HomeMy WebLinkAboutReso - CC - 015-2025RESOLUTION NO. 015-2025
ADOPTION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND
EXECUTE A LEASE AGREEMENT, PURCHASE AND SALE AGREEMENT, AND TENANT
IMPROVEMENT AGREEMENT WITH 1440 CHAPIN OWNER LLC FOR 1440 CHAPIN
AVENUE
WHEREAS, the City Council has a long-standing goal of constructing or purchasing a new
City Hall facility to meet the news of the community, Council, and staff; and
WHEREAS, after the City Council’s 2023 goal-setting session, the City Council established
the City Hall Ad-Hoc Subcommittee to explore the financing and construction of a new City Hall;
and
WHEREAS, on June 20, 2023, the City issued a Request for Proposals soliciting
consultant assistance from an architecture firm and a real estate advisor for the new City Hall
project; and
WHEREAS, in August 2023, the City executed Agreements for preliminary architectural
services and real estate advisor services with Group 4 Architecture and Keyser Martson
Associates, respectively; and
WHEREAS, Group 4 and Keyser Marston reviewed various City owned sites upon which
to build a new City Hall; and
WHEREAS, the cost of building a new City Hall ranged from $73 million to $87 million,
with no office space available to lease to third parties; and
WHEREAS, the City shifted its focus to existing commercial real estate which could serve
as the new City Hall; and
WHEREAS, on May 6, 2024, pursuant to Resolution No. 061-2024, the City Council
authorized the City Manager to execute an agreement with CBRE to serve as the City’s
commercial real estate broker; and
WHEREAS, CBRE identified 24 locations that could serve as the new City Hall; and
WHEREAS, after CBRE identified 1440 Chapin as a site that may meet the needs of the
City to serve as the new City Hall, staff consulted with the City Hall Ad-Hoc Subcommittee and
City Council for direction; and
WHEREAS, 1440 Chapin was built in 1987 and contains 49,590 square feet of office
space, of which the City will lease 26,522 square feet beginning August 1, 2026; and
WHEREAS, rent for 1440 Chapin will be free for the first six months, increase to $6.35 per
square foot, per month for months seven through 12, and increase by three percent every year
thereafter; and
WHEREAS, pursuant to the Purchase and Sale Agreement, the City will close on a
Docusign Envelope ID: F1D2CD84-0A43-456F-8065-560DD4D167FB
purchase of 1440 Chapin by June 30, 2027, at a purchase price of $34,500,000; and
WHEREAS, the building owner will contribute $4,105,760 (which the City will repay with
interest for a total of $4,792,071), and the City will contribute additional funding in the amount of
$2,652,200, to complete tenant improvements; and
WHEREAS, the City plans to retain tenants in the remainder of the new City Hall, which
will serve as a source of revenue for the City; and
WHEREAS, s taff believes that 1440 Chapin can serve as an excellent City Hall for the
City of Burlingame for years to come.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME
RESOLVES AS FOLLOWS:
1. The City Manager is authorized to negotiate and Execute a Lease Agreement, Purchase
and Sale Agreement, and Tenant Improvement Agreement, in substantially the form
attached hereto, with 1440 Chapin Owner LLC for 1440 Chapin Avenue; and
2. The City Manager is authorized to make such minor modifications to said agreements and
to carry out such actions as are necessary to carry out the intent of this Resolution.
Michael Brownrigg, Vice Mayor
I, Meaghan Hassel Shearer, City Clerk of the City of Burlingame, certify that the foregoing
Resolution was introduced at a regular meeting of the City Council held on the 18th day of
February, 2025, and was adopted thereafter by the following vote:
AYES: COUNCILMEMBERS: COLSON, BROWNRIGG, PAPPAJOHN, THAYER
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: STEVENSON
Meaghan Hassel Shearer, City Clerk
Docusign Envelope ID: F1D2CD84-0A43-456F-8065-560DD4D167FB
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LEASE AGREEMENT
by and between
1440 CHAPIN OWNER, LLC,
A DELAWARE LLC,
Landlord
and
THE CITY OF BURLINGAME,
A MUNICIPAL CORPORATION,
Tenant
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BASIC LEASE INFORMATION
TENANT: City of Burlingame
ADDRESS FOR NOTICES: City of Burlingame
501 Primrose Road
Burlingame, CA 94010
Attn: City Manager
lgoldman@burlingame.org
With a copy to: City of Burlingame
501 Primrose Road
Burlingame, CA 94010
Attn: City Attorney
mguina@burlingame.org
LANDLORD: 1440 Chapin Owner, LLC
ADDRESS FOR NOTICES: 1440 Chapin Owner, LLC
c/o Patson Management Company
548 Market Street, PMB #38544
San Francisco, CA 94104-5401
Attn: Ian Paget
Paget@Patson.com
With a copy to: 1440 Chapin Owner, LLC
c/o PCCP, LLC
10100 Santa Monica Blvd., Suite 1000
Los Angeles, CA 90067
Attn: Legal Notices & Melanie Gangel
legalnotices@pccpllc.com
mgangel@pccpllc.com
LEASED PREMISES: 1440 Chapin Avenue,
Suites 100, 205, 300, 340, 350, 385 and 390
Burlingame, CA 94010,
(as described in attached Floor Plans)
NET RENTABLE AREA:
Leased Premises: Suite 100: 2,288 Square Feet
Suite 205: 3,116 Square Feet
Suite 300: 1,078 Square Feet
Suite 340: 4,322 Square Feet
Suite 350: 4,571 Square Feet
Suite 385: 4,467 Square Feet
Suite 390: 6,682 Square Feet
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Total Leased Premises: 26,522 Square Feet
Entire Building: 49,590 Square Feet
TERM COMMENCEMENT DATE: The later of August 1, 2026 or the Substantial
Completion Date (as defined herein)
RENT COMMENCEMENT DATE: Six months following the Term Commencement Date
TERM EXPIRATION DATE: Ten (10) years and six (6) months following the
Term Commencement Date
BASE RENT: Year 1, Months 1-6: $0.00 per month
Months 7-12: $168,414.70 per month
Year 2: $173,467.14 per month
Year 3: $178,671.16 per month
Year 4: $184,031.29 per month
Year 5: $189,552.23 per month
Year 6: $195,238.80 per month
Year 7: $201,095.96 per month
Year 8: $207,128.84 per month
Year 9: $213,342.70per month
Year 10: $219,742.98 per month
Year 11: Months 1-6: $226,335.27 per month
TENANT'S PROPORTIONATE
SHARE: 53.48%
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS ...................................................................................................... __
1.01. Definitions. ................................................................................................................... __
1.02. Additional Rent ............................................................................................................ __
1.03. Base Rent ...................................................................................................................... __
1.04. Basic Operating Cost .................................................................................................... __
1.05. Basic Operating Cost Adjustment ................................................................................ __
1.06. Building ........................................................................................................................ __
1.07. Common Areas ............................................................................................................. __
1.08. Estimated Basic Operating Cost ................................................................................... __
1.09. Fair Market Rent .......................................................................................................... __
1.10. Gross Rent .................................................................................................................... __
1.11. Initial Tenent Improvements ........................................................................................ __
1.12. Leased Premises ........................................................................................................... __
1.13. Net Rentable Area ........................................................................................................ __
1.14. Permitted Use ............................................................................................................... __
1.15. Project ........................................................................................................................... __
1.16. Rent .............................................................................................................................. __
1.17. Rent Commencement Date ........................................................................................... __
1.18. Substantial Completion ................................................................................................ __
1.19. Tenant's Proportionate Share ........................................................................................ __
1.20. Term ............................................................................................................................. __
1.21. Term Commencement Date ......................................................................................... __
1.22. Term Expiration Date ................................................................................................... __
1.23. Other Terms…………………………………………………………………………..__
ARTICLE 2 LEASE .................................................................................................................. __
2.01. Lease. ............................................................................................................................ __
ARTICLE 3 TERM .................................................................................................................... __
3.01. Term and Possession. ................................................................................................... __
3.02. Use. ............................................................................................................................... __
3.03. Base Rent. ..................................................................................................................... __
3.04. Net Lease. ..................................................................................................................... __
3.05. Basic Operating Cost .................................................................................................... __
3.06. Adjustment For Variation Between Estimated And Actual. ........................................ __
3.07. Computation of Basic Operating Cost Adjustment. ..................................................... __
3.08. Initial Tenant Improvements. ...................................................................................... __
3.09. Options to Extend Term. .............................................................................................. __
3.10. Expansion Option; Right of First Refusal.....................................................................__
3.11. Purchase and Sale Agreement. .....................................................................................__
ARTICLE 4 LANDLORD COVENANTS ............................................................................... __
4.01 Basic Services. ............................................................................................................. __
4.02. Graphics And Signage; Entry Intercom. ...................................................................... __
4.03. Repair Obligation. ........................................................................................................ __
4.04 Parking. ........................................................................................................................ __
4.05. Peaceful Enjoyment. ..................................................................................................... __
4.06. Landlord Compliance with Laws. ................................................................................ __
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4.07. Landlord Indemnificatiion. ........................................................................................... __
ARTICLE 5 TENANT'S COVENANTS .................................................................................. __
5.01. Payments By Tenant. .................................................................................................... __
5.02. Taxes on Tenant’s Personal Property and Improvements. ........................................... __
5.03. Repairs by Tenant. ........................................................................................................ __
5.04. Waste. ........................................................................................................................... __
5.05. Assignment or Sublease. .............................................................................................. __
5.06. Alterations, Additions, Improvements. ........................................................................ __
5.07. Compliance With Laws And Insurance Standards. ...................................................... __
5.08. Entry for Repairs, Inspection, Posting Notice, Etc. ..................................................... __
5.09. No Nuisance. ................................................................................................................ __
5.10. Subordination. .............................................................................................................. __
5.11. Estoppel Certificate. ..................................................................................................... __
5.12. Tenant's Remedies. ....................................................................................................... __
5.13. Rules And Regulations. ................................................................................................ __
ARTICLE 6 CASUALTY, EMINENT DOMAIN AND MISCELLANEOUS MATTERS .... __
6.01. Property Insurance. ....................................................................................................... __
6.02. Liability Insurance. ....................................................................................................... __
6.03. Tenant's Additional Insurance. ..................................................................................... __
6.04. Indemnity And Exoneration. ........................................................................................ __
6.05. Waiver of Subrogation Rights. ..................................................................................... __
6.06. Condemnation And Loss Or Damage. ......................................................................... __
6.07. Damage Due To Fire, Etc. ............................................................................................ __
6.08. Default By Tenant; Default By Landlord. .................................................................... __
6.09. Arbitration of Fair Market Rent. .................................................................................. __
6.10. No Waiver. ................................................................................................................... __
6.11. Holding Over. ............................................................................................................... __
6.12. Attorneys' Fees. ............................................................................................................ __
6.13. Amendments. ................................................................................................................ __
6.14. Transfers By Landlord. ................................................................................................ __
6.15. Severability. .................................................................................................................. __
6.16. Notices. ......................................................................................................................... __
6.17. No Joint Venture. ......................................................................................................... __
6.18. Successors And Assigns. .............................................................................................. __
6.19. Applicable Law. ........................................................................................................... __
6.20. Time Of The Essence. .................................................................................................. __
6.21. No Merger. ................................................................................................................... __
6.22. Complete Agreement. ................................................................................................... __
6.23. Corporate Authority. .................................................................................................... __
6.24. Brokers. ........................................................................................................................ __
6.25. Captions. ....................................................................................................................... __
6.26. Gender; Singular, Plural. .............................................................................................. __
6.27. Waiver of Jury. ............................................................................................................. __
6.28. No Recordation. ........................................................................................................... __
6.29. Exhibits. ....................................................................................................................... __
6.30. Certified Access Specialist Inspection. ........................................................................ __
6.31. Force Majeure. ............................................................................................................. __
6.32. Press Releases. ............................................................................................................. __
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6.33. Counterparts; PDF's; Facsimile Signatures. ................................................................. __
SIGNATURE PAGE ................................................................................................................. __
LIST OF EXHIBITS
Exhibit A Floor Plans of Leased Premises
Exhibit B Rules And Regulations
Exhibit C Purchase and Sale Agreement
Exhibit D Tenant Improvement Agreement
Exhibit E Insurance Requirements for Tenant Construction
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LEASE AGREEMENT
This Lease is entered into between Landlord and Tenant, whose respective full names, capacities,
and addresses are specified in the Basic Lease Information attached hereto and incorporated as
an integral part of this Lease (“Basic Lease Information”), effective as of the date it has been
executed by both Landlord and Tenant. Any inconsistencies between the Basic Lease
Information and the remaining text of this Lease shall be governed by such remaining text of this
Lease.
ARTICLE 1
DEFINITIONS
1.01. Definitions. The following terms shall have the meanings set forth in this Article 1.
1.02. Additional Rent shall mean all payment obligations of Tenant hereunder other
than the obligation for payment of Gross Rent.
1.03. Base Rent shall mean the amounts set forth as such in the Basic Lease Information.
1.04. Basic Operating Cost shall have the meaning given in Section 3.05.
1.05. Basic Operating Cost Adjustment for any calendar year shall mean the
difference, if any, between Estimated Basic Operating Cost and Basic Operating Cost for that
calendar year.
1.06. Building shall mean the building and other improvements, including enclosed
and open parking areas, known as 1440 Chapin Avenue, which are located on a parcel of real
property located in Burlingame, California.
1.07. Common Areas shall mean (i) the areas on individual floors of the Building
devoted to non-exclusive uses such as corridors, fire vestibules, elevator foyers, lobbies, electric
and telephone closets, restrooms, mechanical rooms, janitor closets and other similar facilities
for the benefit of all tenants (and invitees) on the Tenant’s particular floors and other floors, (ii)
those areas of the Building devoted to mechanical and service rooms servicing more than one
floor of the Building and (iii) all parking and landscaped areas.
1.08. Estimated Basic Operating Cost for any calendar year shall mean Landlord's
estimate of Basic Operating Cost for such calendar year, which, for calendar year 2025 is
Twenty Two Dollars ($22.00) per square foot of Net Rentable Area.
1.09. Fair Market Rent shall mean the rate being charged for space comparable to the
Leased Premises in the Building and in other first class office buildings of similar age in the
Mid-Peninsula area including, but not limited to, Burlingame, taking into consideration: floor
level, lease takeovers/assumptions, proposed term of lease, extent of service provided or to be
provided, the ownership of the comparable space, the time the particular rate under consideration
became or is to become effective and any other relevant terms or conditions.
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1.10. Gross Rent shall mean the total of Base Rent and Tenant's Proportionate Share of
Estimated Basic Operating Cost.
1.11. Initial Tenant Improvements shall mean those improvements to be installed and
constructed in the Leased Premises by Landlord, as more specifically set forth in Section 3.08
and the Improvement Agreement attached hereto and incorporated herein as Exhibit D.
1.12. Leased Premises shall mean the floor area more particularly shown on the
Exhibit A floor plan attached hereto, containing the Net Rentable Area specified on the Basic
Lease Information.
1.13. Net Rentable Area, with respect to the Leased Premises and with respect to the
entire Building, shall mean the numbers of square feet set forth as such in the Basic Lease
Information, as determined by Landlord in accordance with Building Owners and Managers
Association (BOMA) 2017 standards.
1.14. Permitted Use shall mean corporate, executive and professional office use in the
Leased Premises of a kind appropriate in a building of the type and quality of the Building
inclusive of City Hall and City Council chambers functions; provided, however, that Permitted
Use shall not include (i) offices of any agency or bureau of the United States, (ii) offices or
agencies of any foreign government or political subdivision thereof; (iii) offices of any health
care professionals or service organization; (iv) schools or other training facilities which are not
ancillary to corporate, executive, professional office or government use; (v) retail or restaurant
uses; or (vi) communications firms such as radio and/or television stations. Permitted Use shall
also exclude residential real estate brokerage, the business of originating loans to homeowners
which loans are secured by their residences (i.e. a residential mortgage origination business), and
title and/or escrow company business (for example, and without limiting the generality of the
foregoing, conducting title searches, issuing title reports, issuing title policies, and/or handling
escrows).
1.15. Project shall mean the Building and real property on which the Building is
located.
1.16. Rent shall mean Gross Rent plus Additional Rent.
1.17. Rent Commencement Date shall mean the date specified as such in the Basic
Lease Information.
1.18. Substantial Completion, Substantially Complete and Substantial Completion Date
shall have the meanings set forth in the Improvement Agreement.
1.19. Tenant's Proportionate Share is the percentage that the Net Rentable Area of the
Leased Premises bears to the total Net Rentable Area of the Building, as specified in the Basic
Lease Information.
1.20. Term shall mean the period commencing on the Term Commencement Date and
ending on the Term Expiration Date, unless sooner terminated pursuant to the terms of this
Lease.
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1.21. Term Commencement Date shall mean the date specified as such in the Basic
Lease Information, subject to Tenant's right to early access pursuant to Section 3.01.
1.22. Term Expiration Date shall mean the date specified as such in the Basic Lease
Information.
1.23. Other Terms used in this Lease and in the Basic Lease Information shall have the
meanings given them herein and therein.
ARTICLE 2
LEASE
2.01. Lease. Landlord hereby leases to Tenant and Tenant leases from Landlord the
Leased Premises upon all of the terms, covenants and conditions set forth herein.
ARTICLE 3
TERM
3.01. Term and Possession.
(a) Subject to Section 3.01(b), Landlord shall deliver possession of the Leased
Premises to Tenant, on the Term Commencement Date, vacant and in broom clean condition. The
Term shall be 126 months, commencing on the Term Commencement Date and expiring on the
Term Expiration Date. Landlord will advise Tenant of the expected Substantial Completion Date
thirty (30) days prior thereto, and, following receipt of such advice, Tenant may access the Leased
Premises to install its furniture, fixtures and equipment therein, provided that such activity by
Tenant shall not interfere with Landlord's completion of the Initial Tenant Improvements. The
Term Commencement Date shall not be less than thirty (30) days following receipt of Landlord's
notice to Tenant of the Substantial Completion Date. Notwithstanding anything else contained
herein, Tenant shall not enter the Leased Premises unless and until Tenant has obtained all
insurance required to be obtained by Tenant under this Lease as of the Term Commencement
Date (and provided a written certificate to Landlord evidencing the same) and made the same
effective on or prior to any such entry. All provisions of this Lease regarding indemnification by
Tenant and all entities hired or controlled by Tenant shall be operative and in effect at all times
during any such early entry onto the Leased Premises by Tenant as though the Term started on
such date of early entry.
(b) Subject only to the provisions of Section 3.08 and the Tenant
Improvement Agreement and Landlord’s agreement to assure that all HVAC systems, elevators,
electrical, plumbing, roof, door, mechanical, fire life safety systems and other Building systems
applicable to the Leased Premises and the Common Areas are in good working order and repair
consistent with Class A office space, that the Leased Premises and the Common Areas are ADA
compliant and that there are no mold or hazardous materials present in violation of applicable
law or at levels that require remediation under applicable law upon the Term Commencement
Date, Tenant acknowledges that Landlord has no obligation to make any improvements or
repairs to the Leased Premises at the outset of the Lease and Tenant accepts this Lease subject to
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all applicable laws, codes, rules and regulations governing the use and occupancy of the Leased
Premises.
3.02. Use.
(a) Tenant shall be entitled to use the Leased Premises solely for the Permitted Use
and for no other use or purpose, except as permitted by Landlord pursuant to Landlord's written
consent, which consent may be withheld in Landlord's reasonable discretion.
(b) Notwithstanding any state or local law permitting Controlled Substances Use or
Drug-Related Activities, Tenant shall not use the Leased Premises for a Controlled Substances
Use, or in any manner that violates or could violate any Controlled Substance Laws, including,
without limitation, any business, communications, financial transactions or other activities
related to Controlled Substances or a Controlled Substances Use that violates or could violate
any Controlled Substances Laws (collectively, “Drug-Related Activities”). For purposes of this
Section, (i) “Controlled Substances Laws” means the Federal Controlled Substances Act (21
U.S.C. §§ 801 et seq.) or any other similar or related federal, state or local law, ordinance, code,
rule, regulation, or order; (ii) “Controlled Substances” means marijuana, cannabis, or other
controlled substances as defined in the Federal Controlled Substances Act or that otherwise are
illegal or regulated under any Controlled Substances Laws; and (iii) “Controlled Substances
Use” means any cultivation, growth, creation, production, manufacture, sale, distribution, storage
handling, possession, or other use of a Controlled Substance.
3.03. Base Rent.
(a) Base Rent shall be due and payable by Tenant to Landlord throughout the
Term in the monthly amounts set forth in the Basic Lease Information.
(b) Upon execution of this Lease, Base Rent for the seventh (7th) month of
the Term in the amount of One Hundred Sixty Eight Thousand, Four Hundred Fourteen Dollars
and Seventy Cents ($168,414.70), together with Tenant’s Proportionate Share of Estimated Basic
Operating Cost for one month in the amount of Forty Eight Thousand, Six Hundred Twenty Four
Dollars ($48,624.00), shall be paid by Tenant to Landlord, and shall be applied by Landlord to
the first sums of Gross Rent (consisting of Base Rent plus Tenant's Proportionate Share of
Estimated Basic Operating Cost) payable under this Lease, as and when such sums are due.
Thereafter, commencing with the eighth (8th) month of the Term, on the first day of each
calendar month during the Term and any extensions or renewals thereof, Tenant shall pay to
Landlord the Gross Rent in advance, without demand and without any reduction, abatement
(except as otherwise expressly permitted under this Lease in the context of damage and
destruction or condemnation), counterclaim or setoff, at the address specified in the Basic Lease
Information or at such other address as may be designated by Landlord in the manner provided
for giving notice under Section 6.16 hereof. Gross Rent shall be prorated for any partial month
based on the actual number of days in such month.
3.04. Net Lease. This Lease shall be a net lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses except as provided herein. The provisions for
payment of Basic Operating Cost by means of periodic payment of Tenant's Proportionate Share
of Estimated Basic Operating Cost and the Basic Operating Cost Adjustment are intended to pass
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on to Tenant and reimburse Landlord for Tenant's Proportionate Share of all costs and expenses
of the nature described in Section 3.05.
3.05. Basic Operating Cost.
(a) “Basic Operating Cost” shall mean all expenses and costs (but not specific
costs which are separately billed to and paid by specific tenants) of every kind and nature which
Landlord shall pay or become obligated to pay because of or in connection with the management,
maintenance, preservation and operation of the Project and its supporting facilities directly
servicing the Project including, but not limited to the following:
(1) Commercially reasonable wages, salaries and related expenses and
benefits of any on-site or off-site employees engaged in the operation, maintenance and security
of the Project, excluding employees and other personnel engaged in the initial development and
construction of the Project, and limiting such charges only to amounts directly allocable to
services rendered by the employees for the benefit of the Project.
(2) Commercially reasonable supplies, materials and equipment rental
used in the operation and maintenance of the Project.
(3) Utilities, including water and power, heating, lighting and
ventilating for the entire Project.
(4) All commercially reasonable maintenance, janitorial and service
agreements for the Project and the equipment therein, including, without limitation, alarm
service, window cleaning, elevator maintenance, sidewalks, landscaping, Building exterior and
parking and service areas.
(5) A management cost recovery not to exceed 3.0% of the annual
gross revenue derived by Landlord from the Project.
(6) Routine legal and accounting services for the Project, including the
costs of audits by certified public accountants; provided, however, that legal and accounting
expense shall not include the cost of negotiating leases, termination of leases, extension of
leases, legal and accounting costs incurred in proceedings against any specific tenant or legal
costs incurred in connection with development, construction or sale of the Project and shall not
include accounting costs of any specific tenant audit.
(7) All insurance premiums and costs, including but not limited to the
premiums and cost of fire, casualty and liability coverage and rental abatement and earthquake
insurance (if any) applicable to the Project and Landlord's personal property used in connection
therewith.
(8) Repairs, replacements and general maintenance (except for repairs
paid by proceeds of insurance or by Tenant or other third parties, and alterations attributable
solely to tenants of the Project other than Tenant).
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(9) All real estate or personal property taxes, possessory interest taxes,
business or license taxes or fees, service payments in lieu of such taxes or fees, annual or
periodic license or use fees, excises, transit charges, housing fund assessments, open space
charges, assessments, levies, fees or charges, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, of any kind (including fees "in-lieu" of any such tax or
assessment) which are assessed, levied, charged, confirmed, or imposed by any public authority
upon the Project, its operations or the Rent (or any portion or component thereof), except (i)
inheritance or estate taxes imposed upon or assessed against the Project, or any part thereof or
interest therein, and (ii) taxes computed upon the basis of the net income derived from the
Project by Landlord or the owner of any interest therein; provided, however, if Tenant's
possessory interest is determined to be exempt from taxation, Tenant's Proportionate Share of
Basic Operating Costs shall not include any category of taxes from which Tenant is exempt from
payment, to the extent Landlord is not obligated to pay such category of taxes with respect to the
Leased Premises.
(10) Amortization (together with reasonable financing charges) of
capital improvements over the useful life of such capital improvements, made to the Project
subsequent to the Term Commencement Date which are designed to improve the operating
efficiency of the Project or which may be required by governmental authorities as a result of
laws enacted after the effective date of this Lease, but exclusive of capital improvements solely
benefiting tenant space not occupied by Tenant.
(b) Notwithstanding any other provision herein to the contrary, if the Project
is not fully occupied during any year of the Term, an adjustment shall be made in computing
Basic Operating Cost for such year so that Basic Operating Cost shall be computed as though the
Project had been fully occupied during such year. In no event shall Landlord collect in total,
from Tenant and all other tenants of the Project, an amount greater than one hundred percent
(100%) of the actual Basic Operating Cost during any year of the Term.
3.06. Adjustment For Variation Between Estimated And Actual. If the Basic
Operating Cost Adjustment for any calendar year is a positive number (i.e., actual cost exceeds
estimated cost) Tenant shall pay to Landlord, pursuant to Landlord's billing therefor (submitted
pursuant to Section 3.07), Tenant's Proportionate Share of the Basic Operating Cost Adjustment
within sixty (60) days after presentation of Landlord's statement. If the Basic Operating Cost
Adjustment for any calendar year is a negative number (i.e., estimated cost exceeds actual cost),
then Landlord shall pay Tenant's Proportionate Share of the Basic Operating Cost Adjustment to
Tenant in cash, within sixty(60) days after the Basic Operating Cost Adjustment is finally
determined, or by credit against future installments of Estimated Basic Operating Cost payable
by Tenant hereunder. Should the Term commence or terminate at any time other than the first
day of a calendar year, Tenant's Proportionate Share of the Basic Operating Cost Adjustment
shall be prorated for the exact number of calendar days during such calendar year for which
Tenant is obligated to pay Gross Rent. This Section shall survive termination of the Lease to the
extent necessary to account for the payment of the Basic Operating Cost Adjustment owed by
either Party through the end of the Term or earlier termination of this Lease.
3.07. Computation of Basic Operating Cost Adjustment. Landlord shall give written
notice to Tenant no later than one hundred twenty (120) days after the end of any calendar year
for which Estimated Basic Operating Costs differs from Basic Operating Cost, which notice shall
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contain or be accompanied by a statement of the Basic Operating Cost during such calendar year,
and a computation of Basic Operating Cost Adjustment. Landlord's failure to give such notice
and statement as set forth above in any calendar year for which a Basic Operating Cost
Adjustment is due shall not release either party from the obligation to make any Basic Operating
Cost Adjustment provided for in Section 3.06. Tenant shall have the right to inspect and audit
the books and records of Landlord relating solely to Basic Operating Costs no more than one
time in any one year, and no later than two years after the beginning of the period of time
covered by the Basic Operating Costs for which Tenant desires to inspect the records of
Landlord. Tenant shall coordinate the date of such inspection or audit with Landlord, which
shall in all events be during regular business hours of Landlord and at the location where such
books and records are kept. Landlord must provide a closeout statement no later than July 1 for
the prior calendar year. Any amounts owed by either party to the other in excess of $25,000 may
be paid by the party on a monthly basis in $25,000 increments, until fully paid. Once Landlord
closes out a calendar year, Landlord cannot subsequently revise that calendar year and charge
Tenant for any Basic Operating Cost the Landlord may have missed or undercharged nor can
Tenant make any claim for any amount Tenant believes to be an overcharge.
3.08. Initial Tenant Improvements.
(a) Landlord shall deliver the Leased Premises to Tenant when Substantially
Completed as defined in the Tenant Improvement Agreement attached hereto as Exhibit D and
incorporated herein (the "Improvement Agreement").
(b) Landlord shall provide a Tenant Improvement Allowance (the “TIA”) for
application to Initial Tenant Improvements of up to a total of Four Million, One Hundred Five
Thousand, Seven Hundred Sixty Dollars ($4,105,760.00), which includes a TIA allocation for
Suite 390 of up to Eighty Dollars ($80.00) per square foot of Net Rentable Area (6,682 square
feet), i.e., up to a total of Five Hundred Thirty Four Thousand, Five Hundred Sixty Dollars
($534,560.00), and a TIA allocation for the balance of the Leased Premises of up to One Hundred
Eighty Dollars ($180.00) per square foot of Net Rentable Area (19,840 square feet), i.e., up to a
total of Three Million, Five Hundred Seventy One Thousand, Two Hundred Dollars
($3,571,200.00). The TIA shall be used for hard costs, soft costs, architectural fees, construction
management fee, permitting and all costs related to the Initial Tenant Improvements. A portion of
the TIA of up to Twenty Dollars ($20.00) per square foot of Net Rentable Area of the entire
Leased Premises (26,522 square feet), i.e., up to a total of Five Hundred Thirty Thousand, Four
Hundred Forty Dollars ($530,440.00), can be applied for purchase of furniture, fixtures and
equipment for the Leased Premises, as requested by Tenant. Except for the limitation on use of the
TIA for furniture, fixtures and equipment set forth in the prior sentence, any portion of the TIA
may be used on any portion of the Leased Premises. Any costs of the Initial Tenant Improvements
in excess of a TIA allocation shall be the responsibility of Tenant. If the base contract amounts for
construction of the Initial Tenant Improvements exceeds either of the TIA allocations, or if any
change order causes the TIA allocations to be exceeded, Landlord will advise Tenant in writing
when Landlord becomes aware of such excess amounts. Payment for the costs of the Initial Tenant
Improvements shall be in accordance with the Improvement Agreement.
(c) Landlord acknowledges that Tenant is a public agency subject to the
California Public Contracting Code and Labor Code. Landlord further acknowledges and agrees
that any construction work performed by Landlord on Tenant’s behalf will be a “public work” as
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defined in Labor Code section 1720 and will be subject to all applicable provisions for public
works as provided by the Labor Code, Public Contracting Code, and all applicable laws. Landlord
shall be solely responsible for ensuring that Landlord's contractors and agents comply with all such
requirements. Landlord shall competitively bid the Initial Tenant Improvements construction work
to at least three (3) general contractors and Tenant and Landlord shall mutually select the lowest
responsive and responsible bidder. Tenant shall have the right to have its own selected general
contractor participate in the bid process provided that all Building and Landlord requirements are
met. Tenant shall not be required to restore the Leased Premises to their original condition, with
the exception of certain specialty improvements, including the Council Chambers Dais, as such
specialty improvements are identified in the approved Final Plans (as defined in the Improvement
Agreement).
(d) Landlord shall oversee all aspects of the construction of the Initial Tenant
Improvements. Landlord shall charge a project management fee equal to 3% of the total TIA. Any
contractor performing work as part of the Initial Tenant Improvements will be required to comply
with applicable overtime, prevailing wage and record keeping requirements of the California Labor
Code as in effect from time to time.
(e) Landlord shall pay up to Twenty-Five Cents ($0.25) per square foot of Net
Rentable Area of the Leased Premises (i.e., Six Thousand Six Hundred Thirty One Dollars
($6,631.00) for the initial test fit space plan of the Leased Premises for Tenant's use (and
revision(s) thereof, if any), using Tenant's architect. Any costs of the initial test fit space plan in
excess of Six Thousand Six Hundred Thirty One Dollars ($6,631.00) shall be the responsibility of
Tenant.
3.09. Options to Extend Term.
(a) Tenant shall have four options to extend the Term, each for a five (5) year
period (each, a "Renewal Term") immediately following the Term Expiration Date and
immediately following the termination of the previous Renewal Term, subject to the following
terms. Each Renewal Term shall be upon the same terms and conditions as those applicable as of
the Term Expiration Date or the expiration date of the preceding Renewal Term, as applicable,
except that: (i) monthly Base Rent for the first year of each Renewal Term shall be equal to the
monthly Fair Market Rent as of the beginning of such Renewal Term; and (ii) annual Base Rent
for each year after the first year of the Renewal Term shall be equal to 103% of the annual Base
Rent for the preceding year. For purposes of the preceding sentence, the amount of monthly Base
Rent payable for the month immediately preceding the beginning of a Renewal Term shall not be
reduced to reflect any abatement of rent otherwise applicable under the terms of this Lease (e.g., in
the context of damage and destruction), although once the amount of monthly Base Rent
applicable as of the beginning of the Renewal Term has been determined, any such abatement shall
continue to impact the amount of Base Rent actually payable to the extent provided under the
provisions of this Lease. Tenant shall exercise an option to extend, if at all, by delivery to
Landlord of written notice exercising such option no earlier than four hundred fifty (450) days
prior to, and no later than three hundred sixty (360) days prior to, the Term Expiration Date or the
expiration date of the preceding Renewal Term, as applicable. Any attempt by Tenant to exercise
an option for a Renewal Term shall be deemed ineffective and the option shall be deemed
unexercised if: (i) an event of default by Tenant has occurred or is continuing under the Lease,
after receipt of notice and expiration of any applicable cure period at the time Tenant notifies
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Landlord of its intention to exercise the option or on the date the Term or the then current Renewal
Term would expire in the absence of the Renewal Term; or (ii) Tenant has subleased the Leased
Premises, provided, however, if Tenant has subleased only a portion of the Leased Premises, the
Tenant's option to renew will be effective as to the portion of the Leased Premises that is not
subleased; . Each option will be deemed waived by Tenant if not exercised in a timely fashion.
Time is of the essence with respect to the time of exercise of each option. Landlord shall notify
Tenant of its determination of Fair Market Rent as of the beginning of a Renewal Term by written
notice given to Tenant within thirty (30) days after Tenant’s exercise of the option. If Landlord
and Tenant are able to agree on the amount of Fair Market Rent as of the beginning of a Renewal
Term on or before a date that is ninety (90) days after Tenant exercises the option to extend the
Term (the "Revocation Date"), then the Term shall be extended by the Renewal Term and the
applicable Fair Market Rent shall be the amount so agreed. If Landlord and Tenant for any reason
are unable to agree on the amount of Fair Market Rent to be paid as of the beginning of a Renewal
Term on or before the Revocation Date, then Tenant’s exercise of the option shall be deemed
irrevocably withdrawn and rescinded unless Tenant elects to proceed with arbitration pursuant to
the provisions of Section 6.09 of the Lease. Tenant shall make such election, if at all, by delivery
to Landlord on or before the Revocation Date of written notice stating such election and otherwise
complying with the requirements set forth in Section 6.09(a) (“Arbitration Election Notice”). If
Tenant fails to timely deliver an Arbitration Election Notice to Landlord by the Revocation Date,
Tenant’s prior exercise of the option is irrevocably withdrawn and rescinded. If the option is
deemed withdrawn and rescinded pursuant to the foregoing, Tenant shall have no further rights
respecting the option, and the Term shall not be extended for the Renewal Term. Time is of the
essence with respect to the time of Tenant’s election to proceed with arbitration.
(b) Should Tenant elect to arbitrate and should the arbitration not have been
concluded prior to the beginning of the Renewal Term, Tenant shall pay Gross Rent to Landlord
after the beginning of the Renewal Term including Base Rent adjusted to reflect the greater of
Fair Market Rent as Landlord has determined it or the amount of Base Rent applicable
immediately prior to the beginning of the Renewal Term. If the amount of Fair Market Rent as
determined by arbitration is greater than or less than Landlord's determination, then any
adjustment required to correct the amount previously paid shall be made by payment by the
appropriate party to the other within thirty (30) days after such determination of Fair Market
Rent.
3.10. Expansion Option; Right of First Refusal.
(a) Tenant shall have an ongoing option (“Expansion Option”) to lease any
space that becomes available in the Building. Tenant’s Expansion Option shall be superior to any
tenant renewal options which have expired, or which do not currently exist or exist as of the Term
Commencement Date. For purposes of clarity: all unexpired renewal options of existing tenants
shall remain in place as specified in the respective tenant leases. Landlord shall provide Tenant
not less than six (6) months advance notice of any availability, and Tenant shall have ten (10)
business days to exercise Tenant’s Expansion Option. If Tenant does not exercise an Expansion
Option within ten business days of Landlord's notice, such Expansion Option shall expire and be
of no further force or effect. Any expansion of the Leased Premises as a result of Tenant's exercise
of the Expansion Option that occurs within twenty-four (24) months of the Term Commencement
Date, whether triggered by a right defined within the Lease or upon Tenant’s request, shall be
under the same terms and conditions as the Lease, except any allowance and/or concession will be
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prorated based upon the number of remaining months in the Term. The terms applicable to any
expansion of the Leased Premises as a result of Tenant's exercise of the Expansion Option that
occurs more than twenty-four (24) months following the Term Commencement Date shall be
subject to negotiation by the parties. Any TIA and base rent abatement for this additional
Expansion Option space shall be included in the unamortized costs at sale.
(b) Tenant shall have an ongoing Right of First Refusal (“ROFR”) to lease any
space in the Building which Landlord intends to lease to a third party. Tenant’s ROFR shall be
superior to any existing tenant renewal options which have expired, or which do not currently exist
or exist as of the Term Commencement Date. For purposes of clarity: all unexpired renewal
options of existing tenants shall remain in place as specified in the respective tenant leases.
Landlord shall notify Tenant of its intention to lease any space in the Building to a third party, and
Tenant shall have seven (7) business days following Landlord's notice to exercise Tenant’s ROFR.
If Tenant does not exercise a ROFR within seven (7) days of Landlord's notice, such ROFR shall
expire and be of no further force or effect. Any expansion of the Leased Premises as a result of
Tenant's exercise of the ROFR that occurs within twenty-four (24) months of the Term
Commencement Date, whether triggered by a right defined within the Lease or upon Tenant’s
request, shall be under the same terms and conditions as the Lease, except any allowance and/or
concession will be prorated based upon the number of remaining months in the Term. The lease
terms applicable to any expansion of the Leased Premises as a result of Tenant's exercise of the
ROFR that occurs more than twenty-four (24) months following the Term Commencement Date
shall be subject to negotiation by the parties. Any TIA and base rent abatement for this additional
ROFR space shall be included in the unamortized costs at sale.
3.11. Purchase and Sale Agreement. Tenant and Landlord have entered into a
Purchase and Sale Agreement, in the form attached hereto as Exhibit C ("Purchase and Sale
Agreement"). In addition to the purchase price, and as a condition of closing the purchase
escrow, Tenant shall reimburse Landlord for any unamortized TIA and Base Rent abatement
granted to Tenant under this Lease, which has been amortized at 8% over the Lease Term. The
methodology for determining the reimbursement for unamortized TIA and Base Rent abatement
shall be as set forth in the Purchase and Sale Agreement. Failure by Tenant to purchase the
Project for any reason shall not have any effect on the terms of this Lease, which will continue in
full force and effect in accordance with its terms.
ARTICLE 4
LANDLORD COVENANTS
4.01 Basic Services.
(a) Landlord shall operate the Project to a standard of quality consistent with
that expected of other Class A office projects in Burlingame, California, and shall furnish Tenant
during Tenant's occupancy of the Leased Premises with:
(i) Hot and cold water at those points of supply provided for general
use of other tenants in the Project; central heat and air conditioning in season, at such times as
Landlord normally furnishes these services to other tenants in the Project and at such
temperatures and in such amounts as are considered commercially reasonable or as may be
permitted or controlled by applicable laws, ordinances, rules and regulations. Central heat and
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air conditioning shall be available to Tenant at times other than the times that such services are
ordinarily provided by Landlord upon reasonable advance request by Tenant. Tenant shall
reimburse Landlord for the Landlord's actual costs of providing such additional services.
(ii) Routine maintenance, repairs, structural and exterior maintenance
(including exterior glass and glazing), painting and electric lighting service for all public areas
and special service areas of the Project in the manner and to the extent commercially reasonable.
(iii) Janitorial service on a five (5) days per week basis, excluding
holidays.
(iv) Electrical facilities to provide sufficient power for computers,
printers and other office machines of similar low electrical consumption but not including special
lighting over and above the lighting in the Leased Premises on the date Landlord delivers
possession thereof to Tenant, and not including any other item of electrical equipment which
(singly) consumes more than .5 kilowatts per hour at rated capacity or requires a voltage other
than 120 volts single-phase.
(v) Initial lamps, bulbs, starters and ballasts used in the Leased
Premises, which shall be energy efficient where practical, in Landlord's reasonable judgment.
(vi) Public elevator service serving the floors on which the Leased
Premises is situated.
(b) Landlord shall not be liable for damage to either person or property nor
shall Landlord be deemed to have evicted Tenant nor shall there be any abatement of Rent nor
shall Tenant be relieved from performance of any covenant on its part to be performed hereunder
by reason of (i) deficiency in the provision of basic services, (ii) breakdown of equipment or
machinery utilized in supplying services, or (iii) curtailment or cessation of services due to
causes or circumstances beyond the reasonable control of Landlord unless such conditions are so
severe as to require the Tenant to vacate all or a portion of the Leased Premises for a period of
longer than ten (10) days, in which event Rent shall be abated pro rata for any period of time
exceeding ten (10) days during which all or any portion of the Leased Premises is unusable.
Landlord shall use reasonable diligence to make such repairs as may be required to machinery or
equipment within the Project to provide restoration of services and, where the cessation or
interruption of service has occurred due to circumstances or conditions beyond Project
boundaries, to cause the same to be restored, by diligent application or request to the provider
thereof. In no event shall any mortgagee or the beneficiary under any deed of trust referred to in
Section 5.10 be or become liable for any default of Landlord under this Section 4.01(b).
(c) Landlord represents and warrants that, as of the effective date hereof, to
the actual knowledge of Patson Management Company, Landlord's Project manager, the Leased
Premises are free from the presence of hazardous materials pursuant to applicable regulations
and cracks in structural steel, and the Building is not in violation of the Americans with
Disabilities Act of 1990 or of any applicable regulations regarding hazardous materials.
Landlord shall renew this representation and warranty as of the Term Commencement Date.
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4.02. Graphics And Signage; Entry Intercom. Landlord shall provide identification of
Tenant's name and suite numerals at the main entrance door to the Leased Premises and in the
illuminated interior first floor directory. Subject to the provisions of Section 5.07, Tenant at its
cost may install: (a) at the main entrance door to the Leased Premises (i) its logo (subject to the
following sentence), and (ii) an audio/video door entry intercom system; and (b) a City Hall
monument sign at the front of the Building and prominent signage on the Building façade in a
location and size mutually agreed to by the Landlord and the Tenant. All signs, notices and
graphics of every kind or character, visible in or from the Common Areas or the exterior of the
Leased Premises or the Building shall be subject to Landlord's prior written approval which
Landlord shall not unreasonably withhold, condition or delay, and shall be in conformance with
the Building Master Sign Program as approved by the City of Burlingame. Notwithstanding the
previous sentence, Tenant's signage on the interior of any full floor occupied by Tenant shall not
require Landlord approval or compliance with the Building Master Sign Program. All windows
visible in or from the Common Areas or the exterior of the Leased Premises or the Building shall
be kept free of any banners, posters, or fliers. No later than the end of the Lease Term, Tenant at
its sole cost shall remove all such signage, and shall at its sole cost repair any damage to the
Building occasioned by such removal.
4.03. Repair Obligation. Landlord's obligation with respect to repair shall be limited to
(i) the structural portions of the Building, (ii) the exterior walls of the Building, including glass
and glazing, (iii) the roof, including any solar system, (iv) HVAC, mechanical, electrical,
plumbing and life safety systems, and (v) Common Areas. Landlord shall have the right but not
the obligation to undertake work or repair which Tenant is required to perform hereunder and
which Tenant fails or refuses to perform in a timely and efficient manner. All costs incurred by
Landlord in performing any such repair for the account of Tenant shall be repaid by Tenant to
Landlord upon demand, together with an amount equal to ten percent (10%) of such costs to
reimburse Landlord for its administration and managerial effort.
4.04. Parking. Tenant shall have the right to use, on a non-exclusive basis with all the
other tenants of the Building and their respective contractors, agents, employees, and invitees,
three and one tenth (3.1) nonreserved parking spaces of the Building per 1,000 square feet of Net
Rentable Area of the Leased Premises; provided that, Landlord reserves the right to designate
reserved parking spaces from time to time for Tenant, other users of the parking area or any of
them, and to maintain all or part of the parking area for general use; and provided further that
upon notice to Tenant, Landlord may, in its sole discretion, turn over management to a parking
operator, or institute such other adjustments as it deems appropriate. Tenant shall comply with
all reasonable rules for the parking area adopted from time to time by Landlord or the operator of
the parking area. Landlord acknowledges that Tenant regularly conducts and hosts public
meetings and events both during regular business hours and in the evenings, including but not
limited to City Council meetings, commission meetings, public forums and other events and that
the public visits Tenant during business hours on a regular basis. The parties therefore agree,
notwithstanding anything contained in the Rules and Regulations, to coordinate and cooperate
with each other to the extent possible to make parking spaces available for Tenant employees
and the public at such hours as are required by Tenant for such City functions.
4.05. Peaceful Enjoyment. Tenant shall peacefully have, hold and enjoy the Leased
Premises, subject to the terms hereof, provided that Tenant pays the Rent and performs all of
Tenant's covenants and agreements herein contained. This covenant and the other covenants of
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Landlord contained in this Lease shall be binding upon Landlord and its successors only with
respect to breaches occurring during its and their respective ownerships of Landlord's interest
hereunder.
4.06. Landlord Compliance with Laws. Landlord shall comply with all applicable laws,
ordinances, orders, rules and regulations related to the use, condition, repair, and operation of the
Project.
4.07. Landlord Indemnification. Landlord hereby indemnifies, defends, and holds
harmless, Tenant from and against any and all claims, demands, liabilities, causes of actions,
judgments, assessments, fines, and penalties, including reasonable attorney fees and cleanup and
remediation costs relating in any manner whatsoever to the presence of mold, mildew microbial
growths, and any associated mycotoxin ("Mold") existing in the Project or the Leased Premises
on the Term Commencement Date, to the extent such Mold was not directly caused or
contributed to by Tenant.
ARTICLE 5
TENANT'S COVENANTS
5.01. Payments By Tenant. Tenant shall pay Rent at the times and in the manner
herein provided. All obligations of Tenant hereunder to make payments to Landlord shall
constitute Rent and failure to pay the same when due shall give rise to the rights and remedies
provided for in Section 6.08.
5.02. Taxes on Tenant’s Personal Property and Improvements. In addition to, and
wholly apart from its obligation to pay Tenant's Proportionate Share of Basic Operating Cost,
Tenant shall be responsible for and shall pay, prior to delinquency, taxes or governmental service
fees, possessory interest taxes, fees or charges in lieu of any such taxes, capital levies, or other
charges imposed upon, levied with respect to or assessed against its personal property, on the
value of any improvements or alterations Tenant may make to the Leased Premises pursuant to
this Lease, and on its interest pursuant to this Lease. To the extent that any such taxes are not
separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to
Tenant by Landlord. Notwithstanding the above, Tenant represents that as a government entity it
is exempt from the foregoing taxes.
5.03. Repairs by Tenant. Tenant shall be obligated to maintain and repair the Leased
Premises, to keep the same in good condition and, upon expiration of the Term, to surrender the
same to Landlord in the same condition as when leased, reasonable wear and tear, damage by
fire, and other damage required to be insured by Landlord caused by casualty or the elements not
caused by Tenant, its agents, employees, invitees and licensees excepted. Tenant's obligation
shall include, without limitation, the obligation to maintain and repair all walls, floors, ceilings
and fixtures and to repair all damage caused by Tenant, its agents, employees, invitees and
licensees to the utility outlets and other installations in the Leased Premises or anywhere in the
Project. Any work of repair and maintenance performed by or for the account of Tenant by
persons other than Landlord shall be performed in accordance with the Rules and Regulations
applicable to the Project attached hereto as Exhibit B, and in accordance with procedures
Landlord shall from time to time establish. Tenant shall have no obligation for performance of
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work of maintenance and repair required to be performed by reason of Landlord's negligence or
wrongful acts or those of Landlord's agents or employees.
5.04. Waste. Tenant shall not commit or allow any waste or damage to be committed
in any portion of the Leased Premises.
5.05. Assignment or Sublease.
(a) Tenant shall not assign, mortgage, hypothecate or assign for the benefit of
creditors this Lease or any interest herein, either voluntarily or by operation of law, or sublet the
Leased Premises or any part thereof, or permit the use of the Leased Premises by any party other
than Tenant without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned, or delayed, provided that Tenant complies with the terms
and conditions of this Section 5.05. In the event Tenant intends to assign, mortgage or
hypothecate this Lease or sublet the Leased Premises or any part thereof, Tenant shall give
Landlord written notice of such intent. Tenant's notice shall be accompanied by an exact copy of
the proposed agreements between Tenant and the proposed assignee, mortgagee or subtenant.
Tenant shall provide Landlord with any additional information or documents reasonably
requested by Landlord. In order for any assignment, sublease, mortgage or hypothecation to be
binding on Landlord, Tenant must deliver to Landlord, promptly after execution thereof, an
executed copy of such sublease, hypothecation, mortgage or assignment. Notwithstanding
anything to the contrary in Section 5.05, Tenant shall be entitled to assign this Lease or sublet the
Leased Premises or any portion thereof, without Landlord's consent, to any one or more of the
following related entities of Tenant: the Central County Fire Department, the Burlingame
Elementary School District, Peninsula Clean Energy (each a “Permitted Transfer”). The
assignee or subtenant under any such Permitted Transfer shall expressly assume in writing the
obligations of the Tenant under this Lease. Notwithstanding anything to the contrary in this
Section 5.05 or elsewhere in this Lease, in no event, other than with respect to a Permitted
Transfer, shall Tenant assign this Lease or any rights or obligations hereunder, or sublease all or
any part of the Leased Premises, to any entity that Landlord reasonably deems would not use the
Leased Premises for a Permitted Use.
(b) Landlord shall have a period of twenty (20) days following receipt of any
additional information requested by Landlord (or thirty (30) days from the date of Tenant's
original notice if Landlord does not request additional information) within which to notify
Tenant in writing that Landlord elects either (i) to permit Tenant to assign, mortgage or
hypothecate this Lease or sublet such space, if Landlord approves the proposed assignee or
sublessee, or (ii) to withhold approval of the proposed assignment or sublease. If Landlord
should fail to notify Tenant in writing of such election within said period, Landlord shall be
deemed to have permitted the requested transfer, and written approval by Landlord of the
proposed assignee or sublessee shall not be required. Failure by Landlord to approve a proposed
subtenant or assignee shall not cause a termination of this Lease.
(c) Any rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder and the amortized reasonable
broker fees, attorney fees and other ordinary and reasonable sublease costs, for such sublease or
assignment, shall be divided and paid fifty percent (50%) to Tenant and fifty percent (50%) to
Landlord.
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(d) No assignment or subletting by Tenant shall relieve Tenant of any
obligation under this Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void. Consent to one sublease, mortgage or assignment shall not be deemed
consent to any subsequent sublease, mortgage or assignment. Tenant shall pay Landlord's
reasonable attorneys' fees incurred in connection with any request by Tenant to consent to an
assignment, mortgage, hypothecation or sublet hereunder.
5.06. Alterations, Additions, Improvements. Tenant shall not make or allow to be made
any alterations or physical additions in or to the Leased Premises without notice to Landlord and
obtaining the prior written consent of Landlord which consent shall not be unreasonably
withheld with respect to proposed alterations and additions which (i) comply with all applicable
laws, ordinances, rules and regulations, (ii) are compatible with the Building and its mechanical,
electrical, HVAC and life safety systems; (iii) will not interfere with the use and occupancy of
any other portion of the Building by any other tenant or their invitees; and (iv) do not affect the
structural portions of the Building. Specifically, but without limiting the generality of the
foregoing, Landlord's right of consent shall encompass plans and specifications for proposed
alterations or additions, construction means and methods, the identity of any contractor or
subcontractor to be employed on the work of alterations or additions, and the time for
performance of such work. Tenant shall supply to Landlord any documents and information
reasonably requested by Landlord in connection with its consent hereunder. All alterations,
physical additions or improvements made to the Leased Premises by Tenant shall become the
property of Landlord when made and shall be surrendered to Landlord upon the termination of
this Lease by lapse of time or otherwise; provided, however, that this clause shall not apply to
equipment, furniture or trade fixtures owned by Tenant; and provided further that, when
providing its consent to any such alternations, Landlord may require that any such alterations,
additions or improvements must be removed by Tenant at its sole expense at the end of the
Lease. Tenant shall repair at its sole cost and expense all damage caused to the Leased Premises
or the Project by removal of Tenant's equipment, furniture, trade fixtures and such other
alterations, additions and improvements as Tenant shall be allowed or required to remove from
the Leased Premises by Landlord. Prior to commencing work on any Landlord approved
alterations, additions or improvements to the Leased Premises, Tenant shall provide evidence to
Landlord of compliance with the Insurance Requirements for Tenant Construction, attached
hereto as Exhibit E.
5.07. Compliance With Laws And Insurance Standards. Tenant at its sole expense,
and prior to its initial occupancy of the Leased Premises, shall obtain any use permit required by
the City of Burlingame in connection with its use and/or occupancy of the Leased Premises.
Promptly after obtaining any such use permit, Tenant shall deliver a copy thereof to Landlord.
Tenant shall not occupy or use, or permit any portion of the Leased Premises to be occupied or
used, for any business or purpose which is disreputable or productive of fire hazard, or permit
anything to be done which would in any way increase the rate of fire insurance coverage on the
Project and/or its contents. If Tenant does or permits anything to be done which shall increase
the cost of any insurance policy required to be carried by Landlord hereunder, then Tenant shall
reimburse Landlord, upon demand, for any such additional premiums. Landlord shall deliver to
Tenant a written statement setting forth the amount of any such insurance cost increase and
showing in reasonable detail the manner in which it has been computed. Tenant shall comply
with all laws, ordinances, orders, rules and regulations (state, federal, municipal or promulgated
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by other agencies or bodies having or claiming jurisdiction) related to the use, condition or
occupancy of the Leased Premises. Nothing done by Tenant in its use or occupancy of the
Leased Premises shall create, require or cause imposition of any requirement by any public
authority for structural or other upgrading of or improvement to the Project.
5.08. Entry for Repairs, Inspection, Posting Notice, Etc. After advance notice of at
least three (3) business days (except in emergencies where no such notice shall be required),
Landlord, its agents and representatives, shall have the right to enter the Leased Premises during
reasonable business hours to inspect the same, to clean, to perform such work as may be
permitted or required hereunder, to make repairs to or alterations of the Project or other tenant
spaces therein, to deal with emergencies, to post such notices as may be permitted or required by
law to prevent the perfection of liens against Landlord's interest in the Project or to exhibit the
Leased Premises to prospective tenants, purchasers, encumbrancers or others, or for any other
purpose as Landlord may deem necessary or desirable; provided, however, that Landlord shall
not unreasonably interfere with Tenant's business operations and provided further, Landlord's
access to certain portions of the Lease Premises may be limited in order to protect confidential
information stored therein. Tenant shall be entitled to accompany Landlord during any such
entry. Tenant shall not be entitled to any abatement of Rent by reason of the exercise of any
such right of entry unless Landlord's entry unreasonably interferes with Tenant's use of the
Leased Premises. If and to the extent Tenant is so required by law, Tenant may require any
persons seeking entry into the Premises under this Section 5.08 be subject to reasonable security
and privacy requirements which are consistent with federal and state privacy and banking laws
and regulations, provided Tenant has provided Landlord with notice of such requirements at any
time prior to Landlord's subject entry into the Premises and provided that such requirements do
not prevent access to any part of the Leased Premises. Tenant shall secure its confidential
information as Tenant deems necessary to protect its confidentiality, provided that such security
measures do not prevent Landlord's access to any part of the Leased Premises.
5.09. No Nuisance. Tenant shall conduct its business and control its agents,
employees, invitees and visitors in such manner as not to create any nuisance, or interfere with,
annoy or disturb any other tenant of the Building or Landlord in its operation of the Project.
5.10. Subordination. This Lease and the rights of Tenant hereunder shall be subject
and subordinate to the lien of any mortgage or deed of trust now or hereafter placed upon,
affecting or encumbering the Project or any part thereof or interest therein, and to any and all
advances made thereunder, interest thereon or costs incurred and any modifications, renewals,
supplements, consolidations and replacements thereof. Without the consent of Tenant, the
holder of any such mortgage or deed of trust or the beneficiary thereunder shall have the right to
elect to be subject and subordinate to this Lease, such subordination to be effective upon such
terms and conditions as such holder or beneficiary may direct which are not inconsistent with the
provisions hereof. At the request of the purchaser at any foreclosure or sale under any such
mortgage or deed of trust this Lease shall remain in full force and effect but Tenant shall attorn
to such purchaser. No such subordination shall be effective unless and until the Landlord obtains
from the holder of any such encumbrance a commercially reasonable Subordination, Non-
Disturbance and Attornment Agreement (an "SNDA") in recordable form. Landlord shall,
promptly following execution of this Lease, make reasonable efforts to arrange for Tenant's
benefit a SNDA from Landlord's current lender with respect to the Project.
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5.11. Estoppel Certificate. Within ten (10) business days of request by Landlord,
Tenant shall execute estoppel certificates addressed to (i) any mortgagee or prospective
mortgagee of Landlord or, (ii) any purchaser or prospective purchaser of all or any portion of, or
interest in, the Project, on a form specified by Landlord, certifying as to such facts (if true) and
agreeing to such notice provisions and other matters as such mortgagee(s) or purchasers may
reasonably require; provided, however, that in no event shall any such estoppel certificate require
an amendment of the provisions hereof. If Tenant fails to provide any estoppel certificate as
required hereby and Landlord pursues legal action to enforce its rights, Tenant shall promptly
reimburse Landlord for any and all attorney fees, expenses, and court costs incurred by Landlord
in enforcing such obligation.
5.12. Tenant's Remedies. Landlord, or if Landlord is a partnership, its partners
whether general or limited, or if Landlord is a corporation, its directors, officers or shareholders,
shall never be personally liable for any such judgment. Any lien obtained to enforce any such
judgment and any levy of execution thereon shall be subject and subordinate to any lien,
mortgage or deed of trust to which Section 5.10 applies or may apply.
5.13. Rules And Regulations. Tenant shall comply with the rules and regulations for
the Project attached hereto as Exhibit B and such reasonable amendments thereto as Landlord
may adopt from time to time with prior notice to Tenant. If there is a conflict between the terms
of this Lease and such rules and regulations, the terms of this Lease shall control.
ARTICLE 6
CASUALTY, EMINENT DOMAIN AND MISCELLANEOUS MATTERS
6.01. Property Insurance. Landlord shall maintain, or cause to be maintained, a policy
or policies of insurance insuring the Project against loss or damage by fire and other hazards
insurable under a standard policy (and against earthquake or other loss to the extent Landlord
elects to maintain such coverage) for the full insurable value thereof, or, in the alternative, for
such percentage of the replacement cost thereof as Landlord may elect; provided that, Landlord
shall not be obligated to insure any furniture, equipment, machinery, goods or supplies which
Tenant may keep or maintain in the Leased Premises or any alteration, addition or improvement
which Tenant may make or have made upon the Leased Premises. All such premiums incurred
by Landlord hereunder shall be included in the computation of Basic Operating Cost as set forth
in Section 3.05 hereof. If the annual premiums charged Landlord for such property insurance
exceed the standard premium rates because of the nature of Tenant's operations, Tenant shall,
upon receipt of appropriate premium invoices, reimburse Landlord for such increases in
premium.
6.02. Liability Insurance. Tenant (with respect to the Leased Premises and Project)
shall maintain or cause to be maintained Commercial General Liability insurance on the ISO
Form CG 00 01 or equivalent with limits of not less than $10,000,000 per occurrence,
$10,000,000 general aggregate, $10,000,000 products/completed operations aggregate,
$10,000,000 personal and advertising injury liability, and $100,000 fire legal liability insuring
against claims for bodily injury and property damage occurring in or about the Leased Premises,
or the limits carried by Tenant, whichever are greater. Landlord (1440 Chapin Owner, LLC) and
the following related entities: 1440 Investor Holdings, LLC; PCCP, LLC; PCCP CS VI 1440
Chapin, LLC; Pacifical VI, LLC; Patson Management Company; Patson 1440, LLC; and Patson
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Development Company, as well as the trustees, officers, directors, members and employees of
each of them, and Landlord’s mortgagees (all of the foregoing, collectively, the "Additional
Insured and Covered Party Entities" ) must be included as additional insureds and additional
covered parties for both ongoing and completed operations on a primary and non-contributory
basis. Landlord (with respect to the Project) shall maintain liability limits of not less than
$10,000,000. Upon request of Tenant, Landlord shall provide Tenant reasonable evidence that
the insurance required to be maintained hereunder by Landlord is in full force and effect. All
such premiums incurred by Landlord hereunder shall be included in the computation of Basic
Operating Cost as set forth in Section 3.05 hereof.
6.03. Tenant's Additional Insurance. Tenant shall also carry the following insurance:
(a) Property insurance on a special form basis, covering the full replacement cost of
business personal property, inventory and improvements (including all improvements
and alterations made to or installed in the Leased Premises by or on behalf of Tenant),
or which is required by the terms of this Lease to be maintained by Tenant. Tenant
shall use the proceeds from such insurance for the replacement of trade fixtures,
furniture, inventory and other personal property and for the restoration of Tenant’s
improvements, alterations, and additions to the Leased Premises;
(b) Business Income and Extra Expense insurance with limits not less than one hundred
percent (100%) of all charges payable by Tenant under this Lease for a period of
twelve (12) months. Tenant may choose to self-insure this obligation;
(c) Worker’s Compensation insurance in accordance with the laws of the state in which
the Premises are located, with Employer’s Liability insurance with limits of
$1,000,000 Bodily Injury each Accident, $1,000,000 Disease each Employee, and
$1,000,000 Disease – Policy Limit;
(d) Automobile Liability insurance covering owned, hired and non-owned vehicles with
limits of $10,000,000 combined single limit;
(e) The limits of liability for Commercial General Liability, Automobile Liability, and
Employer’s Liability coverages may be provided through a combination of primary
and Umbrella or Excess Liability policies provided each policy complies with the
requirements set forth in this Agreement. Excess policies shall follow the form of the
underlying policies.
All policies required to be carried by Tenant hereunder shall be issued by insurance companies
authorized to do business in the state in which the Premises is located with a rating of at least "A-
VII" or better as set forth in the most current issue of Best’s Insurance Reports or a pooled
insurance fund, unless otherwise approved by Landlord in writing. Tenant shall not do or permit
anything to be done that would invalidate the insurance policies required herein. All insurance
maintained by Tenant shall be primary/non-contributory coverage with any insurance maintained
by Landlord, and Worker’s Compensation coverage must contain a waiver of subrogation
endorsement in favor of Landlord. Certificates of insurance, acceptable to Landlord, evidencing
compliance with the requirements hereof, including endorsements (or, at Landlord’s option,
copies of the policies evidencing coverage) shall be delivered to Landlord prior to delivery to or
possession by Tenant of the Leased Premises pursuant to Section 3.01 hereof and within ten (10)
days following renewal of Tenant’s insurance policies. The insurer for each required Tenant
insurance policy or Tenant is required to provide Landlord with thirty (30) days prior notice of
cancellation, except for ten (10) days’ notice of cancellation for non-payment of premium.
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Additionally, Tenant will provide to Landlord within 3 days after receipt, a copy of any notice of
cancellation or change of coverage sent to Tenant by any carrier providing Tenant required
insurance coverages. The limits of insurance required by this Lease, or as carried by Tenant,
shall not limit the liability of Tenant or relieve Tenant of any obligation thereunder. The full
amounts of the limits afforded by Tenant’s liability policies required by this Lease are required
to be applicable to Tenant’s additional insured and covered party obligations. Tenant’s insurance
policy self insured retentions shall be the sole responsibility of Tenant.
If Tenant fails to provide evidence of insurance required to be provided by Tenant hereunder,
prior to commencement of the Term, and thereafter during the Term within thirty (30) days prior
to the expiration date of any such coverage, Landlord shall be authorized (but not required) to
procure such coverage in the amounts stated with all costs thereof to be chargeable to Tenant and
payable upon written demand therefor, plus an administrative fee of five percent (5%) of such
costs.
Should Tenant engage the services of any contractor to perform work in the Leased Premises,
Tenant shall maintain, or cause to be maintained by the General Contractor, insurance coverage
equal to Tenant’s insurance requirements for any Tenant improvement projects. Tenant or the
General Contractor must maintain Builder’s Risk or Installation Floater coverage for 100% of
the replacement value of the project. The General Contractor must provide contractual
indemnification, waivers of subrogation for all required insurance coverages, and additional
insured on a primary/non-contributory basis for ongoing and completed operations in favor of
the Additional Insured and Covered Parties Entities.
6.04. Indemnity And Exoneration.
(a) Landlord shall not be liable to Tenant for any loss or damage to person or
property caused by theft, fire, act of God, acts of the public enemy, riot, strike, insurrection, war,
court order, requisition or order of governmental body or authority or for any damage or
inconvenience which may arise through repair or alteration of any part of the Project or failure to
make any such repair except as expressly otherwise provided in Sections 6.06 and 6.07.
(b) Tenant shall indemnify, save, protect, defend (with counsel reasonably
acceptable to Landlord) and hold harmless the Additional Insured and Covered Party Entities,
against and from any and all claims, actions, judgments, damages, penalties, fines, costs,
expenses, liens, losses or liability arising out of or related to claims of injury to or death of
persons, damage to property occurring or resulting directly or indirectly from the use or
occupancy of the Leased Premises or activities of Tenant in or about the Leased Premises or
Project or Tenant’s failure to perform its obligations under this Lease, such indemnity to include,
but without limitation, the obligation to provide all costs of defense against any such claims;
provided, however, that the foregoing indemnity shall not be applicable to claims to the extent
arising by reason of the negligence or willful misconduct of Landlord, the Additional Insured
and Covered Party Entities, or their agents, employees or contractors. Tenant acknowledges that
the foregoing indemnity applies to claims relating to the actions of animals allowed on the
Project property by Tenant, as described in the Rules and Regulations.
(c) Tenant shall indemnify, save, protect, defend and hold the Additional
Insured and Covered Party Entities harmless against and from any and all claims, actions,
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judgments, damages, penalties, fines, costs, expenses, liens, losses or liability arising out of or
related to claims for work or labor performed, materials or supplies furnished to or at the request
of Tenant or in connection with performance of any work done for the account of Tenant in the
Leased Premises or the Project, provided, however, that the foregoing indemnity shall not be
applicable to claims related to the work completed by Landlord pursuant to Section 3.08 and the
Improvement Agreement or to claims to the extent arising by reason of the gross negligence or
willful misconduct of Landlord or its agents, employees or contractors.
(d) Landlord Indemnification. Because Landlord is required to maintain insurance on the
Building and Tenant compensates Landlord for such insurance as part of Basic Operating Cost,
Landlord will, indemnify, defend, and hold harmless Tenant and its officers, elected officials,
employees, agents and contractors ("Tenant Parties") from and against all claims for damage to
property outside the Leased Premises to the extent that such claims are covered by such
insurance (or would have been covered had Landlord carried the insurance required under this
Lease), unless resulting from the negligent acts, omissions, or willful misconduct of Tenant
Parties.
6.05. Waiver of Subrogation Rights. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives, as to Workers Compensation coverage only,
all rights of recovery, claim, action or cause of action, against the other, its agents (including
partners, both general and limited), officers, directors, shareholders or employees, for any loss or
damage that may occur to the Leased Premises, or any improvements thereto, or the Project or
any personal property of such party therein, by reason of fire, the elements, or any other cause
which could be insured against under the terms of standard fire and extended coverage insurance
policies, regardless of cause or origin, including negligence of the other party hereto, its agents,
officers or employees; and each party covenants that no insurer shall hold any right of
subrogation against such other party. Each party shall advise their respective insurers of the
foregoing and such waiver of Workers Compensation subrogation rights shall be a part of each
Workers Compensation policy maintained by Tenant that applies to the Leased Premises, any
part of the Project or Tenant's use and occupancy of any part thereof.
6.06. Condemnation And Loss Or Damage.
(a) If the Leased Premises or any portion of the Project shall be taken or
condemned for any public purpose to such an extent as to render the Leased Premises
untenantable as reasonably determined by Landlord, this Lease shall, at the option of either
party, forthwith cease and terminate as of the date of taking. All proceeds from any taking or
condemnation of the Leased Premises shall belong to and be paid to Landlord subject to the
rights of any mortgagee of Landlord's interest in the Project or the beneficiary of any deed of
trust which constitutes an encumbrance thereon; provided, however, that Tenant may recover
from the condemning authority, but not from Landlord, for moving or relocation expenses, loss
of goodwill or any taking of Tenant's personal property.
(b) In the event of a temporary taking of a portion of the Leased Premises for
less than the remaining Term, Gross Rent will abate during the time of such taking in proportion
to the portion of the Leased Premises taken or not reasonably usable as a result. All proceeds
awarded or paid with respect to such temporary taking shall belong to Landlord.
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6.07. Damage Due To Fire, Etc. In the event of a fire or other casualty in the Leased
Premises, Tenant shall immediately give notice thereof to Landlord. The following provisions
shall then apply:
(a) If the Leased Premises remain tenantable or can be made so within twelve
(12) months from the date of damage or destruction, this Lease shall remain in full force and
effect unless Landlord notifies Tenant within ninety (90) days of the date of damage or
destruction of its desire to terminate this Lease, in which case this Lease shall terminate thirty
(30) days after the date of such notice. So long as reconstruction of the Leased Premises can be
completed within twelve (12) months from the date of damage or destruction, Landlord shall
have the right to elect to reconstruct the Leased Premises, in which event Landlord shall notify
Tenant of such election within said ninety (90) day period and Tenant shall not have the right to
terminate this Lease.
(b) During any period when Tenant's use of the Leased Premises is
significantly affected by damage or destruction, Gross Rent shall abate proportionately until such
time as the Leased Premises are made tenantable as reasonably determined by Landlord and no
portion of the Gross Rent so abated shall be subject to subsequent recapture.
(c) The proceeds from any insurance paid by reason of damage to or
destruction of the Building or any part thereof or any other element, component or property
insured by Landlord shall belong to and be paid to Landlord subject to the rights of any
mortgagee of Landlord's interest in the Project or the beneficiary of any deed of trust which
constitutes an encumbrance thereon.
(d) Tenant hereby waives the provisions of Section 1932, Subdivision 2, and
Section 1933, Subdivision 4, of the California Civil Code which relate to termination of a lease
in the event of substantial destruction of the premises or building, and the provisions of any
similar law hereafter enacted, as the parties intend that the provisions regarding damage and
destruction set forth in this Lease shall govern the rights and obligations of the parties in the
context of damage and destruction.
6.08. Default By Tenant; Default By Landlord.
(a) Events Of Default by Tenant. The occurrence of any of the following
which continues after notice and expiration of any applicable cure period ("Tenant Default")
shall constitute an event of default on the part of Tenant hereunder:
(1) [Intentionally deleted]
(2) Nonpayment Of Rent. Failure to pay any installment of Rent due
and payable hereunder, provided that, for the first instance of Tenant’s failure to pay any
amounts due hereunder when due within each period of twelve (12) consecutive calendar
months, commencing with the first full calendar month following the Term Commencement
Date, Tenant shall be in default only if such failure continues for five (5) business days following
written notice from Landlord that Tenant’s payment was not made when due (such notice may
constitute the statutory notice required for unlawful detainer purposes;
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(3) Other Obligations. Failure to perform any obligation, agreement
or covenant under this Lease other than those matters specified in Sections 6.08(a)(1) and
6.08(a)(2), such failure continuing for thirty (30) days after written notice of such failure (or, if
not curable within thirty (30) days, such longer period as is reasonably necessary to remedy such
default, provided that Tenant shall commence such cure within said thirty (30) day period and
thereafter continuously and diligently pursue such remedy at all times until such default is
cured);
(4) General Assignment. A general assignment by Tenant for the
benefit of creditors;
(5) Bankruptcy. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition
remains undischarged for a period of thirty (30) days. In the event that under applicable law the
trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the
obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be
permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder
outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance of Tenant's
obligations under this Lease;
(6) Receivership. The employment of a receiver to take possession of
substantially all of Tenant's assets of the Leased Premises, if such receivership remains
undissolved for a period of ten (10) business days after creation thereof;
(7) Attachment. The attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or the Leased Premises, if such attachment or other
seizure remains undismissed or undischarged for a period of ten (10) business days after the levy
thereof;
(8) Insolvency. The admission by Tenant in writing of its inability to
pay its debts as they become due, the filing by Tenant of a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, the filing by Tenant of an answer admitting or failing
to timely contest a material allegation of a petition filed against Tenant in any such proceeding
or, if within ninety (90) days after the commencement of any proceeding against Tenant seeking
any reorganization, or arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding shall not have been
dismissed.
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(b) Remedies Upon Tenant Default.
(1) Termination. If a Tenant Default occurs, Landlord shall have the
right, with thirty (30) days' notice, to terminate this Lease, and at any time thereafter recover
possession of the Leased Premises or any part thereof and expel and remove therefrom Tenant
and any other person occupying the same, by any lawful means, and again repossess and enjoy
the Leased Premises without prejudice to any of the remedies that Landlord may have under this
Lease, or at law or equity by reason of Tenant's default or of such termination.
(2) Continuation After Default. Even though Tenant has breached this
Lease and/or abandoned the Leased Premises, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant's right to possession under Section 6.08(b)(1) hereof, and
Landlord may enforce all of its rights and remedies under this Lease including (but without
limitation) the right to recover Rent as it becomes due, and Landlord, without terminating this
Lease, may exercise all of the rights and remedies of a Landlord under Section 1951.4 of the
California Civil Code or any successor code section, provided that Tenant may assign this Lease
or sublet the Leased Premises or any portion thereof subject to the terms and conditions of
Section 5.05 hereof. Acts of maintenance, preservation or efforts to lease the Leased Premises or
the appointment of receiver upon application of Landlord to protect Landlord's interest under this
Lease shall not constitute an election to terminate Tenant's right to possession.
(c) Damages Upon Termination. Should Landlord terminate this Lease
pursuant to the provisions of Section 6.08(b)(1) hereof, Landlord shall have all the rights and
remedies of a landlord provided by Section 1951.2 of the California Civil Code, or successor
Code section. Upon such termination, in addition to any other rights and remedies to which
Landlord may be entitled under applicable law, Landlord shall be entitled to recover from
Tenant: (i) the worth at the time of award of the unpaid Rent and other amounts which had been
earned at the time of termination; (ii) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of award exceeds the
amount of such Rent loss that the Tenant proves could have been reasonably avoided; (iii) the
worth at the time of award of the amount by which the unpaid Rent for the balance of the Term
after the time of award exceeds the amount of such Rent loss that the Tenant proves could be
reasonably avoided; and (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 of things, would be likely to result therefrom. The "worth at the
time of award" of the amounts referred to in (i) and (ii) shall be computed with interest at the
maximum rate allowed by law. The "worth at the time of award" of the amount referred to in
(iii) shall be computed by reference to the Bank Prime Loan Rate as published by the U.S.
Federal Reserve Bank plus one percent (1%).
(d) Computing of Rent For Purposes of Tenant Default. For purposes of
computing unpaid Rent which would have accrued and become payable under this Lease
pursuant to the provisions of Section 6.08(c), unpaid Rent shall consist of the sum of:
(1) the total Base Rent for the balance of the Term, plus
(2) a computation of the Basic Operating Cost for the balance of the
Term, the assumed Basic Operating Cost for the calendar year of the default and each future
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calendar year in the Term (if applicable) to be equal to the Basic Operating Cost for the calendar
year prior to the year in which default occurs compounded at a per annum rate equal to the
greater of (i) the mean average rate of inflation for the preceding five (5) calendar years, or (ii)
2.0% per annum.
(e) Late Charge. In addition to its other remedies, after written notice of its
intention to invoke this paragraph because of previous late payments by Tenant, Landlord shall
have the right to add to the amount of any payment required to be made by Tenant hereunder,
and which is not paid on or before the date the same is due, an amount equal to ten percent
(10%) of the delinquency (but not including any delinquent late charge) for each month or
portion thereof that the delinquency remains outstanding, the parties agreeing that Landlord's
damage by virtue of such delinquencies would be difficult to compute and the amount stated
herein represents a reasonable estimate thereof. The late charge shall be due upon demand by
Landlord at any time after failure to pay any installment of Rent.
(f) Remedies Cumulative. All rights, privileges and elections or remedies of
the parties are cumulative and not alternative to the extent permitted by law and except as
otherwise provided herein.
(g) Recovery of Brokers’ Fees. If Landlord terminates this Lease pursuant to
the provisions of Section 6.08(b)(1), Tenant shall pay to Landlord upon demand the Unamortized
Broker’s Fees, in addition to payment of all other amounts to which Landlord shall become
entitled hereunder. “Unamortized Broker’s Fees” shall mean the total of the amount of the
leasing commissions paid by Landlord to brokers pursuant to Section 6.24, such total amount
multiplied by a fraction the numerator of which is the number of days from the date of
Landlord’s termination of the Lease to the Term Expiration Date and the denominator of which
is the total number of days in the Term.
(h) Landlord Default. Each of (i) Landlord's failure to perform any of its
obligations under this Lease will constitute a default by Landlord under the Lease if the failure
continues for thirty (30) days after written notice of the failure from Tenant to Landlord and (ii)
Landlord’s intentional failure to perform any of its obligations under the Purchase and Sale
Agreement if such failure permits the Tenant, as buyer under the Purchase and Sale Agreement,
to terminate the Purchase and Sale Agreement and Landlord does not cure such failure within
thirty (30) days of notice from Tenant, as buyer, shall (i.e. both (i) and (ii)) constitute a
"Landlord Default", provided Tenant is not in Tenant Default under this Lease or in default
under the Purchase and Sale Agreement at the time it delivers such notice to Landlord. If the
required performance cannot reasonably be completed or Landlord's default under the Purchase
and Sale Agreement cannot be cured within thirty (30) days, Landlord's failure to perform will
constitute a Landlord Default only if Landlord fails to commence such completion or cure within
thirty (30) days and thereafter diligently and continuously attempts to complete such cure as soon
as reasonably possible.
(i) Remedies upon Landlord Default. If a Landlord Default occurs, Tenant
shall have the right, with sixty (60) days' written notice, immediately (after expiration of the
applicable grace periods specified herein) to itself correct the condition that is the subject of the
Landlord Default and deduct the actual, reasonable costs of such correction from any payments
of Rent as they become due, provided, however, in the case of a Landlord Default as described in
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clause (ii) of Section 6.08 (h) above, if as a result of such default the Purchase and Sale
Agreement is terminated, Tenant shall have the right, at its election, to terminate the Lease (but
only if notice of such termination is given within 60 days after the occurrence of the Landlord
Default), which termination shall be effective six (6) months after Tenant’s written notice to
Landlord.
6.09. Arbitration of Fair Market Rent. In the event that Landlord and Tenant disagree
as to the value of Fair Market Rent, and such dispute cannot be resolved by mutual agreement, the
dispute shall be submitted to arbitration. The judgment or the award rendered in any such
arbitration may be entered in any court having jurisdiction and shall be final and binding between
the parties. The arbitration shall be conducted and determined in the County of San Mateo in
accordance with the then prevailing rules of the American Arbitration Association or its successor
for arbitration of commercial disputes except to the extent that the procedures mandated by said
rules shall be modified as follows:
(a) Tenant shall make demand for arbitration in writing not earlier than ten (10)
days prior to, and not later than, the Revocation Date (as defined in Section 3.09 (a), specifying
therein the name and address of the person to act as the arbitrator on its behalf. The arbitrator shall
be qualified as a real estate appraiser familiar with the Fair Market Rent of first-class commercial
office space in the downtown area of Burlingame and the Mid-Peninsula region, in general. Failure
on the part of Tenant to make a timely and proper demand for such arbitration shall constitute a
waiver of the right thereto. Within ten (10) business days after the service of the demand for
arbitration, Landlord shall give notice to Tenant, specifying the name and address of the person
designated by Landlord to act as arbitrator on its behalf who shall be similarly qualified. If
Landlord fails to notify Tenant of the appointment of its arbitrator, within or by the time above
specified, then the arbitrator appointed by Tenant shall be the arbitrator to determine the issue.
(b) In the event that two (2) arbitrators are chosen pursuant to Section 6.09(a)
above, the arbitrators so chosen shall meet within ten (10) business days after the second arbitrator
is appointed and, if within ten (10) business after such first meeting the two arbitrators shall be
unable to agree upon a determination of Fair Market Rent, they, themselves, shall appoint a third
arbitrator, who shall be a competent and impartial person with qualifications similar to those
required of the first two arbitrators pursuant to Section 6.09(a). In the event they are unable to
agree upon such appointment within five (5) business days after expiration of said ten (10) day
period, the third arbitrator shall be selected by the parties themselves, if they can agree thereon,
within a further period of ten (10) business days. If the parties do not so agree, then either party,
on behalf of both, may request appointment of such qualified person by the then Presiding Judge
of the Superior Court having jurisdiction over the County of San Mateo, acting in his or her private
non-judicial capacity, and the other party shall not raise any question as to such Judge's full power
and jurisdiction to entertain the application for and make the appointment. The three (3) arbitrators
shall decide the dispute, if it has not previously been resolved, by following the procedure set forth
in Section 6.09(c) below.
(c) Where the issue cannot be resolved by agreement between the two arbitrators
selected by Landlord and Tenant or settlement between the parties during the arbitration, the issue
shall be resolved by the three arbitrators in accordance with the following procedure. The
arbitrators selected by the parties shall each state in writing his or her determination of the Fair
Market Rent supported by the reasons therefor with counterpart copies to each party. The
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arbitrators shall arrange for a simultaneous exchange of such proposed resolutions. The role of
the third arbitrator shall be to select which of the two proposed resolutions most closely
approximates his determination of Fair Market Rent. The third arbitrator shall have no right to
propose a middle ground or any modification of either of the two proposed resolutions. The
resolution the third arbitrator chooses as most closely approximating his or her determination shall
constitute the decision of the arbitrators and be final and binding upon the parties.
(d) In the event of a failure, refusal or inability of any arbitrator to act, his or her
successor shall be appointed by him or her, but in the case of the third arbitrator, his or her
successor shall be appointed in the same manner as provided for appointment of the third arbitrator.
The arbitrators shall attempt to decide the issue within ten (10) business days after the appointment
of the third arbitrator. Any decision in which the arbitrator appointed by Landlord and the
arbitrator appointed by Tenant concur shall be binding and conclusive upon the parties. Each party
shall pay the fee and expenses of its respective arbitrator and both shall share equally the fee and
expenses of the third arbitrator, if any, and the attorneys' fees and expenses of counsel for the
respective parties and of witnesses shall be paid by the respective party engaging such counsel or
calling such witnesses.
(e) The arbitrators shall have the right to consult experts and competent authorities
with factual information or evidence pertaining to a determination of Fair Market Rent, but any
such consultation shall be made in the presence of both parties with full right on their part to cross-
examine. The arbitrators shall render their decision and award in writing with counterpart copies
to each party. The arbitrators shall have no power to modify the provisions of this Lease.
6.10. No Waiver. The waiver by Landlord or Tenant of any agreement, condition or
provision herein contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other agreement, condition or provision herein contained, nor shall any custom or
practice which may grow up between the parties in the administration of the terms hereof be
construed to waive or to lessen the right of Landlord or Tenant to insist upon the performance by
Tenant or Landlord in strict accordance with said terms. The subsequent acceptance of rental
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant or
Landlord of any agreement, condition or provision of this Lease, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's or Tenant's knowledge of such
preceding breach at the time of acceptance of such rental.
6.11. Holding Over. In the event of holding over by Tenant after expiration or
termination of this Lease with the written consent of Landlord, Tenant shall pay for each month
of hold-over tenancy 125% of the Gross Rent which Tenant was obligated to pay for the month
immediately preceding the end of the Term for each month or any part thereof of any such hold-
over period together with such other amounts as may become due hereunder. No holding over
by Tenant after the Term without Landlord’s consent thereto shall operate to extend the Term.
In the event of any unauthorized holding over, Tenant shall indemnify Landlord against all
claims for damages by any other tenant to whom Landlord has or could have leased all or any
part of the Leased Premises covered hereby effective upon the termination of this Lease. Any
holding over with the consent of Landlord in writing shall thereafter constitute this Lease a lease
from month to month.
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6.12. Attorneys' Fees. In the event either party places the enforcement of this Lease, or
any part thereof, or the collection of any Rent due, or to become due hereunder, or recovery of
the possession of the Leased Premises in the hands of an attorney, or files suit upon the same, the
prevailing party shall recover its reasonable attorneys' fees and court costs from the other party.
6.13. Amendments. This Lease may not be altered, changed or amended, except by an
instrument in writing signed by both parties hereto.
6.14. Transfers By Landlord. Landlord shall have the right to transfer and assign, in
whole or in part, all of its rights and obligations hereunder and in the Project, and upon the
transfer of Landlord's entire interest hereunder and its transferee's assumption of Landlord's
obligations hereunder, no further liability or obligations shall thereafter accrue against the
transferring or assigning person as Landlord hereunder.
6.15. Severability. If any term or provision of this Lease, or the application thereof to
any person or circumstances, shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby, and each provision of this
Lease shall be valid and shall be enforceable to the extent permitted by law.
6.16. Notices. All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be in writing and shall be
deemed to have been fully given (i) by personal delivery, (ii) when sent by email transmission
when proof is provided (x) that the message was sent, (y) that the message was delivered to the
recipient's information processing system, and (z) of the time and date the message was
delivered to recipient; or (iii) five (5) days after the posted date of deposit in the United States
mail, certified or registered, postage prepaid, and addressed to the party to be notified at the
address for such party specified in the Basic Lease Information, or to such other place as the
party to be notified may from time to time designate by at least fifteen (15) days' notice to the
notifying party.
6.17. No Joint Venture. This Lease shall not be deemed or construed to create or
establish any relationship of partnership or joint venture or similar relationship or arrangement
between Landlord and Tenant.
6.18. Successors And Assigns. This Lease shall be binding upon and inure to the
benefit of Landlord, its successors and assigns (subject to the provisions hereof); and shall be
binding upon and inure to the benefit of Tenant, its successors, and to the extent assignment may
be approved by Landlord hereunder, Tenant's assigns.
6.19. Applicable Law. All rights and remedies of Landlord and Tenant under this
Lease and the construction and interpretation of the terms of this Lease shall be construed and
enforced according to the laws of the State of California without regard to any rules regarding
conflict of laws.
6.20. Time Of The Essence. Time is of the essence of each and every covenant herein
contained.
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6.21. No Merger. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work as a merger, and shall, at the option of Landlord,
terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate
as an assignment to it of any or all such subleases or subtenancies.
6.22. Complete Agreement. There are no oral agreements between Landlord and
Tenant affecting this Lease and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any, between Landlord
and Tenant or displayed by Landlord to Tenant with respect to the subject matter of this Lease or
the Project. There are no representations between Landlord and Tenant other than those
contained in this Lease and all reliance with respect to any representations is based solely upon
the terms of this Lease.
6.23. Corporate Authority. Each of the persons executing this Lease on behalf of a
party does hereby covenant and warrant that:
(a) Such party is a duly authorized and existing legal entity;
(b) Such party has and is qualified to do business in California;
(c) Such party has full right and authority to enter into this Lease; and
(d) Each and all of the persons signing on behalf of the party are authorized to
do so.
6.24. Brokers. Landlord shall pay leasing commissions in connection with this lease
transaction to CBRE and to Newmark Cornish & Carey (dba Newmark Knight Frank) per
separate agreements. Except for the foregoing named brokers, the parties hereto agree that (i) no
broker or finder has been involved in the lease transaction described herein, and (ii) in the event
any broker, salesman or other person makes any claim for any commission or finder's fee based
upon this Lease or any other items or interest contemplated by this Lease, the party through
whom said broker, salesman or other person makes a claim shall indemnify and hold harmless
the other party from said claim and all liabilities, costs and expenses relating thereto, including
reasonable attorneys' fees, which may be incurred by such other party in connection with such
claim.
6.25. Captions. The captions and headings used in this Lease are for the purpose of
convenience only and shall not be construed to limit or extend the meaning of any part of this
Lease.
6.26. Gender; Singular, Plural. When the context of this Lease requires, the neuter
gender includes the masculine, the feminine, a partnership or corporation or joint venture, and
the singular includes the plural.
6.27. Waiver of Jury. To the extent permitted by law, the Parties hereby waives any
right it may have to a jury trial in the event of litigation between Tenant and Landlord pertaining
to this Lease.
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6.28. No Recordation. Neither this Lease nor any memorandum hereof shall be
recorded by Tenant in the Official Records of San Mateo County without the prior written
consent of Landlord, which may be withheld in its sole discretion.
6.29. Exhibits. Exhibits A, B, C, D and E attached hereto are hereby made a part
hereof by this reference.
6.30. Certified Access Specialist Inspection. Landlord states that the Leased Premises
have undergone an inspection by a Certified Access Specialist (“CASp”). In accordance with
the requirements of the State of California, Landlord hereby provides the following notice:
“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, Landlord may not prohibit Tenant from obtaining a CASp inspection of the subject
premises for the occupancy or potential occupancy of Tenant, if requested by Tenant. The parties
shall mutually agree on the arrangements 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.”
If Tenant requests and obtains a CASp inspection of the Leased Premises and such
inspection shows that there are no violations of construction-related accessibility standards,
Tenant shall be responsible for payment of the fee for the CASp inspection. If such inspection
shows that there are violations of construction-related accessibility standards, Landlord shall be
responsible for payment of the fee for the CASp inspection. Any repairs necessary to correct
violations within the Leased Premises shall be undertaken in accordance with Section 5.06(a),
provided that all costs associated with the making of such repairs shall be the responsibility of
Landlord.
6.31 Force Majeure. N either party shall be deemed to be in default hereunder so long
as the action or failure to act that would otherwise constitute such default is: (i) caused by war,
insurrection, strikes, lockouts, riots, floods, earthquakes, fires, State or County quarantine
restrictions, and any amendments or modifications thereto, freight embargoes, lack of
transportation, or court order (each a “Force Majeure Cause”); (ii) the impacts of such Force
Majeure Cause could not have been reasonably anticipated; and (iii) such Force Majeure Cause
has had a direct and material adverse impact on the party's ability to satisfy its obligations
hereunder, despite the party’s diligent, good faith, and commercially reasonable, efforts to
perform such obligations. The affected party shall use diligent, good faith, and commercially
reasonable efforts to perform the subject obligations as soon as possible. For this Section 6.31 to
apply to a party’s obligation hereunder, such party must provide written notice of the Force
Majeure Cause to the other party within ten (10) days following the commencement of such
Force Majeure Cause. Notwithstanding anything else contained herein, no Force Majeure Cause
shall excuse a default by Tenant due to: (i)its failure to pay Rent as and when required by this
Lease; or (ii) its failure to maintain all insurance required to be maintained by it under this Lease.
6.32. Press Releases. Landlord shall not announce publicly or issue any press release or
other public notice of this Lease with out the prior written consent of the Tenant.
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6.33. Counterparts; PDF’s; Facsimile Signatures. This Lease may be executed in any
number of counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one instrument. Facsimile
signatures and PDF format signatures sent by electronic mail shall be treated and have the same
effect as original signatures.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Lease or caused this Lease to be
executed by their duly authorized representatives as of the date set forth below.
LANDLORD TENANT
1440 CHAPIN OWNER, LLC, THE CITY OF BURLINGAME,
a Delaware LLC a Municipal Corporation
By 1440 Investment Holdings, LLC, By: ______________________________
by PCCP CS VI 1440 Chapin, LLC,
its Investor Member Name: ___________________________
By: _____________________________ Title: _____________________________
Name: ___________________________ Date: _____________________________
Title: ____________________________
Date: ____________________________
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EXHIBIT A
FLOOR PLANS OF LEASED PREMISES
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EXHIBIT B
BUILDING RULES AND REGULATIONS
1. Common Areas. The sidewalks, doorways, halls, stairways, vestibules and other similar areas
shall not be obstructed by any Tenant or used by them for any purpose other than ingress to or
egress from their respective Leased Premises, and for going from one part of the Building to
another part. Corridor doors, when not in use, shall be kept closed.
2. Atrium. Tenant shall not use or allow the use of the interior atrium of the Building for any
group social activities without the prior consent of the Landlord, which shall not be unreasonably
withheld, and shall not use the atrium for any activity deemed by Landlord in its reasonable
judgment to be dangerous to the Building or to other tenants, including, but not limited to, smoking
and barbecuing.
3. Signs. No sign, placard, picture, name, advertisement or notice visible from the exterior of the
Leased Premises shall be inscribed, painted, affixed or otherwise displayed by Tenant on any part
of the Building or the Leased Premises without the prior written consent of Landlord which consent
may be withheld by Landlord in its sole and arbitrary discretion. Landlord may at any time adopt
and furnish to tenants general guidelines relating to signs inside the Building. Tenant agrees to
conform to such guidelines. All approved signs or lettering shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person approved by Landlord.
4. No Soliciting. Canvassing, soliciting, peddling, distribution of handbills or any other written
material are prohibited and each tenant shall cooperate to prevent these activities.
5. Hours That Doors Are Open. The hours and days that the main lobby doors and rollup garage
door are scheduled to be open are (excluding legal holidays):
Main Lobby Doors: 8 A.M. to 6 P.M. Monday through Friday
Rollup Garage Door Open: 6 A.M. to 6 P.M. Monday through Friday
As these are automated processes, such hours may be affected by electrical power outages,
mechanical failure, vandalism, and other causes. In the event lobby doors or the rollup garage
door are not open during such scheduled hours, Tenant shall notify Landlord by telephone. The
Building lobby doors are normally closed and locked at all other times, including all day and night
Saturday and Sunday, and the rollup garage door is scheduled to be closed at all other times,
including all day Saturday and Sunday.
6. Access Cards for After Hours Ingress to Parking Garage. Access cards to open the rollup door
to the parking garage are available for Tenant’s employees who desire to enter the parking garage
at times the rollup garage door is closed. Entry into the parking garage when the rollup door is
down shall be at such employees’ risk. Tenant shall obtain from Landlord and complete an
Employee Parking Registration form supplying pertinent detailed information for each employee
that Tenant desires to receive such an access card, and shall fill out a new form if/when such
employee changes the car described in such form so that Landlord at all times has a current record
of the car driven by such employee. In the event any employee leaves the employ of Tenant, the
access card for such employee must be returned to Landlord to be voided. Contractors and other
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guests of Tenant shall not be provided access cards; access cards shall be restricted to employees
of Tenant.
7. Nails. Nails, screws and other attachments to the Building require prior written consent from
Landlord except in connection with the hanging of pictures, artwork, certificates, plants and similar
items in the interior of the Leased Premises.
8. Antenna. Tenant shall not install any satellite dishes, radio, television antennas or other devices
on the roof or exterior walls of the Building without prior written consent of Landlord. No
television or radio or recorder shall be played in such a manner as to cause a nuisance to any other
tenants of the Building.
9. Electrical. Tenant shall not use electricity for lighting, machines or equipment in excess of that
required for normal office use.
10. HVAC. Tenant shall not tamper with or attempt to adjust temperature control thermostats in
the Leased Premises. If Tenant desires adjustments in thermostats, Tenant shall request the same
by telephone call to Landlord and if Landlord determines adjustment is appropriate then Landlord
will cause a service technician to make such adjustment. Tenant shall pay the cost of any service
calls necessitated by Tenant’s tampering with or adjusting temperature control thermostats.
11. Janitorial Service. Landlord provides janitorial service to the Building, and Tenant shall not
hire its own janitors or cleaning personnel. Tenant shall not cause any unnecessary labor for the
Building janitors by reason of Tenant’s carelessness or indifference in the preservation of good
order and cleanliness. Tenant shall cooperate reasonably with Landlord in maintaining the Leased
Premises. Nothing shall be swept or thrown into the corridors, halls, elevator shafts, or stairways.
12. Contractors & Vendors. All contractors and technicians rendering any installation service to
Tenant shall be subject to Landlord’s approval and supervision prior to performing services. This
applies to all work performed in the Building, including, but not limited to, installation of
telecommunication equipment, electrical devices, as well as all installations affecting floors, walls,
woodwork, windows, ceilings, and any other physical portion of the Building.
13. Bathrooms. Plumbing fixtures, toilets, urinals, wash bowls and other apparatus shall be used
only for their designated purpose, and no unusual foreign substances of any kind shall be deposited
therein. Damage to any such fixture resulting from misuse by Tenant or any employee or invitee
of Tenant shall be repaired at the expense of Tenant.
14. Rollup Garage Door. Access to the lower parking levels during hours when the rollup garage
door is down shall be made, if at all, by touching a magnetic access card to the card reader located
by the entrance to the lower parking levels. Egress from the garage when the door is rolled down
can normally be made by having the vehicle approach the garage door thereby activating a sensor
that causes the rollup door to rise. However, there is no certainty that the rollup door will open
when it is down as any number of causes (e.g. power failure, mechanical failure, vandalism) can
result in the door not working. Tenant shall not tamper with the rollup garage door if for any
reason it is not rolled up during hours it is scheduled to be rolled up or if for any reason it is not
working (e.g. a power failure, or mechanical failure), but instead shall report the same to Landlord.
If any vehicle is locked in the garage and the rollup door will not open, then the owner/lessee of
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such vehicle should make arrangements to leave the vehicle in the garage until the garage door is
opened again. Such owner/lessee can also attempt to call the emergency telephone number that
may be provided by Landlord to Tenant from time to time. Landlord has no obligation to provide
to Tenant any such emergency number or to ensure that emergency personnel will be available to
help open the rollup door. If Landlord does provide such an emergency telephone number, then
there is absolutely no assurance that anyone will answer at the emergency telephone number or
that any emergency personnel will be available to assist. If in response to any such request
emergency support personnel are deployed to open the rollup door, Tenant will be charged a fixed
amount of $50 for each occurrence. Landlord has absolutely no liability for or obligation to open
the garage door at any time, whether during or outside of the hours the garage door is scheduled
to be open as set forth in Paragraph 5.
15. Food and Beverages. Food, soft drink or other vending machines shall not be placed within
the Leased Premises without Landlord’s prior written consent. Deliveries of water, soft drinks,
newspapers, or other such items to any Leased Premises shall be restricted to reasonable hours
established by Landlord. No cooking shall be done or permitted in the Leased Premises except in
connection with convenience lunchroom or beverage service for employees and guests of Tenant
only (on a noncommercial, not for profit basis) in a manner which complies with all of the
provisions of the Lease and which does not produce excessive or objectionable odors or fumes.
16. Restrictions on Use. Tenant shall not use or keep in the Leased Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material other than small quantities (less
than 5 ounces in the aggregate) of commonly used office equipment maintenance fluids (if any)
that are reasonably necessary for the operation or maintenance of Tenant’s office equipment.
Tenant shall not permit or suffer the Leased Premises to be occupied or used in a manner offensive
or objectionable to Landlord or other occupants of the Building by reason of noise, odors or
vibrations, or interfere in any way with other tenants or those conducting business in the Building.
In consideration of the safety and comfort of all tenants, Landlord prefers that Tenant not allow
animals onto the Project property for any purpose except as strictly necessary (e.g., seeing eye
dogs for the blind). Tenant shall be responsible for any damage to person or property on or about
the Leased Premises, the Building or the Project caused by any animal brought or allowed on the
Project property by Tenant, its employees, representatives or invitees.
17. No Smoking. The Project is a smoke free area, and accordingly Tenant shall cause each and
all of its employees, contractors, agents, customers, and other guests to refrain from smoking
cigarettes, cigars, pipes, or any other smokable materials inside the Building (including the atrium),
in the parking garage, in the visitors and other outdoor parking areas, and anywhere else in the
Project.
18. Trash Removal. Tenant shall store all its trash and garbage within the Leased Premises for
removal by the Building janitors. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary and customary manner
of removing and disposing of office building trash and garbage in the city or county in which the
Building is located without being in violation of any applicable code, regulation, statute, law or
other governmental promulgation governing such disposal. Tenant shall crush and flatten all
boxes, cartons and containers. Tenant shall pay extra charges for disposal by the janitors of trash
in excess of five thirty quart trash containers per employee per week.
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19. Keys. Unless Tenant installs electronic locks during its renovation of the Leased Premises,
Landlord will furnish Tenant without charge with two keys to entrance door locks into the Leased
Premises for Tenant's employees. Landlord may make a reasonable charge for any additional keys.
Tenant shall not alter any lock or install a new or additional lock or any bolt on any door of the
Leased Premises without prior written permission from Landlord. Upon termination of this Lease,
Tenant shall surrender to Landlord all keys to the Leased Premises and all garage access cards, the
combination of all locks for safes and vault doors, if any, and Common Area keys of the Building.
20. Moving Procedures. Movement in or out of the Building of furniture, office equipment, or
other bulky material, which requires the use of elevators, stairways, or Building entrance and lobby
shall be restricted to hours established by Landlord. All such movement shall be under Landlord’s
supervision. Pre-arrangements with Landlord shall be made regarding the time, method, and
rerouting of such movement, and Tenant shall assume all risks of damage and pay the cost of
repairing or providing compensation for damages to the Building, to articles moved and injury to
persons or public resulting from such moves. Landlord shall not be liable for any acts or damages
resulting from any such activity.
21. Security. Tenant shall comply with all reasonable requirements necessary for the security of
the Leased Premises.
22. Name of Building. Landlord retains the right, without notice or liability to any Tenant, to
change the name of the Building. Provided that Landlord first obtains the consent of Tenant
thereto, which consent Tenant shall have absolutely no obligation to give, Landlord shall also be
entitled to change the street address of the Building.
23. Supplemental to Lease. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the covenants of the Lease.
24. Rules & Regulations. Landlord reserves the right to rescind any of these rules and regulations
and to make future reasonable rules and regulations required for the safety, protection and comfort
of the tenants of the Building and their employees and visitors. Such rules and regulations, when
made and written notice given to Tenant, shall be binding as if originally included herein.
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EXHIBIT C
PURCHASE AND SALE AGREEMENT
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EXHIBIT D
TENANT IMPROVEMENT AGREEMENT
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EXHIBIT E
CONSTRUCTION INSURANCE REQUIREMENTS
1.0 Mandatory Insurance Requirements
Before performing work or conducting any activities at the site of the Project, Tenant shall, at its expense,
procure and maintain, or require Contractor to procure and maintain, insurance coverages on all its
operations, in admitted companies having at least an A. M. Best rating of no less than A-X. Landlord may
consider accepting coverage from a non-admitted carrier. Coverage requirements on forms acceptable to
Landlord are as follows:
1.1 Workers’ Compensation and Employers Liability Insurance as required by applicable law or
regulation.
1.101 Employers Liability Insurance with a $1,000,000 limit;
1.102 Waiver of Subrogation endorsement in favor of the Landlord and Tenant;
1.103 [Reserved]
1.104 Acceptance of insurance programs underwritten by any Self-Insured Group (SIG) is
subject to prior approval by Landlord.
1.2 General Liability Insurance on a coverage form at least as broad as 2001 Insurance Services
Office (ISO) occurrence form CG 0001, including coverage for:
1.201 Premises and Operations;
1.202 Products and Completed Operations;
1.203 Broad Form Property Damage (including Completed Operations);
1.204 Explosion, Collapse, Underground Hazards (including subsidence);
1.205 Contractual Liability insuring obligations assumed in this agreement;
1.206 Personal Injury and Advertising Liability;
1.207 Severability of Interest Clause;
1.208 Waiver of Subrogation endorsement in favor of Landlord and Tenant as required by
contract;
1.209 General Aggregate Limits of Insurance shall apply separately to the project.
1.210 “Claims Made” and “Modified Occurrence” policy forms are not acceptable.
1.211 “Risk Retention Groups” are not acceptable.
1.212 Self-insured retention or deductible greater than $25,000 must be declared to
Landlord at time of bid.
1.213 Contractor shall maintain general liability and completed operations coverage
through the expiration of the construction statute of repose period established per
the civil code of the state where the project is located.
1.214 Minimum Limits of Liability shall be:
$1,000,000 Each Occurrence; OR, the full per occurrence limit of the
Contractor’s policy, whichever is greater;
$1,000,000 Personal Injury Liability;
$2,000,000 Products & Completed Operations Aggregate;
$2,000,000 General Aggregate;
1.215 This policy must cover mobile equipment; if it does not, coverage must be included
on the Automobile Liability policy
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1.3 Automobile Liability Insurance on a coverage form at least as broad as ISO form CA 0001,
including:
1.301 Coverage on any automobile, or on all owned, non-owned and hired automobiles
and mobile equipment if not covered under the General Liability policy;
1.302 $1,000,000 Combined Single Limit for bodily injury and property damage.
1.303 Waiver of Subrogation endorsement in favor of Landlord and Tenant.
1.4 Umbrella or Excess Liability Insurance:
1.401 $10,000,000 minimum limit, OR, the full per occurrence limit of the Contractor’s
excess liability policy, whichever is greater. $5,000,000 minimum limit for non-
structural Tenant Improvement projects less than $10M in contract value only.
1.402 Coverage on a follow form basis in excess of primary CGL, Auto and Employers
Liability
1.5 Additional Insured and Primary Insurance Requirement:
1.501 Under the Commercial General Liability policy the Contractor shall add Tenant and
the following entities ("Owner Entities"), including the officers, directors and
employees of each, as additional insured:
1440 Chapin Owner, LLC
1440 Chapin Investment Holdings, LLC
Pacificcal VI, LLC
PCCP, LLC
Patson 1440, LLC
Patson Management Company
Patson Development Company
The policy shall stipulate that the insurance afforded Owner Entities and Tenant as
additional insured shall apply as primary insurance. Any other insurance carried by
Owner Entities and Tenant will be excess only and will not contribute with this
insurance. The insurance afforded to the additional insured parties shall be at least
as broad as that afforded to the first named insured on Contractor’s policy.
1.502 The additional insured coverage, including ongoing and completed operations, shall
be provided by an endorsement providing coverage at least as broad as:
(1) Additional Insured (Form B) ISO endorsement form CG 2010 11/85, or
equivalent, or;
(2) A combination of Additional Insured ISO endorsement form CG 2010 10/01,
and Additional Insured endorsement form CG 2037 10/01, (or equivalent).
1.503 Additional insured endorsements shall be provided to the end of the contract and through
the expiration of the construction statute of repose period established per the civil code of
the state where the project is located.
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1.6 Certificates of Insurance:
1.601 Certificates of Insurance, including copies of Additional Insured, primary and non-
contributory, and Waiver of Subrogation endorsements, shall be furnished by the
Contractor to Landlord and Tenant before any work is commenced hereunder by
the Contractor.
1.602 At any time during the term of the contract, upon certificate holder's reasonable
request, the Contractor, or their appointed representative, agrees to promptly supply
evidence that the insurance coverage required by the contract is in force.
Contractor will notify Landlord and Tenant in writing within 24 hours of receiving a
notice of cancellation on any insurance policy from their insurer or broker. Notices
of cancellation should be emailed to the attention of the Landlord and Tenant Risk
Manager or designee.
1.603 Allowance of any additional exclusions or coverage limiting endorsements is at the
discretion of Landlord, and Contractor’s bid shall be subject to adjustment to
compensate for the existence of such exclusions.
1.604 Payment may be withheld, at the option of the Landlord and Tenant, until such
certificates have been furnished, or upon receipt of a cancellation notice on a policy,
until withdrawal of the notice or the reinstatement of the canceled policy. Copies of
Contractors policies shall be furnished upon request from Landlord and Tenant.
1.7 Insurance Requirements for Subcontractors, Truckers, Trucking Brokers, Sub-haulers
Vendors and Suppliers:
1.701 Contractor shall ensure that it’s Subcontractors, Truckers, Trucking Brokers, Sub-
haulers Vendors and Suppliers of any tier shall maintain insurance in like form and
amounts (except excess liability), including the Additional Insured requirements set
forth above, and will provide Contractor evidence of sub-Subcontractors, truckers,
vendors and suppliers insurance and additional insured compliance prior to their
starting work. A $5,000,000 excess liability limit is recommended for all
subcontractors performing work on site, but Contractor is responsible for
establishing Subcontractor excess liability limit requirements.
1.8 Builders Risk Insurance:
1.801 Builders Risk insurance will be purchased and maintained by Landlord or
Tenant, providing coverage to Contractor for loss or damage to Contractor’s or
Subcontractor’s work. Contractor shall be responsible for the insurance policy
deductible. Contractor is authorized to pass deductible responsibility to
Subcontractors for loss or damage to Subcontractor’s work through the Subcontract
Agreement.
1.802 If Landlord or Tenant has not purchased Builders Risk insurance including the full
insurable value of Contractor’s work, then Contractor may procure such insurance
at its own expense to protect the interests of Contractor and its subcontractors in
the work. Such insurance shall also apply to any of Owner’s property to be installed
by Contractor as part of the Work.
1.803 Landlord or Tenant and Contractor waive all rights against each other and against all
other Subcontractors for loss or damage to the extent reimbursed by Builder’s Risk
or any other property or equipment insurance applicable to the work, except such
rights as they may have to the proceeds of such insurance.
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1.9 Property Insurance:
1.901 Contractor and Subcontractors of every tier shall procure and maintain at their own
expense property and equipment insurance for their tools, equipment, and
temporary structures. A waiver of subrogation in favor of Landlord or Tenant is
required.
1.10 Other Requirements:
1.1001 Acceptance of insurance certificates by Landlord or Tenant shall in no way limit
Contractor’s duties and responsibilities under this Agreement, including the duty to
indemnify Landlord or Tenant.
1.1002 Insurance coverage in the minimum amounts set forth herein shall not be construed
to relieve Contractor for liability in excess of such coverage, nor shall it preclude
Landlord or Tenant from taking
other available actions under any other provision of this Agreement or law.
1.1003 If higher limits or other forms of insurance are required by Lenders or other
Stakeholders, Contractor will comply with such requirements.
1.1004 Contractor shall be responsible for any deductible amount in insurance policies
required of Contractor under these insurance requirements.
1.1005 Should any insurance policy lapse or be canceled during the contract period,
Contractor shall, prior to the effective expiration or cancellation date, furnish
Owner with evidence of renewal or replacement of the policy. Failure of the
Contractor to provide timely notice of pending cancellation shall be considered a
material breach of contract.
1.1006 Failure to continuously satisfy insurance requirements as herein provided is a
material breach of contract.
1.1007 In the event Contractor fails to maintain any insurance coverage required, Landlord
or Tenant may, but is not required to, maintain such coverage and charge the
expense to Contractor (including premium and claims expense), or terminate this
contract.
1.1008 Contractor’s obligations for loss or damage arising out of Contractor’s work are not
limited to the types or amounts of insurance set forth above. To the extent
Contractor maintains insurance greater than these minimum requirements;
Contractor agrees that such insurance shall be applicable to any of Contractor’s
liability obligations.
1.1009 In specifying minimum insurance requirements herein, Landlord or Tenant doesn’t
recommend this insurance as adequate to protect Contractor’s interests.
2.0 Scope Specific Additional Required Insurance Coverages:
2.01 Professional Liability Insurance:
2.0101 A Professional Liability Insurance Policy shall be carried by Contractor with limits
of $1,000,000 per claim and aggregate if work under this contract includes any
professional services, design assist, design-build, or LEED certification services.
2.0102 Evidence of coverage in the form of a Certificate of Insurance shall be provided
prior to the start of the project.
2.0103 Claims-made policies must have a retroactive date prior to the design services
performed under the Scope of Work, and coverage must extend a minimum of five
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(5) years beyond completion of the Scope of Work or end of the Agreement,
whichever is later.
2.0104 If Claims-Made coverage is cancelled or non-renewed, and not replaced with
another claims-made policy with a retroactive date prior to the Agreement effective
date, the Contractor must purchase Extended Reporting (Tail) coverage for a
minimum of three (3) years beyond completion of Scope of Work or end of the
Agreement, whichever is later.
2.0105 Designers, Consultants or Subcontractors retained by Contractor whose work
includes any professional services, design assist, design-build, or LEED certification
services shall also be required to maintain Professional Liability Insurance coverage
with limits of $1,000,000 per claim and aggregate. Higher limits may be required of
certain Designers, Consultants or Subcontractors depending on the scope of their
services.
2.02 Commercial Crime/Employee Dishonesty Insurance:
2.0201 If the Contractor performs operations in an occupied, operating building, a $500,000
Commercial Crime policy providing blanket employee dishonesty must be maintained by
Contractor, including an endorsement for third party liability.
2.03 Aircraft/ UAV/ Drone / Helicopter Insurance:
2.0301 If the Contractor or their Subcontractors use any owned, leased, chartered or hired aircraft
of any type in the performance of this contract, they shall maintain aircraft liability insurance
in an amount of not less than $10,000,000 per occurrence including Passenger Liability. A
UAV (Unmanned Aviation Vehicle) Liability policy for a minimum of $1,000,000 limit is
required if Drones will be used in the Contractor or Subcontractors operations.
2.0302 Evidence of coverage in the form of a certificate of insurance shall be provided prior to the
start of the project.
2.0303 Contractor or their Subcontractors shall name Landlord or Tenant as Additional Insured as
respects aircraft liability or UAV Liability and provide a Waiver of Subrogation endorsement
in favor of Owner as respects physical damage to the aircraft, drone, or helicopter hull.
2.04 Pollution Liability:
2.0401 If Contractor or their Subcontractors or Suppliers of any tier bring pollutants to the
job site, if their operations create a pollution exposure, or as deemed necessary by
the Landlord or Tenant, they shall maintain a Contractor's Pollution Liability policy
with limits not less than $1,000,000 per occurrence.
2.0402 If Contractor or their Subcontractors or Suppliers of any tier are performing work
on the building envelope, dealing with water, or as deemed necessary by the
Landlord or Tenant, Contractor shall maintain a Contractor's Pollution Liability
policy, including mold coverage, with limits not less than $1,000,000 per occurrence
and $2,000,000 annual aggregate.
2.0403 Landlord or Tenant are to be afforded Additional Insured status on the Contractor
and Subcontractor’s Pollution Liability policies.
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2.05 Hazardous Materials Abatement:
2.0501 If Contractors or their Subcontractors or Suppliers of any tier are required to
perform remediation of hazardous materials as those terms are defined in federal,
state, or local law, or if their operations involve an exposure to hazardous materials,
they must carry a Contractor's Pollution Liability policy with limits not less than
$5,000,000 per occurrence and $5,000,000 annual aggregate.
2.0502 Landlord or Tenant are to be afforded Additional Insured status on the Contractor
and Subcontractor’s Pollution Liability policies.
2.0503 If Contractor or their Subcontractors haul hazardous material, the policy must
extend pollution coverage to the transportation of hazardous materials or pollutants
by waste hauling vehicles. If Contractor is subject to the Motor Carrier Act of 1980,
the Motor Carrier Act endorsement MCS-90 must be obtained and attached to the
policy.