TRIPLE NET LEASE AGREEMENT
BY AND BETWEEN
SURPLUS PROPERTY AUTHORITY OF THE CITY OF RICHMOND,
a public body corporate and politic
AS LANDLORD
and
RICHMOND GROWN, LLC,
a California limited liability company
AS TENANT
DATED AS OF _ July 75,2019
09683100218189557.V15
TABLE OF CONTENTS
Page
DEFINITIONS.. 1.
1.1 "Accessibility Laws". 1
1.2 "ACMs". 1
1.3 "Additional Rent". 1
1.4 "Affiliate"...... 1
1.5 "Applicable Laws".
1.6 "Available Assets" 1
1.7 "Award" 1
1.8 "Bankruptcy Laws" 1
1.9 "Base Building Project" .... 1
1.10 "Base Rent" ...2
1.11 "Certificate of Occupancy" 2
1.12 "City" 2
1.13 "Closing" 2
1.14 "Construction Agreement"..
1.15 "Construction Escrow Amount"
1.16 "Controlled Entity"
1.17 "Environmental Laws"
1.18 "Escrow Holder"
1.19 "Event of Default"
1.20 "Existing Improvements". 2
1.21 "Extension Options" 2
1.22 "Extension Terms" 2
1.23 "Final Plans and Specifications" 2
1.24 "Hazardous Materials" 2
1.25 "Index" 2
1.26 "Insurance Proceeds Error! Bookmark not defined.
1.27 "Interest Rate" 3
1.28 "Landlord Party" 3
1.29 "Landlord's Award"... 3
1.30 "Landlord's Compliance Notice" 3
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TABLE OF CONTENTS
(continued)
Page
1.31 "LBP" ....3
1.32 "Lease". ... 3
1.33 "Lease Date". ....3
1.34 "License Taxes"..... ..3
1.35 "Major Alterations"... 3
1.36 "Map". 3
1.37 "Minimum Required Annual Combined Receipts" .3
1.38 "Occupant" 3
1.39 "Official Records" 3
1.40 "Operations Certificate"... 3
1.41 "Option Notice" 3
1.42 "Partial Taking" 3
1.43 "Person" ....4
1,44 "Premises" ....4
1.45 "Project" ..4
1.46 "Purchase Price" ..4
1.47 "Rent" ...4
1.48 "Rent Commencement Date"... ...4
1.49 "Sale Notice" ...4
1.50 "Security Deposit" 4
1.51 "Substantial Completion". .......4
1.52 "Taking"... .. 4
1.53 "Temporary Taking"...... 4
1.54 "Tenant" ...4
1.55 "Tenant's Notice of Agreement to Prohibit Cannabis Use" ...4
1.56 "Tenant's Award"..... ...4
1.57 "Tenant's Interest"... ....4
1.58 "Tenant's Notice of Agreement to Prohibit Cannabis Use".. ....4
1.59 "Tenant's Notice of Election to Terminate" ....4
1.60 "Tenant's Property" ..4
09683100218189557.V15 ii
TABLE OF CONTENTS
(continued)
Page
1.61 "Term" ....5
1.62 "Total Taking".. . 5
1.63 "Use Authorizations".... 5
2. DEMISE OF PREMISES; CONDITION............. 5
2.1 Demise of Premises.... 5
2.2 Title and Condition of Premises. .....5
23 Memorandum of Lease... 8
2.4 Feasibility Contingency. 8
3. TERM 9
3.1 Initial Term; Extension Terms... 9
RENT AND OTHER CHARGES.... 10
4.1 Base Rent. 10
4,2 Payment of Base Rent.. ....10
4.3 Minimum Guaranty of Cannabis Taxes ..10
4.4 Additional Rent ..10
4.5 Net Lease.... ...11
4.6 Taxes and Other Charges.. 11
4.7 Permitted Contests... 12
USE AND QUIET ENJOYMENT; SURRENDER... 12
5.1 Use; Conditions. 12
5.2 Quiet Enjoyment. 13
5.3 Compliance with Law. .. 13
5,4 Compliance with Contractual Requirements . 13
5,5 Tenant's Property. 13
5,6 Ownership of Project….. 14
5.7 Surrender of Premises..... 14
5.8 Special Considerations Relating to Tenant's Use; Permits and Approvals Generally. 14
5.9 Permits and Approvals.. 18
NO MORTGAGES 18
09683100218189557.VI5 iii
TABLE OF CONTENTS
(continued)
Page
6.1 No Right to Mortgage…....... ... 18
SECURITY DEPOSIT ........................... ... 18
8. DESIGN AND CONSTRUCTION OF THE PROJECT.... ...19
8.1 The Base Building Project... ...19
8,2 Schedule and Requirements for Construction.. ..19
8.3 Alterations of Completed Base Building Project. ..19
8.4 Notice of Non-Responsibility. . 19
MAINTENANCE, REPAIR AND OPERATION ..20
9,1 Maintenance and Repair; Operation.. ..20
9.2 Inspection by Landlord.. ...20
9.3 Hazardous Materials. ...20
10. INDEMNITY, LIENS AND INSURANCE ...23
10.1 Indemnification. ..23
10.2 Liens ..24
10.3 Insurance Requirements. ....25
10.4 Insurance Provisions...... ..27
10.5 Waiver of Subrogation.... ...27
11. CASUALTY .....27
11.1 Collection of Claims ..27
11.2 Special Account. 27
11.3 Restoration. .. 28
11.4 Original or Modified Plans... ...28
11.5 Commencement and Completion of Restoration.. 28
11.6 No Abatement of Rent....... 28
11.7 . Demolition and Debris Removal Insurance.. ....28
12. CONDEMNATION. ..29
12.1 A Taking. 29
12,2 Special Account. ..29
12.3 Total Taking ..29
12.4 Partial Taking ..29
09683100218189557.VI5
TABLE OF CONTENTS
(continued)
Page
12.5. Restoration…...... ..30
12.6. Temporary Taking. ..30
12.7 Abatement of Rent. ...30
12.8 Demolition and Debris Removal Insurance.. ..30
13. DEFAULT; REMEDIES …..... ..30
13.1 Events of Default... ...30
13.2 Remedies for Default... 32
13.3 Rights Upon Termination. 34
13.4 Performance by Landlord. 34
13.5 Legal Costs. 34
13.6 Remedies Cumulative.. ..35
13.7 Force Majeure. 35
13.8 Limitations of Landlord's Liability. 36
14. RESTRICTIONS ON ASSIGNMENT AND TRANSFER 36
14.1 Selection of Tenant. 36
14.2 Prohibited Transfers.... .. 36
14.3 Permitted Transfers.. ...36
14.4 Landlord's Consent.... 37
14.5 • Transfers of Interests in Tenant... 38
15. SUBLETTING AND ESTOPPEL CERTIFICATES.. 38
15.1 Subletting.. ..38
15.2 Rent and Charges to Occupants .39
15.3 Estoppel Certificates... 39
16. LANDLORD'S RIGHTS 39
16.1 First Refusal. 39
16.2 • Landlord's Right to Transfer to Tenant. 40
17. REPRESENTATIONS AND WARRANTIES; AFFIRMATIVE COVENANTS ... 42 171 Representations and Warranties ..42
17.2 Affirmative Covenants of Tenant. .. 43
17.3 Maintenance of Business and Existence 43
09683100218189557,v15
TABLE OF CONTENTS
(continued) •
Page
17A Conduct of Business....... ..43
17.5 Compliance with Agreements.. ...43
17.6 Notification of Defaults.... ....43
17.7 Notification of Disputes... .. 43
17.8 Notification of Attachments. 43
17.9 Books and Records....... 43
17.10 Access to Records and Premises. 43
17.11 Financial Statements..... ..44
17.12 Agency Reports... 44
17.13 Further Information 44
17.14 Further Assurances.. 44
17.15 Current Information. ..44
17.16 Audit and Legal Costs.. 44
17.17 General Tenant Covenant... ...44
18. MISCELLANEOUS PROVISIONS....... ...44
18.1 No Recording of Lease... 44
18.2 No Merger of Title. 45
18.3 No Waiver. 45
18,4 Brokers 45
18.5 Arbitration 45
18.6 Time of Essence.... 45
18.7 Survival of Obligations ..... 46
18.8 Supplemental Documents.. 46
18.9 Invalidity of Provisions.. 46
18.10 Binding Effect 46
18.11 Pronouns. 46
18.12 Rights of Others; Third Party Beneficiaries 46
18.13 Amendments 47
18.14 Captions and Headings..... ...47
18.15 Governing Lai........... .. 47
09683100218189557.V15 vi
TABLE OF CONTENTS
(continued)
Page
18.16 Integration................................ ..47
19. NOTICES AND PAYMENTS................. ........................47
19.1 Notices, Demands and Other Instruments. ... 47
09683\002\8189557.V15 vii
INDEX OF EXHIBITS
Description of the Premises
B Parking Agreement
Form of Construction Agreement
09683100218189557.v15 vill
TRIPLE NET LEASE AGREEMENT
THIS TRIPLE NET EASE AGREEMENT, dated as of _Ink
made by and between SURPLUS PROPERTY AUTHORITY OF THE CITY OF RiCHMOND, a public body corporate and politic, as Landlord ("Landlord"), and RICHMOND GROWN, LILC, a California limited liability company, as Tenant ("Tenant").
RECITALS
Landlord is the owner of the Premises.
Landlord wishes to lease to Tenant, and Tenant wishes to lease fiom Landlord, the Premises for the development, redevelopment, and construction, and the subsequent leasing and operation, of the Premises, all on the terms and conditions contained herein.
Now, THEREFORE, in consideration of the rent and the mutual covenants and agreements and conditions herein contained, and for other valuable consideration, receipt of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. DEFINITIONS.
In this Lease, the following words shall have the following meanings, respectively:
1.1 "Accessibility Laws" shall have the meaning set forth in Section 2.2(h) hereof.
1.2 "ACMs" shall have the meaning set forth in Section 2.2(e) hereof.
1.3 "Additional Rent" shall mean all amounts due and payable by Tenant under this Lease other than Base Rent.
"Affiliate" shall mean any Person which owns or controls Tenant, is owned or controlled, duectly or indirectly, by Tenant, or is under common ownership with Tenant, and "control" means the power and authority to direct the day-to-day operations and long-term policies of a Person, whether by beneficial ownership, agreement or otherwise.
1.5 "Applicable Laws" shall mean all laws, statutes, orders, ordinances, zoning and other regulations and ordinances of federal, state, county, municipal and other governmental authorities having jurisdiction.
1.6 "Available Assets" shall have the meaning set forth in Section 13.8 hereof.
1.7 "Award" shall have the meaning set forth in Section 12.2 hereof.
1.8 "Bankruptcy Laws" shall have the meaning set forth in Section 13.1(f) hereof.
1.9 "Base Building Project" shall mean all of the permanent improvements to be constructed, redeveloped, and/or modified on the Premises by Tenant in accordance with the 09683100218189557 v15 1
Final Plans and Specifications and the Construction Agreement (and shall not include the Existing Improvements).
1.10. "Base Rent" shall mean the fixed annual rental amounts determined in :
accordance with Section 4.1 hereof.
1.I1 "Certificate of Occupancy" shall mean the final certificate issued by the City which permits the Project (and Existing Improvements) and all portions thereof for which a certificate of' occupancy would customarily be issued by the City to be legally occupied.
1.12 "City" shall mean the City of Richmond, a municipal corporation and charter city.
1.13 "Closing" shall have the meaning set forth in Section 16.2(d) hereof.
1.14 "Construction Agreement" shall have the meaning set forth in Section 8.2 hereof.
1.15 "Construction Escrow Amount" shall have the meaning set forth in Section 8.2 hereof.
1.16 "Controlled Entity" when used in connection with any entity shall mean a parent ot controlled subsidiary of such entity or a brother-sister entity controlled by such parent.
1.17 "Environmental Laws" shall have the meaning set forth in Section 9.3(a) hereof.
1.18 "Escrow Holder" shall have the meaning set forth in Section 16.2(d) hereof.
1.19 "Event of Default" shall mean those events defined in Article 13 hereof.
1.20 "Existing Improvements" shall mean the buildings, parking lots, driveways, sidewalks, landscaping and all other permanent improvements in existence as of the Lease Date and delivered to Tenant.
1.21 "Extension Options" shall have the meaning set forth in Section 3.1(b) hereof.
1.22 "Extension Terms" shall have the meaning set forth in Section 3.1(b) hereof.
1.23 "Final Plans and Specifications" shall mean a complete set of construction drawings and specifications setting forth in detail the requirements for the construction of the Base Building Project or Major Alterations submitted by Tenant to Landlord in accordance with the terms and requirements of the Construction Agreement.
1.24 "Hazardous Materials" shall have the meaning set forth in Section 9.3(a) hereof.
1.25 "Index" shall mean the Consumer Price Index for All Urban Consumers, San Francisco Oakland San Jose, California, All Items 1982-1984 = 100 (as defined by the United States Department of Labor as of the date hereof). If publication of the Index ceases, or the composition thereof or method of calculation thereunder is substantially changed, the calculations required by this Lease shall be computed upon the basis of whatever index published 09683\002\8189557.V15 2
by the United States Department of Labor, or otherwise, is determined by Landlord as most nearly comparable as a measure of general changes in price levels for the San Francisco Bay Area metropolitan area.
1.26 "Insurance Proceeds" shall have the meaning set forth in Section11.2 hereof.
1.27 "Interest Rate" shall mean the lower of Ten Percent (10%) per annum or the highest rate permissible under Applicable Law.
1.28 "Landlord Party" shall mean the council members, partners, trustees, officers, directors, shareholders, members and managers of Landlord, and their respective officers, members, managers, partners, employees, and agents.
1.29 "Landlord's Award" shall have the meaning set forth in Section 12.2 hereof.
1.30 "Landlord's Compliance Notice" shall have the meaning set forth in Section
5.8(e) hereof.
1.31 "LBP" shall have the meaning set forth in Section 2.2(f) hereof.
1.32 "Lease" shall mean this Triple Net Lease Agreement as the same shall be amended from time to time.
1.33 "Lease Date" shall mean the date that Landlord and Tenant have both executed this Lease.
1.34 "License Taxes" shall have the meaning set forth in Section 4.3 hereof.
1.35 "Major Alterations" shall have the meaning set forth in Section 8.3 hereof.
1.36 "Map" shall have the meaning set forth in Section 16.2(a) hereof.
1.37 "Minimum Required Annual Combined Receipts" shall have the meaning set •forth in Section 4.3 hereof.
1.38 "Occupant" shall mean any lessee, licensee, concessionaire, franchisee or user of a portion of the Premises under a sublease, license, concession ox franchise or similar agreement whether with Tenant or any other person.
1.39 "Official Records" shall mean the Official Records of Contra Costa County, California.
1.40 "Operations Certificate" shall have the meaning set forth in Section 5.8(i) hereof.
1.41 "Option Notice" shall have the meaning set forth in Section 3.1(b) hereof.
1.42 "Partial Taking" shall have the meaning set forth in Section 12.4 hereof. 09683\002\8189557.V15 3
1.43 "Person" shall mean all individuals, limited liability companies, partnerships, corporations and other legal entities, trusts, and all governmental agencies and entities.
1.44 "Premises" shall the General Warehouse (Building 24), a 140,000 square foot World War II era warehouse located at 1324 Canal Boulevard, Richmond, California, 94804, as depicted on Exhibit A. The Premises is located at the Point Potrero Marine Terminal.
1.45 "Project" shall mean the renovation and improvement of an existing building, inclusive of the Base Building Project, and subsequent development and operation of revenue- producing improvements for the Permitted Use.
1:46 "Purchase Price" shall have the meaning set forth in Section 16.2(c) hereof.
1.47 "Rent" shall mean, collectively, Base Rent, Additional Rent and all other sums payable hereunder from time to time by Tenant.
1.48 "Rent Commencement Date" shall mean the date Tenant receives a Certificate of Occupancy for the Premises from the City of Richmond.
1.49 "Sale Notice" shall have the meaning set forth in Section 16.2(b) hereof.
1.50 "Security Deposit" shall have the meaning (if any) set forth in Section 7 hereof.
1.51 "Substantial Completion" shall mean the completion of the Base Building Project located on the Premises (excluding Occupant improvements) in accordance with the Final Plans and Specifications approved by Landlord and this Lease to the extent that only minor adjustments and punch list items remain to be performed.
1.52. "Taking" shall have the meaning set forth in Section 12.1 hereof.
1.53 "Temporary Taking" shall have the meaning set forth in Section 12.6 hereof.
1.54 "Tenant" shall have the meaning set forth in the first sentence hereof.
1.55 "Tenant's Notice of Agreement to Prohibit Cannabis Use" shall have the meaning set forth in Section 5.8(c) hereof.
. 1.56 "Tenant's Award" shall have the meaning set forth in Section 12.2 hereof.
1.57 "Tenant's Interest" shall have the meaning set forth in Section 16.1 (a) hereof.
1.58 • "Tenant's Notice of Agreement to Prohibit Cannabis Use" shall havé the meaning set forth in Section 5.8(e) hereof
1.59 "Tenant's Notice of Election to Terminate" shall have the meaning set forth in Section 5.8(e) hereof.
1.60 "Tenant's Property" shall have the meaning set forth in Section 5.5 hereof. 09683100218189557.15 4
1.61 "Term" shall mean the term of this Lease described in Article 3 hereof.
1.62 "Total Taking" shall have the meaning set forth in Section 12.3 hereof.
1.63 "Use Authorizations" shall have the meaning set forth in Section 16.2(a) hereof.
2. DEMISE OF PREMISES; CONDITIONS
2.1 Demise of Premises. Landlord hereby demises and leases to Tenant, and Tenant hereby demises and leases from Landlord, for the Term and upon the terms and conditions specified in this Lease, the Premises and Landlord's interest in and to all easements, rights and appurtenances relating to the Premises, if any.
2.2 Title and Condition of Premises.
(a) The Premises and all elements thereof are leased subject to (i) all zoning regulations, restrictions, rules and ordinances, building codes and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction; (il) all matters of record; (iii) all real estate taxes and assessments (subject to proration as provided in Section 4.6); (iv) all matters of record; and (v) all matters that would be disclosed by an accurate survey or an inspection of the Premises. The Premises are demised and leased in an "as is," "where is" "all faults" condition as of the Lease Date. Tenant has the right and is encouraged by Landlord to obtain a leasehold title policy by a recognized title insurance company. (b) Tenant understands and expressly acknowledges that unknown liabilities, conditions and defects may exist with respect to the Premises, and that Tenant explicitly took those possibilities into account in determining and agreeing to enter into this Lease.
Tenant shall not rely on any warranties or representations, express or implied, of Landlord, any Landlord Party or any agent, contractor or employee of Landlord or a Landlord Party relating to the Premises, the physical condition, development potential, operation, or income generated by the Premises or any other matter or things affected by of related to the Premises, except for the express warranties and representations, if any, expressly contained in this Lease, and no such representation or warranty shall be implied with respect to the Premises.
Without limiting the gencrality of the foregoing disclaimer of representations and warranties, except for the warranties and representations expressly contained in this Lease, Landlord specifically disclaims any warranties of representations of any kind of character, express or implied, with respect to (i) matters of title, (i) environmental matters relating to the Premises ot any portion thereof, including, without limitation, the presence of hazardous or toxic materials, including asbestos, or any mold or harmful or toxic materials in, on, under or in the vicinity of the Premises, (iii) geological conditions, including, without limitation, subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water, and geologic faults and the resulting damage of past and/or future faulting, (iv) whether, and the extent to which the Premises or any portion thereof is affected by any stream (surface or underground), river, body of water, wetlands, flood prone area, flood plain, floodway or special flood hazard, (v) drainage, (vi) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any undershoring, (vii) the presence of endangered species or any environmentally sensitive or 09683\00218189557.V15 5
protected areas, (viii) zoning or building entitlements to which the Premises ot any portion thereof may be subject, (ix) the availability of any utilities to the Premises or any portion thereof including, without limitation, water, sewage, gas and electric, (x) usages of adjoining properties, (xi) access to the Premises or any portion thereof, (xii) the Premises' compliance with any site plans oi other plans and specitications, or the size, location, age, use, design, quality, description, suitability, structural integrity or soundness, state of repair, water-tightness, operation, habitability, quality of construction ot physical condition of the Premises or the Existing Improvements, or any portion thereof including, without limitation, the plumbing, sewer, heating, ventilating, air conditioning and electrical systems, roofing, windows, balconies, walls, floors and foundations, (xiii) the value, title or financial condition ot potential performance of the Premises, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to the Premises or any part thereof, (xiv) the condition or use of the Premises or compliance of the Premises with any or all past, present or future federal, state ot local ordinances, rules, regulations or laws, building, fire, parking or zoning ordinances, codes or other similar laws, including without limitation the Americans with Disabilities Act, (x) the existence or nonexistence of underground storage tanks, surface impoundments, or landfills, (xvi) the merchantability of the Premises or fitness of the Premises for any particular purpose, (xvii) the truth, accuracy of completeness of any documents made available to Tenant, (xvili) tax consequences, of (xix) any other matter or thing with respect to the Premises.
Tenant has, prior to the execution of this Lease, fully inspected and investigated the Premises and matters relevant to the Premises and has made all inquiries, inspections, tests, audits, studies and analyses that it has deemed necessary or desirable in connection with the Premises, and has approved the results of its investigations and inspections (including engineering, structural ot other tests with respect to the condition of the Premises).
Tenant has relied solely upon the results of Tenant's own inspections and judgment and other information obtained or otherwise available to Tenant, rather than upon any information of Landlord, in determining to enter into this Lease. Landlord has been under no duty to make affirmative disclosures or inquiry regarding any matter which may of may not be known to Landlord or any Landlord Party, and Tenant, for itself and for its successors and assigns, hereby specifically waives and releases Landlord and cach Landlord Party fiom any such duty that otherwise might exist.
(e) Tenant acknowledges that Landlord has advised Tenant that; because of their age, the preexisting improvements, such as concrete, within the Premises may contain asbestos-containing materials ("ACMs"). If ACMs are likely to be disturbed in the course of developing any alterations, additions or improvements, Tenant shall encapsulate or remove the ACMs in accordance with an asbestos-removal plan reasonably approved by Landlord and otherwise in accordance with all applicable Hazardous Materials Laws, including giving all notices required by California Health & Safety Code Sections 25915-25919.7. (f) Tenant acknowledges that Landlord has advised Tenant that soils within the Premises may contain lead-based paints ("LBP"). Lead from paint, paint chips and dust can pose health hazards if not managed properly. Tenant may at its sole cost and expense, have a state-certified LBP Inspector complete a LBP inspection and abatement and, if Tenant completes such inspection, shall provide an abatement certification to Landlord. Landlord has no specific knowledge of the presence of LBP in or about the Premises. 09683\00218189557.VI5 6
(g) Tenant hereby waives and releases Landlord, and each Landlord Party, from any and all present or future claims, demands, causes of actions, losses, damages, including, without limitation, exemplary, punitive, indirect ol consequential, special or other, damages, liabilities, costs and expenses (including attorney's fees whether suit is initiated or not) whether known or unknown, liquidated or contingent ("Claims") arising from or relating to the condition of the Premises, including, without limitation, any of the matters set forth in Sections 2.2(a)-(i), and any environmental and other physical conditions affecting the Premises whether the same are a result of negligence or otherwise. The release set forth in this Section specifically includes, without limitation, any Claims arising in connection with the presence of alleged presence of asbestos or harmful or toxic substances in, on, under or about the Premises including, without limitation, any claims under ol on account of (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as the same may have been amended or may be amended from time to time ("CERCLA") and similar state statutes and any regulations promulgated thereunder; (ii) any other federal, state or local law, ordinance, rule or regulation, now or hereafter in effect, that deals with ot otherwise in any manner relates to, environmental matters of any kind; or (ill) this Lease of the common law. The release set forth in this Section specifically includes, without limitation, any claims under the Americans with Disabilities Act of 1990 or similar federal, state or local laws, as any of those laws may be amended from time to time and any regulations, orders, rules of procedure or guidelines promulgated in connection with such laws, regardless of whether they were in existence on the. date of this Lease. Tenant acknowledges that Tenant has been represented by independent legal counsel of Tenant's selection and Tenant is granting this release of its own volition and after consultation with Tenant's counsel. In connection with such waiver and release, Tenant expressly waives all rights under California Civil Code Section 1542, which provides that "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY HIM
OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
INITIALS:
Tenant
All the terms and provisions of this Section 2.2 shall survive the Lease Date and the expiration or sooner termination of this Lease.
(h) The Premises are subject to, among other Laws, the requirements of the Americans with Disabilities Act, a federal law codified at 42 U.S.C, 12101 et seg., including, but not limited to Title III thereof, and all regulations and guidelines related thereto, together with any and all similar laws, rules, regulations, ordinances, codes and statutes now of hereafter enacted by local or state agencies having jurisdiction thereof, including, but not limited to, Title 24 of the California Code of Regulations, and the Unruh Civil Rights Act, California Civil Code Section 51 et seq., as the same may be in effect on the date of this Lease and may be hereafter modified, amended or supplemented (collectively, the "Accessibility Laws"). Any alterations constructed by Tenant (including any Major Alterations) to be constructed hereunder shall comply with the requirements of all Applicable Laws, including, but not limited to, Accessibility Laws, and all costs incurred to comply therewith shall be a part of and included in the cost of the 09683\00218189557.VIS 7
alterations to be paid for by Tenant. Tenant shall be solely responsible for conducting its own independent investigation of these matters and for ensuring that the design of all Alterations strictly complies with all requirements of all Applicable Laws, including, but not limited to, Accessibility Laws. To Landlord's actual knowledge, as of the date of this Lease, the Premises have not undergone an inspection by a Certified Access Specialist (CASp), as defined in Section
55.52, of the California Civil Code. The foregoing statement is included in this Lease solely for the purpose of complying with California Civil Code Section 1938 and shall not in any manner affect Landlord's and Tenant's respective responsibilities for compliance with construction related accessibility standards as provided in this Lease. Landlord makes no representations, express or implied, as to the compliance of the Premises with applicable Accessibility Laws, and except to the extent expressly set forth in this Lease, Landlord shall have no liability or responsibility to make any repairs or modifications to the Premises or the Project to comply with Accessibility Laws or other Laws.
(i) In accordance with California Civil Code Section 1938(e), Landlord also hereby states the following: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy of potential occupancy of the lessee or tenant, if requested by the lessee ol tenant. The parties shall mutually agree on the atrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related • accessibility standards within the premises." The parties expressly agree that if Tenant elects to obtain a CASp inspection of the Premises, Landlord shall have the right to approve the scope of such inspection. Tenant shall be solely responsible for any and all costs to perform the CASp inspection. In addition, if the results of the inspection determine that any repairs or modifications are required to correct violations of construction-related accessibility standards, then Tenant, at Tenant's expense, shall perform such repairs or modifications.
(i) Tenant's Parking Facility. Tenant's parking facility, location of parking, and related terms is described in the Parking Agreement attached hereto as Exhibit B attached and incorporated herein by this reference. In addition, Tenant acknowledges that Tenant's obligation to constrict the Base Building Improvements shall include the obligation to construct that certain New Parking Lot described in the Construction Agreement.
2.3 Memorandum of Lease. [Intentionally Omitted]
2.4 Feusibility Contingency.
(a) Landlord and Tenant hereby agree that this Lease shall be contingent upon the Tenant's satisfaction of the successful delivery of each and every one of the Construction Deliverables, as that term is used in the Construction Agreement Tenant shall diligently pursue the satisfactory delivery of the Construction Deliverables, 09683\00218189557.V15 8
(b) If Tenant is unable to provide the Construction Deliverables to Landlord by the Deliverables Date (as those terms are used in the Construction Agreement), either party shall have the right to terminate this Lease by giving the other party written notice on or before five (5) days following the expiration of the Deliverables Date. Notice of termination by a party which has not acted reasonably, in good faith, and in accordance with the terms of this Lease shall be null and void.
3. TERM
3.1 Initial Term; Extension Terms.
Initial Term. Subject to the terms, covenants, agreements and conditions contained herein, Tenant shall have and hold the Premises for an initial term (the "Term") of twenty (20) years commencing upon the Lease Date.
(b) Extension Option.
(i) Extension Option. Subject to the terms and conditions set forth in this Section 3.1(b), Landlord hereby grants Tenant two (2) options (the "Extension Options") each to extend the Term of this Lease for a consecutive period of seven (7) years, commencing on the date immediately following the then-scheduled Expiration Date (the "Extension Terms"). (A) Each Extension Option may be exercised only by Tenant giving Landlord irrevocable and unconditional written notice (the "Option Notice") thereof not less than twelve (12) months prior to the date on which the Extension Term in question will commence, time of such exercise being of the essence. The Option Notice must be given as provided in Section 19.1 below.
(B) The Extension Options shall be exercised, if at all, only with respect to the entirety of the Premises.
(C) Tenant's possession of the Premises during the Extension Terms shall be upon all of the terms and conditions contained in this Lease (including, without limitation, the adjustments to Base Rent in accordance with Section 4.1(b) except that there shall be no further extension options at the end of the second Extension Term. Tenant shall accept the Premises during the Extension Term in its then existing as-is, where-is condition. (it) General Provisions. The following general provisions shall apply to the Extension Options:
(A) If Tenant properly exercises the Extension Option, the parties shall promptly execute an amendment to this Lease extending the Term and stating the amount of the Base Rent as of the commencement of the Extension Term. (B) After exercise of the Extension Option, the Expiration Date shall be the last day of the Extension Term, and all references in this Lease to the Term shall be deemed to refex to the Term as so extended, unless the context cleaily provides to the contrary. 09683100218189557.V15 9
(C) Notwithstanding anything to the contrary contained herein, Tenant's Extension Option shall, at Landlord's election, be null and void if Tenant has an uncured breach of this Lease for which notice has been delivered to Tenant, whether or not a formal Event of Default is occurring under this Lease, either at the time of exercise of the Extension Option or at the time of commencement of the Extension Term. (D) If Tenant fails to exercise the Extension Option in a timely manner as provided for above, the Extension Option shall be void. If this Lease shall terminate for any reason, then immediately upon such termination, the Extension Option shall simultaneously terminate and become null and void.
4. RENT AND OTHER CHARGES
4.1 Base Rent.
Base Rent. Effective as of the Rent Commencement Date, Tenant shall pay to Landlord the monthly sum of Twenty Thousand Dollars ($20,000.00) ("Base Rent"), on the first day of each and every month. The Base Rent shall increase by four percent (4%) on each anniversary of the Rent Commencement Date.
Periodic Base Rent Increases - Extension Term. At the commencement of the Extension Term (assuming that the Extension Option is timely and properly exercised), and each anniveisary of such date thereafter, the annual Base Rent shall be increased by four percent (4%) over the rate previously in effect at such date.
4.2 Payment of Base Rent. All Base Rent shall be paid by Tenant to Landlord in lawful money of the United States of America at Landlord's address set forth herein of at such other place or to such other person as Landlord from time to time may designate. Base Rent shall be payable without notice or demand in equal monthly installments, in advance, on the first day of each month during the Term of this Lease after the Rent Commencement Date.
4.3 Minimum Guaranty of Cannabis Taxes. Tenant hereby acknowledges that the Base Rent hereunder has been calculated based on an assumption that Landlord shall at all times from and after the Rent Commencement Date receive minimum annual revenue comprised of Base Rent and cannabis business license taxes ("License Taxes") payable to City ("Minimum Required Annual Combined Receipts") in the combined amount of Five Hundred and Fifty Thousand Dollars ($550,000). The Minimum Required Annual Combined Receipts amount shall be in effect on the first anniversary of the Rent Commencement Date and increase by Fifty Thousand Dollars ($50,000) per year up to a Minimum Required Annual Combined Receipts amount of Seven Hundred Thousand Dollars ($700,000). Any shortfall in the License Taxes required to reach the Minimum Required Annual Combined Receipts shall be supplemented by an increase to the required payment of Base Rent by Tenant for the period of time in question and treated as Base Rent for all purposes.
Additional Rent. Tenant covenants to pay and discharge, when the same shall become due, as Additional Rent, all other amounts, liabilities and obligations which Tenant assumes of agrees to pay or discharge pursuant to this Lease, together with every fine, penalty, interest and cost which may be added for non-payment or late payment thereof and, in the event 09683\002\8189557.v15 10
of any failure by Tenant to pay or discharge any of the foregoing Additional Rent obligations, Landlord shall have all of the rights, powers and remedies provided herein, by law or otherwise that: would be available in the case of non-payment of Base Rent, In addition, Additional Rent shall include an asset management fee in the amount of one percent (1%) of gross rents payable hereunder, inclusive of Base Rent and Additional Rent. The asset management fee shall be paid by Tenant to Landlord's asset manager at the time in question, which may or may not be an affiliate of Landlord.
4.5 Net Lease. It is understood and agreed by Tenant that this Lease is an absolute, unconditional fully net lease and the Base Rent, Additional Rent and all other sums payable hereunder shall be absolutely net to Landlord in all respects. Tenant shall be responsible for all taxes, payments in lieu of taxes, assessments, utility charges, liens, insurance, maintenance, repairs and all other costs and expenses of any nature whatsoever (whether of an operating or capital nature) associated with the Premises or the Existing Improvements or the Project. Tenant shall pay all sums payable hereunder without notice or demand, and without set-off, abatement, suspension or deduction and Tenant shall not interpose any counterclaim or defense of whatever nature or description in any proceeding by Landlord for the collection of money due hereunder, provided, however, that such agreement not to interpose any counterclaim or defense shall not be construed as a waiver of Tenant's right to assert a counterclaim or defense against any action seeking to terminate this Lease or as a waiver of Tenant's right to assert claims against Landlord in any separate action. Tenant shall take all actions necessary on Tenant's part to insure that any and all such payments will be received by the Landlord by the dates due as specified in this Lease.
4.6 Taxes and Other Charges. Without limiting the generality of Section 4.5 above, subject only to Section 4.7 hereof, Tenant will pay (i) all taxes, assessments, levies, fees, water and sewer rents and charges, general and special, ordinary and extraordinary, foreseen and unforeseen, which are, at any time prior to or during the Term hereof, imposed or levied upon or assessed against (A) the Premises, (B) any Base Rent, Additional Rent or other sum payable hereunder oi (C) this Lease or the leasehold estate hereby created, or which arise in respect of the operation, possession or use of the Premises, including possessory interest taxes; (i) all gross receipts or similar taxes imposed or levied upon, assessed against or measured by any Base Rent, Additional Rent ot other sum payable hereunder; (iüi) all sales, use and similar taxes at any time levied, assessed or payable on account of the acquisition, leasing or use of the Premises; and (iv) all charges for utilities serving the Premises. Tenant shall not be required to pay any franchise, transfer, income or similar tax of Landlord (other than any tax referred to in clause (ii) above) unless such tax is imposed, levied of assessed in substitution for any other tax, assessment, charge of levy which Tenant is required to pay pursuant to this Section 4.6, but only in an amount calculated as if Landlord owned only the Premises and Landlord's income consisted only of amounts payable hereunder. Tenant will furnish to Landlord, promptly after demand therefor, proof of payment of all items referred to above which are payable by Tenant. If any such assessment may legally be paid in installments, Tenant may pay such assessment in installments; in such event, Tenant shall be liable only for installments which are attributable to any period falling within the Term hereof. Subject to Section 4.7 hereof, Landlord shall have the right to pay, discharge or remove any tax, assessment, levy, fee, rent, charge, lien or encumbrance on behalf of Tenant and charge Tenant therefor as Additional Rent. Landlord shall have the right to notify Tenant of Landlord's estimate of taxes (and any other Additional Rent charges) at any 09683\00218189557.V15 11
time. If and to the extent required by Landlord's lender(s), commencing on the first day of the following calendar month (or annually beginning in January in Landlord's discretion) and continuing on the first day of every month thereafter, Tenant shall pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent. If Landlord thereafter estimates that taxes (or other Additional Rent) will vary from Landlord's prior estimate, Landlord may, by notice to Tenant, revise the estimate (and Additional Rent shall thereafter be payable based on the revised estimate).
4.7 Permitted Contests. Landlord shall not require Tenant, nor shall Landlord have the right, to pay, discharge ot remove any tax, assessment, levy, fee, rent, charge, lien or encumbrance, or to comply with any legal requirement applicable to the Premises or the use thereof, so long as Tenant shall contest the existence, amount or validity thereof by appropriate proceedings which shall prevent the collection of or other realization upon the tax, assessment, levy, fee, rent, charge, lien or encumbrance so contested, and the sale, forfeiture or loss of the Premises or any Rent to satisfy the same, and which shall not affect the payment of any Rent provided that such contest shall not subject Landlord to the risk of any criminal liability or civil Landlord shall have the right to make any such payment on behalf of Tenant and charge Tenant, therefor. Notwithstanding any other provision in this Lease, Landlord may make any payment or take such other action as it may deem necessary in order to prevent the sale or foreclosure of the Premises or to avoid the imposition on Landlord of any civil or criminal liability or penalty.
5. USE AND QUIET ENJOYMENT; SURRENDER
5.1 Use; Conditions.
Tenant shall use the Premises solely for the Permitted Use and for no other use or purpose, except as permitted by Landlord pursuant to Landlord's prior written consent, which consent may be withheld in Landlord's sole discretion. As used in this Lease the "Permitted Use" means the processing, manufacturing, and wholesale distribution (i.e. on premises sales are strictly probibited) of cannabis products (along with the cultivation use allowed under Section 5.8(b)(iv)) in accordance with City ordinances, rules, and regulations, and state law. Tenant covenants, promises and agrees that during the Term of this Lease it shall not use or permit or allow the Premises to be used for any purpose other than Permitted Use and ancillary offices and parking uses. Subject to the foregoing, Tenant covenants, promises and agrees to use the Premises in accordance with any permits which may be issued by the City and to comply with the requirements therein specified. Tenant covenants not to abandon the Premises or any portion thereof. Tenant shall exercise all due diligence initially to lease and thereafter to keep the Premises at all times leased to Occupants. In the event any Occupant abandons its portion of the Premises, Tenant shall undertake good faith efforts to relet such abandoned portion to a substitute or successor Occupant. Tenant shall: (i) open the Premises for business upon the Substantial Completion of the Project; (ii) employ reputable business standards and practices; and (iii) operate the entire Premises continuously and uninterruptedly during the Term.
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Tenant shall not engage in activities (including, without limitation, spray painting, sandblasting, blowing of stacks, funnels oi exhaust pipes, or other releases of particulate matter) on land or at sea within the jurisdiction of the Port of Richmond that creates a significant risk of injury or damage to the premises or property owned or possessed by any tenant or its customers of which otherwise may materially interfere with the tenant's of customer's operations in the Port of Richmond. Tenant shall conduct its operations in such a manner that it does not create a significant risk of injury or damage to the auto processing facility operated by Auto Warehousing Co. (AWC) at the Pt. Potrero Marine Terminal (Auto Processing Facility) or adversely impact AWC's or AWC's customers' use of the Auto Processing Facility or its operations. This Section 5.1(b) is intended to benefit (and may be enforced by) AWC and AWC's customers. No storage or other operations are permitted outside of the Premises.
5.2 Quiet Enjoyment. If and so long as Tenant shall pay all Base Rent, Additional Rent and other charges herein provided and shall observe and perform all covenants, agreements and obligations contained herein, Landlord warrants peaceful and quiet occupation and enjoyment of the Premises by Tenant; provided, that Landlord and its agents may enter upon and examine the Premises as provided herein.
5.3 Compliance with Law. Subject to the rights granted to Tenant by Section 4.7 and
5.8 hereof, Tenant shall, at its expense, comply with and shall cause the Premises and the Existing Improvements and the Project and all Occupants of any portion thereof to comply with all governmental statutes, laws, rules, orders, regulations and ordinances, including Chapters
2.28 (Nondiscrimination Clauses in City Contracts), 2.56 (Local Employment Program), 2.60 (Living Wage) and 2.65 (Banning the Requirement to Provide Information of Prior Criminal Convictions on All Employment Applications) of the Richmond Municipal Code, if applicable, affecting the Premises, the Existing Improvements, the Project or any portion thereot, or the use thereof, including those which require the making of any structural, unforeseen or extraordinary changes, whethet or not any of the same which may hereafter be enacted involve a change of policy on the part of the governmental body enacting the same. Tenant's obligations under this Section 5.3 shall not be deemed to require Tenant to comply with federal laws prohibiting cannabis processing, manufacturing and distribution (along with the cultivation use allowed under Section 5.8(b)(iv)), provided that Tenant's (and any Occupants) are permitted and licensed under California law, and such operations are at all times in compliance with Section 5.8 hereof.
Compliance with Contractual Requirements. Tenant shall, at its expense, comply with the requirements of all policies of insurance which are carried by Tenant (or by Landlord when permitted by the terms of Section 13.4 of this Lease) which at any time may be in force with respect to the Premises or the Existing Improvements, or the Project or any portion thereof, and with the provisions of all contracts, agreements, covenants, conditions and restrictions entered into by Tenant or by which Tenant or the Premises is from time to time legally bound, including, without limitation, all contracts, agreements, covenants, conditions and restrictions affecting the ownership, occupancy or use of the Premises or any portion thereof.
5.5 Tenant's Property. Tenant or the Occupants shall have the right to remove furniture, equipment and trade fixtures and leaschold or Occupant improvements installed by Occupants or on their behalf in or on the Premises to the extent the same may be removed without damage to the Premises ("Tenant's Property") (but specifically excluding structural 09683100218189557.V15 13
members or any heating, ventilating, air conditioning, plumbing and electrical systems and lighting and communications equipment and systems) from the Premises at any time during the Term of this Lease and shall, upon the request of, Landlord, remove all furniture, equipment and trade fixtures belonging to Tenant or Occupants at the expiration or termination of this Lease. If any such Tenant's Property is removed, Tenant, at its expense, shall repair any damage resulting from such removal. If Tenant leases, ot gives Landlord notice of its intention to lease, Tenant's Property for use in the Premises, Landlord agrees that it will execute a written instiument for the benefit of any equipment lessor, on such commercially reasonable form wherein Landlord shall recognize that its rights to such leased Tenant's Property, if any, shall be subordinate to the rights of the equipment lessor. Auy Tenant's Property remaining on the Premises beyond the expiration or termination of this Lease shall be deemed to be abandoned by Tenant and shall become the property of Landlord. Landlord may thereafter cause any Tenant's Property to be removed from the Premises and disposed of, but the cost of any such removal and disposition and the cost of repairing any damage caused by such removal shall be borne by Tenant.
5.6 Ownership of Project. The Project shall be or become part of the Premises upon Substantial Completion of construction, but such improvements shall be owned by Tenant until the expiration or earlier termination of the Term of this Lease, and Tenant alone shall be entitled to depreciation deductions and tax credits thereon for income tax purposes. Landlord at all times shall own the Existing Improvements, and Landlord alone shall be entitled to depreciation deductions and tax credits thereon for income tax purposes.
5.7 Surrender of Premises. At the expiration or earlier termination of the Term of this Lease, Tenant shall peaceably leave, quit and surrender the Premises. Upon such expiration or termination the Premises (and all of its elements) shall become the sole property of Landlord at no cost to Landlord and shall be free of all liens and encumbrances and in good condition, subject only to reasonable wear and tear and, in the event of a casualty, to the provisions of Article 11 hereof.
5.8 Special Considerations Relating to Tenant's Use; Permits and Approvals Generally.
(a) Landlord and Tenant acknowledge and agree that Tenant intends to use the Premises for the operation of a facility authorized by the State of California and the City of Richmond to process commercial cannabis. Tenant's use of the Premises shall at all times comply with Sections 15.04.610.270 (Medical Marijuana Uses) and 7.04.139 (Cannabis Businesses) of the Richmond Municipal Code, the California Medical and Adult Use Cannabis Regulation and Safety Act (Business and Professions Code section 26000 and California Code of Regulations Title 16, Division 42, et seq.), Revenue and Taxation Code sections 34010, 34011, 34012, 34012.5, and 5504, and all cannabis regulations and license requirement promulgated by the California Bureau of Cannabis Control, the California Department of Public Health, and the California Department of Food and Agriculture related to commercial cannabis operations, as the same may be amended from time to time.
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(b) Tenant covenants, warrants, and represents as follows:
(i) . At all times during the Term of the Lease, Tenant, together with its members, managers, agents, officers, and employees, shall obtain and maintain, in good standing and without interruption or restriction, all licenses, permits, use permits, approvals, and certifications, of any kind whatsoever, required by any governmental or quasi-governmental entity for the lawful manufacture, packaging and distribution of cannabis. (ii) At all times during the Term of the Lease, Tenant shall maintain strict compliance with all applicable laws (other than federal laws inconsistent with local and state laws relating to commercial cannabis operations), ordinances, and regulations, including all laws and regulations of the City and of Contra Costa County.
Tenant shall not sell, barter, donate, transfer, trade, or convey by any means any cannabis at or on the Premises except as permitted by the Richmond Municipal Code and all other Applicable Laws.
Tenant shall not use, or permit the use of, the Premises for the cultivation of cannabis at the Premises, except that, subject to the following conditions, Tenant and Tenant's Occupants may cultivate cannabis in the Premises as part of Tenant's Permitted Use: (a) not more than twenty five percent (25%) square footage of the Premises may at any time used for cultivation, (b) Tenant shall observe standards, policies, and implementation procedures reasonably developed from time to time for the purposes of maintaining a high quality level, security, and health and safety standards, and (c) any such cultivation must comply in all respects with the compliance with laws obligations imposed upon Tenant in Section 5.3.
Tenant shall not permit the consumption of cannabis in or on the • Premises.
(vi) Except in case of an emergency, Tenant shall not permit anyone under the age of 18 to enter the Premises.
Tenant shall, at its sole expense, provide for the physical security of the Premises in accordance with all Applicable Laws and with Ländlord's reasonable requests.
Without limiting the foregoing, Tenant shall at all times operate that portion of the Premises where cannabis is stored, weighed, tested, packaged, or otherwise possessed by Tenant with strict access controls and otherwise in strict compliance with Applicable Law. (d) Tenant shall immediately inform Landlord of any contact Tenant has at or on the Premises with local, state, or federal law enforcement officials or regulatory agents that is related to any violation of applicable law. Obtaining all required commercial cannabis business licenses shall be the sole responsibility of Tenant.
Notwithstanding any contrary ol conflicting provision of this Lease, Landlord shall be entitled, but not required, to immediately give Tenant notice of intent to terminate this Lease (the "Landlord's Compliance Notice") upon the occurrence of any of the following:
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The adoption of any state, ot local law, ordinance, or regulation at the Premises, the parties' mutual intention being that any use by Tenant shall be and at all that, in Landlord's reasonable discretion, makes the processing or presence of cannabis unlawful times remain fully lawful;
(ii) The adoption of any policy or practice by federal, state, or local law enforcement agencies with jurisdiction over the Promises that, in Landlord's reasonable discretion, is incompatible with the continued cannabis business operations in of on the Premises.
(iii) Notice from any governmental or quasi-governmental agency with jurisdiction over the Premises that it intends to undertake enforcement of laws, ordinances, or regulations that restrict or prohibit the cannabis related business operations; Initiation of any criminal, civil, or regulatory action against Tenant, Landlord, or the Premises with respect to or related in any way to Tenant's cannabis related business operations in or on the Premises;
(v) The adoption or enforcement of any land use restriction applicable to the Premises that is incompatiblé with the continued operation of cannabis related business operations in or on the Premises;
(vi) An action by any governmental authority seeking forfeiture of the building housing the Premises, whether or not the court proceeding has actually commenced; (vit) The entry of judgment (whether final or not) that has the effect (whether by restraining order, injunction, declaration, or otherwise) of establishing the Lessee's use of the Premises constitutes a public or private nuisance; or (vili) The commencement of an action under any federal, state, or local law (ordinance) or regulation seeking remediation of the Premises or any portion thereof as a result of a violation by the Tenant of any mandate pertaining to environmental sensitivity or commission of waste, irrespective of Tenant's intent and course of action following its commencement.
(f) Within five (5) days of receiving Landlord's Compliance Notice, Tenant may exercise one, and only one, of the following three (3) options in writing:
(i) Conveyance. Tenant shall deposit the Purchase Price with Escrow Holder and deliver written notice to Landlord directing Landlord to take all steps reasonably required to obtain the Map and the Use Authorizations described in Section 16.2(a) at Tenant's expense, and thereupon convey the Premises to Tenant for the Purchase Price described in Section 16.2(c), provided that any such Map and Use Authorizations and any related parking, use, access ot other rights and restrictions shall be in form and content acceptable to Landlord in good faith, but otherwise in Landlord's sole and absolute discretion, and provided that it must be possible in Landlord's discretion for such Map and Use Authorizations to be in final form on or before the date that is the earlier of the effective date of any forfeiture pursuant to any of the events described in Section 5.8(e)(i)-(viii), or one hundred eighty (180) days after the date of 096831002\8189557.VI5 16
Landlord's Compliance Notice, during which time Tenant may continue its operations as contemplated by this Lease;
(il) Mutual Termination. Tenant shall. deliver written notice to Landlord agreeing to termination of this Lease (the "Tenant's Notice of Election to Terminate").. effective the earlier of the date specified in Tenant's Notice of Election to Terminate or sixty (60) days after the receipt of Landlord's Compliance Notice; or (iii) Prohibition on Cannabis Use. Tenant shall deliver written notice to Landlord agreeing to end all cannabis use at the Premises and terminate all subleases with cannabis Operators (the "Tenant's Notice of Agreement to Prohibit Cannabis Use").
Effective not later than the earlier of the date specified in Tenant's Notice of Agreement to Prohibit Cannabis Use ot sixty (60) days after the receipt of Landlord's Compliance Notice, Tenant shall remove all cannabis and cannabis equipment from the Premises, and thereafter sublease the Premises to non-cannabis tenants (while continuing to be subject to the obligation to pay Minimum Required Annual Combined Receipts irrespective of the non-cannabis use), whereupon the termination of this Lease shall be void, subject to the prohibition on cannabis use. (g) Upon a termination of this Lease for any reason, including pursuant to Section 5.8(f)(ii), Tenant shall immediately vacate the Premises and shall promptly remove all cannabis, in any form, from the Premises. With the exception of defense and indemnity provisions, and any other provision that expressly survives termination of the Lease, Tenant shall thereafter have no further obligation to Landlord under the Lease, including the continued payment of Rent except Rent that has already accrued and is properly owing to the Landlord at the time of termination.
(h) Landlord and Tenant enter into this Lease in full recognition that the state of the law applicable to legal cannabis business operations is not yet settled. Landlord and Tenant therefore agree to cooperate in responding to applicable laws, ordinances, regulations, and governmental policies and practices adopted after the Lease Date. The parties' cooperation shall include adopting such amendments to the Lease as are necessary to protect Landlord, Tenant, and the Premises from adverse legal of regulatory action. Tenant, specifically will comply with stated federal marijuana enforcement policies. As such, the Tenant will not: (a) distribute or market cannabis to minors; (b) direct revenue from the sale of cannabis to criminal enterprises, gangs or cartels; (c) engage in interstate cannabis commerce; (d) engage in local and state-authorized activity as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (e) use violence or firearms in the distribution of cannabis; (f) contribute to drugged driving or other adverse public health consequences associated with cannabis use and will have in place reasonable safeguards to prevent drugged driving and other adverse public health consequences; (g) grow cannabis; (f) possess or use cannabis on federal propetty. (i) Not later than the end of each calendar quarter, Tenant shall furnish to Landlord a written statement in form and content approved by Landlord, certifying the accuracy of the representations therein and executed by a responsible officer of the Tenant with direct knowledge of Tenant's operations at the Premises ("Operations Certificate"). The Operations Certificate shall expressly state that there have been no violations of this Section 5.8, by either Tenant or any Occupant of any kind, or occurrences inconsistent with its requirements, or failure 09683\00218189557.V15 17
to operate in conformity with its restrictions or any other covenant or obligation of Tenant under this Lease, or if any such violations or nonconformance have occurred, shall identify with particularity any such violations or nonconformance. Tenant shall require in its agreements with all Occupants that the Occupants shall undertake the same reporting obligations and deliver a corresponding Occupant Operations Certificate to be aggregated as exhibits to the Operations Certificate(s) delivered to Landlord by Tenant. At the reasonable request of Landlord, Tenant shall allow Landlord to inspect the books and records of Tenant relating thereto.
Tenant represents and warrants that Tenant shall incorporate the requirements of this Section 5.8 into each and every agreement with an Occupant so as to make such requirements direct obligations of each and every Occupant with respect to that Occupant.
5.9 Permits and Approvals. Tenant shall, at its sole cost and expense, obtain all permits, use permits, certificates, approvals, licenses and all other necessary ot appropriate actions of any federal, State or City authorities required to enable the construction of the Project, and the construction, maintenance, leasing, operation and use of the Premises generally. Upon timely applications by Tenant, Landlord acting exclusively in its proprietary capacity as a Landlord, and without limiting the City's independent municipal authority, judgment, and discretion in any respect with regard to the substance of such applications, will help facilitate and cooperate with Tenant regarding to Tenant's applications for such approvals.
6. No MORTGAGES
6.1 No Right to Mortgage. Landlord understands that Tenant intends to finance Tenant's interest in this Lease pursuant to the Property Assessed Clean Energy (PACE) program.
Other than such financing, Tenant shall have no right to encumber its interest in this Lease, or in the Premises and/or the Existing Improvements or the Project, and (including in connection with the PACE financing) at no time shall Landlord's fee title in the Premises or Landlord's interest in this Lease be subjected or subordinated in any manner to the interests of any mortgagee, trust deed holder, or any other lienholder of Tenant or any person claiming by or through Tenant. In addition, (1) no security instrument incurred by Tenant shall, and Tenant shall not have the power to incur any encumbrance that will, constitute in any way a lien or encumbrance on Landlord's reversionary interest in the Premises, Landlord's fee title in the Project, or any interest of Landlord in the Base Building Project or other Project improvements; and (ii) the relevant security instrument and all rights acquired under it shall be subject to each and all of the terms, covenants, conditions and restrictions stated in this Lease. Landlord and Tenant specifically agree that Landlord is not and shall not be obligated to subordinate its rights or ownership interest in the Premises or the Project to any security instrument and none of the Rent (including the Minimum Required Annual Combined Receipts) provided for in this Lease shall be subordinate to any security instrument, such Rent (including the Minimum Required Annual Combined Receipts) being due and payable by Tenant throughout the Term regardless of any such security instrument.
SECURITY DEPOSIT
[Intentionally Omitted.]
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8. DESIGNAND CONSTRUCTION OF THE PROJECT
8,1 The Base Building Project. Tenant hereby agrees to construct on the Premises at its sole cost and expense the Base Building Project in accordance with the Final Plans and Specifications.
8.2 Schedule and Requirements for Construction. Concurrently with the execution of this Lease, Landlord and Tenant are entering into a Construction Agreement ("Construction Agreement"), in the form of the attached Exhibit C, providing in pertinent part for Tenant to provide a letter of credit in the amount of twenty percent. (20%) of the project cost of constructing the Base Building Project inclusive of a contingency of ten percent (10%) (or deposit into escrow such amount of funds) ("Construction Escrow Amount"), and otherwise and for the terms and conditions upon which the Base Building Project shall be constructed. The initial dollar amount for the Letter of Credit or Construction Escrow Amount deposit is anticipated to be approximately One Million Six Hundred Thousand Dollars ($1,600,000), either of which may be supplemented (if the Project Costs are greater than anticipated), and disbursed to pay the Project Costs, as defined in the Construction Agreement, and when provided in the Construction Agreement.
8.3 Alterations of Completed Base Building Project. After the completion of the Base Building Project and Landlord's written acceptance thereof, Tenant shall not make or permit to be made any substantial alteration of, addition to or change in the exterior facade (which shall include, without limitation, entrance locations, materials, windows forming a part of such facade) or the other exterior features, or any major interior features of the Premises or otherwise materially alter the Premises in a manner contrary to the use and design features set forth in the Final Plans and Specifications (collectively, "Major Alterations") without the prior consent of Landlord. All alterations and additions made in accordance with this Section 8.3 shall be constructed in a good and workmanlike manner, with new first-class materials and equipment and in conformity with all applicable Federal, State and local laws, ordinances and regulations and shall be completed with all due diligence. If Tenant shall fail to comply with the foregoing requirements, Landlord may, within a reasonable time after its discovery thereof, direct in writing that Tenant so modify, reconstruct or remove such portion or portions of the Base Building Project as were reconstructed, demolished or subtracted from or added to or extended without the prior approval of Landlord. Tenant shall promptly comply with such directive, and shall not proceed furthel with such reconstruction, demolition, subtraction, addition or extension until such directive is complied with. The term "Final Plans and Specifications" as used in this Lease shall have the meaning given to it in Section 1(d) of the Construction Agreement.
8.4 Notice of Non-Responsibility. Tenant shall not make any alteration, addition ot change to the Premises or any part thereof, including, without limitation, any Major Alterations, notwithstanding consent from Landlord to do so, until Tenant notifies Landlord in writing of the date Tenant desires to commence such alterations and gives Landlord an opportunity to post appropriate notices to avoid any liability to contractors or material suppliers for payment for Tenant's improvements. Tenant shall at all times permit such notices to be posted and to remain posted until the completion of the alterations, additions or changes:
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9. MAINTENANCE, REPAIR AND OPERATION
9.1 Maintenance and Repair; Operation. Tenant agrees that it will, during the Term of. this Lease, at its exponse, keep, maintain, use and operate the Premises and the Existing Improvements and the Project, including any altered, rebuilt, additional or substituted buildings, structures and other improvements thereto, in good repair, and appearance and in a first-class and tehantable condition, and will promptly make all structural and non-structural, foreseen and unforeseen, and ordinary and extraordinary changes and repairs of every kind and nature which may be required to be made upon or in connection with the Premises and the Existing Improvements and the Project or any part thereof in order to keep and maintain the Premises and the Existing Improvements and the Project in good repair and appearance and in a first-class and tenantable condition. Tenant shall, at its own expense, keep the Premises in a clean, neat and sanitary condition and shall make good faith efforts to keep the Premises leased. Landlord shall not be required to maintain, repair or rebuild, or to make any alterations, replacements or renewals of any nature or description to the Premises or the Existing Improvements or the Project ol any part thereof, whether ordinary or extraordinary, structural or non-structural, foreseen or unforeseen, or to maintain the Premises or any part thereof in any way. Tenant hereby expressly waives inevocably and unconditionally any right to make repairs at the expense of Landlord.
Inspection by Landlord. Landlord and its authorized representatives shall have the right to inspect the Premises during regular business hours upon 24 hours' prior notice, provided that such inspections do not unreasonably interfere with the operations of Tenant or any Occupant. In the event of any emergency conditions, such inspection by Landlord may take place after Landlord attempts to provide reasonable notice.
9.3 Hazardous Materials.
(a) Tenant unconditionally agrees that neither it nor any Occupant or other Person will dump, flush, or in any way introduce any hazardous materials or oil of any other toxic substances into the septic, sewage or other waste disposal system serving the Premises in violation of Environmental Laws; and in the event of any such prohibited introduction, at its sole cost and expense, will clean up promptly any damage occasioned by such to the extent required by applicable law. Tenant agrees that neither it nor any Occupant or other Person will generate, store or use - except where said use is in accordance with all applicable governmental regulations, other than federal regulations to the extent those regulations conflict with the laws of the City of Richmond and the State of California concerning cannabis - or dispose of hazardous materials or oil or toxic substances in or on the Premises, or dispose of hazardous materials or oil or toxic substances from the Premises into the air or to any other location, except in compliance with any and all federal laws, state laws, and local laws and ordinances regulating such activity (except to the extent the federal laws conflict with the laws of the City of Richmond and the State of California concerning cannabis). "Hazardous Materials" shall mean (i) any substance or material that is included within the definitions of "hazardous substances," "hazardous materials," "toxic substances," "pollutant," "contaminant," "hazardous waste," or "solid waste" in any Environmental Law; (ii) petroleum or petroleum derivatives, including crude oil or any fraction thereof, all forms of natural gas, and petroleum products or by-products or waste; (iii) polychlorinated biphenyls (PB's); (iv) asbestos and asbestos containing materials (whether 09683\002\8189557.v15 20
friable or non-friable); (v) lead and lead based paint or other lead containing materials (whether friable or non-friable); (vi) wea formaldehyde; (vii) microbiological pollutants; (viii) batteries or liquid solvents ot similar chemicals; (ix) radon gas; and (x) mildew, fungus, mold, bacteria and/or other organic spore material; and "Environmental Laws" means all statutes, terms, conditions, limitations, restrictions; standards, prohibitions, obligations, schedules, plans and entered, promulgated or approved thereunder), relating to pollution ol the protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of hazardous materials into ambient air, surface water, ground water or lands or otherwise relating of
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport Comprehensive handling of hazardous materials, including, but not limited to, the:
Environmental Response Compensation and Liability Act of 1980 (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), 42 U.S.C. 9601 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. 6901 et seq.; Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.; Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; Clean Air Act, 42 U.S.C. 7401 et seq.; and the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. "Environmental Laws" shall include any statutory or common law that has developed or develops in the future regarding mold, fungus, microbiological pollutants, mildew, bacteria and/ot other organic spore material. "Environmental Laws" shall not include laws relating to industrial hygiene ol worker safety, except to the extent that such laws address asbestos and asbestos containing materials (whether friable or non-friable) or lead and lead based paint or other lead containing materials.
Tenant unconditionally agrees to indemnify and hold harmless Landlord and the Landlord Parties from and against all liability, cost, claims and damages to the extent arising out of, in connection with, or relating to, the generation, storage, release or use. of any Hazardous Materials in or on the Premises during the Term. (c) The obligations of Tenant under this Section 9.3 shall constitute an independent covenant of Tenant; shall not be affected by any Event of Default under this Lease and shall survive the expiration or any earlier termination of the Term of this Lease. (d) Safety Precautions and Storm Water Pollution Control. (i) In connection with Tenant's use and occupancy of the Premises, Tenant shall take measures to minimize the potential for Hazardous Materials or other pollutants to enter the San Francisco Bay and/or Port of Richmond's storm water drainage system. The targeted pollutants include Hazardous Materials and floatable materials, oxygen demanding substances (e.g. plant debris, street litter and organic substances, bacteria and viruses, sediment, and nutrients (c.g. nitrogen and phosphorous). These measures shall pertain to the extent related to Tenant's use and occupancy of the Premises, and shall include, but not be limited to, taking all steps ieasonably necessary in:
(A) Preventing fuel spills and leaks and reducing the impact to storm water by not topping off fuel tanks; using secondary containment when transferring fuel 09683\002\8189557.V15
from tanker trucks to fuel tanks; using absorbent material on small spills and for general cleaning rather than hosing; carrying out all federal, state, regional and local requirements regarding underground storage tanks of installing above ground tanks; fueling mobile equipment at. designated fueling areas; and designing fueling areas to prevent the run-on of storm water and the run-off of spills. "Secondary containment" means a back-up system that prevents the spread of pollutants should any spill, leak or otherwise escape. (B) Preventing the discharge of pollutants to storm water from vehicle, boat and equipment maintenance and repair by containing waste oil under cover with absorbent material under each container; keeping drip pans or container under the areas that might drip pollutants; using a vehicle maintenance area designed to prevent storm water materials down storm drains; dry sweeping instead of hosing down work areas; stoting idle equipment under cover, switching to non-țoxic chemicals for maintenance when possible; cleaning small spills with rags and larger spills with absorbent materials; and minimizing the use of solvents.
Preventing the discharge of pollutants to storm water from outdoor equipment and operations by reducing the amount of waste created; enclosing or covering all or some of the equipment; and installing secondary containment. (D) Preventing the discharge of pollutants to storm water from vehicle and equipment washing and steam cleaning by maintaining designated wash areas, preferably covered, to prevent contact with storm water; and not permitting any wash water to enter the storm drains.
(E) Preventing the discharge of pollutants to storm water from outdoor loading/unloading of materials by parking tank trucks or delivery vehicles so that spills or leaks can be contained; covering the loading and unloading docks to reduce exposure of materials to rain; and using drip pans under hoses.
Preventing the discharge of pollutants to storm water from outdoor stosage areas by installing appropriate safeguards against accidental release; installing secondary containment where reasonably required; conducting regular inspections. (G) Protecting materials from rainfall run-on, run-off and wind dispersal by storing materials indoors; complying with specific federal, state, regional and local standards regarding storage of Hazardous Material; enclosing or covering materials; periodically sweeping parking lots or other surfaces near bulk material storage areas to remove debris blown or washed from storage areas; and installing pellet traps at storm water discharge points where plastic pellets are loaded and unloaded.
(H) Preventing the discharge of pollutants to storm water from waste handling and disposal by tracking waste generation, storage, and disposal; reducing waste generation and disposal through source reductions, reuse and recycling; preventing run-on and run-off from waste management areas; and covering dumpsters and garbage cans during the rainy season.
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(1) Preventing the discharge of pollutants to storm water from contaminated or erodible surface areas by leaving as much vegetation on-site as reasonably possible; minimizing soil exposure; stabilizing exposed soils; and preventing storm water rub-on (J) Preventing the discharge of pollutants to storm watet from buildings and grounds maintenance by washing and cleaning up with as little water as reasonably possible; preventing and cleaning up spills immediately; and keeping debris trom entering the (K) Preventing the discharge of pollutants to storm water from building repair, remodeling, and construction by using appropriate containment and erosion controls; and enclosing or covering building material storage areas. (L) Preventing the discharge of pollutants to storm water and receiving waters from over water activities by minimizing over water maintenance; limiting over water hull surface maintenance to sanding and minor painting; not spray painting vessels while they are on the water; avoid washing down boats with soap and detergent; using phosphate-free and biodegradable detergent for hull washing; keeping organic and inorganic wastes out of the water; and cleaning up spills and wastes immediately. "Over water activities" refers to activities undertaken by Tenant on the waters of San Francisco Bay or waters flowing into San Francisco Bay.
10. INDEMNITY, LIENS AND INSURANCE
10.1 Indemnification. Tenant agrees to pay and to defend, indemnify and hold harmless Landlord and the Landlord Parties from and against any and all liabilities, losses, damages, costs, expenses (including all reasonable attorneys' fees and expenses of Tenant and Landlord), causes of action, suits, claims, demands ox judgments of any nature whatsoever arising from:
(a). any injury to or death of or claim of injury to or death of any person or any damage to or loss of or claim of damage to or loss of property on the Premises during the Term growing out of or connected directly or indirectly with Tenant's use, non-use, possession, ownership, condition or occupation of the Premises or any part thereof; the use of the Premises by Tenant or Tenant's employees ot agents, ot from any activity done, permitted or suffered by Tenant in or about the Premises; (c) any act, neglect, fault, willful misconduct or omission of Tenant or Tenant's employees or agents;
(d) violation of any agreement or condition of this Lease by Tenant; (e) violation by Tenant of any contract ot agreement to which Tenant is a. party, or of any Applicable Law, in each case affecting the Premises or any part thereof or the ownership, occupancy of use thereof; and
09683100218189557.V15
(t) any contest referred to in Section 4.7 hereof.
The foregoing indemnification and defense obligations shall apply regardless of the active or passive negligence of Landlord or Landlord's agents or employees, and regardless of whether liability without fault or strict liability is imposed or sought to be imposed on Landlord, but such indemnification obligations shall not apply to the extent of the percentage of liability that a final judgment of a court of competent jurisdiction establishes under the comparative negligence principles of the State of California, that a claim asserted against Landlord was proximately caused by the gross negligence of willful misconduct of Landiord, the Landlord Parties, ot a particular agent or employee of Landlord or any Landlord Parties. If any action or proceeding is brought against Landlord by reason of any such claim, upon notice from Landlord, Tenant shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord. As a material part of the consideration to Landlord for executing this Lease, Tenant hereby releases Landlord and its agents and employees from liability for, waives its entire claim of recovery for, and assumes all risk of, damage to or loss of property or injury to or death of persons in, on ot about the Premises or the Project from any cause whatsoever, except to the extent that a final judgment of a court of competent jurisdiction establishes that any damage, loss, injury or death was caused by the gross negligence or willful misconduct of Landlord, its employees or agents or by the failure of Landlord to perform any of its material obligations under this Lease, and then only if (i) Tenant has promptly notified Landlord of the condition claimed to constitute gross negligence or Landlord failure to perform, (ii) a reasonable period of time has expired after Landlord's receipt of such notice without Landlord having taken reasonable and practicable means to cure or correct the condition ol failure to perform, and (iti) Tenant has taken all reasonably prudent temporary measures and safeguards to prevent any damage, loss, injury or death pending cure or correction of such condition or failure to perform by Landlord. Further, Landlord and its employees and agents shall not be liable for any loss or risk that is covered by Tenant's insurance or that would have been covered by Tenant's insurance if Tenant had maintained the insurance required under this Lease. The obligations of Tenant under this Section 10.1 shall survive the expiration or any earlier termination of the Term.
10.2 Liens. Tenant shall make, or cause to be made, prompt payment of all monies due and legally owing to all Persons doing any work, furnishing any materials or supplies or renting any equipment to Tenant or any of its contractors or subcontractors in connection with the development, construction, reconstruction, furnishing, repair, maintenance or operation of the Premises, and in all events will bond or cause to be bonded, with surety companies reasonably satisfactory to Landlord, of pay or cause to be paid in full forthwith, any mechanics', materialmen's or other lien or encumbrance that arises against the Premises. Tenant shall have the right to contest any such lien or encumbrance in accordance with the terms of Section 4.7 hereof. Nothing contained in this Lease shall be construed as constituting the consent or request of Landlord, expressed or implied, to or for the performance of any labor or services or the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Premises or of any part thereof. Notice is hereby given that Landlord will not be liable for any labor, services or materials furnished or to be furnished to Tenant, or to anyone holding the Premises or any part thereof through or under Tenant, and that no mechanic's or other liens for any such labor, services or materials shall attach to or affect the interest of Landlord in and to the Premises.
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10.3 Insurance Requirements. Beginning on the Lease Date and continuing until the expiration or earlier termination of the Term, Tenant shall at all times carry such liability, property, workers' compensation and other insurance coverage with respect to the Premises and ary other insurable improvements, property and equipment therein or thereon (all of the above known as "Insurable Property") as may be required from time to time by Landlord in its reasonable discretion, but in no event shall Tenant carry less than the following:
(a) commercial general liability insurance (or equivalent) applicable to the Insurable Property for death and bodily and other personal injury with a combined single limit of $50,000,000, and for property damage in the amount of $10,000,000, any or all of which may be increased or decreased, as the case may be, from time to time to reflect changes in amounts of such insurance carried by institutional owners of comparable properties in the City (portions of which liability and property damage coverages may be provided under an umbrella policy); (b) workers' compensation insurance required by law and employer's liability insurance in respect of any work performed by Tenant's employees on or about the Premises; (c) demolition and debris removal insurance (if not included as part of the insurance carried pursuant to clause (d) below) payable in the event that the debris or demolition is occasioned by damage to or destruction of the Premises, its improvements or any portion thereof, including any casualty pursuant to Article 11 hereof, or, to the extent such insurance is available, by condemnation pursuant to Article 12 hereof, in each case sufficient to pay for the removal of any portion of the Premises' improvements if required pursuant to Article 11 or 12 hereof;
(d) causes of loss property insurance with extended coverage and additional cost of the Insurable Property, with an agreed upon value endorsement and commercially reasonable deductibles; and
during any construction periods, builder's risk coverage in amounts reasonably determined by Landlord to be appropriate for the construction work undertaken; and tent insurance to cover Base Rent to Landlord, including but not limited to periods of time when the Premises are unusable by reason of casualty pursuant to Article 11.
All insurance policies required to be maintained by, or caused to be maintained by, Tenant under this Lease shall be issued by an insurance company qualified to do business in the state/commonwealth where the Premises are located for the issuance of such type of coverage and shall have a Best's Financial Strength Rating of A or better and a Best's Financial Size Rating of XIII or better or a rating of A- or better by Standard and Poor's. Prior to Landlord granting access to the Premises to Tenant or Tenant's agents, Tenant shall deliver to Landlord certificates of insurance and true and complete copies of any and all endorsements (including, but not limited to, Tenant's notice of cancellation endorsement) required under this Lease.
Tenant's policies shall provide for at least thirty (30) days' prior written notice of cancellation 09683\00218189557.V15 25
(and at least ten (10) days' written notice if cancellation is due to non-payment of premium) to Tenant. Tenant shall notify Landlord immediately upon receipt of any notice of cancellation or modification of Tenant's policies. Tenant shall, at least ten (10) days' priox to expiration of each policy, furnish Landlord with certificates of insurance evidencing renewal thereof. In addition, within ten (10) days after Landlord's request, Tenant shall provide redacted copies of all insurance policies and endorsements required under this Lease. The failure of Landlord to demand evidence of insurance or to identify any deficiency in any insurance coverage required in this Lease will not be construed as a waiver by Landlord of Tenant's obligation to comply with the insurance requirements of this Lease. Landlord may from time to time require reasonable increases in the types and/or limits of insurance to be maintained by Tenant if Landlord believes that additional coverage is necessary or desirable. If Tenant does not comply with the requirements of this Section, Landlord may, at its option and at Tenant's expense, purchase such insurance coverage. The cost of such insurance shall be paid to Landlord by Tenant, as Additional Rent, within ten (10) days after demand. Unless otherwise specified herein, the insurance required to be maintained, or caused to be maintained, by Tenant must: (i) be primary and non-contributory to any other insurance that may be available to Landlord; (ii) contain a waiver of subrogation in favor of Landlord, which must not contain any limitation or exclusion due to the requirement of contractual privity; (iii) not include defense costs within the limit of liability. The failure of Tenant to fully and strictly comply with the insurance requirements set Should
forth herein may, at Landlord's election, constitute a material breach of this Lease.
Tenant at any time maintain higher limits than the minimum limits required herein, such higher limits shall be deemed required by this Lease for so long as such higher limits are maintained.
Landlord will not be responsible for any deductible or self-insured retentions under insurance policies maintained by Tenant in connection with this Lease, and in no event shall the limits of any insurance policy limit the liability of Tenant under this Lease.
In addition to the insurance Tenant is required to maintain under this Lease, Tenant shall require Occupants and Tenant's vendors, consultants and contractors entering the Premises to maintain such insurance as Landlord shall reasonably determine to be necessary, and satisfactory evidence of such insurance must be delivered to Landlord prior to entry into the Premises by Occupants or such vendors, consultants and contractors. Tenant shall have a written agreement with all Occupants and vendors, consultants and contractors in connection with their use and occupancy of the Premises, and work or services to be performed at the Premises. Said agreement shall require each Occupant vendor, consultant, and contractor to provide true and complete copies of all insurance policies and endorsements to Tenant promptly after Tenant's request, and Tenant shall deliver the same to Landlord within five (5) business days after Landlord's request.
All such insurance shall contain such contingent liability endorsements as shall make such insurance congruent with the fire, extended coverage and demolition and debris removal insurance required by clauses (c) and (d) of this Section 10.3.
The amount and types of coverages stated in this Section shall be reviewed annually by Landlord and shall be modified at such intervals if increases or changes are necessary to reflect inflation or changes in the nature or degree of risks insured, as determined by Landlord in its. prudent judgment, or otherwise as may be required by Landlord's lenders from time to time.
Without limiting the generality of the foregoing, the monetary limits of insurance set forth in this 09683\00218189557.V15
Article 10 shall increase on each fifth anniversary of the Lease Date by the corresponding change in the Index over such period of time without the requirement for a separate justification.
10.4 Insurance Provisions. Insurance maintained by, Tenant pursuant to the requirements of Section 10.3 shall;
•
(a) be issued by standard policies, obtained from financially sound and responsible insurance companies authorized to do business in the State of California; (b) have attached thereto a clause making the loss payable to Tenant and Landlord as their respective interests may appear, in the case of property insurance, and naming Landlord, the City, as such other parties as Landlord may designate, as an additional insured, in the case of liability insurance;
(c) be written to become effective at the time Tenant becomes subject to the risk or hazard covered thereby, and shall be continued in full force and effect for such period as Tenant is subject to such risk or hazard;
(d) provide for waiver of subrogation and payment of losses to Tenant and Landlord, respectively, notwithstanding any act of negligence of Tenant or Landlord; and provide that any cancellation, change or termination thereof shall not be effective with respect to Landlord until after at least thirty (30) days' prior notice has been given to Landlord to the effect that such insurance policies are to be cancelled, changed, or terminated at a particular time:
Certified copies of such policies and renewals, showing the issuance and effectiveness of each such policy and the amount of coverage afforded thereby, shall be delivered to Landlord.
10.5 Waiver of Subrogation. Each of Landlord and Tenant hereby waives all rights or recovery against the other for loss or injury against which the waiving party is protected by insurance but only to the extent of such insurance.
11. CASUALTY
11.l Collection of Claims. If the Premises or its improvements, or any portion thereof shall be damaged or destroyed by fire or other casualty prior to the expiration of the Term, Tenant shall proceed promptly to establish and collect all valid claims which may have arisen against insurers or others based upon any such damage or destruction.
11.2 Special Account. If the total amount of all proceeds of any such claims ("Insurance Proceeds") and any other monies provided for the reconstruction, restoration or repair of the Premises of its improvements shall exceed One Hundred Thousand Dollars ($100,000.00), the same shall be paid into an escrow account, with a single escrow agent which shall be appointed jointly by Landlord and Tenant. Payments from such escrow account shall conform to the requirements of this Article and, in the event of restoration, shall be made on a progress payment basis against vouchers certified by a registered architect selected by Tenant and approved by Landlord, and supervising the work of restoration, and shall be subject to 09683\00218/89557.V15 27
reasonable retainage and (provided the same do not contravene the provisions of this Lease) made in accordance with usual and reasonable disbursement requirements pertaining thereto.
11.3 . Restoration. Unless otherwise determined in accordance with Section 11.4 or Section 11.5, Tenant shall fully repair and reconstruct the Premises and its improvements to its condition at the time of such damage or destruction and the Insurance Proceeds and any other funds so collected shall be used and expended by Tenant for such purpose. Any deficiency shall be paid by Tenant. Tenant's obligation hereunder shall not be affected by the unavailability or insufficiency of Insurance Proceeds. Any excess proceeds after such repair or reconstruction has been fully completed shall be retained by Tenant, subject to the rights of Landlord to require that such excess be applied to the extent necessary to pay any outstanding Base Rent and Additional Rent owed by Tenant to Landlord pursuant to this Lease. Tenant shall have no right whatsoever to terminate this Lease in the event of a fire or other casualty, and neither the Rent nor any other obligations of Tenant under this Lease shall be affected by any such casualty; and Tenant hereby specifically waives all other rights to the contrary it might otherwise have under law or by statute, including, without limitation, California Civil Code Sections 1932 and 1933.
11.4 Original or Modified Plans. Any restoration undertaken pursuant to the provisions of this Article 11 shall in all respects substantially conform to the provisions of the Final Plans and Specifications for the damaged improvements, incorporating any alterations or modifications approved by Landlord prior to the casualty, or shall be built in accordance with such new or modified plans and specifications as Tenant and Landlord may at the time agree upon and approve, subject to any building and zoning laws and other Applicable Laws then in existence.
11.5 Commencement and Completion of Restoration. When reconstruction ot repair of the Premises, or any portion thereof, which have been destroyed or damaged, is required by the provisions of this Article 11, such reconstruction or repair shall be commenced within a period not to exceed sixty (60) days after the Insurance Proceeds have been received by Tenant (or, if the conditions then prevailing require a longer period, such longer period as shall reasonably be required by Tenant proceeding with due diligence), and Tenant shall diligently prosecute such reconstruction of repair to completion, such reconstruction ol repair to be completed within twelve (12) months after the commencement thereof.
11.6 No Abatement of Rent. There shall be no abatement of Rent during the time that the Premises or portions thereof are unusable by Tenant or any of the Occupants (or if the use thereof has been materially impaired) because of such damage or destruction, whether or not covered by rent or business interruption insurance carried by Tenant as required pursuant to Article 10.
11.7 Demolition and Debris Removal Insurance. Proceeds of demolition and debris removal insurance, if separately obtained pursuant to Section 10.3(c) hereof, shall be separately accounted for by the escrow agent and shall be used to the extent available to pay the cost of any such demolition and debris removal occasioned by a casualty unless otherwise agreed by Landlord and Tenant, with Tenant responsible for paying any shortfall between such proceeds and the cost of such demolition and debris removal.
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12.U CONDEMNATION
12.1 A Taling. This Article shall apply to any taking of the title to, access to, or use of the rights of Article 11 aré comprehensive as to a fire or other casualty). Accordingly, the parties both hereby waive (i) the provisions of California Civil Code Sections 1932(1), 1932(2), 1933(4), 1941, and 1942; (ii) California Code of Civil Procedure Section 1265.130; and (ili) any future Applicable Laws intended as successors theręto or otherwise inconsistent with the provisions of Article 11 and Article 12.
12.2 Special Account. The full amount of any award whether pro tanto or final for any Taking (the "Award"), shall, notwithstanding any allocation made by the awarding authority, be paid into an escrow account in accordance with the procedures established in Section 11.2 above, provided that there shall first be deducted from the Award all reasonable fees and expenses of collection, including, but not limited to, reasonable attorneys' fees and experts' fees. Landlord and Tenant shall then attempt to fairly allocate (taking into account any restoration obligation of Tenant) the Award between Landlord's interest in the Premises and Tenant's interest in the remainder of the Term of this Lease, taking into account their respective interests, any existing appraisals used to determine (or to contest) the amount of the Award and any other relevant information and analysis. If the parties are unable to agree on such allocation, the allocation shall be made pursuant to arbitration in the manner provided in Section 18.5 hereof. Upon determination of the allocation of the Award between Landlord and Tenant, either by agreement of the parties or by decision of the arbitrators, Landlord's portion thereof shall be paid forthwith to Landlord, and Tenant's portion shall be paid as provided in this Article 12. The portion of the Award so allocated to Landlord shall be known herein as "Landlord's Award," and the portion so allocated to Tenant shall be known herein as "Tenant's Award." Total Taking. In the event of a permanent Taking of the fee title to or of control of the Premises or its improvements or of the entire leasehold estate hereunder (a "Total Taking"), Tenant, upon the request of Landlord and at Tenant's sole expense, shall deliver to Landlord any plans ot other technical materials related to the design and construction of the Project, and this Lease shall thereupon terminate as of the effective date of such Total Taking, without liability or further recourse to the parties, provided that any Base Rent, Additional Rent, or other charges payable or obligations owed by Tenant to Landlord as of the date of said Total Taking shall be paid or otherwise carried out in full. Tenant's Award for a Total Taking shall be applied first, to the extent necessary to pay any outstanding Base Rent, Additional Rent and other amounts owed by Tenant to Landlord pursuant to this Lease, and then to Tenant.
12.4 Partial Taking. In the event of a permanent Taking of less than all of the Premises (a "Partial Taking"), then Tenant shall restore the Premises and the Premises shall be restored pursuant to Section 11.5 hereof after consultation with Landlord, provided that if the Partial Taking results in a Taking of a portion of the Premises such that the remaining portion of the Premises would be unsuitable for Tenant's operations in Tenant's reasonable judgment, Tenant may elect within sixty (60) days after the Taking to terminate this Lease, in which event 09683\00218189557.V15 29
this Lease shall terminate as of the date of the Taking and be treated for all purposes as a Total Taking.
12.5 Restoration. Tenant and Landlord shall reasonably agree upon and approve plans and specifications to modify the remaining improvements upon the Premises, which plans and specifications shall be, as nearly as possible, in accordance with the original Final Plans and Specifications, amended to take account of the Taking and incorporating alterations or modifications approved by Landlord prior to the Taking, subject to any applicable building and zoning laws and other Applicable Laws then in existence. Upon approval of said plans, Tenant shall promptly proceed, at its expense, to commence and complete the restoration pursuant to the provisions of Section 11.5 hereof. Subject to the procedures of the escrow account set forth in Section 11.2 hereof, Tenant may use the entire Tenant's Award for such restoration, and may retain for its own use any portion of Tenant's Award remaining after the completion of the restoration subject to the rights of Landlord to require that any such excess be applied first to the extent necessary to pay any outstanding Base Rent, Additional Rent and other amounts owed by Tenant to Landlord pursuant to this Lease. If the cost of the restoration shall exceed the amount of Tenant's Award, the deficiency shall be paid by Tenant. Tenant's obligation hereunder shall not be affected by the unavailability or insufficiency of Tenant's Award.
12.6 Temporary Taking. If the use or occupancy of the Premises or any part thereof shall be temporarily requisitioned by any government authority, civil or military (including, without limitation, any requisition or Taking arising out of the exercise of governmental war powers or any other emergency governmental powers) (a "Temporary Taking"), then any Award made as a result of such Temporary Taking shall be payable solely to Tenant and this Lease shall continue in full force and effect and there shall be no abatement of Rent as a result thereof.
12.7 Abatement of Rent. In the event of a Partial Taking of the Premises, each monthly installment of Base Rent payable hereunder shall be reduced, commencing with the first rent payment date following the effective date of such Partial Taking, in proportion to the amount of gross square footage of improvements taken as compared to the gross square footage of all of the Premises.
12.8 Demolition and Debris Removal Insurance. Proceeds of demolition and debris removal insurance required pursuant to Section 10.3(c) hereof shall be used to the extent available to pay the cost of any such demolition and debris removal occasioned by a Taking or Partial Taking, with Tenant responsible for paying any shortfall between such proceeds and the . cost of such demolition and debris removal.
13. DEFAULT; REMEDIES
13.1 Events of Default. An event of default (an "Event of Default") by Tenant shall occur:
(a) if Tenant fails to pay when due any Base Rent, any Additional Rent or any other payments due under this Lease and any such default shall continue for fifteen (15) days after the receipt of written notice thereof by Tenant; or 09683100218189557.V15 30
(b) if Tenant fails in any material respect to observe or perform any covenant, condition, agreement or obligation hereunder, and shall fail to cure, correct or remedy such failure within thirty (30) days after the receipt of written notice thereof, unless such failure cannot be cured by the payment of money and cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not be deemed to continue if Tenant proceeds promptly and with due diligence to cure the failure, and completes the curing thereof within ninety (90) days after Tenant's receipt of Landlord's original written notice; or (c) if Tenant's fails to complete the Base Building Project as required under this Lease, or its vacating or abandoning of, the Premises; or (d) Tenant breaches any obligation under the Construction Agreement; or (e) if any representation of warranty of Tenant set forth in this Lease, in any certificate delivered pursuant hereto, or in any notice, certificate, demand, submittal or request delivered to Landlord by Tenant pursuant to this Lease shall prove to be incorrect in any material and adverse respect as of the time when the same shall have been made and the same shall not have been remedied to the satisfaction of Landlord within thirty (30) days after the receipt of written notice thereof, unless such failure cannot be cured by the payment of money and cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not be deemed to continue if Tenant proceeds promptly and with due diligence to cure the failure, and completes the curing thereof within ninety (90) days atter Tenant's receipt of Landlord's original written notice; or •
if Tenant shall be adjudicated bankrupt or be declared insolvent under the Federal Bankruptcy Code or any other federal or state law (as now or hereafter in effect) relating to banlaruptcy, insolvency, reorganization, winding-up or adjustment of debts ("Bankruptcy Laws"), or if Tenant shall (i) apply for or consent to the appointment of, or the taking of possession by, any receiver, custodian, trustee, United States Trustee or liquidator (or other similar official) of Tenant or of any substantial portion of Tenant's property; (ii) generally not pay its debts as they become due or admit in writing its inability to pay its debts generally as they become due; (iii) make a general assignment for the benefit of its creditors; (iv) file a petition commencing a voluntary case under or seeking to take advantage of any Bankruptcy Law; or (v) fail to controvert in a timely and appropriate manner, or in writing acquiesce to, any petition commencing an involuntary case against Tenant pursuant to any Bankruptcy Law; or if an order for relief against Tenant shall be entered in any involuntary case under the Federal Bankruptcy Code or any similar order against Tenant shall be entered pursuant to any other Bankruptcy Law, or if a petition commencing an involuntary case against Tenant or proposing the reorganization of Tenant under the Federal Bankruptcy Code shall be filed in and approved by any court of competent jurisdiction and not be discharged or denied within sixty (60) days after such filing, ot if a proceeding ol case shall be commenced in any court of competent jurisdiction seeking (i) the liquidation, reorganization, dissolution, winding- up or adjustment of debts of Tenant, (ii) the appointment of a receiver, custodian, trustee, United States Trustee or liquidator (or other similar official of Tenant or of any substantial portion of Tenant's property), or (iii) any similar relief as to Tenant pursuant to any Bankruptcy Law, and any such proceeding ot case shall continue undismissed, or any order, judgment oï decree 09683\00218189557.v15 31
approving or ordering any of the foregoing shall be entered and continued unstayed and in effect for thirty. (30) days.
13.2 Remedies for Default. If there is an Event of Default on the part of Tenant, Landlord shall have the following rights and remedies:
(a) Termination. Upon the occurrence of an Event of Default by Tenant, then in addition to any other remedies available to Landlord at law or in equity and under this Lease, Landlord may terminate this Lease immediately and all rights of Tenant hereunder by giving written notice of termination to Tenant. If Landlord elects to terminate this Lease, then Landlord may recover from Tenant:
the worth at the time of award of any unpaid Rent and any other sums due and payable which have been eatned at the time of termination; plus (ii) the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable which would have been earned after termination until the time of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus
(iii) • the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable for the balance of the Term of this Lease after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course would be likely to result therefrom, including, but not limited to, (A) any costs or expenses incurred by Landlord (1) in retaking possession of the Premises; (2) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering, remodeling or rehabilitating the Premises or any affected portions of the Project, including such actions undertaken in connection with the reletting of attempted reletting of the Premises to a new tenant or tenants; (3) for leasing commissions, advertising costs and other expenses of reletting the Premises; or (4) in carrying the Premises, including taxes, insurance premiums, utilities and security costs; and (B) any unearned brokerage commissions paid in connection with this Lease (such commission to be amortized over the initial Term of the Lease); plus (v) such reasonable attorneys' fees and expenses incurred by Landlord as a result of the Event of Default, and court costs in the event suit is filed by Landlord to enforce such remedy; and plus.
(vi) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable Law.
As used in subsections (i) and (ii) above, the "worth at the time of award" is computed by allowing interest at an annual rate equal to eight percent (8%) per annum or the maximum rate permitted by Applicable Laws, whichever is less. As used in subsection (3) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of Federal 09683\002\8189557.V15 32
Reserve Bank of San Francisco at the time of award, plus one percent (1%). Tenant hereby waives for Tenant and for all those claiming under Tenant all right now or hereafter existing to redeem by order of judgment of any court of by any legal process or writ, Tenant's right of occupancy of the Premises after any termination of this Lease. (b) Re-entry. Upon the occurrence of an Event of Default by Tenant, Landlord shall also have the right, with ot without terminating this Lease, in compliance with Applicable Laws, to re-enter the Premises, by force if necessary, and remove all persons and Premises from the Premises; such Premises may be removed and stored in a public warchouse oi elsewhere at the cost of and for the account of Tenant. (c) Reletting. In the event of the abandonment of the Premises by Tenant or if Landlord elects to re-enter as provided in Section 13.2(b) or takes possession of the Premises pursuant to (i) legal proceeding oi (ii) any notice provided by Applicable Law, then if Landlord does not elect to terminate this Lease as provided in Section 13.2(a), Landlord may from time to . time, without terminating this Lease, relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable with the right to make alterations and repairs to the Premises in Landlord's sole discretion. If Landlord elects to so relet, then rentals received by Landlord from such ieletting shall be applied in the following order: (1) to reasonable attorneys' fees and expenses incurred by Landlord as a result of the Event of Default and court costs in the event suit is filed by Landlord to enforce such remedies; (2) to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the payment of any costs of such reletting; (4) to the payment of the costs of any alterations and repairs to the Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the residual amount, if any, shall be held by Landlord and applied in payment of future Rent and other sums payable by Tenant hereunder as the same may become due and payable hereunder. If the portion of such rentals received from such reletting during any month, which is applied to the payment of Rent hereunder, is less than the • Rent payable during the month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting. (d) Termination. No re-entry or taking of possession of the Premises by Landlord pursuant to this Section 13.2 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Landlord because of an Event of Default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such Default. (e) Continue Lease in Effect. Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue Lease in effect after Tenant's breach and recover rent as it becomes due). Landlord and Tenant agree that the limitations on assignment and subletting set forth in Article 15 in this Lease are reasonable. Acts of maintenance oi preservation, efforts to relet the Premises, or the appointment of a receiver to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession or a termination of this Lease.
09683\00248189557.vI5 33
(f) Cumulative Remedies. The remedies herein provided are not exclusive and Landlord shall have any and all other remedies provided herein or by law or in equity. (g) No. Surrender. No act or conduct of Landlord, whether consisting of the acceptance of the keys to the Premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender of the Premises by Tenant prior to the expiration of the Term, and such acceptance by Landlord of surrender by Tenant shall only be effective upon a written acknowledgment of acceptance of surrender signed by Landlord. The surrender of this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects in writing that such merger take place, but shall operate as an assignment to Landlord of any and all existing subleases, or Landlord may, at its option, elect in writing to treat such surrender as a merger terminating Tenant's estate under this Lease, and thereupon Landlord may terminate any or all such subleases by notifying the subtenant of its election so to do within five (5) business days after such surrender.
13.3 Rights Upon Termination. Upon termination of this Lease pursuant to Section 13.2, Landlord may require Tenant to deliver to Landlord, or otherwise effectively transfer to Landlord any and all rights of possession, ownership or control Tenant may have in and to, any and all plans, specifications, renderings, engineering data, soils or water report and other technical documents or material related to the design and construction of the Project, including the Final Plans and Specifications, and architect's and construction contracts relating to the Project. In addition to the remedies of Landlord described above in Section 13.2 and this Section 13.3, Tenant agrees to reimburse Landlord for any and all actual expenditures incurred and for any and all actual damages suffered by Landlord by reason of such termination, however caused.
13.4 Performance by Landlord, If Tenant shall fail to make any payment or perform any act required under this Lease, or in any event where there is an emergency that Landlord deems requires immediate action, Landlord may (but need not), and without waiving any default or releasing Tenant from any obligations, cure such default for the account of Tenant, or take such action responsive to an emergency situation. Tenant shall promptly pay Landlord, as employees) as Landlord shall have incurred in curing such default, plus an administrative charge of ten percent (10%) for Landlord's overhead, together with interest at the Interest Rate until reimbursed. Landlord's performance of any such obligation shall not constitute a release or waiver of any of Tenant's obligations under this Lease.
13.5 Legal Costs.
(a) If either party hereto fails to perform any of its obligations under this Lease or if any dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Lease, then the defaulting party ot the party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, but not limited to, court costs, expert fees and costs and attorneys' fees and disbursements. In addition to other circumstances, a party shall be deemed to have prevailed in any such action if such action is dismissed upon the payment by the other party of the sums allegedly due or the 09683\002\8189557.v15 34
performance of obligations allegedly not complied with, or if such party obtains substantially the relief sought by it in the action, itrespective of whether such action is prosecuted to judgment.
The reasonable costs to which the prevailing party is entitled shall include costs of investigation, copying costs, electronic discovery costs, electronic research costs, telephone charges, mailing and delivery charges, information technology support charges, consultant and expert witness fees and costs, travel expenses, court reporter fees, transcripts of court proceedings not ordered by the court, mediator fees and attorneys' fees incurred in discovery and contempt proceedings. Tenant shall also pay all attorneys' fees and costs Landlord incurs in defending this Lease or otherwise protecting Landlord's rights in any voluntary or involuntary bankruptcy case, assignment for the benefit of creditors, or other insolvency, liquidation ol reorganization proceeding involving Tenant ot this Lease, including all motions and proceedings related to relief from an automatic stay, lease assumption or rejection, use of cash collateral, claim objections, disclosure statements and plans of reorganization. The non-prevailing party shall also pay the attorneys' fees and costs incurred by the prevailing party in any post-judgment proceedings to collect and enforce the judgment. The covenant in the preceding sentence is separate and several and shall survive the merger of this provision into any judgment in connection with this Lease.
Without limiting the generality of Section 13.5(a) above, if Landlord utilizes the services of an attorney for the purpose of collecting any Rent due and unpaid by Tenant or in connection with any other breach of this Lease by Tenant, Tenant shall pay Landlord's actual attorneys' fees and expenses, regardless of the fact that no legal action may be commenced or filed by Landlord.
13.6 Remedies Cumulative. Unless otherwise specifically provided in this Lease, no remedy herein shall be exclusive of any other remedy or remedies, and each such remedy shall be cumulative and in addition to every other remedy; and every power and remedy given by this Lease may be exercised from time to time and as often as may be deemed expedient by either party. No delay or omission by Landlord to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default ot an acquiescence therein. The absence in this Lease of any enumeration of events of default by Landlord or remedies of either party with respect to money damages or specific performance shall not constitute a waiver by either party of its right to assert any claim or remedy available to it under law or in equity.
13.7 Force Majeure. If either party shall be delayed in performing any obligation under this Lease, except any obligation to pay Base Rent, Additional Rent or any other sums of . money payable hereunder, the time for such performance shall be extended by a period of time equal to such delay, and the party shall not be deemed to be in default where such delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; epidemics; quarantine; restrictions; freight embargoes; acts or failure to act of the City or any other public or governmental agencies or entity that cause a significant portion of the Premises to be unusable in accordance with this Lease; or any other reasonable cause relating to this Lease beyond the control or without the fault of the party claiming an extension of time to perform; provided that the party whose performance is delayed shall have commenced and is assiduously pursuing all reasonable and available means and measures necessary to minimize or eliminate such delay resulting from any such causes or conditions. 09683\002\8189557.V15 35
Each party shall give written notice of any such delay to the other party within five (5) days of such party's knowledge of the occurrence of such event.
13.8 Limitations of Landlord's Liability. If Tenant obtains a judgment against Landlord due to a default or other breach by Landlord of any covenant ot other obligation on Landlord's part to be performed under this Lease, Tenant agrees to look solely to the estate of Landlord in the Premises plus the rents, income and other receivables arising therefrom (collectively, the "Available Assets") and Tenant agrees that no other lands, estates, assets or other real or personal property of Landlord shall be reachable or otherwise subject to execution or other action to satisfy such judgment. Further, neither Landlord nor, if Landlord be a legal entity, any of the Persons comprising Landlord, shall be liable to Tenant for any deficiency beyond the Available Assets. Tenant acknowledges that Landlord may for administrative convenience from time to delegate certain tasks to staff employed by the City of Richmond. City shall have no obligations nor incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to this Lease or otherwise and the City is hereby released and relieved of any other obligations or liability hereunder, under this Lease or with respect to the Premises or in any way operate to place responsibility for the control, care, management or repair of the Premises upon the City or impose upon the City responsibility for the carrying out of any of the terms or conditions of this Lease, and City shall not be responsible for any dangerous or defective condition of the Premises or for any negligence in the management, upkeep, repair or control of the Premises or any occurrences at the Premises.
14. RESTRICTIONS ON ASSIGNMENT AND TRANSFER
14.1 Selection of Tenant. The parties have entered into this Lease to permit and encourage the development of the Premises in accordance with the terms hereof and not to permit speculation in landholdings. Tenant acknowledges that:
(a) The qualifications and identity of Tenant and its management personnel are of particular concern to Landlord; and
(b). It is because of such qualifications and identity that Landlord is entering into this Lease; and
(c) In doing so, Landlord is willing to accept and rely upon the obligations of Tenant for the faithful performance of all undertakings and covenants to be performed by it under this Lease.
14.2 Prohibited Transfers. For the reasons set forth in Section 14.1 hereof and except as otherwise provided in Section 14.3, and Section 15.1, commencing on the date hereof and continuing until the date of Substantial Completion with respect to the entire Project, Tenant shall not transfer (by sale, assignment, pledge, sublease or otherwise) all or any of its rights under this Lease of its title to any of the Project improvements ot to the Premises to any Person without the prior written consent of Landlord, which consent may be given or withheld in Landlord's sole and absolute discretion.
14.3 Permitted Transfers. The restrictions set forth in Section 14.2 hereof shall not apply to any transfer:
09683\002\8189557.v15 36
(a) of Tenant's interest in this Lease, the Premises and the Project from and after at least two (2) years following the date of Substantial Completion of the entire Project; provided that Landlord shall have a right of first refusal to purchase Tenant's interest in this Lease and Premises (including the Project) as set forth in Article 16;, and provided, further, that (i) there shall be no uncured Event of Default under this Lease; and (ii) any proposed transferee, by instrument in writing in recordable form, shall for itself and its successors and assigns, and expressly for the benefit of Landlord, have expressly assumed, subject to Section 13.8, all the obligations of Tenant under the Lease, and agreed to be subject to all of the conditions and restrictions to which Tenant is subject; and (iii) the proposed transferee shall have a reputation of high quality and, in the reasonable opinion of Landlord, the qualifications, experience and financial responsibility required to fulfill the obligations contained herein for the continued first- class management and operation of the Project or, if the proposed transferee does not have the qualifications and experience required to manage and operate the Project, it shall be, in the reasonable opinion of Landlord, financially responsible and shall have a management agreement or other contract with an entity which has, in the reasonable opinion of Landlord, qualifications and experience required to fulfill the obligations contained herein; and (iv) if the proposed transferee is chartered, or directly controlled by a person chartered, in a country other than the United States of America, the transaction of business with such person shall not violate or otherwise be in conflict with any law, regulation, order of decree of the government of the United States of America; and (V) confirmation shall be obtained from Landlord that the proposed transferee satisfies the requirements of this Section 14.3(a) pursuant to the provisions of Section 14.4;
b) of any leasehold interest by lease or sublease between Tenant, as landlord, and an Occupant of the Premises; provided, however, that any such transfer is made pursuant to the requirements of Section 15.1;
14.4 Landlord's Consent. If the consent of Landlord to any transfer is required by this Article 14, Tenant shall notify Landlord of the Person to whom such transfer is proposed, and such notice shall provide reasonably sufficient information to enable Landlord to evaluate the acceptability of the proposed transferee. Within thirty (30) days of its receipt of a request for confirmation that a proposed transferee satisfies the criteria set forth in Section 14.3(a) or of any request for consent to transfer of any interest in this Lease, Landlord shall either determine that the proposed transferee satisfies the applicable criteria, or is otherwise satisfactory to Landlord, or it shall notify Tenant of the specific respects in which such proposed transferee does not satisfy the applicable criteria, or, if Section 14.3(a) is not applicable, does not otherwise satisfy Landlord, or it shall indicate with reasonable specificity what further information it requires to make its determination. If Landlord requests further information concerning a proposed transferee, within thirty (30) days of receipt of such additional information, Landlord shall confirm that the proposed transferee satisfies the applicable criteria, or is otherwise satisfactory to Landlord, or it shall notify Tenant of the specific respects in which such proposed transferee does not satisfy the applicable criteria or, if Section 14.3(a) is not applicable, otherwise satisfy Landlord. If an assignment or other agreement to transfer is not entered into with the proposed transferee to which consent is given hereunder within ninety (90) days of the date such consent is given, then such consent shall be void. Notwithstanding anything to the contrary contained elsewhere in this Lease, the consent of Landlord or an objection by Landlord to any proposed 096831002\8189557.v15 37
transferee shall be made or withheld at the absolute discretion of Landlord except as otherwise specifically provided in Section 14.3(a) of this Lease.
14.5 Transfers of Interests in Tenant. Without limiting the other transaction(s) that may constitute or result in an assignment of this Leasc, each of the following shall be deemed to be an assignment under this Lease: (a) the merger or consolidation of Tenant with or into another entity, whether ot not Tenant is the surviving entity, except a merger of Tenant into a wholly-owned subsidiary to effect a reincorporation in another state; (b) except in the case of a public offering of securities registered with the Securities and Exchange Commission, a transter, issuance, oi dilution of greater than fifty percent (50%) of the ownership or beneficial interests (whether stock, partnership interest, membership interest ot otherwise) in Tenant, either in a single transaction or a series of transactions (whether related or unrelated), such that the ultimate owners or holders (whether direct or indirect) of such interests on the date of this Lease cease to own more than fifty percent (50%) of the ownership or beneficial interest in Tenant; (c) the commencement of liquidation proceedings or the dissolution of Tenant (whether or not in connection with liquidation proceedings); (d) the conversion or change of Tenant into another type of entity (e.g., the conversion of a corporation into a limited liability company); (e) the reorganization or restructuring of Tenant, including by a spin-off or split-off; and (f) the change in the identity of such number of "controlling persons" as, under the organizational documents of Tenant, is the minimum number of persons required to approve any act involving the management or operation of the business of Tenant. For purposes of this Section 14.5, (1) the term "controlling persons" means the directors if Tenant is a corporation, the members or managers if Tenant is a limited liability company, the general partners if Tenant is a partnership, or other persons having equivalent control over said approval if another entity, and (2) the term "organizational documents" means the charter, bylaws, and shareholders' agreement if Tenant is a corporation, the articles of organization or certificate of formation and operating agreement if Tenant is a limited liability company, the partnership agreement if Tenant is a partnership, ot equivalent documents governing Tenant's organization and governance if Tenant is another entity,
15. SUBLETTING AND ESTOPPEL CERTIFICATES
15.1 Subletting. Tenant shall have the right to enter into subleases, leases, license agreements, concession and occupancy arrangements of any kind for any portion of the Premises without the prior consent of Landlord, provided that any such use and occupancy is conditioned upon the Occupant or other party possessing a valid state license for such use and upon full compliance with Section 5.8 hereof. Upon Landlord's request, Tenant shall submit to Landlord a copy of any sublease or other agreement together with any information concerning the identity and financial worth of the proposed Occupant as Landlord may reasonably request. Tenant may also submit to Landlord in writing from time to time prior to submitting the text of such sublease or agreement, information concerning the identity of a proposed Occupant or proposed terms of a sublease or agreement. The form of all subleases, leases, license agreements and occupancy arrangements used by Tenant with respect to the Premises shall be subject to the prior approval of Landlord and a copy of all executed subleases, leases, license agreements and occupancy arrangements entered into by Tenant shall be delivered to Landlord upon request. Except as otherwise required by this Section, Tenant shall have the right to sublet any part of the Project at any time and from time to time during the Term of this Lease with such minor, non-material 096831002881895S7,V15 38
changes and additions to the forms approved by Landlord pursuant to the prior sentence as Tenant shall deem necessary or appropriate. No sublease made as permitted by this Section 15.1 shall impose any obligations on Landlord or otherwise affect any rights of Landlord under this Lease.
15.2 Rent and Charges to Occupants. Tenant shall charge all Occupants not less than a reasonable fair market rent (including any customary and appropriate percentage rent arrangements in the relevant maiketplace) for such Occupant's premises, subject to such the so want artice discounts or other below market arrangements as are customary in the real estate industry for propeities of this kind at any time any such arrangements are made, provided that no such arrangements shall reduce Landlord's right to receive Rent hereunder.
15.3 Estoppel Certificates. Landlord and Tenant, as the case may be, will execute, acknowledge and deliver to each other, within fifteen (15) days after a written request therefor, a certificate certifying:
that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified, and stating the modifications);
(b) the dates, if any, to which Base Rent, Additional Rent and other sums payable hereunder have been paid;
(c) whether or not, to the knowledge of Landlord or Tenant, as the case may be, there are then existing any defaults under this Lease (and if so, specifying the same); and (d) such other matters relating to this Lease as may be reasonably required.
16. LANDLORD'S RIGHTS
16.1 First Refusal.
Tenant hereby grants Landlord a right of first refusal with respect to the purchase of its leasehold interest in the Premises and its interest in the Project ("Tenant's Interest") on the terms set forth in this Section 16.1. Landlord may transfer Landlord refusal right to a designee.
(b) Tenant agrees that at such time as Tenant receives a bona fide offer (which it desires to accept from any third party to purchase Tenant's Interest, prior to consummating any such sale Tenant shall first offer Tenant's Interest to Landlord at the same price offered by the Landlord shall have thirty (30) days from its receipt of such notice to notify Tenant that Landlord has elected to purchase Tenant's Interest at the same price offered by the third party and in accordance with the terms and conditions of purchase offered by the third party. The failure by Landlord to execute a purchase and sale agreement within such thirty (30) day period shall be deemed to constitute a waiver of the right of first refusal for the proposed purchase and sale 09683100218189557.V15 39
transaction that is the subject of such right. If Landlord waives such right of first refusal, either expressly or by failing to act within the thirty (30) day period, Landlord shall execute and deliver to Tenant a written waiver in recordable form. No sale or other transfer of title of Tenant's Interest by Tenant shall be valid unless and until the written waiver by Landlord shall be recorded in the Official Records or until the thirty (30) day period has elapsed without action by Landlord and Tenant tecords a certificate of that fact in the Official Records, together with a copy of the notice sent to Landlord.
(c) If Landlord waives its right of first refusal either expressly or by failing to act within the thirty (30) day period, Tenant shall be free within the one year period following the notice to Landlord, to conclude the proposed sale with the original third party at the same or bigher price (but not a lower price or on other terms less favorable to Tenant) as set forth in its original notice to Landlord. If Tenant does not conclude a sale within one year from the date of • its notice to Landlord or if Tenant lowers the price at which it proposes to sell or if Tenant proposes to sell to a different party or if Tenant proposes to grant terms more favorable to a purchaser than was previously communicated to Landlord in a notice under this Section, then this Section shall remain applicable and Tenant must submit a new notice to Landlord and comply with the provisions of this Section before concluding the sale. Tenant shall not be required to give notice to Landlord under this Section if, within the applicable one year period, Tenant accepts an offer more favorable to Tenant than was previously communicated to Landlord in a notice under this Section.
(d) Notwithstanding Landlord's waiver of its right of first refusal in any particular instance, Landlord's rights hereunder shall remain in force and be binding upon any subsequent owner or owners of Tenant's Interest in connection with any subsequent sale to the same extent as if said subsequent owner or owners were a party or parties hereto. (e) Landlord's rights under this Section 16.1 shall run with the land and shall be binding upon Tenant and its successors and assigns during the Term of this Lease.
16.2 Landlord's Right to Transfer to Tenant.
(a) Subject to the terms and conditions set forth in this Section 16.2, Tenant hereby agrees to acquire and purchase the Premises from Landlord, at a time chosen in Landlord's sole election. Tenant acknowledges and understands that the Premises is not a separate legal parcel, and that Landlord, acting solely in its capacity as a commercial landlord and not in its municipal capacity, may (as part of such commercially reasonable efforts with which Landlord and Tenant will cooperate) (i) process and record a parcel map or subdivision map ("Map") that creates a separate legal parcel for the Premises, and (ii) process modifications to such ordinances, rules, requirements, resolutions, policy statements and regulations (including, agencies having jurisdiction over the Premises bearing on the construction, maintenance, use, operation or sale of the Premises for the Permitted Use ("Use Authorizations"). failure to obtain the Map or the Use Authorizations shall not be deemed a default hereunder.
Tenant and Landlord agree that, no later than five (5) business days after recordation of a Map (if 09683\00218189557.v15 40
at all), Tenant and Landlord shall amend this Agreement to attach an Exhibit A-2, which shall be the legal description for the Premises, as approved by Landlord and Tenant, which approval shall not be unreasonably withheld, delayed or conditioned.
(b) Method of Exercising Option. Conditioned upon obtaining the Map and the Use Authorizations, Landlord may at any time exercise its right to cause Tenant to purchase the Premises by giving written notice ("Sale Notice") to Tenant, unequivocally exercising the right to cause the purchase and sale of the Premises, and specifying a date for Closing that is (i) at least thirty (30) days after Landlord's delivery of the Sale Notice. (c) Purchase Price.
(i) The purchase price for the Premises ("Purchase Price") shall be the sum of Ten Million Dollars ($10,000,000).
(11) Method of Payment. The Purchase Price shall be payable in cash in lawful money of the United States to Landlord by Tenant as of the Closing. (iii) Title to Premises. Title to the Premises shall be conveyed by grant deed, in the form typically used by the Escrow Holder, It shall be a condition for Tenant's benefit that the Escrow Holder's title company issue the title insurance referenced in Section
16.2(d)(i) below, insuring that title to the Premises is being conveyed by Landlord to Tenant free and clear of all liens, encumbrances, covenants, conditions, restrictions, easements and rights of- way of record, leases or other tenancy agreements, and other matters of record, except (A) current taxes, a lien not yet delinquent, (B) those portions of current assessments not yet due and payable, and (C) all exceptions of record as of the date of this Lease. (d) Escrow. The sale shall be consummated through an escrow with Old Republic Title Company or another title company selected by Landlord ("Escrow Holder"), to be opened within five (5) days after the Sale Notice has been given to Tenant. The parties shall execute all documents required by Escrow Holder as long as they are consistent with the provisions of this Section 16.2. Escrow shall be deemed to be closed pursuant to this section on the date the grant deed is recorded (the "Closing").
Title Insurance. At the Closing, Escrow Holder must be prepared to issue a CLTA Standard Coverage Policy of Title Insurance in the amount of the Purchase Price insuring title to the Premises vested in Tenant.
(ii) Proration of Costs and Income. Base Rent and Additional Rent shall be prorated as of the close of the Closing.
(iii) Closing Costs. The cost of the title policy referred to in Section
16.2(d)(i) and any endorsements shall be paid by Tenant. Charges of escrow and all other closing costs, including transfer taxes and recording fees, shall be paid allocated between the parties as customary in Contra Costa County.
terminate, and the parties slac oe see sc tom eminations and de Closing this feise chall 09683100218189557.v15 41
except those which, by the provisions of this Lease, expressly survive the expiration or termination of the Term of this Lease
(e) Condition of Premises. In light of Tenant's occupancy of the Premises prior to its purchase thereof, such sale shall be on a strictly "as is" basis, without any warranties by Landlord as to (i) the condition of the Premises, (ii) the Premises' compliance with Applicable Laws or suitability for Tenant's intended use, or (iii) other matters that are likely to be within the knowledge of a sophisticated party in possession of property.
Exchange. If either party wishes to effect an exchange under Internal Revenue Code Section 1031, the other party shall cooperate, provided that. (i) there is no additional out-of-pocket cost to or other liability or obligation imposed upon such other party and (ii) there is no material delay in the Closing.
(g) No Broker. Landlord shall have no obligation to pay any broker or finder fees in connection with any sale described in this Section 16.2. (h) Without obligating Landlord to sell or Tenant to purchase the Premises, if Tenant reasonably concludes that there is a risk of a change in law, a potential enforcement action, or another occurrence that could trigger Landlord's right to deliver a Landlord's Compliance Notice pursuant to Section 5.8(e), Tenant may by written notice to Landlord require Landlord to prospectively prepare the Map and process Use Authorizations described above in Section 16.2(a), at Tenant's sole expense and sole risk. Landlord may require an deposit of funds from Tenant as a condition to proceeding with such matters, in an amount calculated by Landlord in its sole business judgement as an estimate for the cost associated to complete them.
17. REPRESENTATIONS AND WARRANTIES; AFFIRMATIVE COVENANTS
17.1 Representations and Warranties. The parties hereto each represent and warrant with respect to themselves:
(a) • Such party has been duly formed and is validly existing under the laws of its state of organization. Such party is registered to transact business as an entity organized under the laws of the State of California. The execution hereof and the performance of the obligations herein described, and of any acts which may be reasonably necessary or appropriate to accomplish the purposes set forth herein, have been duly authorized by each of the respective parties.
b) Each party has full power and authority to enter into this Lease and this Lease and any agreements to be executed herewith or pursuant hereto are of will be, upon execution, the duly executed, legal, valid and binding obligations of each of the respective parties, enforceable in accordance with their terms as the same may be limited by bankruptcy, insolvency of similar laws affecting the rights of creditors generally. (c) This Lease and the agreements to be executed herewith or pursuant hereto are not in conflict with any joint venture agreement, charter, statutory authority, or any indenture agreement or other instrument to which any party hereunder is a party or by which any party hereto is bound.
096831002\8189557.v15 42
(d) There is no litigation or administrative proceeding pending or anticipated which would in any way affect the ability of the party making the warranty to carry out its obligations under this Lease or which would otherwise affect the Project.
17.2 Affirmative Covenants of Tenant. Tenant covenants and agrees that, during the period of this Lease, it will undertake the actions set forth in Sections 17.3 through 17.17.below.
17.3 Maintenance of Business and Existence. Tenant will continue to engage in business of the same general type as now conducted by it so that its principal business shall continue to be substantially the same as it is on the date of execution of this Lease and to do all things necessary to preserve, renew, and keep in full force and effect its corporate existence and rights and franchises necessary to continue such business and preserve and keep in force and effect all licenses and permits necessary for the proper conduct of its business, unless prior written approval of Landlord is obtained.
17.4 Conduct of Business. Tenant will conduct and maintain its business in compliance with all Applicable Laws and in accordance with this Lease.
17.5 Compliance with Agreements. Tenant will comply with all material provisions of. all contracts, agreements, undertakings ot other instruments to which it is a party relating to or affecting the Premises or the Project.
17.6 Notification of Defaults. Tenant will promptly notify Landlord of any material default, or the acceleration of any debt, under any agreement, lease or otber instrument to which it is a party or by which it is bound and which affects the Premises or the Project and any default in the payment or performance of any of its obligations under or pursuant to this Lease, whether ot not any requirement or notice or lapse of time, or both, or any other condition has been satisfied or has occurred.
17.7 Notification of Disputes. Tenant will promptly notify Landlord of any adverse claims, actions or proceedings affecting the Premises or the Project or its performance of this Lease.
17.8 Notification of Attachments. Tenant will promptly notify Landlord of any levy, attachment, execution or other process against its assets, which will adversely affect the Premises or the Project or its performance of this Lease.
17.9 Books and Records. Tenant will at all times maintain true and complete books, records and accounts in which true and correct entries shall be made of its transactions concerning this Lease, the Premises, Minimum Annual Combined Receipts and the Project (including e.g. the Project) in accordance with generally accepted accounting practices consistently applied and consistent with those applied in the preparation of the financial statements referred to in Section 17.11 hereof. Tenant shall retain such books and records relating to a particular fiscal year of Tenant for not less than five (5) years from the end of such year.
17.10 Access to Records and Premises. Tenant will afford access by Landlord, its accountants, attorneys or agents, during normal business hours of Tenant and upon twenty-foul 09683\002\8189S57.VI5 43
(24) hours' notice, to the Premises and to Tenant's books, records, leases, subleases, other agreements, plans, drawings, specifications and any other documents relating to this Lease, the Premises, Minimum Annual Combined Receipts or the Project to inspect and make and take away copies of any and all of the same and to promptly deliver to Landlord such certificates and documents as Landlord may reasonably request.
17.11 Fincincial Statements. Tenant will furnish to Landlord within one hundred twenty (120) days after the end of each fiscal year of Tenant a balance sheet for Tenant, statements of income, statements of changes in stockholder's or member's equity for Tenant, certified by independent certified public accountants of recognized standing selected by Tenant, together with copies of all documents and materials filed by it, its parent of its subsidiaries during the year with the United States Securities and Exchange Commission.
17.12 Agency Reports. Tenant will provide Landlord with copies of any reports furnished to any state or federal agency or regulatory body relative to the Premises or the Project.
17.13 Further Information. Tenant will promptly furnish Landlord from time to time such other information regarding its operations, business affairs and financial condition concerning the Premises, including regarding Minimum Annual Combined Receipts, as Landlord may reasonably request.
17.14 Further Assurances, Upon request, Tenant will execute and deliver, or cause to be executed and delivered, such further instruments and do ot cause to be done such further acts, as may reasonably be necessary or proper to carry out the intent and purpose of this Lease.
17.15 Current Information. Tenant will promptly furnish Landlord from time to time current information which changes in any material adverse manner information previously submitted to Landlord by Tenant.
17.16 Audit and Legal Costs. Tenant will pay to Landlord reasonable accounting and legal costs of Landlord in the event Landlord incurs expenses of a separate audit or other services of an independent certified public accountant as a result of any discrepancies of more than three percent (3% of the audited amount in financial statements submitted by Tenant pursuant to Section 17.11. Tenant will also reimburse Landlord for all reasonable legal expenses incurred by Landlord in connection with all requests by Tenant for consent, approval or review hereunder, non-disturbance agreements, estoppel certificates, easements, licenses, amendments to this Lease and other agreements relating to this Lease or to the Premises.
17.17 General Tenant Covenant. Tenant will perform and observe, ot cause to be performed and observed, all the terms, covenants, conditions and agreements provided in this Lease and in any amendments hereto.
18. MISCELLANEOUS PROVISIONS
18.1 No Recording of Lease. Landlord and Tenant agree that this Lease shall not be recorded.
09683\00218189557.V15 44
18.2 No Merger of Title. There shall be no merger of the leasehold estate created by this Lease with the fee estate in the Premises by reason of the fact that the same Person may own or hold (a) the leasehold estate created by this Lease or any interest in such leasehold estate, and (b) the fee estate in the Premises or any interest in such fee estate; and no such merger shall occut unless and until all Persons, including Landlord, having any interest in (i) the leasehold estate created by this Lease, or (i) the fee estate in the Premises, shall join in a written instrument effecting such merger and shall duly record the same.
18.3 No Waiver. The failure of either party to insist in any one oi more cases upon the strict performance of any of the covenants of this Lease, or to exercise any option or election herein contained, shall not be construed as a waiver or relinquishment for the future of such covenant, option or election unless this Lease specifies otherwise. A receipt by Landlord of Rent with knowledge of the breach of any covenant herein shall not be deemed a waiver of such breach.
18.4 Brokers. Landlord and Tenant each represents and warrants to the other that neither it nor its officers or agents nor anyone acting on its behalf has dealt with any real estate broker in the negotiating of making of this Lease, and each party agrees to indemnify and hold harmless the other from any claim or claims, costs and expenses, including attorneys' fees and expenses, incurred by the indemnified party in conjunction with any such claim or claims of any other broker or brokers to a commission or other compensation in connection with this Lease as a result of the actions of the indemnifying party.
18.5 Arbitration. Whenever, pursuant to the terms of this Lease, a disagreement between Landlord and Tenant is expressly required to be resolved by arbitration, the following procedure shall be followed: If the parties cannot agree upon the matter to be determined, then the determination, upon the election of either Landlord or Tenant, shall be submitted to arbitration as follows: the matter shall be determined by impartial arbitrators, one to be chosen by Tenant, one to be chosen by Landlord, and a third to be selected, if necessary, as below provided. • Such impartial arbitrators shall be qualified, independent real estate professionals with experience in transactions of a size and character similar to the Project. The unanimous written decision of the two first chosen (without selection and participation of a third arbitrator), or otherwise the written decision of a majority of three arbitrators chosen as herein provided shall be conclusive and binding upon Landlord and Tenant. Landlord and Tenant shall each notify the other of its chosen arbitrator within ten (10) days following the call for arbitration and, unless such two arbitrators shall have reached a unanimous decision within thirty (30) days after their designation, they shall select an impartial third arbitrator. Such third arbitrator and the first two chosen shall render their decision within thirty (30) days following the date of appointment of the third arbitrator and shall notify Landlord and Tenant thereof. Judgment may be entered in any court of competent jurisdiction upon an award reflecting the decision of such arbitrators.
Landlord and Tenant shall divide equally all expenses of arbitration
18.6 Time of Essence. Time is of the essence of this Lease, and the parties hereto shall diligently, promptly and punctually perform the obligations required to be performed by each of them and shall diligently, promptly and punctually attempt to fulfill the conditions applicable to each of them it being understood that the date by which either party is required to perform any 09683\00218189557.V15 45
obligation under this Lease shall be determined by taking into account the provisions of Section 13.7, if applicable.
18.7 Survival of Obligations. All of the obligations, representations, warranties and covenants made in this Lease shall be deemed to have been relied upon by the party to which they were made and to be material and shall survive the execution and performance of any agreements related hereto to the extent that they are by their terms, or by a reasonable interpretation of the context, to be performed or observed or relied upon after the execution or performance of such agreements.
18.8 Supplemental Documents. Recognizing that the implementation of the provisions hereof may require the execution of supplemental documents the precise nature of which cannot now be anticipated, each of the parties agrees to consent to, execute and deliver such other and further documents as may be reasonably requested or required by the other party hereto so long as such other and further instruments and documents are consistent with the terms and provisions hereof, shall not impose additional obligations on any party, shall not deprive any party of the privileges herein granted to it and shall be in furtherance of the intent and purposes of this Lease. To the extent any provisions of any agreement hereafter executed by the parties hereto pursuant to this Lease are inconsistent with the provisions of this Lease, the terms of such agreement shall govern, but such agreements shall be interpreted, if possible, to implement the spirit of this Lease, and'shall not be used to frustrate the purposes set forth herein.
18.9 Invalidity of Provisions. If any one or more of the phrases, sentences, clauses or paragraphs contained in this Lease shall be declared invalid by the final and unappealable order, decree or judgment of any court, this Lease shall be construed as if it did not contain such phrases, sentences, clauses or paragraphs, provided that such construction does not substantially alter the material benefits and burdens of the respective parties as set forth in this Lease.
18.10 Binding Effect. Except as otherwise provided in this Lease, all of the covenants, conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective authorized successors and assigns of Landlord and Tenant to the same extent as • if each such successor and assign were in each case named as a party to this Lease. Any Person acquiring any or all of the rights, title and interest of Tenant in and to the leasehold estate in the Premises, (i) by foreclosure proceeding or action in lieu thereof (notwithstanding the covenants herein against such encumbrances); or (ii) as a result of any legal process or proceedings (other than eminent domain proceedings by public authority), shall thereby become liable under and be fully bound by all of the provisions of this Lease (subject to the provisions of Section 13.8 and except as otherwise provided in this Lease), provided that in no event shall Tenant be released from its obligations under this Lease.
18.11 Pronouns. Whenever the context may require, any pronouns used in this Lease shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
18.12 Rights of Others; Third Party Beneficiaries. Nothing in this Lease, express ot implied, is intended to confer upon any person other than the parties hereto and their authorized 09683\002\8189557.v15 46
successors and assigns, rights or remedies under or by reason of this Lease. No Person shall be a third party beneficiary of this Lease.
18.13 Amendments. This Lease may not be amended, changed, modified or discharged :.
except by an instrument in writing signed by Landlord and Tenant.
18.14 Captions and Headings. The captions and headings throughout this Lease are for convenience and reference only, and they shall in no way be held or deemed to define, modify or add to the meaning, scope or intent of any provisions of this Lease.
18.15 Governing Law. This Lease shall be governed by and interpreted under the laws of the State of California. This Lease is entered into and relates to real property located in Contra Costa County, California, and any action of other proceeding relating to this Lease shall be instituted and prosecuted in the courts of Contra Costa County, California.
18.16 Integration. This Lease (including for the purposes of this Section 18.16 the Construction Agreement and all exhibits attached hereto) and the other writings expressly referred to herein or delivered pursuant to this Lease contains the entire understanding of the parties with respect to its subject matters. This Lease supersedes all prior agreements (including without limitation that certain Exclusive Right to Negotiate Agreement Regarding the General Warehouse, dated as of March 26, 2018), interviews, discussions, correspondence, term sheets, memoranda and understandings between the parties with respect to the subject matter hereof. IN
FURTHERANCE OF THE FOREGOING, EACH OF LANDLORD AND TENANT
ACKNOWLEDGES AND AGREES THAT SUCH PARTY (A) HAS RECEIVED AND READ
THIS LEASE AND HAS DISCUSSED THIS LEASE WITH ITS LEGAL COUNSEL, (B)
UNDERSTANDS THAT THE TERMS AND CONDITIONS OF THIS LEASE MAY DIFFER
FROM THE TERMS SET FORTH IN ANY TERM SHEET, PRIOR DRAFTS OF THIS
LEASE, ON IN ANY PRIOR AGREEMENTS, NEGOTIATIONS, DISCUSSIONS OR OTHER
COMMUNICATIONS BETWEEN LANDLORD AND TENANT, AND (C)
INTENTIONALLY, KNOWINGLY AND EXPRESSLY INTENDS FOR THIS LEASE TO
SUPERSEDE AND TAKE PRECEDENCE OVER ANY PRIOR AGREEMENTS, TERM
SHEETS, DRAFT DOCUMENTS, NEGOTIATIONS, DISCUSSIONS OR OTHER COMMUNICATIONS. All parties have been represented by counsel in the preparation and negotiation of this Lease, and this Lease shall be construed according to the fair and plain meaning of its language. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Lease. Except to the extent expressly set forth in this Lease, the parties shall act reasonably in performing their obligations under this Lease.
19. NOTICES AND PAYMENTS
19.1 Notices, Demands and Other Instruments.
(a) Unless otherwise expressly permitted by the terms of this Lease, all notices, demands, submissions, requests, consents, approvals and other instruments required ot permitted to be given pursuant to the terms of this Lease shall be in wiiting and shall be deemed to have been properly given upon delivery or refusal to accept delivery if delivered by hand 09683\002k8189557.v15 47
delivery or overnight courier service to the addressee of sent by registered or certified United States mail, postage prepaid, return receipt requested, and notices to Landlord shall be addressed to:
Surplus Property Authority of the City of
Richmond
1322 Canal Boulevard
Richmond, California 94804
Attention: Port Director
and with a copy to:
Surplus Property Authority of the City of
Richmond
450 Civic Center Plaza
Richmond, California 94804
Attention: City Attorney
and with a copy to:
Shartsis Friese LLP
One Maritime Plaza, Suite 1800
San Francisco, California 94111
Attention: Thomas D. Morell, Esq.
(b) except to the extent Tenant is required to make such payments electronically, in the manner set forth in Section 4.5 of this Lease, Rent payments due herein shall be made payable to Landlord at::
Surplus Property Authority of the City of
Richmond
450 Civic Center Plaza
Richmond, California 94804
Attention: Finance Director
09683100218189557.15 48
(c) notices directed to Tenant shall be addressed to:
Richmond Grown, LLC
21 Cordone Drive
San Anselmo, CA 94960
Attention: Kevin Saavedra
with a copy to:
Wendel, Rosen, Black & Dean LLP
1111 Broadway, 24th Floor •
Oakland, CA 94607
Attention: Robert W. Selna, Esq.
or to such other address as may from time to time be specified in writing by any party hereto.
Unless otherwise specified in writing, each party shall direct all sums payable to another party to said party's address for notice purposes.
[SIGNATURE PAGE(S) FOLLOWI
IN WITNESS WHEREOF, the parties have caused this Lease to be executed as a sealed instrument by their respective duly authorized agents, as of the date and year first set forth above.
LANDLORD: SURPLUS PROPERTY AUTHORITY OF THE CITY OF
RICHMOND,
a public body corporate and politic
2. far
By: By: Jemy
its
TENANT: RICHMOND GROWN, LL.C,
a California limited liability company
By:
Name: Kevin Saquelva
Title: Panther
-and by-
By:
Name:
Title:
09683\00218189557.V15 49
EXHIBIT A
DEPICTION OF THE PREMISES
of
.. samant toddada satalite astates coltanta sensedirtiest salate rulin •-
= 107292%: 517: 046073 mallardl.
ТПУ
A0.0
09683\00218189557.v15 A-1
ЕХнвІ B
PARKING AGREEMENT
1. During the Term, Tenant has the right to utilize a prorata share of the parking spaces for the use of Tenant and Tenant's Occupants and their respective employees and visitors in the parking area located adjacent to and servicing the Premises (the "Parking Area"), generally as of the various users within the Point Potrero Marine Terminal including, but not limited to, the Tenant, Auto Warehousing Company, Red Oak Winery, SS Red Oak Victory, and the Port of Richmond. This will include modifying the existing parking area located east and adjacent to the Premises and creating a new parking area located to the north of wharf number 8 and to the east of the railroad loading area as described in the Construction Agreement. The plan's goal shall be to provide an adequate number of stalls for the various users as well as to accommodate the needs of Auto Warehousing Company by Tenant's construction of a new parking that shall have no less than 90 stalls for the sole use of Auto Warehousing Company, as described in the Construction Agreement. The design shall be coordinated with Auto Warehousing and shall include the development of two security turnstiles and fencing as well as associated electrical and communications equipment. The parking area shall be configured to allow for passage of emergency vehicles. The final layout shall provide accessible stalls as required by the current building code.
2. Tenant shall at all times comply with all applicable ordinances, rules, regulations, codes, laws, statutes and requirements of all federal, state, county and municipal governmental bodies or their subdivisions respecting the use of the Parking Area. Landlord reserves the right to adopt, modify and enforce reasonable rules ("Rules") governing the use of the Parking Area from time to time, including permit requirements. Landlord may also provide for access controls to govern the use and security of the parking. If applicable, Landlord shall have the right to require Tenant' to place a deposit on each such parking permit and to pay a fee for any lost or damaged permit.
Landlord may refuse to permit any person who violates such Rules to park in the Parking Area, and any violation of the Rules shall subject the car to removal from the Parking Area following reasonable notice. Tenant shall comply with and cause its employees to comply with all the Rules as well as all reasonable additions and amendments thereto.
3. Unless specified to the contrary above, the parking spaces shall be provided on a non- designated "first-come, first-served" basis. Landlord reserves the right to assign other specific parking spaces, and to reserve other parking spaces for visitors, small cars, handicapped persons and for other tenants, guests of tenants ot other parties, which assigument and reservation or. spaces may be relocated as determined by Landlord from time to time, and Tenant and persons designated by Tenant hereunder shall not park in any such location designated for such assigned or reserved parking spaces.
Tenant shall not store or permit its employees to store any automobiles in the Parking Area without the prior written consent of the operator. Except for emergency repairs, Tenant, its employees, or any third party shall not perforn any work on any automobiles while located in the Parking Area. In the event a third party is required to make emergency repair, said third 09683\00218189557.V15 B-1
party shall provide Landlord a certificate of insurance prior to commencement of repairs. If it is necessary for Tenant or its employees to leave an automobile in the Parking Area overnight, Tenant shall provide the operator with prior notice thereof designating the license plate number and model of such automobile.
5. Landlord shall have the right to temporarily close the Parking Area, or certain areas therein in order to perform necessary repairs, maintenance and improvements to the Parking Area.
6. LANDLORD SHALL NOT BE LIABLE FOR ANY LOSS, INJURY OR DAMAGE TO
PERSONS USING THE PARKING FACILITIES OR AUTOMOBILES OR OTHER
PROPERTY THEREIN, IT BEING AGREED THAT, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE USE OF THE SPACES SHALL BE AT THE SOLE RISK OF TENANT AND ITS EMPLOYEES. WITHOUT LIMITING THE FOREGOING, TENANT
HEREBY VOLUNTARILY RELEASES, DISCHARGES, WAIVES AND RELINQUISHES
ANY AND ALL ACTIONS OR CAUSES OF ACTION FOR PERSONAL INJURY OR
PROPERTY DAMAGE OCCURRING TO TENANT ARISING AS A RESULT OF PARKING
IN THE PARKING FACILITIES, OR ANY ACTIVITIES INCIDENTAL THERETO,
WHEREVER OR HOWEVER THE SAME MAY OCCUR, AND FURTHER AGREES THAT
TENANT WILL NOT PROSECUTE ANY CLAIM FOR PERSONAL INJURY OR
PROPERTY DAMAGE AGAINST LANDLORD OR ANY OF THE LANDLORD RELATED PARTIES FOR ANY SAID CAUSES OF ACTION. IN ALL EVENTS, TENANT AGREES
TO LOOK FIRST TO ITS INSURANCE CARRIER AND TO REQUIRE THAT TENANT'S
EMPLOYEES LOOK FIRST TO THEIR RESPECTIVE INSURANCE CARRIERS FOR
PAYMENT OF ANY LOSSES SUSTAINED IN CONNECTION WITH ANY USE OF THE PARKING FACILITIES. TENANT HEREBY WAIVES ON BEHALF OF ITS INSURANCE
CARRIERS ALL RIGHTS OF SUBROGATION AGAINST LANDLORD OR LANDLORD RELATED PARTIBS.
Tenant shall not assign its rights under this Parking Agreement or sublease any parking or permit rights (except in connection with a permitted sublease to an Occupant) without the consent of Landlord.
09683\00218189SS7.V15 B-2
ЕхнІвт B-1
DEPICTION OF PARKING AREA
POTENTIAL FIRE
HYDRANY RELOCATION
ELWO PARKING ACCESS CATE
-HWU PARKING
STUDY AREA
-POTENTIAL. NESTRIPHIS (POTENTIAL •30 SPACES) (25% COMPAGT SPACE APPLICAT AWO PARKING AREA CONCEPT • OVERALL
POINT POTRERO AUTOMOTIVE FACILMES
DO TRANSDEVELOTMONT PORT OF RICHMOND, CALIFORNIA
[Exhibit B-1 Continues on the Next Page]
09683\00218189557.V15 B-1-1
FRE ACCERS ATE
AWO PARKING AREA CONCEPY
POINT POTRERO AUYOMOTIVE FACILITIEG
E TRANSDKVRLOPMENT PORT OF RICHHONO, CALIFORNIA
09683100218189557.VI5 B-1-2
EXHIBIT C
FORM OF CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT (his "Agreement) is made as of Suy 25, 2019 ("Lease Date"), by and among SURPLUS PROPERTY AUTHORITY OF THE CITY OF RICHMOND, A PUBLIC BODY CORPORATE AND POLITIC ("Landlord"), RICHMOND GROWN, LILC, A CALIFORNIA LIMITED LIABILITY COMPANY ("Tenant").
RECITALS
Lease. Capitalized terms used in this Agreement, and not otherwise defined in this Agreement, shall have the meanings given to them in the Lease.
B. The Base Building Project incorporates at a minimum those elements described in the attached Exhibit A ("Base Building Project"), and also includes an upgraded parking facility located generally as depicted on Exhibit A-1, and paved, striped and otherwise improved as reasonably required by Landlord ("New Parking Lot") for the exclusive use of another tenant, Auto Warehousing Company, although Tenant also contemplates the construction of additional interior tenant improvements to ready space in the Building for occupancy by individual Occupants.
C. The total cost of the Base Building Project is currently estimated to be $8 million.
D. Pursuant to Section 8.2 of the Lease, Landlord and Tenant have also agreed to enter into a Construction Agreement, providing in pertinent part for Tenant to deliver a letter of credit, or to deposit into escrow, twenty percent (20%) of the total projected costs of constructing the Base Building Project ("Base Building Project Costs"), inclusive of a contingency of ten percent (10%), and specifying other material terms and conditions upon which the Base Building Project and its funding shall proceed.
Now, THEREFORE, the parties hereto agree as follows:
PLANNING OF THE BASE BUILDING PROJECT
1.1 Selection of Architect; Construction Drawings. Tenant shall retain an architect (the "Architect"), approved in writing in advance by Landlord, such approval not to be unreasonably withheld, to prepare the Construction Drawings, as that term is defined below.
Tenant shall retain qualified engineering consultants approved in writing, in advance by Landlord, such approval not to be unreasonably withheld (the "Building Consultants") to prepare all plans and engineering working drawings and perform all work relating to mechanical, electrical and plumbing ("MEP"), HVAC/Air Balancing, life-safety, structural, sprinkler systems. Landlord has approved of MacCracken Architects, as the Base Building Project Architect.
C-1
09683\00218189557.V15
1.2 Development of Construction Drawings. The plans and drawings to be prepared by Architect and the Building Consultants hereunder (i.c., both the Preliminary Plans and the Working Drawings, as each of those terms is defined below) shall be known collectively as the "Construction Drawings." All Construction Drawings shall comply with the drawing format and specifications determined or approved by Landlord and shall be subject to Landlord's prior written approval, not to be unreasonably withheld, conditioned or delayed. All MEP drawings must be fully engineered and cannot be prepared on a "design-build" basis. Landlord's review of the Construction Drawings shall be for its sole purpose and shall not obligate Landlord to review the same, for quality, design, Code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings.
1.3 Preliminary Plans. Landlord has approved Tenant's preliminary schematic plans for the Base Building Project (the "Preliminary Plans") Landlord may request clarification or more specific drawings for special use items not included in the Preliminary Plans. Landlord shall advise of any additional information requested by Landlord pursuant to the provisions of the immediately preceding sentenoe) if the same is approved or is unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall promptly cause the Preliminary Plans to be revised to correct any deficiencies or other matters Landlord may reasonably require.
1.4 Working Drawings. After the Preliminary Plans have been approved by Landlord, Tenant shall cause the Architect and the Building Consultants to promptly complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the "Working Drawings") and shall submit the same to Landlord for Landlord's review and approval. Landlord shall advise Tenant within 10 business days after Landlord's receipt of the Working Drawings if Landlord, in good faith, determines confirm that the revised Working Drawings are approved of advise why they are not. When finally approved by Landlord, such Working Drawings shall be referred to as the "Final Plans and Specifications."
1.5 • Landlord's Approval. Landlord may retain a qualified construction consultant ot consultants ("Landlord's Construction Consultants") solely to assist Landlord with reviewing plans and other submittals, inspecting the Base Building Project, reviewing the Disbursement Request Supporting Documentation (as defined below) and the underlying performance of the work for which such disbursements are sought, attending meetings, and performing its responsibilities generally under this Agreement. The fees of the Landlord's Construction Consultant shall be promptly paid by Tenant upon presentation of an invoice therefor (but not more than once a mont), and subject to maximum monthly reimbursement amount of Two C-2
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Thousand Dollars ($2,000). Tenant acknowledges and agrees that Landlord's decision to approve or disapprove any matter under this Agreement is not, and will not be deemed to be, a regulatory determination, but is an exercise of Landlord's proprietary authority over the Premises as the owner of the fee.
1.6 The Contractor. Landlord has approved of NOVO Construction to construct the Base Building Project ("Contractor").
1.7 Construction Contract. Tenant's construction contract and general conditions with Contractor (the "Contract") shall comply with all relevant provisions of the Lease and this Agreement. The Contract shall provide for the completion of the Base Building Project to be accomplished for a stipulated sum ot a guaranteed maximum price not exceeding the Base Building Project Costs, as defined below. Prior to the Deliverables Date, defined below, and in all events prior to the commencement of the construction of the Base Building Project, Tenant shall provide Landlord with a schedule of values consisting of a detailed breakdown, by trade, of the Base Building Project Costs to be incurred or which have been incurred, for all expenditures (including soft and hard costs) to be incurred in connection with the design and construction of the Base Building Project, which costs form the basis for the amount of the Contract ("Project Costs Statement" and "Project Costs" respectively). The Project Costs Statement shall specifically identify the work that shall be required to qualify for the Base Building Project to be deemed to be fifty percent (50%) completed ("50% Milestone").
2. CONSTRUCTION DELIVERABLES
2.1 On or before the date that is six (6) months after the Lease Date first stated above ("Deliverables Date"), Tenant shall deliver to Landlord the following "Construction Deliverables" for Landlord's review and approval:
(a) Approved Final Plans and Specifications;
(b) Project Costs Statement (including specification of 50% Milestone); (c) Approved Construction Contract;
A clear and demonstrated financing plan for the Base Building Project, including an explanation of the financing of the Base Building Project Costs; (e) A schedule for construction of the Base Building Project, providing in pertinent part that Tenant shall commence construction of the Base Building Project within twenty-four (24) months after the Lease Date, shall prosecute such construction diligently and shall substantially complete such construction within thirty-six (36) months of the Lease Date ("Outside Date for Construction"); and
Letter of Credit (as defined below) or evidence that the Construction Escrow (as defined below) is fully funded and available.
2.2 Extensions of Deliverables Date. Tenant may, at its election, have the right to up to two (2) extensions of the Deliverables Date, each to be six (6) months in duration, by C-3
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delivering to Landlord written notice of its intention to so extend the Deliverables Date, at least five (5) business days prior to the expiration of the then scheduled Deliverables Date, provided that Buyer deposits with Landlord, concurrently with each such notice, a non-refundable payment of One Hundred Thousand Dollars ($100,000.00) (the "Extension Payments)") in immediately available funds. Bach Extension Payment shall, immediately upon its receipt by Landlord, be the sole property of Landlord and shall in no event be refunded to Tenant or credited to Tenant's obligations under the Lease or this Agreement, but shall be paid solely in consideration of the extensions) of the Deliverables Date. If Tenant fails to deliver the Construction Deliverables by the end of the second Extension of Deliverables Date, the Lease shall terminate.
2.3 Letter of Credit.
(a) Generally. On or before the Deliverables Date, Tenant (unless Tenant instead elects to fund the Construction Escrow described below in Section 3 as an alternative) shall deliver to Landlord, as collateral for the full performance by Tenant of its obligations to timely complete the Base Building Project in accordance with the terms and conditions of this Agreement and for all losses and damages Landlord may suffer as a result of Tenant's failure to do so, an unconditional, irrevocable, transferable standby letter of credit (the "Initial Letter of Credit") in the form attached hereto as Exhibit B in the amount of twenty percent (20% of the amount of the Base Building Project costs [currently estimated to be approximately $1,600,000 based upon an initial estimate of $8,000,000 as the currently contemplated Project Costs] (the "Letter of Credit Amount"), issued by a financial institution (the "Issuing Bank") acceptable to Landlord, such acceptance not to be unreasonably withheld. The Letter of Credit shall be "callable" at sight, permit partial draws and multiple presentations and drawings, and be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices- ISP 98, International Chamber of Commerce Publication #590. Tenant shall cause the Letter of Credit to be continuously maintained in effect (whether through a Replacement Letter of Credit (defined below), amendment, renewal or extension) through the earlier of December 31, 2021, or the date that Landlord has approved in writing the Final Disbursement Documentation, as defined below (the "Final Letter of Credit Expiration Date"). (b) Drawing Under Letter of Credit. Without prejudice to any other remedy available to Landlord under the Lease or at law, Landlord may draw upon the Initial Letter of Credit or any Replacement Letter of Credit on or after the occurrence of either: (i) any uncured failure by Tenant to perform one or more of its obligations under the this Agreement (and the corresponding provisions of the Lease relating to the Base Building Project) to diligently prosecute and complete the Base Building Project within the time periods required hereunder; (ii) any failure by Tenant to deliver to Landlord a Replacement Letter of Credit as and when required; (iii) an uncured failure by Tenant to perform one or more of its obligations under this Agreement to diligently prosecute the Base Building Project and the existence of circumstances in which Landlord is enjoined or otherwise prevented by operation of law from giving to Tenant a written notice which would be necessary for such failure of performance to constitute an event of default, or (iv) the appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or an assignment of Tenant for the benefit of creditors, or any action taken ot suffered by Tenant under any insolvency, bankruptcy, reorganization or other debtor relief C-4
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proceedings whether now existing or hereafter amended or enacted, or (V) without limiting (i) Credit, as applicable, as required to complete the Base Building Project and to compensate Landlord for damages incurred (with subsequent demands at Landlord's sole election as Landlord incurs further damage). Tenant will not interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a draw by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord's right to draw upon the Letter of Credit. No condition or term of the Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner.
Delivery of Replacement Letter of Credit. Tenant shall deliver to Landlord a new letter of credit (a "Replacement Letter of Credit") (the Initial Letter of Credit and/or any Replacement Letter of Credit being referred to herein as a "Letter of Credit") at least thirty (30) days prior to the expiry date of the Initial Letter of Credit or of any Replacement Letter of Credit held by Landlord. Each Replacement Letter of Credit delivered by Tenant to Landlord shall: (i) be issued by a banking institution acceptable to Landlord; (ii) be in the same form as the letter of credit attached to this Agreement as Exhibit B; (il) bear an expiry date not earlier than one (1) year from the date when such Replacement Letter of Credit is delivered to Landlord; and (iv) be in an amount not less than the Letter of Credit Amount. Upon the delivery to Landlord of a Replacement Letter of Credit, Landlord shall return to Tenant the Initial Letter of Credit ot any previous Replacement Letter of Credit then held by Landlord.
Proceeds of Draw. Tenant acknowledges that (1) the Letter of Credit constitutes a separate and independent contract between Landlord and the Issuing Bank, (2) Tenant is not a third party beneficiary of such contract, (3) Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and (4) in the event Tenant becomes a debtor under any chapter of the U.S. Bankruptcy Code (the "Bankruptcy Code"), neither Tehant, any trustee, nor Tenant 's bankruptcy estate shall have any right to restrict or limit Landlord's claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the Bankruptcy Code or otherwise. Landlord may immediately upon any draw permitted hereunder (and without notice to Tenant except as may be expressly provided in the Lease) apply or offset the proceeds of the Letter of Credit against all losses and damages that Landlord has suffered of that Landlord reasonably estimates that it may suffer as a result of Tenant's failure to perform its obligations under this Agieement, including without limitation any costs required directly or indirectly to complete the Base Building Project ("Allowable Costs'). Tenant (I) agrees that the proceeds of any draw by Landlord will not be deemed to be or treated as a "security deposit" under the Security Deposit Laws (defined below), and (2) waives all rights, duties and obligations cither party may now or, in the future, will have relating to or arising from the Security. Deposit Laws. The amount of any proceeds of a draw upon the Letter of Credit received by Landlord, may be applied against any Allowable Costs (including such amounts reasonably estimated by Landlord that it will incur as Allowable Costs). (e) Landlord's Transfer If Landlord conveys or transfers its interest in the Leased Premises and, as a part of such conveyance or transfer, Landlord assigns its interest in the C-5
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Lease: (1) any Letter of Credit shall be transferred to Landlord's successor; (2) Landlord shall be released and discharged from any further liability to Tenant with respect to such Letter of Credit; and (3) any Replacement Letter of Credit thereafter delivered by Tenant shall state the name of the successor to Landlord as the beneficiary of such Replacement Letter of Credit and shall contain such modifications in the text of the Replacement Letter of Credit as are required to appropriately reflect the transfer of the interest of Landlord in the Premises. (f) Nature of Letter of Credit. Landlord and Tenant (1) acknowledge and agree that in no event or circumstance shall the Letter of Credit of any renewal thereof or substitute therefor or any proceeds thereof be deemed to be or treated as a "security deposit" under any law applicable to security deposits in the commercial context including Section 1950.7 of the California Civil Code (as now existing or hereafter amended of succeeded, "Security Deposit Laws"), (2) acknowledge and agree that the Letter of Credit (including any renewal thereof or substitute therefor or any proceed thereof) is not intended to serve as a security deposit, and the Security Deposit Laws shall have no applicability or relevancy thereto, and (3) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws.
g) Reduction in Letter of Credit Amount Provided that Tenant has not previously been in Default of this Construction Agreement or the construction provisions of the Lease relating thereto, prior to the effective date of the applicable reduction request and further provided that Tenant is not in Default of this Construction Agreement or the construction provisions of the Lease relating thereto at the time of such request, upon written request by Tenant, the Letter of Credit Amount may be reduced as follows: (1) to fifty percent (50%) of the Letter of Credit amount, at any time after the 50% Milestone has been achieved; and (2) the remainder of the Letter of Credit returned to Tenant and cancelled at any time after Landlord has approved in writing the Final Disbursement Documentation for the Base Building Project. Any reduction in the Letter of Credit Amount shall be accomplished by Tenant providing Landlord with a Replacement Letter of Credit or an amendment thereto in the reduced amount, in either case in form and substance satisfactory to Landlord.
Landloved, the cost relating to the design and construction of the Base Building Project shall If, after the Project Costs Statement has been delivered by Tenant to increase for any reason, any additional costs necessary to perform such design and construction in excess of the Base Building Project Costs, shall be reflected in an increased amount of the Letter of Credit.
3. ESTABLISHMENT OF ESCROW.
3.1 In lieu of delivering the Initial Letter of Credit to Landlord, as provided in Section 2, Tenant will have the right as an alternative to instead place the Letter of Credit Amount (which shall instead for such purpose be referred to as the "Construction Escrow Amount) in an escrow account managed by a qualified third party entity approved by Landlord in writing, which will disburse the funds upon the occurrence of the relevant project milestones, as and when such distributions are approved by Landlord in writing ("Construction Escrow").
Tenant will name its preferred third-party Construction Escrow entity for City approval, whose C-6
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approval may not be unreasonably withheld, and the parties shall cause such party (the "Escrow Agent") to execute a counterpart of this Agreement.
3.2 The initially required Construction Escrow Amount shall be deposited by Tenant with Escrow Agent by wire transfer on or before the deadline for the Construction Deliverables.
If, after the Project Costs Statement has been delivered by Tenant to Landlord, the costs relating to the design and construction of the Base Building Project shall increase for any reason, any additional costs necessary to such design and construction in excess of the Base Building Project Costs, shall be deposited immediately with Escrow Holder as an addition to the Construction Escrow Amount search if the Construction Escrow has been established.
3.3 The Construction Escrow Amount shall be invested by Escrow Agent in an account to be designated or approved by Tenant in its reasonable discretion. The interest accruing on the Construction Escrow Amount shall be deemed to be a part of the Construction Escrow Amount. Tenant shall pay when due, to the extent required by applicable law, any income taxes on any interest that accrues on the Construction Escrow Amount even though the Construction Escrow Amount has not been released to Tenant. • 4. DISBURSEMENT OF CONSTRUCTION ESCROW.
If a Construction Escrow is established, Tenant shall have the right to draw against the Construction Escrow Amount for the purpose of paying for the performance by Tenant of the Base Building Project. Landlord shall review Tenant's disbursement requests and the Disbursement Request Supporting Documentation (as defined below) and shall authorize the release of funds by Escrow Agent for the benefit of Tenant subject to and upon the following conditions:
4.1 Following the completion of the work constituting the 50% Milestone, Tenant shall deliver to Landlord: (1) a request for payment of the Contractor (defined below) approved by Tenant, in a form to be provided or approved in advance by Landlord, including a schedule of values and showing the percentage of completion, by trade, of the Base Building Project, which details the portion of the work completed and the portion not completed (and the cost to complcte the Base Building Project), and executed by the Contractor and the Architect showing the that required elements of the Base Building Project are completed; (2) invoices from all of subcontractors (and any other materials suppliers) for labor rendered and materials delivered to the Premises; (3) executed conditional mechanics' lien releases from all subcontractors and materials suppliers with respect to the subject request for payment which shall comply with all applicable laws, as reasonably determined by Landlord, including, without limitation, all appropriate provisions of California Civil Code Section 3262(d) (or any successor statute); (4) a copy of the checks) which Tenant issued to pay the requested sums; (5) a current updated construction schedule; (6) a current permit log and copy of any new permits pulled after prior draw; (7) an executed change order log; (8) a change order request log; (9) a potential change order log; (10) updated testing and inspection reports, and any field walk reports by experts/consultants; (11) a current request for information log; (12) Owner-Architect-Contractor meeting minutes from the current pay request period; and (13) all other information reasonably requested by Landlord (collectively, "Disbursement Supporting Documentation")..
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4.2 Within 15 business days thereafter, Landlord shall deliver to Escrow Agent a joint authorization for disbursement as provided in Section 5(a) below, for payment of fifty percent (50%) of the Construction Escrow Amount (the balance of fifty percent (50%) being the Completion Disbursement described below), provided that if Landlord, in good faith, disputes any item in a'request for disbursement based on non-compliance of any work with the Final Plans and Specifications or due to any substandard or incomplete work and delivers a written objection to such
disputed item from the payment. Landlord and Tenant shall, in good faith, endeavor to diligently resolve any such dispute. Landlord's authorization of disbursement of any such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's disbursement request.
4.3 Subject to the provisions of this Agreement, following the completion of construction of the Base Building Project, Tenant may request that Landlord approve Escrow Agent's distribution to Tenant of a check made payable to Tenant, or a check or checks made payable to another party or parties as reasonably requested by Tenant, in the amount of the balance of the Construction Escrow ("Completion Disbursement"), provided that (A) Tenant delivers to Landlord properly executed unconditional mechanics': lien releases from all of Tenant's Agents in compliance with all applicable laws, as reasonably determined by Landlord, including, without limitation, compliance with both California Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4) (or any successor statute); (B) Landlord has determined in good faith that no substandard work exists which adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other systems of the Base Building Project, the structure or exterior appearance of the Premises; (C) Architect delivers to Landlord a certificate, in a form reasonably acceptable to Landlord, certifying that the construction of the Base Building Project in the Premises has been substantially completed; (D) Tenant supplies Landlord with evidence that all required governmental approvals required for Tenant to legally occupy the Premises have been obtained; and (E) Tenant has fulfilled its Completion Obligations (as defined below) and has otherwise complied with Landlord's reasonably "close-out" requirements regarding city approvals, closeout tasks, closeout documentation regarding the Contractor, financial close-out matters, and tenant vendors ("Final Disbursement Documentation").
4.4 Allowable Disbursement Items. Except as otherwise set forth in this Agreement, the Escrow shall be disbursed by Escrow Agent only for the following items and costs:
(a) Payment of the fees of the Architect and the Building Consultants; (b) Payment of fees and costs reasonably incurred by Landlord for the review of the Construction Drawings (defined below) by Landlord; (c) Payment of the fees of Landlord's Construction Consultants; (d) The payment of plan check, permit and license fees relating to the Base Building Project;
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The cost of construction of the Base Building Project, including, without limitation, testing and inspection costs, trash removal costs, and contractors' fees and general conditions;
(f) The cost of any changes to the Base Building Project when such changes are required by the Final Plans and Specifications, such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith; (g) The cost of any changes to the Construction Drawings or Project required by applicable building codes (collectively, "Code").
4.5 Inspection. Notwithstanding any other provision of the Lease of this Agreement, all construction work of Tenant hereunder and all requests for disbursement from Escrow shall be subject to inspection by representatives of Landlord, including Landlord's Construction Consultants, during normal business hours upon reasonable prior notice (except in the case of an emergency, in which event no notice shall be required); provided such restrictions shall apply to Landlord only in its capacity as a party to this Agreement, and shall not be deemed or construed to limit, and shall not affect, any rights the City of Richmond may have to access the Prèmises at any time in its capacity as a public entity with regulatory authority over the Premises and Project.
Such representatives shall abide by all reasonable and usual rules of the workplace established by the Contractor, including, without limitation, safety requirements. In the event Landlord determines in good faith that any work or materials on or for the Base Building Project does not substantially conform to the Final Plans and Specifications or sound building practice, ot otherwise departs from any requirements of the Lease or this Agreement, Landlord may require Tenant, by written notice to Tenant, to stop the work of construction and/or take any other actions that may be necessary, as determined in good faith by Landlord, to correct or remedy such nonconformance or departure. Tenant shall promptly undertake such actions as may be so required and shall complete the same within 30 days after Tenant's receipt of Landlord's notice; provided, however, that if such actions cannot reasonably be completed within such 30 day period, then Tenant shall have such additional time as shall be reasonably required so long as Tenant commences such actions within the aforesaid 30 day period, thereafter diligently prosecutes the same to completion, and actually corrects or remedies the nonconformance or departure within 60 days after Tenant's receipt of Landlord's notice. For purposes of clarity and • to avoid ambiguity, Landlord shall be under no duty to inspect construction or examine any books and records of Tenant or its Contractor or subcontractors in connection therewith. Any such inspection or examination by Landlord is for the sole purpose of protecting Landlord's interest in the Premises and preserving Landlord's rights under the Lease or this Agreement. No default of Tenant will be waived by any such inspection or examination by Landlord. It no event will any such inspection or examination by Landlord be a representation that there has been or will be compliance with the Final Plans and Specifications or that the construction is free from defective materials or workmanship. Landlord shall have the right to require progress meetings to review the work of the Base Building Project, at such time, frequency, and location as is reasonably required by Landlord. Progress of the Base Building Project shall be reported in detail with reference to construction schedules delivered to Landlord. Upon request. by Landlord, Tenant shall cause Contractor, Architect, Building Consultants, or an interested subcontractor to attend the meeting for the purposes of reporting upon the progress of the Base Building Project and transmitting information desired by Landlord.
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4.6 Except as otherwise provided in Section 5(b) with respect to the disbursement upon the Outside Date for Construction, no disbursement shall be made from the Construction Escrow Amount without the approval of Landlord's Representative as provided in this Agreement, which approval shall be evidenced by the Landlord's signing the joint notice contemplated in Section 5(a). Landlord's approval of such draw request, and execution and delivery of such joint notice, shall not be unreasonably withheld, conditioned or delayed.
5. DISBURSEMENTS BY ESCROW HOLDER.
5.1 Delivery of Joint Approval Notice. After Landlord's Representative reviews and approves Tenant's draw request as contemplated in Section 4, Landlord and Tenant shall jointly send to Escrow Agent a notice containing the following information: (i) the amount to be disbursed, (ii) to whom the disbursement is to be made, and (ili) the means of disbursement by wire transfer or check and directions therefor. Such notice to Escrow Agent shall be irrevocable.
Escrow Agent shall disburse the amount requested pursuant to the aforesaid notice within 10 calendar days of receipt thereof, subject, however, to any order or direction of any court. In the event the requested amount exceeds the available amount of the Construction Escrow Amount, is returned to Escrow Agent or cannot otherwise be delivered in accordance with the aforesaid notice, or a court requires a contrary disposition of the Construction Escrow Amount, Escrow Agent shall promptly notify Landlord and Tenant and shall, subject to Section 6, either not make any disbursement until Escrow Agent has received another joint notice in accordance with this Section or, if applicable, follow the order or direction of such cout. Except as required in Section 5(b) or Section 5(c), Escrow Agent shall not make any disbursement of the Construction Escrow Amount, or any portion thereof, unless Landlord and Tenant shall send such joint notice to Escrow Agent.
5.2 Disbursement to Landlord at Outside Date for Construction. Subject to any order or direction of any court to the contrary, Escrow Agent shall disburse the then-current balance of the Construction Escrow Amount ("Final Disbursement") to Landlord before 12:00 p.m. (noon) Pacific Time on the Outside Date for Construction, pursuant to wiring instructions provided by Landlord, unless prior to such date, Escrow Agent receives a notice from Landlord: (i) stating that an event of Force Majeure (as defined in the Lease) has occurred, and (ii) specifying the date to which the Outside Date should be extended. If the foregoing conditions are met, the Outside Date shall be deemed to be the date specified in the aforesaid notice from Landlord. Landlord shall send the foregoing notices to Tenant at the same time such notices are sent to Escrow Agent, but failure to do so shall not affect Escrow Agent's instructions set forth above. In the event the Construction Escrow Amount is returned to Escrow Agent or cannot otherwise be delivered to Landlord in accordance with wiring instructions provided by Landlord, Escrow Agent shall promptly notify Landlord and Landlord shall provide it with correct wiring instructions.
• 5.3 Disposition Directed By Court. In the event a court requires a contrary disposition of the Construction Escrow Amount, Escrow Agent shall promptly notify Landlord and Tenant and shall follow the order or direction of such court.
6. GENERAL REQUIREMENTS FOR CONSTRUCTION BY TENANT.
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6.1 Construction Requirements. Tenant shall construct the Base Building Project in a good and workmanlike manner, with new first-class materials and equipment, and in conformity with all applicable local laws, ordinances and regulations and subject to all conditions which Landlord may in Landlord in its proprietary capacity and the City of Richmond in its regulatory capacity may in their discretion impose. Such conditions imposed by Landlord may include requirements for Tenant to provide payment or performance bonds or additional insurance (from Tenant or Contractor or Tenant's other contractors, subcontractors or design professionals).
6.2 Tenant's Selection of Contractors.
Procurement, Prevailing Wage and Local Employment. Bids for construction shall be solicited in compliance with applicable provisions of Chapter 2.52, of the Richmond Municipal Code (Contracting and Purchasing Procedures). Landlord and Landlord's Construction Consultants shall be provided a copy of the tabulation of bid results upon request.
COALACys) for the construction of the Base Building Project shall e awarded to the qualified contractors) submitting the lowest responsible bids), as determine by the Tenant.
Tenant, Contractor and all subcontractors shall pay not less than the prevailing rates of wages as those wages are determined pursuant to Labor Code Sections 1720 et seg., and implementing regulations of the Department of Industrial Relations, and to comply with all other applicable federal, State and local laws, regulations and ordinances pertaining to labor standards insofar as those laws, regulations and ordinances apply to the performance of this Agreement, including any applicable City of Richmond employment requirements, including but not limited to the City of Richmond's Living Wage Ordinance (Richmond Municipal Code Chapter 2.60), the City of Richmond's Business Opportunity Ordinance (Richmond Municipal Code Chapter 2.50), the City of Richmond's Local Employment Program Ordinance (Richmond Municipal Code Chapter 2.56), and the City of Richmond's Ordinance Banning the Requirement to Provide Criminal Convictions on All Applications (Richmond Municipal Code Chapter 2.65). During the performance of the Base Building Project work, Tenant and/or its Contractor shall post at the Premises the applicable prevailing rates of per diem wages.
(iii) Tenant shall maintain and/or shall cause Contractor to maintain accurate payroll records showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker and others employed on the Base Building Project. Each payroll record shall contain or be verified by a written declaration made under penalty of perjury, stating both of the following: (1) the information contained in the payroll record is true and correct, and (2) the employer has complied with the requirements of Labor Code Section 1771 (prevailing wage provisions), Section 1811 (eight-hour day, forty-hour week provisions), and Section 1815 (overtime compensation) for any work performed by his or her employees on the Base Building Project. Tenant shall and/or shall cause Contractor to provide certified payroll records to Landlord each week, no later than ten (10) days after the end of a weekly pay period.
Payroll records shall be maintained and made available in accordance with Labor: Code Section 1776. In addition, Tenant shall and/or shall cause Contractor promptly to deliver to Landlord, C-11
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upon request, documents verifying compliance with the Living Wage Ordinance, which include documents which evidence that each affected employee has been notified regarding the wages r'equired to be paid pursuant to the Living Wage Ordinance. Such wages shall also be posted at the Premises.
The requirements set, forth in this Section 6.2(a) shall survive the termination or expiration of this Agreement.
(b) Tenant's Agents. All subcontractors used by Tenant that ate "major trades" must be approved in writing by Landlord, in Landlord's sole discretion (Landlord will approve or disapprove Tenant's Agents constituting major trades within 15 business days following Tenant's written request). If Landlord does not approve any of Tenant's proposed subcontractors constituting major trades, Tenant shall submit other proposed subcontractors for Landlord's written approval. All of subcontractors shall be licensed in the State of California, capable of being bonded.
6.3 Landlord's General Conditions for Subcontractors and Tenant Improvement Work. Construction of the Base Building Project shall comply with the following: (A) the Base Building Project shall be constructed in strict accordance with the Final Plans and Specifications; (B) the procurement, prevailing wage and local employment requirements set forth in Section 6(b)(i) of this Agreement; and (C) subcontractors shall submit detailed estimated progress schedules of all work relating to the Base Building Project to Tenant and Landlord. This schedule shall be resubmitted each month until the construction of the Base Building Project has been completed, with actual progress shown. This monthly submission shall accompany a written report by Tenant citing any adjustments to the progress forecast, analyzing the causes thereof, and, where applicable, noting corrective efforts.
6.3 Indemnity. Tenant's indemnity of Landlord as set forth in the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant, Contractor, or subcontractors, or anyone directly or indirectly employed by any of them, or in connection with Tenant's non-payment of any amount arising out of the Base Building Project and/or Landlord's disapproval of all or any portion of any request for payment. Such indemnity by Tenant, as set forth in the Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to Landlord's performance of any ministerial acts reasonably necessary (1) to permit Tenant to complete the Base Building Project, and (2) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises, or the City of Richmond's response to such applications in its regulatory capacity.
6.4 Requirements of Subcontractors. Each subcontractor shall guarantee to Tenant and for the benefit of Landlord that the portion of the Base Building Project for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Each subcontractor shall be responsible for the replacement or repair, without additional charge, of all work done of furnished it accordance with its contract that shall become defective within one (1) year after the completion of the work performed by such contractor or subcontractor. The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection C-12
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with the removal or replacement of all of any part of the Base Building Project, and/or the Premises and/or common areas that are damaged or disturbed thereby. All such warranties or guarantees as to materials ot workmanship of or with respect to the Base Building Project shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant covenants to give to Landlord any assignment or other assurances as may be necessary to effect such right of direct enforcement.
6.5 Insurance Requirements.
(a) General Coverages. Contractor and all subcontractors shall carry employer's liability and worker's compensation insurance covering all of their respective employees, and shall also carry commercial general liability insurance, including personal and bodily injury, property damage and completed operations liability, all with limits, in form and with companies as may be reasonably required by Landlord. The City of Richmond's Risk Manager can provide Tenant with Landlord's current guidelines for insurance coverage to be maintained by subcontractors.
(b) Special Coverages. Tenant shall carry or shall require Contractor to carry "Builder's All Risk" insurance in an amount standard in the construcțion industry and subject to reasonably approval by Landlord covering the construction of the Base Building Project, and such other insurance as Landlord may reasonably require, it being understood and agreed that the Base Building Project shall be insured by Tenant pursuant to the Lease immediately upon completion thereof. The "Builder's All Risk" insurance shall be provided in an amount not less than one hundred percent (100%) of the completed insurable value of the work being performed by Contractor, including, to the extent not covered by other insurance, the structures upon and in which such work is being done and all work in progress including materials to be incorporated in the work. Such insurance shall cover the interests of both Landlord, Tenant, and Contractor in the Premises as their interests may appear.
(c) General Terms. Certificates for all of the foregoing insurance coverage shall be delivered to Landlord before the commencement of construction of the Base Building Project and before the Contractor's or any subcontractor's equipment is moved onto the site. In the event that the Premises are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and expense.
Subcontractors shall maintain all of the foregoing insurance coverage in force until the Base Building Project is fully completed and accepted by Landlord, except for any Products and Completed Operations Coverage insurance required by Landlord, which is to be maintained for one (1) year following completion of the work and acceptance by Landlord and Tenant. All policies carried hereunder shall insure Landlord and Tenant, as their interests may appear, as well as subcontractors. All insurance, except Workers' Compensation, maintained by subcontractors shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects Landlord and Tenant and that any other insurance maintained by Landlord or Tenant is excess and noncontributing with the insurance required hereunder. The requirements for the foregoing insurance shall not diminish Tenant's obligation to indemnify Landlord under the Lease and/or this Construction Agreement.
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6.6 Governmental Compliance. The Base Building Project shall comply in all respects with the following: (i) the Code and other federal, state, city and/or quasi-governmental laws, codes, ordinances and regulations, including the procurement, prevailing wage and local employment requirements set forth in Section. 6(b)(i) of this Agreement, as each may apply according to the rulings of the controlling public official, agent or other person or entity; (11) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer's specifications.
6.7 Meetings. Tenant shall hold periodic meetings at a reasonable time with the Architect and the Contractor regarding the progress of the preparation of the Construction Drawings and the construction of the Base Building Project and Landlord and/or its agents, including Landlord's Construction Consultants, shall receive prior written notice of, and shall have the right to attend, all such meetings. In addition, minutes shall be taken at all such meetings, and Landlord and Landlord's Construction Consultants will be included in the distribution list for such minutes. One such meeting each month shall include the review of Contractor's current request for payment, and Tenant's corresponding disbursement request.
6.8 Notice of Completion: Copy of Record Set of Plans. Within 15 days after completion of construction of the Base Building Project (and prior to disbursement of the Completion Disbursement), Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of Contra Costa County and shall furnish a copy thereof to Landlord upon such recordation, and shall timely give all notices required pursuant to the California Civil Code.
If Tenant fails to do so, Landlord may execute and file such Notice of Completion and give such notices on behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense. Within 30 days following the completion of construction of the Base Building Project, (i) Tenant shall cause the Architect and Contractor (A) to update the Final Plans and Specifications as necessary to reflect all changes made to the Final Plans and Specifications during the course of construction, (B) to certify to the best of their knowledge that the updated drawings are true and correct, which certification shall survive the expiration or termination of the Lease, and (C) to deliver to Landlord such updated drawings in accordance with Landlord's then-current CAD Requirements, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the Base Building Project and all improvements, equipment, and systems in the Premises. Tenant's obligations set forth in this Section are collectively referred to as the "Completion Obligations."
6.9 Tenant's obligation to construct the New Parking Lot shall not require Tenant to expend more than Two Hundred Thousand Dollars ($200,000), provided that such limit shall not excuse Tenant's obligation to pay costs or penalties arising out of a Tenant's unreasonable delay, negligence, failure to diligently prosecute the construction, failure to pay the Contractor, and such similar costs unrelated to the direct costs of construction.
RESOLUTION OF DISPUTES.
7.1 Actions By Escrow Agent. If applicable following the establishment of the Construction Escrow, in the event of the receipt by Escrow Agent from Landlord or Tenant of a notice that there is a dispute or litigation between Landlord or Tenant relating to the Construction C-14
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Escrow Amount and/or any disbursement thereof, Escrow Agent shall either: (i) interplead the Construction Escrow Amount, whereupon Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder, or (ii) continue to hold the Construction Escrow Amount, subject to any court order or direction with respect to the Construction Escrow Amount, until the earlier to occur of: (A) Escrow Agent's receipt of a joint written notice for disbursement from Landlord and Tenant in accordance with Section 5, (B) the Outside Date for Construction, or (C) a court's ordering or directing the disbursement of the Construction Escrow Amount. Escrow Agent shall make, and shall have no liability for making, any disbursement as requested pursuant to a joint notice pursuant to Section 5(a), directed upon the Outside Date for Construction as required by Section 5(b), or as required by a court as provided in Section 5(c).
TENANT'S DEFAULT.
Notwithstanding any provision to the contrary contained in the Lease, if a Default by Tenant of this Construction Agreement of any construction related provisions of the Lease relating to this Agreement has occurred at any time on or before the completion of the Base Building Project, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right to withhold approval of disbursement of all or any portion of the Construction Escrow Amount.
9. NOTICES.
All notices, payments, submissions, deliveries, requests, and other communications pursuant to or in connection with this Agreement shall be in writing and shall be deemed given upon delivery with a written receipt (or upon refusal of delivery or receipt) at the appropriate address indicated below either: (1) by registered or certified United States mail, return receipt requested, postage prepaid; or (2) by hand; or (3) by a nationally recognized overnight delivery service; or (4) by any other method, agreed upon by Landlord, Tenant and (if applicable) Escrow Agent.
9.1 Notices to Landlord shall be addressed to:
Surplus Property Authority of the City of
Richmond
1322 Canal Boulevard
Richmond, California 94804
Attention: Port Director
and with a copy to:
Surplus Property Authority of the City of
Richmond
450 Civic Center Plaza
Richmond, California 94804
Attention: City Attorney
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and with a copy to:
Shartsis Friese LLP
One Maritime Plaza, Suite 1800
San Francisco, California 94111
Attention: Thomas D. Morell, Esq..
notices directed to Tenant shall be addressed to:
Richmond Grown, LLC
21 Cordone Drive
San Anselmo, CA 94960
Attention: Kevin Saavedra
with a copy to:
Wendel, Rosen, Black & Dean LLP
1111 Broadway, 24th Floor
Oakland, CA 94607
Attention: Robert W. Selna, Esq.
Either party may change its mailing address at any time by giving notice of such change to the other party in the manner provided herein at least 10 days prior to the date such change is effected. All courtesy copies of notices sent to the parties listed above as receiving copies shall be given in the same manner as the original notice was sent but shall not be a prerequisite to the effectiveness of any notice.
10. MISCELLANEOUS PROVISIONS.
10.1 Tenant's Representative. Tenant shall immediately upon Landlord's request provide the name and contact information of a sole representative to act on Tenant's behalf with respect to the matters set forth in this Construction Agreement, who shall until further notice is given to Landlord, have full authority and responsibility to act on behalf of Tenant as required in this Construction Agreement.
10.2 Landlord's Representative. Landlord has designated Jim Matzorkis, Port Executive Director, as its sole representative with respect to the matters set forth in this Construction Agreement, who, until further notice to Tenant and Escrow Agent (if applicable), shall have full authority and responsibility to act on behalf of Landlord as required in this Construction Agreement.
10.3 Tenant shall pay the reasonable expenses of the Escrow Agent (if applicable) hereunder, provided, that any expenses incurred by an Escrow Agent arising out of a dispute between Landlord and Tenant shall be paid by the non-prevailing party in such dispute, provided, further, however, that, notwithstanding the foregoing, Tenant shall pay the Escrow Agent's reasonable expenses during the course of such dispute.
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..."
10.4 Following the establishment of the Construction Escrow (if applicable) Escrow Agent may act upon any instrument or writing believed by Escrow Agent in good faith to be genuine and executed on behalf of Landlord of Tenant. The parties hereto acknowledge that Escrow Agent is acting solely as stakeholder at the request of the parties hereto and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable. in connection with the performance of its duties hereunder except in the event of the willful misconduct or gross negligence of Escrow Agent or its agents ol employees. Tenant shall hold harmless and indemnify Escrow Agent from and against any and all costs, expenses and liabilities (including, without limitation, reasonable attorneys' fees and disbursements) resulting from or incurred in connection with the performance of Escrow Agent's duties hereunder of any dispute arising under this Agreement, except for the willful misconduct or gross negligence of Escrow Agent or its agents or employees.
10.5 Tenant acknowledges that Landlord may for administrative convenience from time to delegate certaini tasks to staff employed by the City of Richmond. The City of Richmond shall have no obligations nor incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to the Lease or otherwise and the City of Richmond is hereby released and relieved of any other obligations or liability hereunder, under the Lease or with respect to the Premises. Such delegation shall not in any way operate to place responsibility for the control, care, management or repair of the Property upon the City of Richmond or impose any responsibility for the carrying out of any of the terms or conditions of the Lease, and the City of Richmond shall not be responsible for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair ol control of the Premises of any occurrences at the Premises.
10.6 This Agreement shall be governed by the laws of the State of California without regard to the conflict of laws principles thereof. This Agreement is entered into in Contra Costa County, California, and any action relating to this Agreement shall be instituted and prosecuted in the couts of Contra Costa County, California.
10.7 This Agreement (and any disbursement approvals and "joint notices" to be delivered hereunder) may be executed in one or more counterparts, each of which when so. executed and delivered shall be deemed an original, and all of which taken together shall constitute one and the same original. An authorized officer must sign on behalf of the Landlord and Tenant. Counterparts may be delivered via facsimile or electronic mail (including pdt or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or echosign, etc.) and any counterpart so delivered shall be deemed to have been duly and validly delivered, valid and effective for all purposes and binding upon the partie hereto.
10.8 The agreements, terms, covenants and conditions herein shall bind and inure to the benefit of Landlord and Tenant and their respective heirs, personal representatives, successors and assigns (except as otherwise provided herein).
10.9 The provisions of the Lease pertaining to default by Landlord or Tenant thereunder shall be applicable to any default by Landlord of Tenant under this Agreement, C-17
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including the right to receive attorneys' fees in the event of a breach or default or dispute to the extent provided under the Lease.
10.10 Undefined capitalized terms in this Agreement shall have the same meanings as set forth in the Lease.
[signatures appear on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
LANDLORD: SURPLUS PROPERTY AUTHORITY OF THE CITY OF
RICHMOND,
A PUBLIC BODY CORPORATE AND POLITIC,
TENANT: RICHMOND GROWN, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
By:
Kevin Saavala
Farther
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EXHIBIT A
Description of Base Building Project Elements
•The tenant shall generally complete the work as depicted in the plan set entitled "Richmond Grown" dated June 1, 2018 ("Preliminary Plans"), prepared by MacCracken Architects. At i ninimum, this includes implementing the following elements a. Restrooms
b. Freight and passenger elevators
c. Elevator lobbies
d. North and south stairwells
e. Entry doors
f. Electrical and equipment rooms
g. Demising walls as shown in the Preliminary Plans are diagrammatic, however; and will be modified to meet the needs of future tenants and inform the requirements of the Base Building Project. They are not considered as part of the Base Building Project.
The Base Building Project shall include the following:
a. All work shall comply with applicable code.
b. Complete weatherized and insulated building envelope and building structure including related walls, roofs, floors, decks and terraces, entrances, doors and windows, and exterior finishes, compliant with all structural requirements. c. The entry lobby area shall include finishes and floor coverings. d. Vertical circulation including stairs and elevators. e. Common area of services on each floor including restrooms, telephone/data, electrica. rooms, janitor closets, service entry and mechanical rooms. f. Electrical system in Building including transformer; switchgear; electrical distribution to each floor, electrical to lobby, elevator and core service areas. Exterior building lighting as required. Interior lighting for lobbies.
g. Fire alarm system for Building core & shell in a condition ready to expand to tenant spaces.
h. Heating, ventilation, and air conditioning system to provide for a "warm shell" and ready for distribution to tenant spaces.
Plumbing system for core services with adequate capacity to support tenant spaces.
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j. Fire protection main and distribution as required by code and capacity for contemplated tenant improvements.
k. Security system for Building
1: Repairs to the Building's exterior facade including patching, stain removal, and rehabilitation of historic signage.
m. Common area improvements meeting emergency egress as well as accessible path of travel from tenant spaces to the Building's exterior:
n. A potable water connection with water meter of sufficient capacity to serve the Building. o. A fire water connection with sufficient capacity to serve the Building. p. Rehabilitation of the wastewater piping within and outside of the Building to the connection with the sewer main. Provide appurtenances as required by the City's wastewater department to protect the municipal sewer system. q. Repair rain water leaders as well as storm drain connections from the Building to the main.
1. Provide the required number of accessible stalls in the Parking Area to service the projected Occupant load.
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EXHIBIT A-1
New Parking Lot
HYDRANT RELOGATION
•PROPOSED:
JEVO PARKING TACCESS DATE
• ILWU PARKING
POTENTIAL. RESTRIPINO (POTENTIAL +30 SPACES) (25% COMPACT SPACE APFLICATI AWC PARKING AREA CONCEPT • OVERALL
POINT POTRERO AUTOMOTIVE FACILITIES
TRANSDEVELOPENY PORT OP RICHMOND, CALIFORNIA
[Exhibit A-1 Continues on the Next Page]
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LOAPAHO TRACKS
NIKE & CCCOS GATE
TE FOR AWCOACC
BATURSH
ETMNG FESTRUCTED ARKA
AWO PARKING AREA CONCEPY
POINT POTRERO ALTOMOTIVE FACIITIES
T TRANSDEVELOPM EUT _AVE PORT OF RICHMOND, CALIFORNIA
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EXHIBIT B
Letter of Credit
Irrevocable Standby Letter of Credit No.._
Beneficiary: Issuance Date:
Attention:
Accountee/Applicant:
Ladies and Gentlemen: :
We hereby establish our Irrevocable Letter of Credit no. . in your favor for the account of . for an amount not to exceed in the aggregate U.S. Dollars ($
Funds under this credit are available against presentation of this original Letter of Credit and the attached Exhibit 1, with the blanks appropriately completed.
This Letter of Credit expires and is payable at the office of [Issuing Bank's name, address, department, and fax number), on or prior to Tenter the Expiration Datel, or any extended date as hereinafter provided for (the "Expiration Date").
If the Expiration Date shall ever fall on a day which is not a business day, then such Expiration Date shall automatically be extended to the date which is the next business day. It is a condition of this Letter of Credit that the Expiration Date will be automatically extended without amendment for one (1) year from the Expiration Date hereof, or any future Expiration Date, unless at least sixty (60) days prior to any Expiration Date we notify you by certified mail, return receipt requested, or overnight courier service with proof of delivery to the address shown above, concurrently notify
one same delive neil, that ecle no cocken the sprain late of is ector of Creati Upon your receipt of such notification, you may draw against this Letter of Credit by presentation of this original Letter of Credit and the attached Exhibit 2, with the blanks appropriately completed.
Demands presented by fax (to fax number are acceptable; provided that if any such demand is presented by fax, the original Exhibit and Letter of Credit shall be C-24
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simultaneously forwarded by overnight courier service to our office located at the address stated above; provided further that the failure of the courier service to timely deliver shall not affect the efficacy of the demand. Further, you shall give telephone notice of a drawing to the Bank, attention: at → on the day of such demand, provided
that your failure to provide such telephone notification shall not invalidate the demand.
Drawing(s) in compliance with all of the terms of this Letter of Credit, presented prior to 11:00 A.M., Pacific time, on a Business Day, shall be made to the account number or address designated by you of the amount specified, in immediately available funds, on the immediately following Business Day.
Drawing(s) in compliance with all of the terms of this Letter of Credit, presented on or after 11:00 A.M., Pacific time, on a Business Day, shall be made to the account number or address designated by you of the amount specified, in immediately available funds, on the second Business Day.
This Letter of Credit is transferable any number of times without charge to you. Transfer must be requested in accordance with our transfer form, which is attached as Exhibit 3, accompanied by the return of this original Letter of Credit and all amendments thereto for endorsement thereon by us to the transferee. This Letter of Credit is transferable provided that such transfer would not violate any governmental rule, order or regulation applicable to us.
We hereby engage with you that documents (including fax documents) presented in compliance with the terms and conditions of this Letter of Credit will be duly honored if presented to our bank on or before the Expiration Date of this Letter of Credit, which is Multiple and partial drawings are permitted.
This Letter of Credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590.
[Issuing Bank's name]
By:
Name:
Title:
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Exhibit 1 to Exhibit B.
SIGHT DRAFT
Irrevocable Standby Letter of Credit No._
Date of This Draft:
To:
Name of Issuing Bank
Address
Re: Irrevocable Standby Letter of Credit No.
To the order of
Pay_
At Sight
The undersigned, a duly authorized official of Surplus Property Authority of the City of Richmond, a public body corporate and politic (hereinafter referred to as "Landlord"), hereby certifies that Landlord is entitled to draw upon Irrevocable Standby Letter of Credit No. . in the amount of $_ [amount in words U.S. Dollars] pursuant to that certain Lease dated → 2019, and ancillary Construction Agreement of even date therewith, by and between Landlord and a corporation, as Tenant.
Payment of the amount demanded is to be made to the Beneficiary by wire transfer in immediately available funds in accordance with the following instructions:
[Payment instructions to be inserted]
By:
Name:
Title:
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Exhibit 2 to Exhibit B
Irrevocable Standby Letter of Credit No.
Date:
•To:
Name of Issuing Bank
Address
Ladies and Gentlemen:
Re: Irrevocable Standby Letter of Credit No.
The undersigned, a duly authorized official of Surplus Property Authority of the City of Richmond, a public body corporate and politic, (hereinafter referred to as "Landlord"), hereby certifies that Landlord is entitled to draw upon Irrevocable Standby Letter of Credit No. in the amount of $ [amount in words U.S. Dollars] as we have been notified that the Letter of Credit will not be extended and has not provided us with an acceptable substitute irrevocable standby letter of credit in accordance with the terms of that, certain Lease dated as by and between Landlord and _ as Tenant.
Drawn under Irrevocable Standby Letter of Credit No. issued by [name of Issuing Bank].
Payment of the amount demanded is to be made to the Beneficiary by wire transfer in immediately available funds in accordance with the following instructions:
[Payment instructions to be inserted]
[Beneficiary's name]
By:
Name:
Title:
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Exhibit 3 to Exhibit B
Irrevocable Standby Letter of Credit No.
Date:
To:
Name of Issuing Bank
Address
Ladies and Gentlemen:
Re: Irrevocable Standby Letter of Credit No.
For value received, the undersigned Beneficiary hereby irrevocably transfers to:
(Name of Transferee)
(Address)
(City, State, Zip Code)
All rights of the undersigned beneficiary to draw under the above Letter of Credit up to its available amount as shown above as of the date of this transfer.
By this transfer, all rights of the undersigned Beneficiary in such Letter of Credit are transferred to the Iransferee and the Transferee shall have the sole rights as Beneficiary thereof, including sole rights relating to any amendments whether increases or extensions or other amendments and whether now existing or hereafter made. All amendments are to be advised direct to the Transferee without necessity of any consent of or notice to the undersigned Beneficiary.
The original of such Letter of Credit is returned herewith, and we ask you to endorse the transfer on the reverse thereof, and forward it directly to the Transferee with your customary Notice of Transfer.
Very truly yours,
[Beneficiary's name]
By:
Name:
Title:
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...
The above signature with title as stated conforms to that on file with us and is authorized for the execution of said instruments.
[Name of Authenticating Bank]
By:
Name:
Title:
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