-.............. ..................... inconvenience to or interference with COUNTY's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby, except in the case of LESSOR's gross negligence. For each of the aforesaid purposes, LESSOR shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding County's vaults, safes and offices or file rooms containing files or recordsclassified by law as confidential files or documents. LESSOR shall have the right to use any and all means which LESSOR may deem proper to open any door(s) in an emergency without liability therefore. LESSOR agrees to notify COUNTY twenty-four(24) hours in advance of LESSOR's intent to enter the Premises, excepting janitorial service, normal maintenance and emergencies. C.7. RECOGNITION, SUBORDINATION AND ATTORNMENT: A. This Lease shall be subject only to and subordinate to the Deed of Trust recorded June 4, 1992 in Book 17561 of official records Page 1 under Recorder's Serial Number 9.2140302 in favor of the Cho flung Bank, a Korean banking corporation ("Lender"') 601 California Street, Suite 1502, San Francisco, California 94108. As a material consideration for this Lease, LESSOR agrees to obtain from Lender a subordination, nondisturbance and attornment agreement in substantially the form attached hereto as Exhibit I [TO BE LENDER'S FORM, APPROVED BY COUNTY]. B. In the event of the sale or assignment of LESSOR's interest in the Premises, COUNTY shall,attorn to and recognize such purchaser or assignee or mortgagee as LESSOR under this Lease. C. In the event of any proceedings brought for the foreclosure of any mortgage or Deed of Trust covering the Property, or in the event of the exercise of a power of sale pursuant thereto and upon the written request of a purchaser at such foreclosure proceedings, COUNTY shall, at the request or such purchaser, attorn to and recognize such purchaser as LESSOR under this Lease. D. LESSOR, upon reasonable notice by COUNTY, shall provide COUNTY with a non-disturbance agreement from any other mortgage and/or lien holder, in substantially the form attached hereto as Exhibit I. E. The above subordination and attornment clauses shall be self-operative and no further instruments of subordination or attornment,need be required by any mortgagee, -2b- we-Zo852 Draft April 3, 1998 trustee, purchaser or assignee. In confirmation thereof, COUNTY agrees that, upon the request of LESSOR, or any such mortgagee, COUNTY shall execute and deliver whatever instruments may be required for such purposes in order to carry out the intent of this Section. C.8. TAXES ON COUNTY'S PROPERTY: COUNTY shall be liable for and shall pay, prior to their becoming delinquent, any and all taxes and assessments levied against any personal property or trade or other fixtures placed by COUNTY in or about the Premises, 'including any additional real estate taxes or assessments which may be levied against the Property by reason ofCOUNTY`s fixtures and/or furnishings in the Premises. C.9. PARKING AGREEMENT. COUNTY agrees to abide by the Parking Agreement attached hereto and made a part hereof as Exhibit B. C.10. RULES AND REGULATIONS: COUNTY agrees to abide by the Rules and Regulations attached hereto and made a part hereof as Exhibit C. C.11. RECORDING: A Memorandum of Lease shall be executed and recorded by the parties hereto in the form attached hereto as Exhibit G. This will be in lieu;of recording the entire instrument. Upon termination of this Lease (except through purchase), COUNTY shall immediately execute a Quitclaim Deed to LESSOR to clear the Lease from Lessor's title. C. 12. CONDITION OF THE PREMISES: A. Disclosure. LESSOR shall make available to COUNTY or its agents, upon reasonable prior notice and during normal business hours, copies of all maintenance or operation manuals, building or site plans, warranty information, and similar documents which it has in its possession, including any and all information in LESSOR'S possession regarding the environmental and structural condition of the Premises, and shall authorize COUNTY to obtain copies of any such documents which are in the possession of others. COUNTYacknowledges that COUNTY has made its own independent investigation of the Premises, and has reviewed that certain phase I prepared by as Job No. regarding the environmental condition of the Property, and is familiar with all information contained therein. Further, and based upon such investigation, COUNTY accepts the Premises and Additional Premises"AS IS" with all faults, and it is agreed that LESSOR shall not have any obligation to alter, remodel, improve, repair, decorate, or -27- «c-20852 Draft April 3, 1998 paint the Premises or Additional Premises, or any part thereof, except to complete.the Tenant )Improvements as specifically set forth in this Lease, and that no representations respecting the condition of the Premises or Additional Premises have been made by LESSOR or LESSOR's agents. B. No Pending Actions. Based upon the actual knowledge of LESSOR, without investigation, LESSOR has received no notice of any violation or any existing, pending or threatened investigation by any governmental authority under any applicable federal, state or local law, regulation or ordinance pertaining to air and water quality, including without limitation, any applicable environmental zoning and other land use matters. As used herein, "actual knowledge" means the current actual knowledge of without any independent investigation or inquiry, without any review of files, and without any interviews of any ether employees, representatives, agents,officers, directors or employees of LESSOR, and not any implied, imputed or constructive knowledge of themselves or any other individual C. Future Actions. COUNTY and LESSOR each agrees to immediately notify the other party in writing of(1) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any environmental law; (2) any claim made or threatened by any person against COUNTY, LESSOR,the Premises, or any improvements relating to damage, contribution cost, recovery compensation, loss or injury resulting from or claimed to result from any Hazardous Substances, (3) any reports made to any environmental agency arising out of or in connection with any Hazardous Substances in or removed from the Premises; including any complaints, notices, warnings or asserted violations in connection therewith; and (4)any release of Hazardous Substances on the Premises. D. Environmental Release and Indemnity. (1) By COUNTY. COUNTY shall not release, use, generate, manufacture, store or dispose of Hazardous Substances on, under or about the Premises or transfer any Hazardous Substances to or from the Premises. There is excluded from this prohibition Hazardous Substances of the type commonly used in offices in California, in ordinary and reasonable quantities, subject to the condition that they are used, stored and disposed of in accordance with law. COUNTY agrees to hold harmless, defend, indemnify and -28- wc-20852 Draft April 3, 1998 protect LESSOR from and against all liability, loss, damage, costs, penalties, fines and/or expenses (including attorneys fees and court costs) arising out of or in any way connected with (1) COUNTY's breach or violation of any covenant, warranty or prohibition in this Lease concerning environmental matters or(2)the activities, acts or omissions of COUNTY, its agents, employees, servants, contractors, subtenants, licensees, or business invitees in or about the Premises which affect the Premises regarding the release, discharge transportation or storage of any Hazardous Substances or other kinds of contamination or pollutants of any kind into the air, soil, groundwater or surface water on, in, under or from the Premises, whether such condition, liability, loss, damage, cost, penalty fine and/or expense shall accrue or be discovered before or after termination of this Lease. E. Survival. The clauses of this section C.12 shall survive the expiration or earlier termination of this Lease until all claims within the scope of this section C.12 are fully, finally and absolutely barred by the applicable statute of limitations. C.13. OPTION TO PURCHASE: A. As part of the consideration for this Lease, LESSOR hereby grants to COUNTY the exclusive right and privilege to purchase the real property(the "Property," which includes the Premises) described as follows: FOR DESCRIPTION SEE EXHIBIT D ATTACHED HERETO AND MADE A PART HEREOF. COUNTY SPECIFICALLY ACKNOWLEDGES AND AGREES THAT LESSOR IS SELLING AND COUNTY IS PURCHASING THE PROPERTY ON AN "AS 1S WITH ALL FAULTS" BASIS AND THAT, EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.4, COUNTY IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM LESSOR, ITS AGENTS, OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION: (i)the quality, nature, adequacy and physical condition of the Property, including, but not limited to, the structural elements, foundation, roof, appurtenances, access, landscaping, parking facilities and the electrical, mechanical, HVAC, plumbing, sewage, and utility systems, facilities and appliances, (ii)the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii)the existence, quality, nature, adequacy and -29- we-20852 Draft April 3, 1998 physical condition of utilities serving the Property, (iv)the development potential of the Property, and the Property's use, habitability, merchantability, or fitness, suitability, value or adequacy of the Property for any particular purpose, (v) the zoning or other legal status of the Property or any'other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any applicable codes, laws,;regulations, statutes, ordinances, covenants, conditions and restrictions of any governmental or quasi- governmental entity or of any other person or entity, (vii)the presence of Hazardous Materials on, under or about the Property or the adjoining or neighboring property, (viii) the quality of any labor and materials used in any improvements on the Real Property, (ix) the condition of title to the Property, (x) the leases, contracts,'or other agreements affecting the Property and (xi)the economics of the operation of the Property. This option to purchase may be exercised at any time prior to December 31, 1999 for TWELVE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($12,200,000.00) plus reimbursement of tenant improvement amounts as provided in Section C.1, TENANT IMPROVEMENT ALLOWANCE, above. B. To exercise the purchase option, COUNTY shall give sixty (60) days prior written notice to LESSOR(the"Option Notice"). C. LESSOR shall deliver to COUNTY an executed grant deed in recordable form conveying the Property. Title to the Property shall be conveyed by LESSOR.to COUNTY free and clear of all liens, encumbrances, covenants, conditions, restrictions, easements, and rights of way of record, leases, and other matters of record,except current taxes, a lien not yet delinquent, those portions of current assessments not yet due and payable, leases for Suites 125, 150, 170, 180, and 200, and exceptions 4, 5, 6, 7, 8, 9, 10, 11 (NO7F-,VEE IF 11 CANCFLS 7), 12, 13, 14, 15, 16, 17, 18, 19, 22, 23, 27, 31, in the Old Republic Title Company preliminary report dated November 10, 1997, order no. 239832-SU, attached hereto and made a part hereof as Exhibit E. . D. The sale shall be consummated through an escrow (the"Escrow")to be opened with First American Title Insurance Company, , Attn: after the Option Notice has been given to LESSOR, and Escrow shall be deemed to be opened under this paragraph on the date the Option Notice has been delivered to Escrow. The parties shall execute all documents required by the escrow -30- wc-20852 Draft April 3, 1998 holder as long as they are consistent with the provisions of this paragraph. Escrow shall close no later than December 31, 1999, unless further extended by the Parties, in writing. Escrow shall be deemed to be closed pursuant to this paragraph on the date the grant deed is recorded. E. At the close of Escrow, escrow holder must be prepared to issue a CLIA Standard Coverage Policy of Title Insurance in the amount of the purchase price insuring title to the Property vested in COUNTY, subject only to the matters set forth in subparagraph C, above. F. Rent shall be prorated as of close of Escrow, based on a 365-day year. G. Transfer taxes and recording fees on the deed, the cost of the title policy referred to in subparagraph E, charges of escrow, and all other closing costs shall be paid by COUNTY. H. If the Property is damaged by an insured casualty between the date COUNTY exercises the option to purchase and the date set for the close of Escrow, COUNTY shall nevertheless close the purchase of the Propery and LESSOR shall assign to COUNTY all of the insurance proceeds. If the Property is damaged by an uninsured casualty between the date COUNTY exercises the option to purchase and the date set for close of Escrow, and the cost of repair exceeds $1,000,440 then COUNTY shall have the right to rescind the exercise of its option to purchase the Property and terminate the Lease. 1. On close of Escrow, LESSOR shall provide to COUNTY, or its agents, copies of all maintenance or operation manuals, building or site plans, warranty information, and similar documents which it has in its possession, and shall authorize COUNTY to obtain copies of any such documents which are in the possession of others. J. On close of Escrow, this Lease shall terminate and the parties shall be released from all liabilities and obligations under this Lease except as otherwise provided. C.14. SURVIVAL OF COVENANTS: Any covenants and agreements that this Lease does not require to be fully performed prior to the close of Escrow, shall survive the closing date and shall be fully enforceable after the closing date in accordance with their terms. -31- wc-20852 Draft April 3, 1998 C.15. SIGNATURE BLOCK COUNTY LESSOR COUNTY OF CONTRA COSTA, a SUMMIT CENTRE.INVESTORS, INC: political subdivision of the State of California By By Director of General Services RECOMMENDED FOR APPROVAL: By By Deputy County Administrator By Health Services Department By Deputy General Services Director By Lease Manager APPROVED AS TO FORM: VICTOR T. WESTMAN, County Counsel By Deputy EXHIBITS EXHIBIT A: PREMISES. EXHIBIT B: PARKING AGREEMENT. EXHIBIT C: RULES AND REGULATIONS. EXHIBIT D: LEGAL DESCRIPTION EXHIBIT E: PRELIMINARY TITLE REPORT EXHIBIT F: DEFINITIONS EXHIBIT G: MEMORANDUM OF LEASE EXHIBIT H: JANITORIAL SERVICES EXHIBIT 1: SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT -32- we-20852 Draft April 3, 1998 EXHIBIT "A," Premises (See Attached) -33- wc-Zt3852 Draft>April 3, 1998 EXHIBIT"B" Parking Agreement (See Attached) -34- Draft April 3, 1998 r�vc-20852 EXHE131T "C" Rules and Regulations (See Attached) -35- we-20862 Draft April 3, 1998 EXHIBIT""D" Legal Description (See Attached) -36- we-20852 Draft April 3, 1998 EXHIBIT"E" Preliminary Title Report (See Attached) -37- wc-20852 Draft>Apri(3, 1998 ......... ......... ......... ......... .........._.. ..... ........_........... ......... .......... . ....... .. ....... ......... ......... ......... __.._ ......... . ........ .......... ........ ......... ......... ......... ....._. .... _._._.__....................................................................... EXHIBIT"F" Definitions (See Attached) -38- WC-20$52 Draft April 3, 1998 s EXHIBIT"G" Memorandum of Lease RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Morrison&Foerster LLP 101 Ygnacio Valley Road, Suite 450 P.D. Box 8130 Walnut Creek, CA 94596-8130 Attention: Pamela J. Reed, Esq. MEMORANDUM OF LEASE T1-ns MEMORANDUM oF LEASE, is dated as of April 1998, by and between SUMMIT CENTRE INVESTORS, INC., ("Landlord"), and COUNTY OF CONTRA COSTA, a,political subdivision of the State of California ("Tenant"). Landlord hereby leases to Tenant a portion of that certain real property described in Exhibit attached hereto and incorporated herein by reference,consisting of the Building commonly known as One Summit Centre, located at 2530 Arnold Drive, Martinez, California, commencing as of February 1, 1998, and terminating on December 31, 2008, on the terms and conditions set forth in that certain Lease between Landlord and Tenant dated as of April 1998 (the"Off Record Lease"). The Off Record Lease contains an option to purchase, as provided therein. Draft April 3, 1998 wc-20852 x IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease so that third parties might have notice of the tease by Landlord and Tenant herein. Landlord: Tenant.- SUMMIT enant.SUMMIT CENTRE INVESTORS, INC. COUN'T'Y OF COMMA COSTA a political subdivision of the State of California By: Name: By: Title: Director of General Services By: RECOMMENDED FOR APPROVAL: Name: By: Title: Deputy County Administrator By: Health Services Department By: Deputy General Services Director By: Lease Manager APPROVED AS TO FORM: VICTOR J. WESTMAN, County Counsel, By: Deputy Draft April 3, 1998 Svc-20852 ExrBTT'A DESCRIPTioN OF PROPERTY Draft April 3, 1998 we-20852 A h EXHIBIT"U" Janitorial Services (See Attached) Draft April 3, 1998 we-20852 ...................I........................... ............................................ ................................................. EXHIBIT"I" Subordination, Nondisturbance and Attornment Agreement [INSERT LENDER'S FORM] Draft April 3, 1998 we-20852 ............... .................................. ..................... ................................ ......................... ....................................................................... .................................................... . ..............