HomeMy WebLinkAbout2014-07-23 e-packetRESOLUTION NO.____
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
RESOLUTION AUTHORIZING THE CITY MANAGER TO TERMINATE
THE EXISTING SUBLEASE AGREEMENT WITH SUMITA SAHA AND
ALEX ZAMMATARO FOR THE COMMERCIAL SPACE AT 636 EL
CAMINO REAL, SUITE A AND TO EXECUTE A NEW SUBLEASE
AGREEMENT WITH SUMITA SAHA AND LINDA SAHA FOR THE
COMMERCIAL SPACE AT 630 EL CAMINO REAL
WHEREAS, on August 14, 2013, the City Council authorized the City to enter into a
Sublease Agreement (“Existing Sublease”) with Sumita Saha and Alex Zammataro to open a café at
636 El Camino Real, Suite A, also known as 630 El Camino Real; and
WHEREAS, in April 2014, Ms. Saha notified staff that she planned her to end her
partnership with Mr. Zammataro and bring in a new, stronger business partner. Subsequently in May
2014, staff was notified that the partnership between Ms. Saha and Mr. Zammataro had been
terminated and both parties requested that the Existing Sublease be terminated; and
WHEREAS, Ms. Saha has a new business partner, Linda Saha, and has requested that the
City enter into a new sublease agreement with her and Linda Saha (“Café Tenant”) for the same
commercial space, 630 El Camino Real (“New Sublease”); and
WHEREAS, on April 23, 2014, the City Council awarded a construction contract for the
tenant improvements at 636 El Camino Real in the amount of $449,909 to Southland Construction.
At the time the City Council awarded the contract, staff reported to the City Council that based on
the Southland Construction’s bid, Café Tenant’s share of the construction costs would be $77,975;
and
WHEREAS, staff reviewed the Contractor’s bid and schedule of values and found that the
Café Tenant’s share had included costs for improvements that the City was obligated to provide.
More specifically, the Café Tenant’s share included the cost of drilling the concrete foundation and
installing all necessary water supplies, drainage and electrical service which is to be provided by the
City per Exhibit C of the sublease. Therefore, staff reevaluated the City’s share using the
Contractor’s schedule of values and found that the City’s portion of the tenant improvement should
have included $39,975 incorrectly assigned to the tenant. The Tenant’s actual share of the expense is
$38,000; and
WHEREAS, the Café Tenant is a local, small-scale business owner with limited capital.
Therefore, staff recommends providing the Café Tenant with a Thirty-Eight Thousand Dollars
($38,000) tenant improvement loan (“Loan”) amortized over the five-year term of the sublease with
an interest rate of three percent (3%) instead of the $12,000 tenant allowance provided for in the
lease. The Loan would cover all the costs of the tenant improvements not provided by the City. The
monthly loan payments would be added to the scheduled monthly Base Rent based on a graduated
amortization schedule. The graduated loan payment schedule will allow for smaller initial loan
payments while the business is stabilizing and for higher loan payments once the business is strong
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and thriving; and
WHEREAS, the New Sublease will contain the same provisions and lease rates as the
Existing Sublease with the following exceptions: 1) the partner changes from Alex Zammataro to
Linda Saha; 2) Sections 1.16 and 17.2 of the sublease which provides the tenant with a $12,000
tenant allowance would be replaced with language indicating the City will provide the Loan to the
Café Tenant for their portion of the improvements; and 3) the Work Letter in Exhibit C of the
Existing Sublease would be removed; and
WHEREAS, all funds necessary to complete the tenant improvements, which includes the
Café Tenant’s improvements inclusive of the tenant improvement loan are available from the
$510,000 Mid-Peninsula Housing Coalition (Mid-Pen) contribution already conveyed to the City.
These funds are specifically earmarked for tenant improvements according to the agreements
between Mid-Pen and the City; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby:
1. Terminates the Sublease Agreement with Sumita Saha and Alex Zammataro for the retail
space at 636 El Camino, Suite A
2. Approves the Sublease Agreement with Sumita Saha and Linda Saha for 630 El Camino
Real, attached hereto as Exhibit B, and incorporated herein.
BE IT FURTHER RESOLVED by the City Council that the City Manager, or his
designee, is authorized to execute the Sublease Agreement and any related documents and to
take any other actions as necessary to carry out the intent of this Resolution.
* * * * * *
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a City Council meeting held on the 23rd day of
July, 2014 by the following vote:
AYES: ____________________________________________________________
NOES: _____________________________________________________________
ABSTAIN: _____________________________________________________________
ABSENT: _____________________________________________________________
ATTEST: ________________________________
Clerk
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Exhibit A
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Exhibit A
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SUBLEASE AGREEMENT
(630 El Camino Real)
This Sublease Agreement (“Sublease”) is entered into effective as of July 24,
2014, (the “Effective Date”) by and between the City of South San Francisco, a
California municipal corporation, (“Landlord” or “City”), and Sumita Saha and Linda
Saha (collectively “Tenant”). Landlord and Tenant are hereinafter referred to
collectively as the (“Parties”).
ARTICLE I
BASIC SUBLEASE PROVISIONS
1.1 Landlord’s mailing address: City of South San Francisco
P.O. Box 711, South San Francisco, CA 94083.
1.2 Landlord’s contact: Armando Sanchez, Redevelopment Consultant
Telephone: (650) 877-8667
1.3 Tenant’s address: 117 South Magnolia Avenue
South San Francisco, CA 94080
1.4 Tenant’s contact: Sumita Saha
Telephone: (650) 872-9695
Linda Saha
Telephone: (650) 438-1846
1.5 Premises address: 630 El Camino Real
South San Francisco, CA 94080
1.6 Premises Square Footage and Location:
Rentable Square Footage: Approximately 1,600 square feet
Usable Square Footage: Approximately 1,600 square feet
Premises are depicted in Exhibit A.
1.7 Commencement Date: ________________, 2014
1.8 Term: Sixty (60) months.
1.9 Expiration Date: _________________, 2019
1.10 Option(s) to Extend Term: Two (2) options to extend the Term for a period of
sixty (60) months each. See Section 3.5.
Exhibit B
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1.11 Base Rent:
Period Monthly Annual Base Rent Per
(Month) Base Rent Base Rent Rentable Square Foot
Per Month
1-12 $3,000.00 $36,000.00 $1.88
13-24 $3,090.00 $37,080.00 $1.93
25-36 $3,183.00 $38,196.00 $1.99
37-48 $3,278.00 $39,336.00 $2.05
49-60 $3,376.00 $40,512.00 $2.11
See Section 4.3 regarding Triple Net Expenses in addition to Base Rent and
Section 4.1 regarding annual increases beginning as of the thirteenth (13th) month,.
1.12 Security Deposit: $3,000.00, due upon Tenant’s execution of the Sublease.
1.13 Rent Commencement: The earlier of: (a) ninety (90) days of substantial
completion of the Work outlined in Exhibit C, or (b) Tenant’s commencement of
business at the Premises.
1.14 Permitted Uses: Retail sales, sit-down and take-out, of coffee, tea and related
specialty drinks, smoothies, juices, and pastries, and for no other purpose.
1.15 Parking: Tenant may use unreserved parking spaces in Landlord’s surface retail
parking lot on an unreserved basis. Landlord reserves the right to assign reserved
parking spaces at its discretion to individual tenants, but under no circumstance
will Tenant be assigned fewer than three (3) parking spaces.
1.16 Tenant Improvement Loan: Landlord will provide Tenant with a Thirty-Eight
Thousand Dollars ($38,000) loan amortized over the five-year term and an
interest rate of three percent (3%). The Tenant Improvement Loan will cover the
costs of the tenant improvements not provided by the Landlord. The obligations
of Landlord and Tenant, with respect to the Tenant Improvements are set forth in
and attached hereto as Exhibit C. The monthly loan payments shall be added to
the scheduled monthly Base Rent based on a graduated amortization schedule
below.
Exhibit B
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Period
(Month)
Interest
Rate
Monthly
Loan
Payment
Principal
Balance at End
of Period
Monthly Base
Rent
Total Monthly
Rent
1-12 3.0% $401.92 $34,265.85 $3,000.00 $3,401.92
13-24 3.0% $502.11 $29,799.57
$3,090.00 $3,592.11
25-36 3.0% $535.46 $24,191.35
$3,183.00 $3,718.46
37-48 3.0% $1,039.77 $12,276.87
$3,278.00 $4,317.77
49-60 3.0% $1,039.77 $ -
$3,376.00 $4,415.77
ARTICLE II
DEFINITIONS
Definitions. As used in this Sublease, the following terms shall have the definitions set
forth below. Additional terms are defined in the remainder of the Sublease.
2.1 “Additional Rent” means any and all sums other than Base Rent which
Tenant is or becomes obligated to pay to Landlord under this Sublease (whether or not
specifically called “Additional Rent” in this Sublease).
2.2 “Affiliate of Tenant” means any entity that controls, is controlled by, or
is under common control with Tenant. “Control” means the direct or indirect ownership
of more than fifty percent (50%) of the voting securities of an entity or possession of the
right to vote more than fifty percent (50%) of the voting interest in the ordinary direction
of the entity’s affairs.
2.3 “Alterations” means any alterations, decorations, modifications, additions
or improvements made in, on, about, under or contiguous to the Premises by or for the
benefit of Tenant (other than the Tenant Improvements) including but not limited to,
telecommunications and/or data cabling, lighting, HVAC and electrical fixtures, pipes
and conduits, partitions, cabinetwork and carpeting.
2.4 “Applicable Laws” is defined in Section 5.4.
2.5 “Base Rent” means for each Sublease Year the monthly amount payable
per rentable square foot of the Premises set forth in Section 1.11.
2.6 “Building” means the building located at 636 El Camino Real, South San
Francisco, California.
2.7 “Claims” is defined in Section 6.3.
Exhibit B
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2.8 “Commencement Date” is the date set forth in Section 1.7.
2.9 “Common Area” means all areas and facilities located on the Land or in
the Building, exclusive of the Premises. The Common Area includes, but is not limited
to, retail parking areas, access and perimeter roads, sidewalks, landscaped areas and
similar areas and facilities.
2.10 “Environmental Laws” is defined in Section 6.6.
2.11 “Hazardous Material” is defined in Section 6.5.
2.12 “Indemnitees” is defined in Section 6.3.
2.13 “Master Lease Agreement” is defined in Section 3.1.
2.14 “Premises” means the premises shown on Exhibit A consisting of 1,600
square feet of rentable space in the Building.
2.15 “Real Property” means collectively, (i) the Building; (ii) the parcel of
real property on which the Building is situated (the “Land”); and (iii) the other
improvements on the Land, including, without limitation, a retail parking lot, driveways,
lighting and landscaping.
2.16 “Real Property Taxes” is defined in Section 4.5.
2.17 “Rent” means Base Rent and Additional Rent, collectively.
2.18 “Rules and Regulations” means the Rules and Regulations set forth in
Exhibit B attached hereto as such may be modified or amended from time to time by
Landlord.
2.19 “Tenant Improvements” means those certain improvements to be
constructed on the Premises as provided in Section 17.2 and Exhibit C.
2.20 “Tenant Parties” is defined in Section 6.1.
2.21 “Term” means the term of this Sublease as set forth in Section 1.8 as such
may be extended pursuant to the terms hereof.
Exhibit B
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ARTICLE III
PREMISES AND TERM
3.1 Lease and Sublease of Premises. Landlord leases the Premises pursuant to
its assignment and assumption of a Master Lease Agreement dated as of March 1, 2011
between MP South City, L.P., a California limited partnership, and the former
Redevelopment Agency of the City of South San Francisco, and incorporated herein by
reference (“Master Lease Agreement”). Tenant shall comply with the terms of the
Master Lease Agreement to the extent applicable to the Premises subleased to Tenant.
Subject to and upon the terms and conditions set forth herein, Landlord hereby subleases
the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The
Premises consist of the Building commonly known as 636 El Camino Real which is
depicted in the diagram attached hereto as Exhibit A. Tenant acknowledges that
Landlord has made no representation or warranty regarding the condition of the Premises,
the Building or the Real Property except as specifically stated in this Sublease.
As used in this Sublease, the term “Rentable Square Footage” means the net
rentable area measured according to standards similar to the standards published by the
Building Owners and Managers Association International, Publication ANSI Z65.1-1996,
as amended from time to time. The Parties agree that the Rentable Square Footage of the
Premises is 1,600 square feet and the Usable Square Footage of the Premises is 1,600
square feet. Tenant and Landlord hereby stipulate and agree that same are correct,
notwithstanding any minor variations in measurement or other minor variations that may
have been incurred in the calculation thereof. If the Building is ever demolished, altered,
remodeled, renovated, expanded or otherwise changed in such a manner as to alter the
amount of space contained therein, then the Rentable Square Footage of the Building
shall be adjusted and recalculated by using the foregoing method of determining Rentable
Square Footage, but such recalculation shall not increase the rental hereunder. The
Rentable Square Footage of the Building is stipulated for all purposes to be 1,600 square
feet.
3.1.1 Appurtenant Rights. Tenant is granted the right during the Term to
the nonexclusive use of the common corridors and hallways. Landlord has sole discretion
to determine the manner in which the public and common areas are maintained and
operated, and the use of such areas shall be subject to the Rules and Regulations.
3.2 Term and Commencement. The Term of this Sublease shall commence on
the Commencement Date, and unless sooner terminated as provided herein, the Term
shall be for the period set forth in Section 1.8 as the same may be extended in accordance
with any option or options to extend the Term granted herein.
3.3 Delay in Delivery of Premises. If Landlord fails to deliver possession of
the Premises to Tenant on or before the Commencement Date, Landlord shall not be
subject to any liability for its failure to do so. This failure shall not affect the validity of
this Sublease or the obligations of Tenant hereunder, but the Sublease Term shall
Exhibit B
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commence on the date upon which Landlord delivers possession of the Premises to
Tenant.
3.4 Early Access. Tenant shall not occupy the Premises prior to the
Commencement Date except with the express prior written consent of Landlord.
Provided that (i) the Sublease has been executed by Tenant and Landlord; (ii) Tenant
has provided to Landlord certificates of insurance for all insurance that Tenant is required
to maintain under this Sublease, the Security Deposit, and the amount of first month’s
Rent; and (iii) such access does not interfere with the work of Landlord, including
without limitation, as applicable, any work of Landlord pursuant to Exhibit C, or any
work of another tenant; Tenant shall be permitted to access to the Premises commencing
upon full execution of this Sublease, and thus prior to the Commencement Date, for the
purpose of installing Tenant’s designated trade fixtures and other necessary
improvements and to conduct such work as may be necessary to obtain necessary
permits. Such early access shall not be for the purpose of operating Tenant’s business on
the Premises. Prior to the Commencement Date, all of the terms and provisions of this
Sublease shall apply to Tenant’s use of the Premises except for the requirement for the
payment of Rent beyond that provided for in this Section 3.4, and Tenant shall abide by
all of such terms and provisions.
3.5 Options to Extend Term. Landlord grants Tenant two (2) options to
extend the Sublease Term (“Extension Options”) for a period of sixty (60) months each
(“Extension Terms”), subject to the conditions set forth in this Section 3.5. Tenant shall
have no other right to extend the Term beyond the Extension Term.
3.5.1 Extension Option Conditions. An Extension Option may be
exercised with respect to all or any portion of the Premises subject to this Sublease at the
time of exercise only by written notice delivered by Tenant to Landlord no later than nine
(9) months prior to the expiration of the initial Term or the First Extension Term, as
applicable, and only if as of the date of delivery of the notice, Tenant is not in default
under this Sublease. An Extension Option may be exercised only by the originally
named Tenant or by an assignee or sublessee approved pursuant to Article X and only if
the originally named Tenant or such approved assignee or sublessee is not in default
under the Sublease at the time of delivery of notice of exercise and occupies the entire
Premises as of the date it exercises the Extension Option. If Tenant or such approved
assignee or sublessee properly exercises the Extension Option and is not in default at the
end of the initial Sublease Term of the First Extension Term, as applicable, the Term
shall be extended for the applicable Extension Term. The failure to exercise an
Extension Option in accordance with this Section shall constitute an election to terminate
this Sublease at the end of the initial Term or the First Extension Term, as applicable, and
Landlord’s acceptance of any Rent subsequent to the expiration of such Term shall not
constitute a waiver by Landlord of the requirement of timely exercise of the Extension
Option by delivery of notice pursuant to this Section.
3.5.2 Extension Term Rent. The Rent payable by Tenant during the
First Extension Term shall be equal to, and subject to all terms and conditions of, the
Exhibit B
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Rent for the initial Term. The Rent payable by Tenant during the Second Extension Term
shall be the Fair Market Rental Value of the Premises as of the commencement date of
the Second Extension Term. For purposes of this Section, “Fair Market Rental Value”
shall be the amount that a willing, comparable, new (i.e., non-renewal), non-equity tenant
would pay, and that a willing landlord of a comparable space in the vicinity of the
Building would accept at arms’ length. Appropriate consideration shall be given to: (i)
the annual rental rate per rentable square foot; (ii) the definition of rentable square feet
for purposes of comparing the rate; (iii) location and quality of the Building; (iv) the
financial condition (e.g., creditworthiness) of Tenant; (v) escalation (including type, base
year and stop) and abatement provisions (if any) reflecting free rent and/or no rent during
the period of construction; (vi) brokerage commissions, if any, (vii) length of the lease
term; (viii) size of the Premises; (ix) building standard work letter and/or tenant
improvement allowance, if any; provided, however, the Fair Market Rental Value shall
not include any tenant improvements or any alterations made by Tenant at Tenant’s
expense; (x) condition of space; (xi) lease takeover / assumptions; (xiii) moving expenses
and other concessions (if any); (xii) extent of services to be provided; (xiii) distinctions
between “gross” and “net” leases; (xiv) base year figures or expense stops (if any) for
escalation purposes for both operating costs and ad valorem / real estate taxes; (xv) the
time the particular rental rate under consideration becomes or is to become effective;
(xvi) applicable caps (if any) on the amount of real estate taxes and assessments passed
through to tenants; and (xvii) other generally applicable conditions of tenancy for the
space in question. The Fair Market Rental Value shall be subject to an annual cost of
living increase thereafter.
3.5.3 Arbitration. If Landlord and Tenant are not able to agree on the Fair
Market Rental Value of the Premises within forty-five (45) days following the date upon
which Tenant delivers notice of exercise of the Second Extension Option (the
“Agreement Deadline”), the Fair Market Rental Value will be determined by “baseball
arbitration” in accordance with this Subsection 3.5.3. Landlord and Tenant shall each
make a separate determination of Fair Market Rental Value and notify the other Party
within fifteen (15) days following after the Agreement Deadline. If either Party fails to
make a determination of the Fair Market Rental Value within the fifteen (15) day period,
that failure shall be conclusively deemed to be that Party’s approval of the Fair Market
Rental Value submitted within such period by the other Party. If both Parties timely
make determinations of Fair Market Rental Value, such determinations shall be submitted
to an arbitrator. The determination of the arbitrator shall be limited to the sole issue of
determining which of the Party’s determinations is closest to the actual Fair Market
Rental Value as determined by the arbitrator, taking into consideration the requirements
of Section 3.5.2. The arbitrator must be a licensed real estate broker who has been active
in the leasing of commercial properties in the South San Francisco area over the
immediately prior five-year period. If the Parties are unable to agree upon an arbitrator,
then each Party shall appoint one arbitrator within fifteen (15) days following the
Agreement Deadline and shall notify the other Party of such appointment. Within ten
(10) days following the appointment of the second arbitrator, the two arbitrators so
selected shall agree upon and appoint a third appraiser who shall have the qualifications
specified in this paragraph and shall notify the Parties of such appointment. Within thirty
Exhibit B
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(30) days following the appointment of the third arbitrator, the three arbitrators shall
decide whether to use Landlord’s or Tenant’s determination of Fair Market Rental Value
and shall notify the parties of their decision. The decision of the majority of the
arbitrators shall be binding. If either Party fails to appoint an arbitrator within fifteen
(15) days following the Agreement Deadline, then the arbitrator timely appointed shall
reach a decision and shall notify Landlord and Tenant of such decision within thirty (30)
days after such arbitrator’s appointment. The decision of such arbitrator shall be binding
on Landlord and Tenant. The cost of the arbitration shall be paid by the losing Party.
3.5.4 Amendment to Sublease. If Tenant timely exercises the Second
Extension Option, Landlord and Tenant shall, within fifteen (15) days after the Second
Extension Term rent is determined, execute an amendment to this Sublease extending the
Term on the terms and conditions set forth in Section 3.5.
3.5.5 Second Extension Term Rent Floor. In no event shall the Rent for
the Second Extension Term be less than the Base Rent payable during the prior year
under this Sublease.
3.6 No Representations. Tenant acknowledges that neither Landlord nor any
of Landlord’s agents has made any representation or warranty as to the suitability or
fitness of the Premises for the conduct of Tenant’s business, and that neither Landlord
nor any of Landlord’s agents has agreed to undertake any alterations or additions or to
construct any tenant improvements to the Premises except as expressly provided in this
Sublease.
3.7 AS-IS Sublease. Notwithstanding that Tenant Improvements will be made
pursuant to this Sublease, Tenant acknowledges and agrees that by executing this
Sublease Tenant shall be deemed to have approved of all characteristics and conditions of
the Premises, the Building and the Real Property, following its own independent
investigation and due diligence, and that Tenant is leasing and accepting same in its
present condition, “AS IS” WHERE IS AND WITH ALL FAULTS, and no present or
latent defect or deficiency in any legal or physical condition thereof, whether or not
known or discovered, shall affect the rights of either Landlord or Tenant hereunder, nor
shall Rent be reduced as a consequence thereof. Without limiting the foregoing,
Landlord shall, prior to the Commencement Date, ensure that the Building’s mechanical
equipment, plumbing and roof are in working order.. Except as expressly provided
herein, Landlord shall have no further obligation to make the Building ready for Tenant.
Without limiting the foregoing, Landlord and Tenant acknowledge that Landlord shall
have no obligation to remove or pay for the removal of flooring and mastic.
ARTICLE IV
RENT, OPERATING EXPENSES, TAXES AND SECURITY DEPOSIT
4.1 Monthly Rent. From and after the Rent Commencement Date, Tenant
shall pay to Landlord for each calendar month of the Term, the monthly Base Rent set
forth in Section 1.11, as the same may be adjusted upon Tenant’s exercise of the Second
Exhibit B
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Extension Option as provided in Section 3.5.2. Each monthly installment of Base Rent
shall be due and payable to Landlord in lawful money of the United States, in advance,
on the first (1st) day of each calendar month during the Term, without abatement,
deduction, claim or offset, and without prior notice, invoice or demand, at Landlord’s
address set forth in Section 1.1 or such other place as Landlord may designate from time
to time. Tenant’s payment of Base Rent for the first month of the Term shall be delivered
to Landlord concurrently with Tenant’s execution of this Sublease. Beginning as of the
thirteenth (13th) month, and continuing throughout the initial Term of this Sublease,
annual Rent shall be increased by three percent (3%) of the Rent paid in the prior year.
4.2 Prorations. Monthly installments for any fractional calendar month at the
beginning or end of the Term shall be prorated based on the number of days in such
month.
4.3 Additional Rent; Triple Net Sublease; Property Management Fee. All
Additional Rent, including without limitation, all of Tenant’s required payments pursuant
to this Article IV, shall be due and payable to Landlord in lawful money of the United
States without abatement, deduction, claim or offset within twenty (20) days of receipt of
Landlord’s invoice or statement for same (or if this Sublease provides another time for
the payment of certain items of Additional Rent, then at such other time) at Landlord’s
address set forth in Section 1.1 or such other place as Landlord may designate from time
to time. This is a triple net sublease to Landlord. Tenant agrees to pay, without
abatement, deduction, claim or offset, all costs and expenses relating to the Premises or
any part thereof, of any kind or nature whatsoever. Such costs and expenses shall
include, without limitation, all amounts attributable to, paid or incurred in connection
with the ownership, operation, repair, restoration, maintenance and management of the
Premises; property taxes and payments in lieu thereof; rent taxes; gross receipt taxes
(whether assessed against Landlord or assessed against Tenant and collected by Landlord,
or both); water and sewer charges; insurance premiums (including earthquake); utilities;
refuse disposal; lighting (including outside lighting); fire-detection systems including
monitoring, maintenance and repair; security; janitorial services; labor; air conditioning
and heating; maintenance and repair costs and service contracts; costs of licenses, permits
and inspections; and all other costs and expenses paid or incurred with respect to the
Premises or part thereof. During the initial Term of this Sublease, triple net expenses
shall not exceed $.50 per square foot of rentable space per month. In addition, Tenant
shall pay a property management fee of fifteen percent (15%) of the common area
maintenance expenses.
4.4 Late Charge. Tenant acknowledges that the late payment of Rent will
cause Landlord to incur administrative costs and other damages, the exact amount of
which would be impracticable or extremely difficult to ascertain. Landlord and Tenant
agree that if Landlord does not receive any such payment within five (5) calendar days
after such payment is due, Tenant shall pay to Landlord as Additional Rent an amount
equal to five percent (5%) of the overdue amount as a late charge for each month or
partial month that such amount remains unpaid. The Parties acknowledge that this late
charge represents a fair and reasonable estimate of the costs that Landlord will incur by
Exhibit B
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reason of the late payment by Tenant. Acceptance of any late Rent and late charge
therefore shall not prevent Landlord from exercising any of the other rights and remedies
available to Landlord for any other Event of Default under this Sublease.
4.5 Taxes. The term “Real Property Taxes” means any form of tax,
assessment, charge, license, fee, rent tax, levy, penalty (if a result of Tenant’s
delinquency), real property or other tax (other than Landlord’s net income, estate,
succession, inheritance, or franchise taxes), now or hereafter imposed with respect to the
Building, the Real Property or any part thereof (including any Alterations), this Sublease
or any Rent payable under this Sublease by any authority having the direct or indirect
power to tax, or by any city, county, state or federal government or any improvement
district or other district or division thereof, whether such tax or any portion thereof (i) is
determined by the area of the Building, the Real Property, or any part thereof or the Rent
payable under this Sublease by Tenant, including, but not limited to any gross income or
excise tax levied by any of the foregoing authorities with respect to receipt of Rent due
under this Sublease, (ii) is levied or assessed in lieu of, in substitution for, or in addition
to, existing or additional taxes with respect to the Building, the Real Property or any part
thereof whether or not now customary or within the contemplation of Landlord or Tenant,
or (iii) is based upon any legal or equitable interest of Landlord in the Building, the Real
Property or any part thereof. Tenant and Landlord intend that all Real Property Taxes,
including without limitation all new and increased assessments, taxes, possessory interest
taxes charged or levied in place of real property taxes, fees, levies, and charges and all
similar assessments, taxes, fees, levies and charges shall be included within the definition
of “Real Property Taxes” for purposes of this Sublease.
4.5.1 Apportionment of Taxes. If the Building is assessed as part of a
larger parcel, then Landlord shall equitably apportion the Real Property Taxes and
reasonably determine the Real Property Taxes attributable to the Building. If other
buildings exist on the assessed parcel, the Real Property Taxes apportioned to the
Building shall be based upon the ratio of the square footage of the Building to the square
footage of all buildings on the assessed parcel. Landlord’s reasonable determination of
such apportionment shall be conclusive.
4.5.2 Tax on Improvements. Notwithstanding anything to the contrary
set forth in this Sublease, Tenant shall pay prior to delinquency any and all taxes, fees
and charges which are levied or assessed against Landlord or Tenant: (a) upon Tenant’s
equipment, furniture, fixtures, improvements and other personal property located in the
Premises, (b) by virtue of any alterations or leasehold improvements made to the
Premises by Tenant, and (c) upon this transaction or any document to which Tenant is a
party creating or transferring an interest or an estate in the Premises. If any such tax, fee
or charge is paid by Landlord, Tenant shall reimburse Landlord for Landlord’s payment
upon demand.
Exhibit B
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ARTICLE V
USE OF PREMISES
5.1 Permitted Use; Entitlements. The Premises shall be used solely for the
purposes set forth in Section 1.14 and for no other purpose without the written consent of
Landlord, which may be granted or withheld in Landlord’s sole discretion. Tenant shall
not do or suffer or permit anything to be done in or about the Premises, the Building or
the Real Property, nor bring or keep anything therein that would in any way subject
Landlord to any liability, increase the premium rate of or affect any fire, casualty, rent or
other insurance relating to the Real Property or any of the contents of the Building, or
cause a cancellation of, or give rise to any defense by the insurer to any claim under, or
conflict with, any policies for such insurance. If any act or omission of Tenant results in
any such increase in premium rates, Tenant shall pay to Landlord upon demand the
amount of such increase.
Tenant shall bear sole responsibility for obtaining and securing all
required permits and other entitlements, pursuant to Applicable Laws, prior to
commencing occupancy of the Premises.
5.2 Exclusive Use. Landlord shall not lease other space in or about the
Premises to any other tenant whose primary source of business is the Permitted Use
described in Section 1.14. Such exclusive use provision shall terminate immediately in
the event that either: (a) Tenant ‘s Permitted Use ceases as the result of any cause other
than remodeling, repair, maintenance or casualty that prohibits Tenant from being open,
or (b) Tenant changes its use of the Premises. Further, such exclusive use provision shall
not apply to any leases in existence at time of execution of this Sublease or to any
incidental sales of excluded items by other tenants.
5.3 Signage. Tenant shall obtain the prior approval of the Landlord, which
approval may be withheld in Landlord’s sole discretion, before placing any sign or
symbol on doors or windows or elsewhere in or about the Premises so as to be visible
from the public areas or exterior of the Building, or upon any other part of the Building or
Real Property, including building directories. Any signs or symbols which have been
placed without Landlord’s approval may be removed by Landlord. Upon expiration or
termination of this Sublease, all signs installed by Tenant shall be removed and any
damage resulting therefrom shall be promptly repaired by Tenant, or such removal and
repair may be done by Landlord and the cost charged to Tenant as Rent. Tenant shall be
provided signage as a part of the Building directory.
Tenant is hereby granted the right to place and maintain in place during the Term
of this Sublease Tenant’s name on the exterior of the Building with lighting. The design
of the signage and the lighting shall be subject to Landlord’s approval. Landlord shall
determine in its reasonable discretion the position, location and configuration of Tenant’s
name on the Building. All signs or lettering shall conform in all respects to the sign
and/or lettering criteria reasonably established by Landlord. All signage shall comply
Exhibit B
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with regulations promulgated by the City of South San Francisco. The cost of Building
signage shall be counted toward the Tenant Improvement Allowance.
5.4 Rules and Regulations. Tenant shall comply with the rules attached hereto
as Exhibit B and any amendments or additions thereto promulgated by Landlord from
time to time for the safety, care and cleanliness of the Premises, Building and Real
Property (the “Rules and Regulations”). Tenant shall not use or permit any person to
use the Premises for any purpose that is contrary to the Rules and Regulations, that
violates any Applicable Law, that constitutes waste or nuisance, or that would
unreasonably annoy or interfere with other occupants of the Building or the occupants of
buildings adjacent to the Building. Landlord shall not be responsible to Tenant for the
nonperformance or noncompliance by any other tenant or occupant of the Building of or
with any of the Rules and Regulations. In the event of any conflict between the
provisions of this Sublease and the provisions of the Rules and Regulations, the
provisions of this Sublease shall control.
5.5 Compliance with Laws. Tenant shall procure and maintain all
governmental approvals, licenses and permits required for the proper and lawful conduct
of Tenant’s permitted use of the Premises. Tenant shall throughout the Term comply with
and shall not use the Premises, the Building or the Real Property, or suffer or permit
anything to be done in or about the same which would in any way conflict with any of the
following (collectively “Applicable Laws”): (i) the provisions of all recorded covenants,
conditions and restrictions applicable to the Building or the Real Property, or (ii) any
federal, state, county, local or other governmental agency rules, regulations, statutes,
ordinances, orders, standards, requirements or laws now in force or hereafter enacted,
promulgated or issued which are applicable to the Real Property, Premises, the Building,
or the use or occupancy thereof, including without limitation building, zoning, and fire
codes and regulations.
ARTICLE VI
ENVIRONMENTAL MATTERS
6.1 Use of Hazardous Materials. Tenant shall not cause or permit any
Hazardous Material to be generated, brought onto, used, stored, or disposed of in or about
the Premises, the Building or the Real Property by Tenant or Tenant’s agents, employees,
contractors, subtenants or invitees (collectively “Tenant Parties”), except for limited
quantities of standard office and janitorial supplies. At Tenant’s sole cost and expense,
Tenant shall use, store and dispose of all such Hazardous Materials in strict compliance
with all Environmental Laws, and shall in all other respects comply with all
Environmental Laws.
6.2 Notice of Release or Investigation. If during the Sublease Term (including
any extensions), Tenant becomes aware of (a) any actual or threatened release of any
Hazardous Material on, under, or about the Premises, the Building or the Real Property,
or (b) any inquiry, investigation, proceeding, or claim by any government agency or other
person regarding the presence of Hazardous Material on, under, or about the Premises,
Exhibit B
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the Building, or the Real Property, Tenant shall give Landlord written notice of the
release or investigation within five (5) days after learning of it and shall simultaneously
furnish to Landlord copies of any claims, notices of violation, reports, or other writings
received by Tenant that concern the release or investigation.
6.3 Indemnification. Tenant shall defend (with counsel acceptable to
Landlord), indemnify and hold harmless Landlord and Landlord’s elected and appointed
officers, officials, employees, agents and representatives (collectively, “Indemnitees”)
from and against any and all liabilities, losses, damages, fines, deficiencies, penalties,
claims, demands, suits, actions, causes of action, legal or administrative proceedings,
judgments, costs and expenses (including without limitation reasonable attorneys’ fees
and expenses, court costs, expert witness fees and post judgment collection costs) (all of
the foregoing, collectively “Claims”) resulting or arising from or in connection with any
release of any Hazardous Material in or about the Premises, the Building or the Real
Property by Tenant, or Tenant’s agents, assignees, sublessees, contractors, or invitees, or
any other violation of any Environmental Law by Tenant, or Tenant’s agents, assignees,
sublessees, contractors, or invitees. This indemnification includes: (i) losses attributable
to diminution in the value of the Premises or the Building, (ii) loss or restriction of use of
rentable space in the Building, (iii) adverse effect on the marketing of any space in the
Building; and (iv) all other liabilities, obligations, penalties, fines, claims, actions
(including remedial or enforcement actions of any kind and administrative or judicial
proceedings, orders, or judgments), damages (including consequential and punitive
damages), and costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation. The indemnity provided in this Section shall not
extend to Claims to the extent the same are caused by the gross negligence or willful
misconduct of Indemnitees. The provisions of this Section shall survive the expiration or
termination of this Sublease.
6.3.1 Landlord’s Representations and Warranties. Landlord represents
and warrants that Landlord has received no notice, warning, notice of violation,
administrative complaint, judicial complaint, or other written notice alleging that the
Building or the Real Property are in violation of any Environmental Laws (defined
below) or informing Landlord that the Building or the Real Property is subject to
investigation or inquiry concerning Hazardous Materials, nor is Landlord aware of any
such violation. In addition, to the best knowledge of Landlord, there is no pending or
threatened litigation, administrative proceeding, or other legal or governmental action
with respect to the Building or the Real Property in connection with the presence of
Hazardous Materials in, on or under the Building or the Real Property. Whenever used in
this Agreement, the phrase “to the best knowledge of Landlord” shall mean the actual
knowledge of Landlord’s Facilities Services Manager.
6.4 Remediation Obligations. If the presence of any Hazardous Material brought
onto the Premises or the Building by Tenant or Tenant’s employees, agents, contractors,
or invitees results in contamination of the Building, Tenant shall promptly take all
necessary actions to remove or remediate such Hazardous Materials, whether or not they
are present at concentrations exceeding state or federal maximum concentration or action
Exhibit B
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levels, or any governmental agency has issued a cleanup order, at Tenant’s sole expense,
to return the Premises and the Building to the condition that existed before the
introduction of such Hazardous Material. Tenant shall first obtain Landlord’s approval of
the proposed removal or remedial action. This provision does not limit the
indemnification obligation set forth in Section 6.3.
6.5 Definition of Hazardous Material. As used in this Sublease, the term
“Hazardous Material” means any hazardous or toxic substance, material, or waste at
any concentration that is or becomes regulated by the United States, the State of
California, or any government authority having jurisdiction over the Building. Hazardous
Material includes: (a) any “hazardous substance,” as that term is defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA) (42 United States Code sections 9601-9675); (b) “hazardous waste,” as that
term is defined in the Resource Conservation and Recovery Act of 1976 (RCRA) (42
United States Code sections 6901-6992k); (c) any pollutant, contaminant, or hazardous,
dangerous, or toxic chemical, material, or substance, within the meaning of any other
applicable federal, state, or local law, regulation, ordinance, or requirement (including
consent decrees and administrative orders imposing liability or standards of conduct
concerning any hazardous, dangerous, or toxic waste, substance, or material, now or
hereafter in effect); (d) petroleum products; (e) radioactive material, including any
source, special nuclear, or byproduct material as defined in 42 United States Code
sections 2011-2297g-4; (f) asbestos in any form or condition; and (g) polychlorinated
biphenyls (PCBs) and substances or compounds containing PCBs.
6.6 Definition of Environmental Laws. As used in this Sublease, the term
“Environmental Laws” means all federal, state and local laws, ordinances, regulations,
rules orders and directives pertaining to Hazardous Materials, including without
limitation, the laws, statutes, and regulations cited in the preceding Section 6.5, as any of
the foregoing may be amended from time to time.
6.7 Environmental Reports. Landlord shall provide to Tenant copies of all
studies, reports and investigations concerning the environmental condition of the
Building and the Real Property which were prepared within the past five years and which
are in Landlord’s possession.
ARTICLE VII
UTILITIES AND SERVICES
7.1. Utility Services. Tenant shall contract and pay for all utility services
(“Utility Services”), including, without limitation, the following: (i) electricity for
Building lighting and power suitable for use of the Premises for ordinary retail store and
veterinary service purposes; (ii) air conditioning and heating; and (iii) water for drinking,
lavatory and veterinary service purposes.
Exhibit B
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7.2 Maintenance Services and Repairs. Tenant shall be responsible for all interior
and maintenance of the Premises and the Building’s common retail areas (collectively,
“Maintenance Services”), including, without limitation: (i) maintenance and repair of
the Premises mechanical, electrical, HVAC, plumbing equipment and systems, floors and
walls, (ii) maintenance of all public and common retail areas of the Building including
retail parking lot, corridors and windows; (iii) provision of exterior window washing with
reasonable frequency, but in no event less than two times per year; and (iv) provision of
janitorial services to the common areas (“Janitorial Services”). Tenant shall be
responsible for janitorial service to the Premises and interior window cleaning. .
Tenant shall, at all time during the Term of this Sublease, at Tenant’s sole
expense, keep the Premises (including all tenant improvements, Alterations, fixtures and
furnishings) in good order, repair and condition at all times during the Term. Subject to
Landlord’s prior approval and within any reasonable period specified by Landlord,
Tenant shall, at Tenant’s sole expense, promptly and adequately repair all damage to the
Premises and replace or repair all damaged or broken fixtures and other leasehold
improvements. If Tenant fails to maintain or keep the Premises in good repair or if such
failure results in a nuisance or health or safety risk, at Landlord’s option, Landlord may
perform any such required maintenance and repairs and within ten days after receipt of
Landlord’s invoice therefor, Tenant shall pay Landlord’s costs incurred in connection
with such repairs, plus a percentage of such costs sufficient to reimburse Landlord for all
overhead, general conditions, fees and other costs and expenses in connection therewith.
7.3 Waiver. Tenant hereby waives the provisions of Sections 1941 and 1942
of the California Civil Code and any other present or future law permitting repairs by a
tenant at the expense of a landlord or termination of a lease by reason of the condition of
the leased premises.
7.4 Compliance with Applicable Laws. Landlord and Tenant shall each
comply with (and shall cause their respective employees, agents and contractors to
comply with) all Applicable Laws, including without limitation all Environmental Laws,
whenever either party undertakes any work of construction, alteration or improvement in
the Premises or the Building,
ARTICLE VIII
ALTERATIONS AND ADDITIONS
8.1 Alterations and Improvements. Tenant may not make any improvements,
alterations, additions or changes to the Premises (“Alterations”) without the prior written
approval of Landlord, which approval shall not be unreasonably withheld or delayed.
Any such Alterations shall be done at Tenant’s expense, in a good and workmanlike
manner conforming in quality and design with the Premises existing as of the
Commencement Date, by a licensed contractor reasonably approved by Landlord, in
conformity with plans and specifications reviewed and approved by Landlord, and in
Exhibit B
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compliance with all Applicable Laws. Tenant shall obtain all necessary governmental
approvals and permits for such Alterations. Tenant shall give Landlord not less than ten
(10) business days’ notice prior to the commencement of construction so that Landlord
may post a notice of nonresponsibility on the Premises. Notwithstanding any other
provisions in this Sublease, unless Landlord otherwise agrees in writing, Tenant shall
remove, prior to expiration of the Term and at Tenant’s sole cost and expense, any and all
wires, cables and related telecommunications devices installed by or on behalf of Tenant,
and Landlord may at its option by written notice to Tenant, require that Tenant, upon the
expiration or sooner termination of this Sublease, at Tenant’s expense, remove any or all
other Alterations and return the Premises to its condition as of the Commencement Date,
normal wear and tear excepted; provided, however, Tenant shall have no obligation to
remove the initial Tenant Improvements constructed pursuant to Exhibit C hereto upon
expiration of the Term of this Sublease. In no event shall any Alteration (i) affect the
exterior of the Building, (ii) affect any of the structural portions of the Building,
including without limitation, the roof, (iii) require any change to the basic floor plan of
the Premise or any change to the structural or mechanical components of the Premises,
(iv) diminish the value of the Premises, (v) result in an increase in the demand for utilities
or services that Landlord is required to provide, (vi) cause an increase in the premiums
for hazard or liability insurance carried by Landlord, or (vii) overload the floor load
capacity or unduly burden the plumbing, heating, ventilation, air conditioning, electrical
or other basic systems that serve the Building. Upon completion of any Alteration,
Tenant shall (a) cause a timely notice of completion to be recorded in the official records
of South San Francisco County in accordance with Civil Code Section 3093 or any
successor statute, and (b) deliver to Landlord evidence of full payment and unconditional
final waivers of all liens for labor, services, or materials.
8.2 Liens. Tenant shall not permit any mechanics’, materialmen’s or other liens,
to be filed against the Building or the Real Property or against Tenant’s leasehold interest
in the Premises. Landlord has the right at all times to post and keep posted on the
Premises any notice that it considers necessary for protection from such liens. If Tenant
fails to cause the release of record of any lien(s) filed against the Premises or Tenant’s
leasehold estate therein, by payment or posting of a proper bond within ten (10) days
from the date of the lien filing(s), then Landlord may, at Tenant’s expense, cause such
lien(s) to be released by any means Landlord deems proper, including but not limited to
payment of or defense against the claim giving rise to the lien(s). All sums reasonably
disbursed, deposited or incurred by Landlord in connection with the release of the lien(s),
including but not limited to all costs, expenses and attorney’s fees, shall be due and
payable by Tenant to Landlord as Additional Rent on demand by Landlord.
ARTICLE IX
INSURANCE AND INDEMNITY
9.1 Indemnity. To the fullest extent permitted by law, Tenant shall defend
(with counsel reasonably acceptable to Landlord), indemnify and hold Indemnitees
harmless from and against any and all Claims arising out of or relating directly or
Exhibit B
22
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indirectly to this Sublease or the Premises (including without limitation, Claims for or
relating to loss of or damage to property, injury or death of any person or animal),
including any Claim arising from or in connection with or in any way attributable to: (i)
the use or occupancy, or manner of use or occupancy of the Premises, the Building or the
Real Property by Tenant or the Tenant Parties, (ii) any act, error, omission or negligence
of Tenant Parties or any invitee, guest or licensee of Tenant in, on or about the Real
Property, (iii) any Alterations, (iv) construction of the Tenant Improvements (as defined
in Section 17.2 below), (v) Tenant’s work performed pursuant to Exhibit C hereto, (vi)
work performed pursuant to Section 7.2 above, and (vii) any activity, work, or thing
done, omitted, permitted, allowed or suffered by Tenant or Tenant Parties in, at, or about
the Premises, the Building or the Real Property, except to the extent caused by the gross
negligence or willful conduct of Landlord. The provisions of this section shall not be
construed or interpreted as in any way restricting, limiting or modifying Tenant’s
insurance obligations under this Sublease. Tenant’s compliance with the insurance
requirements set forth in this Sublease shall not in any way restrict, limit or modify
Tenant’s indemnification obligations hereunder. The provisions of this section shall
survive the expiration or earlier termination of this Sublease.
9.2 Tenant’s Insurance. Tenant shall, at its sole expense, procure and
maintain throughout the Term (plus such earlier and later periods as Tenant may be in
occupancy of the Premises) all of the following:
(a) Commercial general liability insurance including contractual
liability coverage, written on an “occurrence” policy form, covering bodily injury,
property damage and personal injury arising out of or relating (directly or indirectly) to
Tenant’s operations, conduct, assumed liabilities, or use or occupancy of the Premises,
the Building or the Real Property naming the Indemnitees as additional insureds, with
minimum coverage in the amount of Two Million Dollars ($2,000,000) per occurrence
combined single limit for bodily injury and property damage and Five Million Dollars
($5,000,000) in the aggregate;
(b) Property insurance protecting Tenant against loss or damage by
fire and such other risks as are insurable under then available standard forms of “all risk”
insurance policies, covering Tenant’s personal property and trade fixtures in or about the
Premises or the Real Property, and any improvements and/or Alterations in the Premises,
in an amount not less than one hundred percent (100%) of their actual replacement cost
or highest insurable value;
(c) Workers’ compensation insurance in at least the statutory amounts.
Tenant is not required to provide workers’ compensation insurance cover to Tenant’s
employees until Tenant has employees; and
(d) If Tenant operates owned, leased or non-owned vehicles on the
Real Property, comprehensive automobile liability insurance with a minimum coverage
of one million dollars ($1,000,000) per occurrence, combined single limit.
Exhibit B
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The foregoing policies shall protect Tenant as named insured, and
Landlord and the other Indemnitees as additional insureds, and if subject to deductibles
shall provide for deductible amounts not in excess of those approved in advance in
writing by Landlord in its reasonable discretion. Landlord reserves the right to increase
the foregoing amount of required liability coverage from time to time (but not more often
than once each calendar year) to adequately protect Indemnitees and to require that
Tenant cause any of its contractors, vendors or other parties conducting activities in or
about or occupying the Premises to obtain and maintain insurance as determined by
Landlord and as to which the Indemnitees shall be additional insureds.
9.3 Excess Coverage Liability Policy. Nothing in this Article IX shall prevent
Tenant from obtaining insurance of the kind and in the amounts provided for under this
Section under an excess coverage liability insurance policy covering other properties as
well as the Premises; provided, however, that any such policy of excess coverage liability
insurance (i) shall specify those amounts of the total insurance allocated to the Premises,
which amounts shall not be less than the amounts required by Section 9.2, (ii) such
amounts so specified shall be sufficient to prevent any one of the insureds from becoming
a co-insurer within the terms of the applicable policy, and (iii) shall, as to the Premises,
otherwise comply with the requirements of this Article as to endorsements and coverage.
9.3.1 Self-Insurance. Any insurance required to be maintained by the
Tenant pursuant to this Sublease may be maintained under a plan of self-insurance
through a wholly-owned subsidiary of Tenant’s parent company which specializes in
providing such coverage for Tenant’s parent company and its subsidiaries, provided that
Tenant’s parent company’s net worth exceeds One Hundred Million Dollars
($100,000,000). Tenant agrees that if Tenant elects to self-insure, Landlord shall have
the same benefits and protections as if Tenant carried insurance with a third-party
insurance company satisfying the requirements of this Sublease (including without
limitation, waive of subrogation provisions).
9.4. Policy Form. Each insurance policy required pursuant to Section 9.2 shall
be issued by an insurance company licensed in the State of California and with a general
policyholders’ rating of “A+” or better and a financial size ranking of “Class VIII” or
higher in the most recent edition of Best’s Insurance Guide. Each insurance policy, other
than Tenant’s workers’ compensation insurance, shall (i) provide that it may not be
cancelled or allowed to lapse unless thirty (30) days’ prior written notice to Landlord is
first given; (ii) provide that no act or omission of Tenant shall affect or limit the
obligations of the insurer with respect to any other insured; (iii) include all waiver of
subrogation rights endorsement necessary to effect the provisions of Section 9.6; and (iv)
provide that the policy and the coverage provided shall be primary, that Landlord,
although an additional insured, shall nevertheless be entitled to recovery under such
policy for any damage to Landlord or the other Indemnitees by reason of acts or omission
of Tenant, and that any coverage carried by Landlord shall be noncontributory with
respect to policies carried by Tenant. A certificate evidencing each insurance policy shall
be delivered to Landlord by Tenant on or before the Commencement Date, and thereafter
Tenant shall deliver to Landlord renewal policies or certificates at least thirty (30) days
prior to the expiration dates of expiring policies. If Tenant fails to procure such insurance
Exhibit B
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or to deliver such certificates to Landlord, and such failure continues five (5) business
days after notice thereof from Landlord to Tenant, Landlord may, at its option, procure
the same for Tenant’s account, and the cost thereof shall be paid to Landlord by Tenant
upon demand.
9.5 Insurance of Tenant’s Contractors and Agents. In addition to any other
insurance requirements, Tenant expressly agrees that none of its agents, contractors,
workmen, mechanics, suppliers or invitees performing construction or repair work in the
Premises shall commence such work unless and until each of them shall furnish Landlord
with satisfactory evidence of insurance coverage, financial responsibility and appropriate
written releases of mechanic’s or materialmen’s lien claims, as necessary.
9.6 Waiver of Subrogation. Tenant and Landlord to cause the insurance
companies issuing their respective property (first party) insurance to waive any
subrogation rights that those companies may have against Tenant or Landlord,
respectively, as long as the insurance is not invalidated by the waiver. If the waivers of
subrogation are contained in their respective insurance policies, Landlord and Tenant
waive any right that either may have against the other on account of any loss or damage
to their respective property to the extent that the loss or damage is insured under their
respective insurance policies.
9.7 Landlord’s Insurance. Landlord shall maintain throughout the Term
liability and property damage insurance comparable to or exceeding the coverage and
amounts of insurance carried by reasonably prudent landlords of comparable buildings
and workers’ compensation coverage as required by law. If Landlord so chooses,
Landlord may maintain “Loss of Rents” insurance, insuring that the Rent will be paid in a
timely manner to Landlord for a period of at least twelve (12) months if the Premises or
the Building or any portion thereof are destroyed or rendered unusable or inaccessible by
any cause insured against under this Sublease.
ARTICLE X
ASSIGNMENT AND SUBLETTING
10.1 Landlord’s Consent Required. Tenant shall not directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, assign, mortgage, pledge,
encumber or otherwise transfer this Sublease, or permit all or any part of the Premises to
be subleased or used or occupied for any purpose by anyone other than Tenant without
the prior written consent of Landlord, which consent shall not be unreasonably withheld,
delayed or conditioned. Any assignment or sublease without Landlord’s prior written
consent shall, at Landlord’s option, be void and shall constitute an Event of Default
entitling Landlord to terminate this Sublease and to exercise all other remedies available
to Landlord under this Sublease and at law. Notwithstanding anything to the contrary
contained herein, Tenant shall be permitted to assign this Sublease and to sublet the
Premises in whole or in part to any Affiliate of Tenant without Landlord consent
(“Permitted Transfer”).
Exhibit B
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10.2 Basis for Withholding Consent. Landlord agrees that it will not
unreasonably withhold, delay or condition its consent to Tenant’s assigning this Sublease
or subletting the Premises. In addition to other reasonable bases, Tenant hereby agrees
that Landlord shall be deemed to be reasonable in withholding its consent if: (i) there
exists an Event of Default (as defined in Section 16.1) at the time of request for consent
or on the effective date of such subletting or assigning; (ii) the proposed subtenant or
assignee seeks to use any portion of the Premises for a use not consistent with other uses
in the Building, or is financially incapable of assuming the obligations of this Sublease;
(iii) the assignment or subletting would materially increase the operating costs for the
Building;
(iv) the assignment or subletting may conflict with the terms of any easement, covenant,
condition or restriction or other agreement affecting the Real Property; or (vi) the
assignment or sublease would involve a change in use from that expressly permitted
under this Sublease.
Tenant shall submit to Landlord the name of a proposed assignee or subtenant, the
terms of the proposed assignment or subletting, the nature of the proposed subtenant’s or
assignee’s business, and such information as to the assignee’s or subtenant’s financial
responsibility and general reputation as Landlord may reasonably require.
10.3 No Release of Obligations. The consent by Landlord to an assignment or
subletting hereunder shall not relieve Tenant or any assignee or subtenant from the
requirement of obtaining Landlord’s express prior written consent to any other or further
assignment or subletting. No subtenant may assign its sublease, or further sublet its
subleased premises, without Landlord’s prior written consent, which consent may be
withheld in Landlord’s sole discretion. Neither an assignment or subletting nor the
collection of rent by Landlord from any person other than Tenant shall be deemed a
waiver of any of the provisions of this Article or release Tenant from its obligations to
comply with this Sublease, and Tenant shall remain fully and primarily liable for all of
Tenant’s obligations under this Sublease.
10.4 Permitted Assignment to Affiliates. Provided that no Event Default, or
event which with the passage of time or the giving of notice would constitute an Event of
Default, exists under this Sublease, Tenant may, without Landlord’s consent, assign or
sublet all or a portion of this Sublease or the Premises to an Affiliate of Tenant or to any
non-Affiliated entity with which Tenant merges or which purchases substantially all of
the assets of Tenant, if (i) Tenant notifies Landlord at least fifteen (15) days prior to such
assignment or sublease; and (ii) the transferee assumes and agrees in a writing reasonably
acceptable to Landlord to perform Tenant’s obligations under this Sublease and to
observe all terms and conditions of this Sublease.
10.5 Administrative Costs of Assignment Transaction. In connection with any
request by Tenant for approval of an assignment or sublease other than a Permitted
Transfer, Tenant shall pay Landlord’s then standard reasonable processing fee, any taxes
or other charges imposed upon Landlord or the Real Property as a result of such
Exhibit B
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assignment or sublease, and shall reimburse Landlord for all reasonable costs, including
the reasonable fees of attorneys consulted by Landlord in connection with such
assignment or sublease, whether or not such proposed assignment or sublease is
consented to by Landlord.
ARTICLE XI
DAMAGE AND DESTRUCTION
11.1 Repair and Restoration; Termination Rights. If all or part of the Premises is
damaged by fire or other casualty, or if the Building is so damaged that access to or use
and occupancy of the Premises is materially impaired, within forty-five (45) days of the
date of the damage, Landlord shall notify Tenant of the estimated time, in Landlord’s
reasonable judgment, required for repair or restoration (“Repair Period”). If the
estimated time is one hundred eighty (180) days or less, Landlord shall proceed promptly
and diligently to repair or restore the Premises or the portion of the Building necessary
for Tenant’s occupancy, and this Sublease shall remain in effect, except that for the time
unusable, Tenant shall receive a Rent abatement for that part of the Premises rendered
unusable in the conduct of Tenant’s business.
If the estimated time for repair or restoration is in excess of one hundred eighty
(180) days from the date of the casualty, either Party, at its option exercised by written
notice to other Party within sixty (60) days after the date of the casualty, may terminate
this Sublease as of the date specified by Landlord in the notice, which date shall be not
less than twenty-five (25) nor more than forty-five (45) days after the date such notice is
given, and this Sublease shall terminate on the date specified in the notice. In the event
that neither Party elects to terminate this Sublease, Landlord shall commence to timely
repair the damage, in which case this Sublease shall continue in full force and effect.
In either case if Landlord fails to repair the damage by the date that is forty-five
(45) days after the end of the Repair Period, then Tenant may give notice to Landlord,
within ten (10) business days after the end of the Repair Period terminating this Sublease
as of the date specified in Tenant’s notice, which date shall not be earlier than thirty (30)
days after the date of Tenant’s termination notice; provided however, if Landlord repairs
the damage for which it is responsible within thirty (30) days after receipt of Tenant’s
termination notice, Landlord may elect to nullify Tenant’s termination notice (and
thereupon this Sublease shall continue in full force and effect) by Landlord’s notice of
such repair and election given to Tenant on or prior to the expiration of such thirty (30)-
day period.
11.2 Damage Near End of Term. Notwithstanding anything to the contrary set
forth in this Article, if the Premises or the Building are damaged during the last twelve
(12) months of the Term, including any Extension Term, Landlord and Tenant shall each
have the option to terminate this Sublease by giving written notice to the other of the
exercise of that option within thirty (30) days after the damage or destruction, and this
Exhibit B
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Sublease shall terminate as of the date specified in such notice which shall be not before
the date of such notice nor more than thirty (30) days after the date of such notice.
11.3 Rent Apportionment. If Landlord or Tenant elects to terminate this Sublease
under this Article XI, Tenant shall pay Rent, prorated on a per diem basis and paid up to
the date of the casualty. If the Premises are wholly untenantable and this Sublease is not
terminated, Rent shall abate on a per diem basis from the date of the casualty until the
Premises are ready for occupancy by Tenant. If part of the Premises are untenantable,
Rent shall be prorated on a per diem basis and abated in proportion to the portion of the
Premises which is unusable until the damaged part is ready for Tenant’s occupancy.
Notwithstanding the foregoing, if any damage was caused by the gross negligence or
willful misconduct of Tenant, its employees or agents, then, in such event, Tenant agrees
that Rent shall not abate or be diminished.
11.4 Waiver of Statutory Provisions. The provisions of this Sublease, including
those in this Article XI, constitute an express agreement between Landlord and Tenant
that applies in the event of any damage to the Premises, Building, or Real Property.
Tenant therefore, fully waives the provisions of any statute or regulation, including
California Civil Code sections 1932(2) and 1933(4), relating to any rights or obligations
concerning any such casualty.
ARTICLE XII
CONDEMNATION
12.1 Total Taking - Termination. If title to the Premises or so much thereof is
taken through the exercise of any government power (by legal proceedings or otherwise)
by any public or quasi-public authority or by any other party having the right of eminent
domain, or by a voluntary sale or transfer either under threat of exercise of eminent
domain or while legal proceedings for eminent domain are pending so that reconstruction
of the Premises will not result in the Premises being reasonably suitable for Tenant’s
continued occupancy for the uses and purposes permitted by this Sublease, this Sublease
shall terminate as of the date possession of the Premises or part thereof is so taken.
12.2 Partial Taking. If any part of the Premises is taken through the exercise of
eminent domain (or is voluntarily conveyed under the threat thereof) and the remaining
part is reasonably suitable for Tenant’s continued occupancy for the uses and purposes
permitted by this Sublease, this Sublease shall as to the part so taken terminate as of the
date that possession of such part of the Premises is taken and the Rent shall be reduced in
the same proportion that the floor area of the portion of the Premises taken (less any
addition thereto by reason of any reconstruction) bears to the original floor area of the
Premises as reasonably determined by Landlord or Landlord’s architect. Landlord shall,
at its own cost and expense, make all necessary repairs or alterations to the Premises so
as to make the portion of the Premises not taken a complete unit.
Exhibit B
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12.3 No Apportionment of Award. All condemnation awards and similar
payments shall be paid and belong to Landlord, except for any amounts awarded or paid
specifically to Tenant for leasehold improvements, removal and reinstallation of Tenant’s
trade fixtures and personal property, Tenant’s moving costs and Tenant’s goodwill. It is
expressly understood and agreed by Tenant that except as otherwise stated in this section,
Landlord shall be entitled to the entire award for any partial or total taking.
12.4 Temporary Taking. No temporary taking of the Premises (which shall
mean a taking of all or any part of the Premises for one hundred eighty (180) days or less)
shall terminate this Sublease or give Tenant any right to any abatement of Rent. Any
award made to tenant by reason of such temporary taking shall belong entirely to Tenant,
and Landlord shall not be entitled to share therein.
ARTICLE XIII
SUBORDINATION AND ESTOPPEL
13.1 Estoppel Certificate. From time to time and within fifteen (15) days after
request by Landlord, Tenant shall execute and deliver a certificate to any proposed lender
or purchaser, or to Landlord, certifying, with any appropriate exceptions, (a) that this
Sublease is in full force and effect without modification except as noted, (b) the amount,
if any, of prepaid rent and deposits paid by Tenant to Landlord (and not returned to
Tenant), (c) the nature and kind of concessions, rental or otherwise, if any, which Tenant
has received or is entitled to receive, (d) that, to Tenant’s knowledge, Landlord has
performed all of its obligations due to be performed under this Sublease and that there are
no defenses, counterclaims, deductions or offsets outstanding or other excuses for
Tenant’s performance under this Sublease as of such date, and (e) any other fact
reasonably requested by Landlord or such proposed lender or purchaser.
13.2 Subordination and Attornment. Tenant agrees that this Sublease is subject
and subordinate to (i) the lien of any mortgage, deed of trust or other encumbrance of the
Building or the Real Property, (ii) all present and future ground or underlying leases of
the Building or Real Property now or hereafter in force against the Building or Real
Property, and (iii) all renewals, extensions, modifications, consolidations, and
replacements of the items described in clauses (i) and (ii), provided that the mortgagee or
beneficiary thereunder agrees that so long as no Event of Default exists, (a) Tenant’s
possession of the Premises and rights and privileges under this Sublease shall not be
diminished or interfered with by such mortgagee or beneficiary during the term of this
Sublease or any extensions or renewals hereof, and (b) such mortgagee or beneficiary or
lessor will not join Tenant as party for the purpose of terminating or otherwise affecting
Tenant’s interest in this Sublease in any action of foreclosure or other proceeding to
enforce any rights arising out of any default under any mortgage or deed of trust.
13.3 Subordination Agreement. The subordination described in this Article
XIII is self-operative, and no further instrument of subordination shall be required to
make it effective. To confirm this subordination, however, Tenant shall, within fifteen
Exhibit B
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(15) days after Landlord’s request, execute any further instruments or assurances in
recordable form that Landlord reasonably considers necessary to evidence or confirm the
subordination of this Sublease to any such encumbrances or underlying leases, provided
that that any such instrument provides that the mortgagee or the beneficiary agrees that so
long as no Event of Default exists, (a) Tenant’s possession of the Premises and rights and
privileges under this Sublease shall not be diminished or interfered with by such
mortgagee or beneficiary during the term of this Sublease or any extensions or renewals
hereof, and (b) such mortgagee or beneficiary will not join Tenant as party for the
purpose of terminating or otherwise affecting Tenant’s interest in this Sublease in any
action of foreclosure or other proceeding to enforce any rights arising out of any default
under any mortgage or deed of trust. Tenant shall have no obligation to execute any
instrument subordinating its rights hereunder to the lien of any mortgage or deed of trust
unless such instrument contains the foregoing conditions. Tenant’s failure to execute and
deliver such instrument(s) shall constitute a default under this Sublease.
13.4 Attornment. Tenant covenants and agrees to attorn to the transferee of
Landlord’s interest in the Real Property or the Building by foreclosure, deed in lieu of
foreclosure, exercise of any remedy provided in any encumbrance or underlying lease
affecting the Building or the Real Property, or operation of law (without any deductions
or setoffs), if requested to do so by the transferee, and to recognize the transferee as the
lessor under this Sublease. The transferee shall not be liable for any acts, omissions, or
defaults of Landlord that occurred before the sale or conveyance other than acts,
omissions or defaults that are continuing upon transferee’s acquisition of the Real
Property and Transferee fails to cure the same after receiving notice thereof.
13.5 Notice of Default; Right to Cure. Tenant agrees to give written notice of
any default by Landlord to the holder of any encumbrance or underlying lease affecting
the Building or the Real Property, provided that Tenant has received written notice of the
name and address of such encumbrance holder or lessor. Tenant agrees that, before it
exercises any rights or remedies under the Sublease, the lienholder or lessor shall have
the right, but not the obligation, to cure the default within the same time, if any, given to
Landlord to cure the default, plus an additional thirty (30) days. Tenant agrees that this
cure period shall be extended by the time (not to exceed an additional sixty (60) days)
necessary for the lienholder to begin foreclosure proceedings and to obtain possession of
the Building or Real Property, as applicable.
13.6 Nondisturbance. Landlord agrees to use commercially reasonable efforts
to obtain from the holder of any existing and future indebtedness secured by the Building,
a subordination, nondisturbance and attornment agreement which provides that in the
event of foreclosure or transfer in lieu of foreclosure, so long as no default by Tenant has
occurred under this Sublease and remains uncured beyond any applicable cure period (i)
Tenant shall not be named or joined in any proceeding that may be instituted to foreclose
or enforce the mortgage unless such joinder is legally required to perfect such
proceeding, and (ii) Tenant’s possession and use of the Premises in accordance with the
provisions of the Sublease shall not be affected or disturbed by reason of the
subordination to or any modification of or default under the mortgage.
Exhibit B
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ARTICLE XIV
SURRENDER OF PREMISES; HOLDING OVER
14.1 Surrender of Premises. On expiration of this Sublease, Tenant shall
surrender the Premises in the same condition as when the Term commenced, ordinary
wear and tear excepted. Except for furniture, equipment and trade fixtures (other than
those which are affixed to the Premises so that they cannot be removed without material
damage to the Premises) all alterations, additions or improvements, whether temporary or
permanent in character, made in or upon the Premises, either by Landlord or Tenant, shall
be Landlord’s property and at the expiration or earlier termination of the Sublease shall
remain on the Premises without compensation to Tenant; provided that, upon reasonable
written request of Landlord, Tenant shall, at its expense and without delay, remove any
alterations, additions or improvements (including, without limitation, all
telecommunications equipment and cabling, and all alterations and improvements made
by Tenant after the Commencement Date) made to the Premises by Tenant and
designated by Landlord to be removed, and shall repair any damage to the Premises or
the Building caused by such removal. Notwithstanding the foregoing, provided,
however, Tenant shall have no obligation to remove the initial Tenant Improvements
constructed pursuant to Exhibit C hereto upon expiration of the Term of this Sublease. If
Tenant fails to complete any removal required by this section or to repair the Premises,
Landlord may complete such removal and repair, and Tenant shall reimburse Landlord
therefor. If Tenant fails to remove such property as required under this Sublease,
Landlord may dispose of such property in its sole discretion without any liability to
Tenant, and further may charge the cost of any such disposition to Tenant.
14.2 Hold Over Tenancy. If Tenant remains in possession of the Premises after
the expiration or earlier termination of this Sublease with Landlord’s written consent,
Tenant shall be deemed, at Landlord’s option, to occupy the Premises as a tenant from
month-to-month. During such tenancy (and prior to any termination by Landlord),
Tenant agrees to pay Landlord, monthly in advance, an amount equal to: (a) during the
first ninety (90) days of such tenancy One Hundred Twenty Five Percent (125%) of all
Base Rent which would become due during the last month of the Term, together with all
other amounts payable by Tenant to Landlord under this Sublease, and (b) for any period
following the first ninety (90) days of such tenancy, One Hundred Fifty Percent (150%)
of all Base Rent which would become due during the last month of the Term, together
with all other amounts payable by Tenant to Landlord under this Sublease. Except as
provided in the preceding sentence, such month-to-month tenancy shall be on the same
terms and conditions of this Sublease except that any renewal options, expansion options,
rights of first refusal or any other rights or options pertaining to additional space in the
Building contained in this Sublease shall be deemed to be terminated and shall be
inapplicable thereto. Landlord’s acceptance of rent after such holding over with
Landlord’s written consent shall not result in any other tenancy or in a renewal of the
initial term of this Sublease.
Exhibit B
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If Tenant remains in possession of the Premises after the expiration or earlier
termination of this Sublease without Landlord’s written consent, Tenant’s continued
possession shall be on the basis of a tenancy at sufferance and Tenant shall pay monthly
Rent during the holdover period in an amount equal to two hundred percent (200%) of all
Base Rent which would become due the last month of the Term, together with all other
amounts payable by Tenant to Landlord.
ARTICLE XV
LANDLORD’S RESERVED RIGHTS.
15.1 Rights Reserved to Landlord. Without notice and without liability to
Tenant, and without effecting an eviction or disturbance of Tenant’s use or possession,
Landlord shall have the right to (i) grant utility easements or other easements in, or
subdivide or make other changes in the legal status of the Land, the Building or the Real
Property as Landlord shall deem appropriate in its sole discretion, provided such changes
do not substantially interfere with Tenant’s use of the Premises for the Permitted Use; (ii)
enter the Premises at reasonable times and with reasonable advance notice (and at any
time in the event of an emergency), to inspect (including inspections by prospective
lenders for or buyers of the Real Property), or repair the Premises or the Building and to
perform any acts related to the safety, protection, reletting, sale or improvement of the
Premises or the Building; (iii) install and maintain signs on and in the Building and the
Real Property; and (iv) make such rules and regulations as, in the reasonable judgment of
Landlord, may be needed from time to time for the safety of the tenants, the care and
cleanliness of the Premises, the Building and the Real Property and the preservation of
good order therein. Landlord shall at all times retain a key with which to unlock all of
the doors in the Premises, except Tenant’s vaults and safes. If an emergency necessitates
immediate access to the Premises, Landlord may use whatever force is necessary to enter
the Premises and any such entry to the Premises shall not constitute a forcible or unlawful
entry into the Premises, a detainer of the Premises or an eviction of Tenant from the
Premises or any portion thereof.
ARTICLE XVI
DEFAULT AND REMEDIES
16.1 Tenant’s Default. It shall be an “Event of Default” hereunder if Tenant
shall:
(a) fail to pay when due any monthly installment of Rent (or, if applicable
under this Sublease, Operating Expenses), or fail to pay any other amount owed
by Tenant to Landlord under this Sublease as and when due and such failure
continues for five (5) days following written notice thereof to Tenant by
Landlord;
Exhibit B
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(b) fail to provide any certificate, instrument or assurance as required
pursuant to Article IX if the failure continues for five (5) days after written notice
of the failure from Landlord to Tenant;
(c) make a general assignment for the benefit of its creditors or file a
petition for bankruptcy or other reorganization, liquidation, dissolution or similar
relief;
(d) have a proceeding filed against Tenant seeking any relief mentioned in
(c) above which is not discharged within sixty (60) days thereafter;
(e) have a trustee, receiver or liquidator appointed for Tenant or a
substantial part of its property;
(f) abandon the Premises for more than three (3) consecutive months;
(g) assign this Sublease or sublease any portion of the Premises in
violation of Article X; or
(h) fail to comply with any other provision of this Sublease in the manner
required hereunder and such failure continues for thirty (30) days after written
notice thereof to Tenant by Landlord (or if the noncompliance cannot by its nature
be cured within the thirty (30)-day period, if Tenant fails to commence to cure
such noncompliance within the thirty (30)-day period and thereafter diligently
prosecute such cure to completion).
16.2 Remedies on Default. Upon the occurrence of an Event of Default, Landlord
shall have the right to pursue any one or more of the following remedies in addition to
any other remedies now or later available to Landlord at law or in equity. These remedies
are not exclusive but instead are cumulative.
(a) Continue Sublease. Landlord may continue this Sublease in full force
and effect. In such case, so long as Landlord does not terminate Tenant’s right to
possession, the Sublease will continue in effect and Landlord shall have the right
to collect Rent when due, and may undertake efforts to relet the Premises, or any
part of them, to third parties for Tenant’s account. Tenant shall be liable to
Landlord for all reasonable costs Landlord incurs in reletting the Premises
including, without limitation, broker’s commissions, expenses of remodeling the
Premises required by the reletting, and like costs. Reletting can be for a period
shorter or longer than the remaining term of this Sublease. Tenant shall pay to
Landlord the Rent due under this Sublease on the date the Rent is due, less the
Rent Landlord receives from any reletting. No act by Landlord allowed by this
section shall terminate this Sublease unless Landlord terminates Tenant’s right to
possession. After an Event of Default and for as long as Landlord does not
terminate Tenant’s right to possession of the Premises, if Tenant obtains
Exhibit B
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Landlord’s consent, Tenant shall have the right to assign or sublet its interest in
this Sublease, but Tenant shall not be released from liability.
(b) Terminate Sublease. Landlord may terminate the Sublease and
Tenant’s right to possession of the Premises at any time following an Event of
Default. No act by Landlord other than giving written notice to Tenant shall
terminate this Sublease. Acts of maintenance, efforts to relet the Premises or the
appointment of a receiver on Landlord’s initiative to protect Landlord’s interest
under this Sublease shall not constitute a termination of Tenant’s right to
possession. On termination, Landlord shall have the right to recover from Tenant
all of the following:
(i) The worth, at the time of the award, of any unpaid Rent that had
been earned at the time of termination of this Sublease;
(ii) The worth, at the time of the award, of the amount by which
the unpaid Rent that would have been earned after the date of termination
of this Sublease until the time of the award exceeds the amount of the
unpaid Rent that Tenant proves could have been reasonably avoided;
(iii) The worth, at the time of the award, of the amount by which
the unpaid Rent for the balance of the Term after the time of the award
exceeds the amount of unpaid Rent that Tenant proves could have been
reasonably avoided;
(iv) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant’s failure to perform obligations
under this Sublease, including, without limitation, brokerage commissions,
advertising expenses, expenses of remodeling the Premises for a new
tenant, and any special concessions made to obtain a new tenant; and
(v) Any other amounts, in addition to or in lieu of those listed
above that may be permitted by law.
“The worth, at the time of the award” as used in clauses (i) and (ii) of this
Paragraph (b) is to be computed by allowing interest at the maximum rate allowed
by law at that time, or if there is no such maximum, at a rate of ten percent (10%)
per annum. “The worth, at the time of the award,” as referred to in clause (iii) of
this Paragraph (b) is to be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award plus
one percent (1%).
(c) Receiver. Landlord shall have the right to have a receiver appointed to
collect Rent. Neither the filing of a petition for the appointment of a receiver nor
the appointment itself shall constitute an election by Landlord to terminate this
Sublease.
Exhibit B
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16.3 Landlord’s Default. Landlord’s failure to perform any of its obligations
under this Sublease shall constitute a Landlord Event of Default hereunder if the failure
continues for thirty (30) days after written notice of the failure from Tenant to Landlord.
If the required performance cannot be completed within thirty (30) days, Landlord’s
failure to perform shall not constitute a Landlord Event of Default if Landlord undertakes
to cure the failure within such thirty (30)-day period and diligently and continuously
attempts to complete the cure as soon as reasonably possible. Tenant waives any right to
terminate this Sublease and to vacate the Premises upon Landlord’s default under this
Sublease. Tenant’s sole remedy on Landlord’s default is an action for damages or
injunctive or declaratory relief.
ARTICLE XVII
PARKING
17.1 Parking. Landlord hereby grants to Tenant a nonexclusive license and
right, in common with Landlord and all persons conducting business on the Real Property
and their respective customers, guests, licensees, invitees, employees and agents, to use
the retail parking area, excluding reserved spaces, located on the Real Property for
vehicular parking, such nonexclusive license to be appurtenant to Tenant’s leasehold
estate created by this Sublease. Tenant may use unreserved parking spaces in Landlord’s
surface retail parking lot on an unreserved basis. The nonexclusive license and right
granted pursuant to this section shall be subject to the Rules and Regulations. There shall
be no overnight parking of any vehicles, and vehicles which have been parked in
violation of the terms hereof may be towed away at the owner’s expense. Tenant shall
not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s
employees, suppliers, shippers, customers or invitees to be loaded, unloaded, or parked in
areas other than those designated by Landlord for such activities.
17.2 Tenant Improvement Loan: Landlord will provide Tenant with a Thirty-
Eight Thousand Dollars ($38,000) loan amortized over the five-year term and an interest
rate of three percent (3%). The Tenant Improvement Loan will cover the costs of the
tenant improvements not provided by the Landlord. The obligations of Landlord and
Tenant, with respect to the Tenant Improvements are set forth in and attached hereto as
Exhibit C. The monthly loan payments shall be added to the scheduled monthly Base
Rent based on a graduated amortization schedule as described in Section 1.16.
ARTICLE XVIII
MISCELLANEOUS
18.1 No Waiver. No receipt and retention by Landlord of any payment
tendered by Tenant in connection with this Sublease shall constitute an accord and
Exhibit B
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satisfaction, or a compromise or other settlement, notwithstanding any accompanying
statement, instruction or other assertion to the contrary unless Landlord expressly agrees
to an accord and satisfaction, or a compromise or other settlement, in a separate writing
duly executed by Landlord. Landlord will be entitled to treat any such payments as being
received on account of any item or items of Rent, interest, expense or damage due in
connection herewith, in such amounts and in such order as Landlord may determine at its
sole option. Failure of any party to exercise any right in one or more instance shall not be
construed as a waiver of the right to strict performance or as an amendment to or
modification of this Sublease. Any waiver of any condition or provision set forth in this
Sublease shall not be deemed a waiver of any subsequent breach of such condition or
provision or of any other condition or provision, nor shall any such waiver be deemed a
continuing waiver.
18.2 Severability. The Parties intend this Sublease to be legally valid and
enforceable in accordance with all of its terms to the fullest extent permitted by law. If
an arbitrator or a court of competent jurisdiction holds any provision hereof to be invalid
or unenforceable in whole or in part for any reason, the validity and enforceability of the
remaining clauses, or portions of them, shall not be affected unless an essential purpose
of this Sublease would be defeated by loss of the invalid or unenforceable provision.
18.3 Governing Law; Construction. This Sublease shall be construed according
to the laws of the State of California without regard to principles of conflict of laws. The
parties acknowledge that this Sublease is the product of negotiation and compromise on
the part of both parties, and agree that the provisions hereof shall be construed in
accordance with their fair meaning and not in accordance with any rule providing for
interpretation against the party who causes the uncertainty to exist or against the drafter.
The captions used for the Sections and Articles of this Sublease have been inserted for
convenience only and shall not be used to alter or interpret the content of this Sublease.
18.4 Binding Effect; Survival. The covenants, conditions, warranties and
agreements contained in this Sublease shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns. The representations and
warranties of Landlord and Tenant and the indemnification obligations of Landlord and
Tenant set forth herein shall survive the expiration or termination of this Sublease as shall
all other provisions hereof which are intended to survive such expiration or termination.
18.5 Time. Time is of the essence of each provision of this Sublease.
18.6 Entire Agreement; Amendments. This Sublease and Exhibits A through C
attached hereto and incorporated herein by this reference, constitutes the final, complete,
and exclusive statement of the terms of the agreement between Landlord and Tenant
pertaining to the lease of space in the Building and supersedes all prior and
contemporaneous understandings or agreements of the parties. This Sublease may not be
amended or modified except in a writing signed by both parties.
Exhibit B
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18.7 Notices. All notices delivered pursuant to this Sublease shall be in writing
and delivered to Landlord or Tenant at the applicable address designated in Section 1.1 or
to such other address as may hereafter be designated by either party by written notice
delivered to the other party in accordance with this Section. Such notices shall be
effective upon receipt or refusal of delivery. Such notices shall be sent by (i) United
States mail, certified mail with return receipt requested, or (ii) overnight delivery service.
18.8 Force Majeure. Except as otherwise provided in this Sublease, the time
for performance of an obligation other than the payment of money under this Sublease
shall be extended for the period during which a party is prevented from performing due to
Unavoidable Delay. “Unavoidable delay” shall mean any and all delay beyond the
applicable party’s reasonable control, including without limitation, delays caused by the
other party; governmental restrictions, regulations, controls, preemptions or delays;
orders of civil, military or naval authorities; strikes, labor disputes, lock-outs, shortages
of labor or materials or reasonable substitutes therefore; Acts of God; fire, earthquake,
floods, explosions or other casualties; extreme weather conditions or other actions of the
elements; enemy action, civil commotion, riot or insurrection.
18.9 Attorneys’ Fees; Prejudgment Interest. If the services of an attorney are
required by either Party to secure the performance hereof or otherwise upon the breach or
default of the other Party, or if any judicial remedy is necessary to enforce or interpret
any provision of this Sublease, or if the services of an attorney are required upon the
bankruptcy of a party to this Sublease to compel or object to assumption or rejection of
this Sublease, seek relief from the automatic stay or object to an action to recover a
preference or fraudulent transfer, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs, expert witnesses fees, post judgment collection costs, and other
expenses, in addition to any other relief to which such party may be entitled. Any award
of damages following judicial remedy as a result of the breach of this Sublease or any of
its provisions shall include an award of prejudgment interest from the date of the breach
at the maximum amount of interest allowed by law.
18.10 Authority. Each Party warrants and represents that it has full authority to
enter into this Sublease, that this Sublease constitutes a binding obligation of such Party,
and that the individual(s) signing on behalf of such party are duly authorized to bind such
Party hereto. In that regard, Landlord represents that title to the Real Property was
previously conveyed from the Redevelopment Agency of the City of South San
Francisco, a public body, corporate and politic, to the City of San Francisco, a municipal
corporation, prior to the dissolution of the Redevelopment Agency effective February 1,
2012. By operation of law, real property held by the former Redevelopment Agency is
or will be transferred to the Agency as successor in interest. The governing bodies of the
Agency and the City agree to take such actions as may be necessary to approve, affirm or
ratify this Sublease.
18.11 Landlord Approvals. Whenever the consent or approval of Landlord is
required hereunder, such consent or approval may be granted or withheld by the Agency
Executive Director/City Manager or his or her designee, unless the Agency Executive
Exhibit B
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Director/City Manager determines in his or her discretion that such matter shall be
referred to the Agency/City governing board(s) for consideration.
18.12 Counterparts. This Sublease may be executed in counterparts, each of
which shall constitute an original, and all of which together shall constitute one and the
same instrument. The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided such signature
page is attached to any other counterpart identical thereto except having additional
signature pages executed by any other party. This Sublease shall take effect when signed
by all parties hereto and all parties have written notice of the signature of all the
remaining parties. The parties agree that a signed copy of this Sublease transmitted by
one party to the other party(ies) by facsimile transmission shall be binding upon the
sending party to the same extent as if it had delivered a signed original of the Sublease.
18.13 Brokers. Tenant and Landlord each represent and warrant to the other that
except as stated in this Section, no broker or agent is entitled to a broker’s commission or
finder’s fee in connection with the execution of this Sublease or the consummation of the
transaction contemplated hereby, and each Party agrees to defend and indemnify the
other Party against any loss, expense or liability incurred by the other party as a result of
a breach of such representation and warranty. The provisions of this Section shall
survive the expiration or earlier termination of the Sublease.
18.13.1 SRS Real Estate Partners. Landlord and SRS Real Estate Partners
(Contractor) entered into that certain Professional Services Agreement (“Agreement”)
dated August 24, 2012 and amended on July 11, 2013, whereby Contractor agreed to
perform professional services related to the marketing of commercial leases for retail
space at 636 El Camino Real, South San Francisco. As compensation for services
performed, Landlord shall pay Contractor according to the commission schedule for the
full and satisfactory completion of the work in accordance with the terms and conditions
of the Agreement.
18.14 Submission of Sublease. Submission of this document for examination or
signature by the Parties does not constitute an option or offer to lease the Premises on the
terms in this document or a reservation of the Premises in favor of tenant. This document
is not effective as a lease or otherwise until executed and delivered by both Landlord and
Tenant.
18.15 Non-Agency. It is not the intention of Landlord or Tenant to create hereby
a relationship of principal and agent, and under no circumstances shall Tenant be
considered the agent of Landlord, it being the sole purpose and intent of the Parties to
create a relationship lf landlord and tenant.
18.16 No Merger. The voluntary or other surrender of this Sublease by Tenant
or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger,
and shall at the option of Landlord terminate all or any existing subtenancies or may at
Exhibit B
38
33
the option of Landlord, operate as an assignment to Landlord of any or all such
subtenancies.
SIGNATURES ON FOLLOWING PAGE.
Exhibit B
39
Exhibit B
40
EXHIBIT A
DIAGRAM OF PREMISES
Exhibit B
41
Exhibit AExhibit B
42
EXHIBIT B
RULES AND REGULATIONS
Exhibit B
43
Exhibit B
44
Exhibit B
45
Exhibit B
46
EXHIBIT C
LANDLORD SHALL PROVIDE THE FOLLOWING IMPROVEMENTS:
1. Electrical service panel - 200 amp. service, 120 volts, three phase four wire
including breakers, within the Premises.
2. Restrooms - One (1) located at rear wall in an area designated by Landlord,
provided with one (1) toilet, one (1) lavatory, one (1) exhaust fan, (1) standard light
fixture, one (1) electrical wall duplex outlet, and rough-in water supply and
electrical junction box for hot water heater (hot water heater not provided by
Landlord). If code requires a second restroom, Landlord shall be responsible for
adding the extra bathroom.
3. Ceiling - Finished ceiling in restroom.
4. Floor - Vinyl tile (3/32") or sheet vinyl, per Landlord's selection in restroom;
balance of floor area, uncolored concrete slab, finished and sealed suitable for a
restaurant use. Said concrete floor shall be raised to match the level of the
storefront and rear door.
5. Walls - Unpainted masonry or unpainted drywall over stud, as specified by
Landlord.
6. Electrical Outlets - Duplex convenience outlets (including restroom), located per
Tenant’s layout.
7. Lighting – Drop lights - including lamps - panel switched, located per Tenant’s
layout.
8. Sign outlet - One (1), location designated by Landlord.
9. Telephone outlet - One (1) outlet box at location designated by Landlord, with
empty conduit stubbed to above ceiling.
10. Air conditioning and heating - Refrigerated air conditioning and heating per
Landlord's design, adequate for Tenant’s business.
11. Store front – as presently exists.
12. Additional Plumbing – Floor drain(s), mop sink(s), and other slab penetrations that
are required due to Tenant’s plans.
TENANT SHALL BE RESPONSIBLE FOR THE COST OF ALL IMPROVEMENTS
NOT LISTED ABOVE AND SAID IMPROVEMENTS MUST BE PRE-APPROVED
BY LANDLORD.
Exhibit B
47
RESOLUTION NO.____
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
RESOLUTION APPROVING THE PROPOSED COMMUNITY
DEVELOPMENT BLOCK GRANT (CDBG) FUNDED PUBLIC RIGHT OF
WAY (ROW) IMPROVEMENT PROJECTS
WHEREAS, the City Council held a Study Session on February 14, 2014 to present the
implementation of an economic development strategy for the City of South San Francisco (“City”);
and
WHEREAS, part of the economic development strategy included a staff proposal on how to
improve the Downtown, specifically, staff proposed to undertake public right of way
enhancement/beautification projects to improve the look and feel of the Downtown; and
WHEREAS, the City Council approved staff’s proposal and directed staff to prepare a list of
Downtown improvements to the public Right of Way (ROW); and
WHEREAS, City Council also allocated $200,000 in FY 14-15 Community Development
Block Grant (“CDBG”) funding for these improvements; and
WHEREAS, the proposed ROW projects are: 1) installing banners on lampposts in the
Downtown Area; 2) replacing the existing and dated trash receptacles; 3) installing flower baskets on
the lamp posts at the main intersections along Grand Avenue; 4) installing customized bike racks; 5)
installing decorative lighting above the breezeway; and 6) enhancing the crosswalk and streetscape in
front of City Hall;
WHEREAS, the City Council has already allocated $200,000 in FY 14-15 Community
Development Block Grant (“CDBG”) funding for these improvements and public improvements
such as streets and sidewalks, including aesthetic amenities on public property, are CDBG eligible under
24 CFR 570.20; and
WHEREAS, the City Council only allocated $200,000 in FY 14-15 for ROW projects
therefore staff recommends 1) completing the banners, trash receptacles, flower baskets, bike racks,
and breezeway lighting projects along with the design and some preliminary construction of the City
Hall Pedestrian Improvement Project in FY 14-15; and 2) directing staff to look at additional funding
between now and FY 15-16 to complete the remainder of the City Hall Pedestrian Improvement
Project; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby:
1. Approves the proposed Community Development Block Grant (CDBG) Funded Public Right
of Way (ROW) Improvement Projects, attached hereto as Exhibits A and B, and incorporated
herein.
2. Directs staff to look at additional funding between now and FY 15-16 to complete the
1
remainder of the City Hall Pedestrian Improvement Project.
BE IT FURTHER RESOLVED by the City Council that the City Manager, or his
designee, is authorized to implement the improvements consistent with this Resolution and
Exhibits, to execute any related documents, and to take any other actions as necessary to carry
out the intent of this Resolution.
* * * * * *
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a City Council meeting held on the 23rd day of
July, 2014 by the following vote:
AYES: ____________________________________________________________
NOES: _____________________________________________________________
ABSTAIN: _____________________________________________________________
ABSENT: _____________________________________________________________
ATTEST: ________________________________
Clerk
2
Improvement Item Design Examples Details Notes
Banners Location: Select lampposts in the
Downtown area
•Banner design ideas include
holding an art contest for banner
design or multiple banner designs
with connecting theme
Quantity: 42
Cost Estimate: $9,000
Trash Receptacles Location: Select locations on
Grand Ave between Airport Blvd &
Spruce Ave
•Dual Stream (i.e. trash and
recycling)
•Design/look will align with City’s
long term streetscape goals
Quantity: 40
Cost Estimate: $57,000
Flower Baskets Location: Main intersections at
Grand: Airport Blvd (4), Linden
Ave (4), Maple Ave (4), Spruce
Ave (4), City Hall (2)
•Installation on a seasonal basis
(Spring to Fall)
Quantity: 18
Cost Estimate: $10,000
Custom Bike Racks Location: Select locations on
Grand Ave between Airport Blvd &
Spruce Ave
•Design ideas include SSF-themed,
Biotech-themed (e.g. DNA strand),
or corresponding to adjacent
businesses (e.g. coffee cup in front
of coffee shop) OR
•Historic looking bike rack to match
Downtown characteristics
Quantity: 3
Cost Estimate: $3,000
Breezeway
Decorative Lighting
Location: Above the Grand Ave
Breezeway
•String lighting
•Edison lights
Quantity: 5 strands (75 ft. per
strand)
Cost Estimate: $8,000
City Hall Crosswalk
Improvements
Location: City Hall •Enhancing the crosswalk and
streetscape in front of City Hall
•Expanding the width of the current
crosswalk, adding additional
landscaping, and new trash
receptacles & benches.
•Provides expanded plaza type
space for community events and
activities
•Example of what a BID could offer
Quantity: N/A
Cost Estimate: $360,000*
Total Estimated Cost: $447,000
*Note there is only approximately $113,000 available in FY 14-15 CDBG funding for the City Hall Pedestrian Improvement Project
Exhibit A - CDBG-Funded Public Right of Way (ROW) Improvements Map
3
South San franciSco, ca | March 4, 2008 | city of South San franciSco, ca
SSf 415 Grand avenue | PerSPective view lookinG South froM city hall StePS
Exhibit B - City Hall Pedestrian Improvement Project
4
South San franciSco, ca | March 4, 2008 | city of South San franciSco, ca
0 20’10’
SSf 415 Grand avenue | StreetScape iMproveMentS
Exhibit B - City Hall Pedestrian Improvement Project
5
RESOLUTION NO.____
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
RESOLUTION APPROVING THE REVISED PROGRAM GUIDELINES,
PROPERTY PRIORITY LIST, DEVELOPMENT OF A CITY FEE WAIVER
POLICY, AND GRANT AGREEMENT AND LOAN DOCUMENT TEMPLATES
FOR THE DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
WHEREAS, the City Council held a Study Session on February 14, 2014 to present the
implementation of an economic development strategy for the City of South San Francisco (“City”);
and
WHEREAS, part of the economic development strategy included a staff proposal on how to
improve the Downtown; and
WHEREAS, the City Council approved staff’s proposal and directed staff to 1) amend the
City’s existing Commercial Rehabilitation Program guidelines to include increased façade grants,
loans for interior tenant improvements, architectural assistance, and program promotion measures; 2)
prepare a list of key businesses to focus the revised program on; and 3) change the program’s
funding source; and
WHEREAS, the City Council has already changed the program’s funding source through the
allocation of $200,000 in one-time General Fund dollars in the FY 2014-15 City Operating Budget to
support these activities; and
WHEREAS, based on the direction given by City Council, staff recommends the City
Council approve the following changes to the Commercial Rehabilitation Program starting in FY
2014-15: 1) renaming the existing Commercial Rehabilitation Program to the Downtown Façade
and Tenant Improvement Program; 2) revising the program guidelines to include increased grant
and loan thresholds, interior tenant improvements as an eligible improvement, architectural
assistance, and program promotion measures; 3) approving the Property Priority List, which
shows the eligible program areas and identifies key businesses in need of façade improvements;
4) approving the development of a policy that exempts Downtown Façade and Tenant
Improvement Program projects from having to pay City fees; and 5) approving the Downtown
Façade and Tenant Improvement Program grant agreement and loan document templates; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby:
1. Approves the Downtown Façade and Tenant Improvement Program Guidelines, attached
hereto as Exhibit B, and incorporated herein.
2. Approves the Property Priority List for the Downtown Façade and Tenant Improvement
Program, attached hereto as Exhibits C and D, and incorporated herein.
3. Approves the development of a City fee waiver policy.
4. Approves the Downtown Façade and Tenant Improvement Program grant agreement and loan
document templates, attached hereto as Exhibits E and F, and incorporated herein.
1
BE IT FURTHER RESOLVED by the City Council that the City Manager, or his
designee, is authorized to implement the guidelines and improvements consistent with this
Resolution and Exhibits, to execute any related documents, and to take any other actions as
necessary to carry out the intent of this Resolution.
* * * * * *
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a City Council meeting held on the 23rd day of
July, 2014 by the following vote:
AYES: ____________________________________________________________
NOES: _____________________________________________________________
ABSTAIN: _____________________________________________________________
ABSENT: _____________________________________________________________
ATTEST: ________________________________
Clerk
2282399.1
2
Paperwork Type
# of
Pages
Completed
and/or
signed by
Applicant
Prepared
by Staff Other Paperwork Type
# of
Pages
Completed
and/or
signed by
Applicant
Prepared
by StaffOther
Application Phase Application Phase
Application 5 500Application 3 300
Application Guidelines 11 0011Application Guidelines 5 005
Before Photos 5 050Before Photos 5 050
Subtotal 215511 Subtotal 13355
Bidding Phase Bidding Phase
Request for Proposal (RFP)15 0150Request for Proposal (RFP)10 0100
Bid Walk Through Notes 1 010Bid Walk Through Notes 1 010
Contractors Bids (3)15 0015Contractors Bids (3)15 0015
Subtotal 3101615 Subtotal 2601115
Contract Phase Contract Phase
Owner/Contractor Contract2 2 002Owner/Contractor Contract2 2 002
Insurance Certificates 3 300Insurance Certificates 3 300
W9 Form 1 100W9 Form 1 100
Subtotal 6402 Subtotal 6402
Grant Agreement Grant Agreement
Grant Agreement2 13 0130Grant Agreement2 10 0100
Subtotal 130130 Subtotal 100100
Loan Documents Loan Documents
Promissory Note2 6 600Promissory Note2 6 600
Owner Participation Agreement2 30 3000 Owner Participation Agreement2 30 3000
Deed of Trust2 27 2700 Deed of Trust2 27 2700
Truth in Lending Disclosure2 1 100Truth in Lending Disclosure2 1 100
Request for Notice of Default 1 001Request for Notice of Default 1 001
Notice of Right to Cancel2 1 100Notice of Right to Cancel2 1 100
Control Instructions2 2 200Control Instructions2 2 200
Subtotal 686701686701
Construction/Payment Phase Construction/Payment Phase
Construction Schedule 1 001Construction Schedule 1 001
Request for Reimbursement Form 1 100Request for Reimbursement Form 1 100
Invoice(s)2 002Invoice(s)2 002
Proof of Applicant's Payment 1 100Proof of Applicant's Payment 1 100
After Photos 5 050After Photos 5 050
Subtotal 10253 Subtotal 10253
CDBG Requirements 3 CDBG Requirements ‐ N/A
Environmental Review 35 0350Environmental Review 0 0 00
State Historic Preservation Office
(SHPO) Notification
13 0130State Historic Preservation Office
(SHPO) Notification
0 0 00
MBE/WBE Form 1 001MBE/WBE Form 0 0 00
Section 3 Form 2 002Section 3 Form 0 0 00
Davis Bacon Wage Decision 50 0050Davis Bacon Wage Decision 0 0 00
Davis Bacon HUD 4010 Form 5 005Davis Bacon HUD 4010 Form 0 0 00
Davis Bacon Certified Payrolls 4 004Davis Bacon Certified Payrolls 0 0 00
Davis Bacon Interview Forms 2 020Davis Bacon Interview Forms 0 0 00
Davis Bacon Project Wage Sheet 1 010Davis Bacon Project Wage Sheet 0 0 00
Davis Bacon Payroll Review Form 1 010Davis Bacon Payroll Review Form 0 0 00
Subtotal 11405262 Subtotal 0000
Planning Division Requirements 4 Planning Division Requirements 4
Design Review Board Application 4 400Design Review Board Application 4 400
DRB App Attachments
(e.g. plans, photos, samples, etc.)
15 0150DRB App Attachments
(e.g. plans, photos, samples, etc.)
15 0150
Subtotal 194150 Subtotal 194150
Building Division Requirements 5 Building Division Requirements 5
Building Permit Application 2 002Building Permit Application 2 002
Building Permit App Attachments
(e.g. plans, photos, etc.)
5 050Building Permit App Attachments
(e.g. plans, photos, etc.)
5 050
Building Permit 1 010Building Permit 1 010
Building Inspections 1 010Building Inspections 1 010
Subtotal 9072 Subtotal 9072
Engineering Requirements Engineering Requirements
Encroachment Permit Application 1 100Encroachment Permit Application 1 100
Encroachment Permit Guide 2 002Encroachment Permit Guide 2 002
Encroachment Permit App
Attachments (e.g. plans, photos)
5 050Encroachment Permit App
Attachments (e.g. plans, photos)
5 050
Encroachment Permit 1 010Encroachment Permit 1 010
Subtotal 9162 Subtotal 9162
Total Pages ‐ Grant 2321611997 Total Pages ‐ Grant 102145929
Total Pages ‐ Loan 2878310698 Total Pages ‐ Loan 160814930
2This item is only signed by Applicant
Exhibit A
4Note: larger scale projects may require Design Review Board and Planning Commission Review and Approval
5Note: Building Permits are not required for all projects and larger scale projects may require a Plan Check Application
Approximation of Paperwork Generated1
New Downtown Façade & Tenant Improvement ProgramExisting CDBG Commercial Rehabilitation Program
1 This does not included any staff reports and/or memos that are prepared in connection with the programs
3Note: This does not include any of the CDBG reporting or reimbursement requirements staff completes for all CDBG‐funded activities
3
4
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN
FAÇADE & TENANT
IMPROVEMENT
PROGRAM
This guide is provided as a reference for business owners interested in applying for
the City of South San Francisco Downtown Façade and Tenant Improvement Program
To apply, call (650) 829-6620 or email downtown@ssf.net
If instructed by the City to proceed, please complete the packet and email to
downtown@ssf.net or mail it to:
City of South San Francisco
Economic and Community Development Office
Downtown Façade and Tenant Improvement Program
PO Box 711
South San Francisco, CA 94083-0711
Your application will be reviewed for completeness and eligibility. Please contact
downtown@ssf.net or (650) 829-6620 with any questions concerning this program.
Table of Contents
Program Guidelines Pg. 2-3
City Contact Information Pg. 3
Program Application Pg. 4-5
Landlord Consent Form Pg. 6
Request for Payment Form Pg. 7
Permit Information Pg. 8
Exhibit B
15
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
Program Guidelines
Overview
The City of South San Francisco offers local businesses an opportunity to take part in beautifying the downtown
streetscape. The Downtown Façade and Tenant Improvement Program, which is supported by the City General Fund,
provides grants or loans to rehabilitate eligible downtown businesses. For business owners, it is a way to make your
business more attractive to downtown visitors. It also increases civic pride and encourages support for businesses,
which in turn is beneficial to the community and the local economy.
IN ORDER TO BE ELIGIBLE FOR FUNDING, THIS APPLICATION AND ALL ADDITIONAL DOCUMENTS MUST
BE SUBMITTED AND APPROVED BY THE CITY PRIOR TO COMMENCEMENT OF WORK.
Eligibility
• This program exclusively considers improvements for downtown businesses. Refer to the map below.
Businesses located on the shaded streets are considered geographically eligible for this program.
• Eligible improvements include signs, awnings, exterior lighting, exterior painting, structural façade
improvements, and interior tenant improvements.
• To be eligible for funding, the Applicant must own the property to be improved, or if the Applicant is a tenant,
written permission from the property owner is required.
• Funds provided will be used for construction costs only, unless otherwise approved by the City.
• Note that modifying the building may subject the project to state or federal environmental and historic
preservation requirements. The City will provide assistance to the Applicant, where possible, regarding these
requirements.
• New improvements only. This program does not fund work in progress or already completed.
Funding Available
*Funding is available on a first come first serve basis
Improvement Type Fund Type Limit
Exterior Façade Improvements
e.g. signage, lighting, paint, awnings, ADA
Grant Up to $50,000
Interior Tenant Improvements
e.g. restaurant tenant improvements and equipment
Loan Up to $100,000
Exhibit B
26
Contact
Information
Economic & Community
Development Dept.
400 Grand Avenue
South San Francisco,
CA 94080
Phone: (650) 829-6620
Fax: (650) 829-6623
Email: downtown@ssf.net
Building Division
315 Maple Avenue
South San Francisco,
CA 94080
Phone: (650) 829-6670
Fax: (650) 829-6672
Email: web-ecd@ssf.net
Planning Division
315 Maple Avenue
South San Francisco,
CA 94080
Phone: (650) 877-8535
Fax: (650) 829-6639
Email: web-ecd@ssf.net
Engineering Division
315 Maple Avenue
South San Francisco,
CA 94080
Phone: (650) 829-6652
Fax: (650) 829-6689
Email:
engineering@ssf.net
APPLICATION PROCESS
1. Email downtown@ssf.net or call (650)829-6620 to obtain an application and
schedule an appointment with City staff to review program procedures and
requirements.
2. Bring your completed Application and any preliminary designs you have to your
appointment with City staff.
3. The City will conduct an initial inspection to document existing property conditions
and establish the scope of work.
4. The City formally reviews the application and approves or denies grant or loan
proposal.
DESIGN & CONTRACTOR SELECTION PHASE
5. Consult with an architect, designer, or engineer (if applicable) to discuss the
improvements and alterations to the building exterior.
6. Architect/designer shall submit the following as applicable 1) building elevations,
2) colors and materials, 3) site plan.
7. Work with City staff to obtain complete bids from at least three licensed
contractors. You must meet with City staff before getting bids/estimates.
8. City staff can provide guidance on the contractor selection based on cost efficiency,
qualifications, proposed schedule, etc. However, the ultimate selection of the
contractor is the Applicant’s responsibility. Note all contractors and subcontractors
must have a valid South San Francisco business license.
9. Applicant and the City finalize design and funding amount.
CONTRACT PHASE
10. Applicant and City execute a grant or loan agreement secured by a Deed of Trust.
Any work not approved by the City will not be reimbursed.
Note – the grant or loan agreement will require applicant to maintain/clean, on a
regular basis, all façade improvements funded by the City.
11. Applicant executes contract with selected Contractor and submits a copy of the
contract to the City.
CONSTRUCTION/IMPROVEMENT PHASE
12. Responsible party (owner, tenant, or contractor) must obtain all necessary building,
sign, or encroachment permits along with obtaining all necessary Planning Division
approvals which may include approval by the Design Review Board and/or
Planning Commission.
13. Once all contracts are in executed and all necessary permits and approvals are
obtained, City issues Notice to Proceed.
14. Construction begins. Applicant or Contractor is to provide a construction schedule.
15. Depending on the proposed improvements, a progress inspection(s) and a final
inspection may be conducted.
16. Change Orders: All change orders require City and Applicant approval.
PAYMENT PROCEDURES
17. City reimburses Applicant
Applicant must submit the following documents in order to receive reimbursement:
• A Request for Payment form (Page 7)
• Copies of invoices from contractor working on the project
• Proof of Applicant’s payment to the Contractor (cancelled checks, credit card
receipts, or contractor receipts)
• Final payment requires a copy of final building inspection (if applicable)
OR
City Pays Contractor Directly
Contractor submits invoice(s) directly to the City. Final payment requires a copy of
final building inspection (if applicable)
Program Process
Exhibit B
37
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
Application
Prior to the meeting with City staff, complete this Application to the best of your knowledge.
Applicant Information
Business Name:
Business Type: Restaurant Retail Office Other
Business Address:
Applicant Name:
Applicant Mailing Address (if different from above):
Applicant Telephone:
Applicant Email Address:
Are you the owner or tenant of the building? I am the Owner I am the Tenant
If you are the Owner, describe your ownership interest in property to be improved.
Free and Clear Mortgage
Name(s) on Title: Specify ownership interest of each name on the title
If you are a Tenant, you must obtain consent from your landlord prior to starting any work.
Please have your landlord complete the attached Landlord Consent Form and submit this with your application.
Improvement Information
1. Is your business located in the eligible downtown commercial area? Yes No
2. Number of stories:
3. Number of businesses located in the building:
4. Names of current tenants:
5. Has construction already begun for this improvement? Yes No
6. What is your proposed improvement(s) (Check all that apply):
Sign Awning Exterior Painting Exterior Lighting Structural Façade Improvement
Interior Tenant Improvement Other
7. Describe the current condition of the building (e.g. deteriorating, vandalized/defaced, unattractive, etc.)
Exhibit B
48
8. Do you currently have any code violations? Yes No
If yes, what are the code violations? Please attach a copy of the code violation notice to this application
9. Please describe your proposed improvements. Identify each type of work to be completed, such as signage,
lighting, or interior improvements. Be specific with size, dimensions, materials, and colors. Attach a separate
paper if necessary.
10. How will the improvement(s) benefit the business?
11. How will the improvement(s) benefit the downtown community?
Funding Requested
12. What is the estimated cost of the project?
13. Funding Requested (Check all that apply): Grant | Amount
Loan | Amount
Reference Table for Available Funding
Improvement Type Fund Type Limit
Exterior Façade Improvements
e.g. signage, lighting, paint, awnings, ADA
Grant Up to $50,000
Interior Tenant Improvements
e.g. restaurant tenant improvements and equipment
Loan Up to $100,000
Application Confirmation
☐ I/we certify that all statements on this application are true and correct to the best of my/our knowledge. I/we
understand that any intentional misstatements will be grounds for disqualification. I/we authorize City staff the right to
access the property to be improved for the purpose of inspecting or obtaining information for the Downtown Façade and
Tenant Improvement Program. If application is accepted, I/we hereby agree to enter into a grant and/or loan agreement
with the City. I/we have read the Downtown Façade and Tenant Improvement Program description and eligibility
criteria and agree to carry out the work in accordance with these guidelines. I/we further agree to comply with all City
ordinances and the design recommendations of the Planning Division. For any changes I/we want to make to the
approved scope of work, I/we understand I/we must request and receive the approval of the Economic and Community
Development Department first.
______________________________ _ ___________________
Signature Date
______________________________ _ ___________________
Signature Date
Exhibit B
59
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
Landlord Consent Form
If you do not own the building that your business is located in, you must have your landlord complete the form below.
Consent
The undersigned owner of the existing building located at ______________________________________ (ADDRESS)
certifies that _________________________ (APPLICANT) operates or intends to operate a business at this
location. The undersigned agrees to permit APPLICANT and his/her contractors or agents to implement
improvements listed on the City of South San Francisco Downtown Façade and Tenant Improvement Program
Application dated ____________________ (DATE ON APPLICATION). The undersigned agrees to hold the City of
South San Francisco (CITY) harmless for any charges, damages, claims, or liens arising out of the APPLICANT’s
participation in the Downtown Façade and Tenant Improvement Program.
Property Owner
________________________________ ________________________________
(Name)
________________________________
________________________________ ________________________________
(Title) (Mailing Address)
________________________________ ________________________________
(Daytime Phone Number) (Email)
As the legal owner of the above property, I hereby grant authorization to complete the improvements indicated on the
submitted application.
________________________________ ________________________________
(Signature) (Date)
Exhibit B
610
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
Request for Payment Form
Date:
Requisition Number: of
Applicant Name:
Telephone Number:
Business Name:
Business Address:
Contractor
Description
of Work Invoice #
Invoice
Date
Total Cost
(submit copy
of invoice)
Amount Paid
by Applicant
(submit proof
of payment)
Date Paid by
Applicant
Ex:
Example
Painting
Company
Painted
building
exterior
Invoice
#123
1/18/13
$10,000
$10,000
3/17/13
1.
2.
3.
4.
5.
Totals:
The work listed above was performed in accordance with the approved improvement design and in compliance with all
City of South San Francisco ordinances. I certify that the amounts listed above are true and correct. I am enclosing a copy
of the invoice listed above and proof of payment. I further understand that it may take up to 30 days before a
reimbursement check is issued.
_________________________________________
Applicant Signature
Total Amount Requested:
Exhibit B
711
CITY OF SOUTH SAN FRANCISCO
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM
Permit Information
Building Permit: The Building Division staff reviews plans and applications for completeness. After this, the
Building Division staff determines the proper routing for the application. Applications for simple projects, such as
building a small deck or shed, can sometimes be approved at the Permit Center. Applications for more complex projects,
such as large-scale tenant improvements, must be routed to the appropriate departments within the City for approval.
Once all approvals are obtained, the Building Division issues a permit. The time necessary for the plan review depends
upon the number of reviews required and the complexity of the project. For more information, call (650) 829-6670.
Construction Permit Application can be found here:
http://casouthsanfrancisco.civicplus.com/DocumentCenter/Home/View/168
Plan Check Application: Depending on the scope of work detailed in the application, the Planning Division
may require submission of a Plan Check Application. For more information, call (650) 829-6670.
Plan Check Application can be found here: http://www.ssf.net/DocumentCenter/Home/View/170
Sign Guidelines: The City of South San Francisco encourages creative signs that complement the building’s
design and the adjacent streetscape. Typeface, color and logo should generally conform to the adopted graphics of the
company. The use of logos is encouraged as they are easy to spot from a distance. Signage should not completely fill a
space; it should have enough blank area to contrast and balance with words and logos.
Additional Sign Guidelines can be found here: http://www.ssf.net/DocumentCenter/Home/View/645
• Type A Sign Permit: Temporary and permanent signs that are used by individual business establishments
and have a maximum freestanding height of six feet or less and have a maximum surface area of 25 square feet or
less. Type A Sign Permit can be found here: http://www.ssf.net/DocumentCenter/View/196
• Type B Sign Permit: Signs that are used by individual or multi-tenant businesses and have a freestanding
height of more than six feet and less than 10 feet and have a maximum surface area of more than 25 square feet
and less than 100 square feet. Type B Sign applications require approval by the City’s Design Review Board.
Type B Sign Permit can be found here: http://www.ssf.net/DocumentCenter/View/198
• Type C Sign Permit: Signs that are used by individual or multitenant businesses and have a freestanding
height of 10 feet or more, and less than 20 feet and have a maximum surface area of 100 square feet or more and
less than 300 square feet and Master Sign Programs. Type C Sign applications require approval by the City’s
Design Review Board and Planning Commission. Type C Sign Permit can be found here:
http://www.ssf.net/DocumentCenter/View/199
Encroachment Permit: Encroachment permits allow certain uses and improvements within the public
Right-of-Way or dedicated easement (e.g. awnings installed on public Right-of-Ways). Permits are issued by the
Engineering Division upon review and approval of complete applications. Complete applications must include
descriptions of construction work, diagrammatic drawing showing relationship to street, sidewalk, and property, utility
trench detail, and traffic plans if road closures are required.
Encroachment Permit Application can be found here:
http://casouthsanfrancisco.civicplus.com/DocumentCenter/Home/View/2444
Exhibit B
812
1. 116 Grand
(L)
Los Compadres Taqueria 7. 324 Grand
(L)
Galli’s Sanitary Bakery 13. 380-385
Grand (M)
Vacant / Lonora Gold / May Fair
Current
Condition
- Broken blinds
on street facing
windows
Proposed
Improvement
- Revamp
windows with
mural and/or
coverings
Current
Condition
- Ripped
awning
Proposed
Improvement
- New awning
skin
Current
Condition
- Dated façade
- Lacks
architectural
detail
- Non-uniform
design
Proposed
Improvement
- New signage
- Add design
details
- Uniform
design
2. 204 Grand*
(H)
Luminous Spa 8. 328-330
Grand (M)
Princess Nails / Pro Cut Hair Salon 14. 394 Grand
(L)
Taquerias El Farolito
Current
Condition
- Good
condition
- Owner
already has a
façade design
Proposed
Improvement
- Add canopy
over threshold
-New signage
Current
Condition
- Faded
awnings
Proposed
Improvement
- New awning
skins
- New paint
Current
Condition
- Threshold has
peeling paint
- Dirty awning
Proposed
Improvement
- New paint
- New or clean
awning
3. 238 Grand
(H)
Deportivo USA 9. 336-338
Grand (M)
Ariel Accessories / Boss Tycoon 15. 415-417
Grand* (H)
Armstrong Brewery / Wine &
Canvas, etc.
Current
Condition
- Dilapidated
sign
- Faded awning
- Dilapidated
threshold
Proposed
Improvement
- New blade
sign
- New awning
- New paint
Current
Condition
- Illegal box
signs
- Dated facade
Proposed
Improvement
- New signage
- New Paint
Current
Condition
- Owner
already has a
façade design
& doing some
improvements
independently
Proposed
Improvement
- New signage
- Iconic mural
- Add arch.
design details
4. 250 Grand
(H)
South City Hair 10. 337 Grand
(M)
South City Pawn 16. 312-314
Linden (M)
Da Thanh / Crimpers Bizarre
Current
Condition
- Unattractive
lighting
- Exposed, dirty
vents
- Plywood
signage
Proposed
Improvement
- New awning
- Remove
existing lighting
- New address
numbers
- New paint
Current
Condition
- Broken box
sign
- Lacks signage
- Dilapidated
exterior
Proposed
Improvement
- Remove box
sign
- New awning
- New paint
Current
Condition
- Faded awning
- Faded blade
signs
Proposed
Improvements
- New awning
skin
- New blade
signs
-New paint
5. 254 Grand
(M)
Club Marakas 11. 348 Grand
(M)
Ed’s Diner 17. 415-437
Linden (L)
Papa Joe’s / Burgundy Shears /
Siam Spoon / Beeper Printing /
Sarkis Signs / Nelly’s Bridal
Boutique
Current
Condition
- Dilapidated
blade sign
Proposed
Improvement
- Fix or replace
blade sign
- New paint
Current
Condition
- Faded sign
Proposed
Improvement
- Repaint sign
and façade
- Replace neon
lighting
Current
Condition
- Dilapidated
signage
- Faded paint
Proposed
Improvements
- New paint
- New signage
6. 317 ½
Grand (H)
Joyeria Latina Jewelry 12. 349 Grand
(H)
Rose Mery Store 18. 523 Linden
(L)
South City Dry Cleaners /
Fuente de Vida & Salud
Current
Condition
- Lacks signage
- Dated façade;
lacks detail and
character
Proposed
Improvement
- Hire architect
for façade
redesign
- New signage
- New paint
- Add arch.
detail
Current
Condition
- Dilapidated
Façade
Proposed
Improvement
-Hire Architect
for façade
redesign
- New signage
- Add arch.
detail
Current
Condition
- Illegal box
sign and
temporary
banner signage
Proposed
Improvements
- New paint
- New signage
Exhibit C: Property Priority List
H= High Priority M= Medium Priority L= Low Priority
*Business Owner or Property Owner has already contacted the City regarding assistance with façade improvements and already has a new façade designs in place 13
14
Awning
(Skin Only)
Awning
(Skin + Frame)Signage
Exterior
Lighting
Exterior
Paint
Façade Redesign
(Consultation w/
an architect)
Add
Architectural
Detail
204 Grand*Luminous Spa High 5,000$ 10,000$ 10,000$ 25,000$
238 Grand Deportivo USA High 3,000$ 3,000$ 10,000$ 16,000$
250 Grand South City Hair High 5,000$ 2,000$ 10,000$ 17,000$
317 ½ Grand Joyeria Latina Jewelry High 6,000$ 10,000$ 3,000$ Unknown 19,000$
349 Grand Rose Mery Store High 7,000$ 25,000$ 3,000$ Unknown 35,000$
415-417 Grand*Armstrong Brewery, Wine & Canvas, etc.High 9,500$ 32,000$ 58,500$ 100,000$
Subtotal 3,000$ 10,000$ 35,500$ 2,000$ 97,000$ 6,000$ 58,500$ 212,000$
254 Grand Club Maraka’s Med 5,000$ 10,000$ 15,000$
328-330 Grand Princess Nails & Pro Cut Hair Salon Med 6,000$ 10,000$ 16,000$
336-338 Grand
Ariel Accessories Express &
Boss Tycoon Smoke & Fashion Med 10,000$ 10,000$ 20,000$
337 Grand South City Pawn Med 5,000$ 10,000$ 15,000$
348 Grand Ed’s Diner Med 5,000$ 10,000$ 15,000$
380-385 Grand
Vacant, Lonora Gold, and May Fair
Restaurant Med 8,000$ 25,000$ 3,000$ Unknown 36,000$
312-314 Linden
Da Thanh Vietnamese Restaurant &
Crimpers Bizarre Salon Med 6,000$ 3,000$ 10,000$ 19,000$
Subtotal 17,000$ -$ 31,000$ -$ 85,000$ 3,000$ -$ 136,000$
116 Grand Los Compadres Taqueria Low 2,000$ 2,000$
324 Grand Galli’s Sanitary Bakery Low 3,000$ 3,000$
394 Grand Taquerias El Farolito Low 3,000$ 5,000$ 8,000$
415-437 Linden
Papa Joe’s, Burgundy Shears Hair Salon,
Siam Spoon, Beeper Printing, Sarkis
Signs, & Nelly’s Bridal Boutique Low 8,000$ 50,000$ 58,000$
523 Linden
So. City Dry Cleaners &
Fuente de Vida & Salud Low 10,000$ 20,000$ 30,000$
Subtotal 6,000$ 18,000$ 77,000$ 101,000$
Total Estimated Cost Per Improvement Type 26,000$ 10,000$ 84,500$ 2,000$ 259,000$ 9,000$ 58,500$ 449,000$
*Business Owner or Property Owner has already contacted the City regarding assistance with façade improvements and already has a new façade designs in place
Exhibit D
Estimated Cost of Proposed Improvements
Improvement Type & Estimated Cost
PriorityBusiness Name(s)Address
Total
Estimated
Cost Per
Address/
Business
Downtown Façade & Tenant Improvement Program
15
GRANT AGREEMENT BETWEEN THE CITY OF SOUTH SAN FRANCISCO
AND [GRANTEE], FOR THE PROVISION OF
DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM FUNDS
This Agreement dated , is between the City of South San Francisco, a municipal
corporation, hereinafter referred to as "CITY" and , hereinafter referred to as
"GRANTEE” who is the owner of , at
. CITY and GRANTEE are hereinafter collectively referred to as (the “Parties”).
RECITALS
A. Pursuant to the Downtown Façade and Tenant Improvement Program (“Program”) GRANTEE
has requested grant funds to as described
in the attached estimates and incorporated as Exhibit A (“Scope of Work”). The budget for the
Scope of Work is attached and incorporated as Exhibit B.
B. GRANTEE is the owner of a in the downtown area
of the CITY.
C. The CITY has allocated General Fund dollars specifically for the Program to facilitate
downtown rehabilitation activities.
D. The CITY has approved and authorized the provision of no more than AMOUNT ($X,XXX)
from said General Fund dollars, to GRANTEE for the purposes and under the terms contained
herein.
NOW, THEREFORE, in consideration of the recitals and the mutual obligations of the parties
as herein expressed, CITY and GRANTEE agree as follows:
1. Provision of Funds
a. CITY Funds. CITY agrees to provide grant funds in the amount not to exceed
AMOUNT ($X,XXX) to GRANTEE for the Scope of Work performed at the Grantee’s
property, located at , South San Francisco, California
(“Property”). This work includes , and is more
specifically described in the Scope of Work, attached hereto as Exhibit A.
b. Grant Payment Terms. Payment of grant funds by CITY shall be made to GRANTEE on a
reimbursement basis upon completion of work and submission of a reimbursement request.
Disbursement of grant funds by CITY to GRANTEE shall be made only for costs incurred
on or after the effective date of this AGREEMENT, on a reimbursement basis. Project
funds will be disbursed to GRANTEE upon receipt and approval of reimbursement requests.
All reimbursement requests shall contain the following: i) certified payroll(s) for all labor
completed pursuant to this Agreement; ii) legible copies of all invoices, payment vouchers,
with a written certification that all such construction of the improvements have been
completed; and iii) any other documentation as may reasonably be requested in order to
verify the actual total cost of construction for which payment is sought. The reimbursement
Exhibit E
16
request must also contain a statement of the cumulative totals of expenditures from effective
date of this Agreement to date.
CITY shall review requests for reimbursement and provide GRANTEE with grant funds
within fifteen (15) business days of receipt of an approved request for payment.
GRANTEE acknowledges that payment shall be made to GRANTEE only for costs incurred
on or after the effective date of this Agreement.
2. Grantee Execution of Work
a. Following execution of this Agreement, GRANTEE shall enter into a contract or
contracts with one or more properly licensed contractors to perform the work contained
in the Scope of Work. The construction contract or contracts will be solely between
GRANTEE and the Contractor or Contractors, CITY will not be a party to those
contracts.
b. Prior to performing any work under this Agreement, GRANTEE or its contractor shall
prepare, submit and obtain all necessary government approvals that may be required for
the work described in the Scope of Work.
c. GRANTEE will be required to obtain a minimum of three informal construction bids.
GRANTEE shall have the right to select its contractor, provided that the CITY finds
that the bid covers is the required work and is within the budget for the Scope of Work.
3. Time of Performance
The term of this Agreement shall commence on [begin date] and end on [end date], unless
sooner terminated as hereinafter provided. Any grant funds, which remain unexpended after
payment to GRANTEE for the period ending [end date], shall become available to the CITY
for use for other activities as the CITY shall determine. In the event that all improvements
listed in Exhibit A are not completed, and all reasonable efforts to secure their completion are
unsuccessful, any unexpended grant funds contributed by CITY will be refunded to CITY in
full.
4. Prevailing Wage
The wages to be paid for a day's work to all classes of laborers, workmen, or mechanics on the
work contemplated by this Purchase Agreement, shall be not less than the prevailing rate for a
day’s work in the same trade or occupation in the locality within the state where the work
hereby contemplates to be performed as determined by the Director of Industrial Relations
pursuant to the Director’s authority under Labor Code Section 1770, et seq. Each laborer,
worker or mechanic employed by Contractor or by any subcontractor shall receive the wages
herein provided for. The Contractor shall pay two hundred dollars ($200), or whatever amount
may be set by Labor Code Section 1775, as may be amended, per day penalty for each worker
paid less than prevailing rate of per diem wages. The difference between the prevailing rate of
per diem wages and the wage paid to each worker shall be paid by the Contractor to each
Exhibit E
17
worker.
The City will not recognize any claim for additional compensation because of the payment by
the Contractor for any wage rate in excess of prevailing wage rate set forth. The possibility of
wage increases is one of the elements to be considered by the Contractor.
NOTE: An error on the part of an awarding body does not relieve the Contractor from
responsibility for payment of the prevailing rate of per diem wages and penalties pursuant to
Labor Code Sections 1770-1775.
a. Posting of Schedule of Prevailing Wage Rates and Deductions. If the schedule of
prevailing wage rates is not attached hereto pursuant to Labor Code Section 1773.2,
the Contractor shall post at appropriate conspicuous points at the site of the project a
schedule showing all determined prevailing wage rates for the various classes of
laborers and mechanics to be engaged in work on the project under this contract and
all deductions, if any, required by law to be made from unpaid wages actually earned
by the laborers and mechanics so engaged.
b. Payroll Records. Each Contractor and subcontractor shall keep an accurate
payroll record, showing the name, address, social security number, work week, and
the actual per diem wages paid to each journeyman, apprentice, worker, or other
employee employed by the Contractor in connection with the public work. Such
records shall be certifies and submitted weekly as required by Labor Code Section
1776.
5. No Partnership
The terms of this Agreement shall in no way be construed to create a partnership, joint venture
or any other joint relationship between CITY and GRANTEE.
6. Independent Contractor
GRANTEE and its employees are not employees of CITY but rather are and shall always be
considered independent contractors.
7. Indemnity and Hold Harmless
GRANTEE agrees to indemnify, defend, and hold harmless CITY and its officers, agents and
employees, from any liabilities, claims, suits or actions, losses or expenses, including attorney
fees, caused by, arising out of, or in connection with, either directly or indirectly,
GRANTEE'S performance under this Agreement. Nothing herein shall be construed to
require Grantee to indemnify the City, its officers, agents and employees against any
responsibility or liability in contravention of Section 2782 of the California Civil Code.
8. Insurance
Any contractor hired to complete work under this Agreement shall not commence work under
Exhibit E
18
this Agreement until insurance has been obtained to cover all work under this Agreement and
such insurance has been approved by the City Attorney, with certificates of insurance
evidencing the required coverage.
All insurance required by this Agreement shall be written on an occurrence basis and shall
name the CITY and its officers, agents and employees as additional insureds. The certificates
shall contain a statement of obligation on the part of the carrier to notify City of any material
change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in
advance of the effective date of any such material change, cancellation, termination or non-
renewal. Further, if the Grantee’s insurance policy includes a self-insured retention that must
be paid by a named insured as a precondition of the insurer’s liability, or which has the effect
of providing that payments of the self-insured retention by others, including additional
insureds or insurers do not serve to satisfy the self-insured retention, such provisions must be
modified by special endorsement so as to not apply to the additional insured coverage required
by this Agreement so as to not prevent any of the parties to this Agreement from satisfying or
paying the self-insured retention required to be paid as a precondition to the insurer’s liability.
Additionally, the certificates of insurance must note whether the policy does or does not
include any self-insured retention. The City’s Risk Manager may waive or modify any of the
insurance requirements of this section by means of a written document.
a. Worker's Compensation and Employer's Liability Insurance:
Anyone performing work under this Agreement shall have in effect during the entire life
of this Agreement Worker's Compensation and Employer's Liability Insurance providing
full statutory coverage. In signing this Agreement, Grantee and/or a contractor hired to
complete work under this Agreement makes the following certification, required by
Section 18161 of the California Labor Code: I am aware of the provisions of Section
3700 of the California Labor Code which require every employer to be insured against
liability for Worker's Compensation or to undertake self-insurance in accordance with
the provisions of the Code, and I will comply with such provisions before commencing
the performance of the work of this Agreement.
b. Liability Insurance:
Anyone performing work under this Agreement shall take out and maintain during the
life of this Agreement such Bodily Injury Liability and Property Damage Liability
Insurance as shall protect it while performing work covered by this Agreement from any
and all claims for damages for bodily injury, including accidental death, as well as any
and all claims for property damage which may arise from work or operations under this
Agreement, whether such operations be by GRANTEE or by any sub-contractor or by
anyone directly or indirectly employed by either of them. The amounts of such
insurance shall be One Million Dollars ($1,000,000) each occurrence and Two Million
Dollars ($2,000,000) annual aggregate.
Exhibit E
19
9. Changes to Work Scope
No changes in the Scope of Work as described in this Agreement shall be made without
written approval of the CITY.
10. Assignability
The GRANTEE shall not assign in this Agreement, and shall not transfer any interest in the
same (whether by assignment or novation), without the prior written consent of the CITY,
provided, however, that claims for money due or to become due to GRANTEE from the CITY
under this Agreement may be assigned to a bank, trust company, or other financial institution
without such approval. Notice of such assignment or transfer shall be furnished promptly to
the CITY.
11. Inspection of Work
It is understood that periodic review of GRANTEE's work may be necessary and the right to
so review is reserved by the CITY. The CITY shall have access to any books, documents,
papers and records of GRANTEE which are directly pertinent to the Scope of Work being
funded.
a. CITY shall not assume liability or responsibility for any conditions that may be in
violation of local and/or state health and building codes. CITY shall not assume
responsibility for correcting said conditions, either existing or discovered during the
course of construction. Failure to correct said conditions during the course of
construction shall not imply the CITY has accepted said conditions; nor forfeit CITY’S
right to have said conditions corrected in the future.
12. Project Representation and Notices
The CITY and GRANTEE hereby designate the following agents to act as project
representatives in the matters dealing with the performance of work under this Agreement and
for receipt of all notices:
CITY: [NAME]
P.O. Box 711
South San Francisco, CA 94083
GRANTEE: [NAME]
[ADDRESS]
[ADDRESS]
13. Suspension, Termination or Withholding of Payments
The CITY may, at any time in its absolute discretion, elect to suspend or terminate payment to
GRANTEE, in whole or in part, under this Agreement, or not to make any particular payments
on this Agreement in the event of any of the following occurrences:
Exhibit E
20
a. If GRANTEE (with or without knowledge) shall have made any material
misrepresentation of any nature with respect to any information or data furnished to
CITY in connection with the project.
b. If there is pending litigation with respect to the Performance by GRANTEE of any of its
duties or obligations under this Agreement which may materially jeopardize or
adversely affect the undertaking of or the carrying out of the project.
c. If GRANTEE shall have taken any action pertaining to the project which requires CITY
approval without having obtained such approval.
d. If GRANTEE is in default under any provision of this Agreement.
e. If GRANTEE makes improper use of grant funds.
f. If GRANTEE fails to comply with any of the terms and conditions of this Agreement in
such a manner as to constitute material breach thereof.
g. If GRANTEE submits to CITY any reports which are incorrect or incomplete in any
material respect.
CITY shall give GRANTEE fourteen (14) days' written notice of its intention to withhold,
suspend or terminate payment under this paragraph. Such notice shall specify the actions, if
any, which must be taken by GRANTEE before payments will be resumed.
14. Termination of Agreement
a. CITY may terminate this Agreement immediately (by giving written notice to
GRANTEE of the effective termination date stated in the notice) if GRANTEE
abandons its work under the Agreement; if for any reason the timely completion
of such project is rendered improbable, infeasible, or illegal; or if CITY otherwise
deems such termination to be in the public interest.
b. This Agreement may be terminated for convenience by either CITY or GRANTEE.
15. Reversion of Assets
Upon expiration of this Agreement, GRANTEE shall transfer to CITY any Grant Fund dollars
on hand at the time of expiration and any accounts receivable attributable to the use of Grant
Fund dollars.
Exhibit E
21
IN WITNESS WHEREOF, this Agreement is executed by the parties.
APPROVED AS TO CONTENT: CITY OF SOUTH SAN FRANCISCO
A municipal corporation
BY: BY:
___________________________
Mike Futrell
Economic Development City Manager
& Housing Manager
Grantee
BY:
________________________________
Owner
APPROVED AS TO FORM:
___________________________
City Attorney
ATTESTED BY:
___________________________
City Clerk
Exhibit E
22
Exhibit A
SCOPE OF WORK
Exhibit E
23
DOWNTOWN FAÇADE & TENANT IMPROVEMENT PROGRAM
LOAN AGREEMENT
by and between
THE CITY OF SOUTH SAN FRANCISCO
and
[BUSINESS NAME]
_________________,
Exhibit F
24
1246539-2 2
Exhibits
A Legal Description of Property
B Financing Plan
C Form of Memorandum of Loan Agreement
D Form of Certificate of Completion
E Form of Promissory Note
F Form of Deed of Trust
Exhibit F
25
1246539-2 3
THIS DOWNTOWN FAÇADE AND TENANT IMPROVEMENT PROGRAM LOAN
AGREEMENT (this “Agreement”) is entered into effective as of _____________________,
(“Effective Date”) by and between the City of South San Francisco, a municipal
corporation (“City”) and , __________________ (“Borrower”).
City and Borrower are hereinafter collectively referred to as the “Parties.”
RECITALS
A. Borrower leases the real property located at [ADDRESS] in South San Francisco,
and known as San Mateo County Assessor’s Parcel No. [APN] as more particularly described in
Exhibit A attached hereto (the “Property”) and the improvements thereon (“Improvements”).
B. City operates a Downtown Façade & Tenant Improvement Program (the
“Program”) pursuant to which the City provides loans for the rehabilitation of buildings located
within the Downtown.
C. Borrower has proposed to rehabilitate the Improvements in order to, among other
improvements, [SCOPE OF WORK] (all of the foregoing, collectively, the “Project”).
D. The owner of the Property has consented to the Project and the improvement of
the Property as set forth in this Agreement.
E. Borrower has requested, and City has agreed to provide, a loan (the “Loan”) to
Borrower pursuant to the terms and conditions set forth herein for the purpose of providing
partial financing for the Project.
F. The City has determined that (i) rehabilitation of the Property pursuant to this
Agreement will be of benefit to the health and welfare of the citizens of the City by improving
the appearance of the Improvements, and by providing increased job and economic development
opportunities, and (ii) the Loan is necessary to make the Project economically feasible.
G. A material inducement to the City to enter into this Agreement is the agreement
by Borrower to rehabilitate the Property within the time periods specified herein and in
accordance with the provisions hereof, and the City would be unwilling to enter into this
Agreement in the absence of an enforceable commitment by Borrower to complete the Project in
accordance with such provisions and within such time periods.
H. In connection with this Agreement: (i) Borrower shall execute a secured
promissory note (the “Note”) in the amount of the Loan and a Leasehold Deed of Trust with
Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) which shall
provide the City with a security interest in Borrower’s leasehold interest in the Property and the
Improvements. This Agreement, the Note, and the Deed of Trust are collectively hereinafter
referred to as the “City Documents.”
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows.
Exhibit F
26
1246539-2 4
ARTICLE I
DEFINITIONS
1. Definitions. The following terms shall have the meanings set forth in the Sections
referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional
terms are defined in the Recitals and text of this Agreement.
1.1 “City Documents” is defined in Recital H.
1.2 “Certificate of Completion” is defined in Section 3.15.
1.3 “City” is defined in Recital A.
1.4 “City Council” is defined in Section 11.2.
1.5 “Claims” is defined in Section 3.17.
1.6 “Closing Date” is defined in Section 4.1.
1.7 “Conditions of Approval” is defined in Section 3.2.
1.8 “Construction Plans” is defined in Section 3.11.
1.9 “Deed of Trust” is defined in Recital H.
1.10 “Environmental Laws” is defined in Section 8.4.
1.11 “Financing Plan” is defined in Section 3.7.
1.12 “Hazardous Materials” is defined in Section 8.3.
1.13 “Improvements” is defined in Recital A.
1.14 “Indemnitees” is defined in Section 3.17.
1.15 “Loan” is defined in Section 4.1.
1.16 “Note” is defined in Section 4.1.
1.17 “Official Records” means the Official Records of San Mateo County.
1.18 “Permitted Exceptions” is defined in Section 4.5.
1.19 “Project” is defined in Recital C and further described in Section 3.2.
1.20 “Title Policy” is defined in Section 4.5.
1.21 “Transfer” is defined in Section 4.7.
Exhibit F
27
1246539-2 5
ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE AND TERM
2.1 Borrower’s Representations. Borrower represents and warrants to City as
follows, and Borrower covenants that until the expiration or earlier termination of this
Agreement, upon learning of any fact or condition which would cause any of the warranties and
representations in this Section 2.1 not to be true, Borrower shall immediately give written notice
of such fact or condition to City. Borrower acknowledges that City shall rely upon Borrower’s
representations made herein notwithstanding any investigation made by or on behalf of City.
(i) Authority; General Partner. Borrower is a corporation, duly organized and
in good standing under the laws of the State of California. Borrower has the full right, power
and authority to undertake all obligations of Borrower as provided herein, and the execution,
performance and delivery of this Agreement by Borrower has been duly authorized by all
requisite actions. The persons executing this Agreement on behalf of Borrower have been duly
authorized to do so. This Agreement and the other City Documents constitute valid and binding
obligations of Borrower, enforceable in accordance with their respective terms.
(ii) No Conflict. Borrower’s execution, delivery and performance of its
obligations under this Agreement will not constitute a default or a breach under any contract,
agreement or order to which Borrower is a party or by which it is bound.
(iii) No Litigation or Other Proceeding. No litigation or other proceeding
(whether administrative or otherwise) is outstanding or has been threatened which would
prevent, hinder or delay the ability of Borrower to perform its obligations under this Agreement.
(iv) No Borrower Bankruptcy. Borrower is not the subject of a bankruptcy or
insolvency proceeding.
(v) Property Owner’s Consent. The Property is owned by[OWNER NAME],
an individual (the “Landlord”). Borrower has obtained the consent of Landlord and all other
parties whose consent is required for: (i) the construction of the Project, (ii) the recordation of
the Deed of Trust and the Memorandum; and (iii) the execution and recordation of a
memorandum of the Lease (defined below).
(vi) Leasehold Interest; Borrower’s Covenant to Extend Lease. Borrower has
provided to City a correct and complete copy of Borrower’s lease for the Property together with
all amendments thereto (collectively, the “Lease”). The Lease is in full force and effect. The
term of the Lease expires on [LEASE EXPIRATION DATE]. Borrower has the right under the
Lease to execute this Agreement and the Deed of Trust. No default under the Lease remains
uncured, nor has any event occurred which, with the passage of time or service of notice or both,
would constitute such a default. No circumstances exist which would permit the Landlord to
terminate the Lease. Borrower has [NUMBER OF OPTIONS] options to extend the term of the
Lease, each for a period of [NUMBER OF YEARS] (the “Options”). No circumstances exist
that would cause any of the Options to expire or be terminated. Borrower covenants that for so
long as the Loan remains outstanding, Borrower will exercise each of the Options, and Borrower
acknowledges that failure to do so or to otherwise extend the term of the Lease shall constitute a
Exhibit F
28
1246539-2 6
default hereunder, permitting City to accelerate the Note and exercise City’s remedies under this
Agreement, the Note and the Deed of Trust. Borrower covenants to execute and to obtain
Landlord’s signature on a memorandum of the Lease that will be recorded in the Official
Records. Borrower agrees that for so long as the Loan remains outstanding, the fee title to the
Property shall not merge with the leasehold interest in the Lease, notwithstanding any union of
such estates in the Landlord, Borrower, or any third party. Borrower agrees that if Borrower
becomes the fee owner of the Property, the Deed of Trust shall automatically be a lien on such
Property.
2.2 Effective Date; Memorandum. The obligations of Borrower and City hereunder
shall be effective as of the Effective Date. Concurrently with the execution of this Agreement,
the Parties shall execute a Memorandum of this Agreement substantially in the form attached
hereto as Exhibit C which shall be recorded in the Official Records (“Memorandum”).
ARTICLE III
DEVELOPMENT OF THE PROJECT
3.1 The Property. Borrower represents and warrants that as of the Effective Date: (i)
Borrower possesses a leasehold interest in the Property and the Improvements, (ii) the owner of
the Property has consented to the Project; and (iii) to Borrower’s knowledge, the Property is
subject to no covenant, condition, restriction or agreement that would prevent the development
of the Project in accordance with this Agreement. If at any time the foregoing statements
become untrue, the City shall have the right to terminate this Agreement upon written notice to
Borrower.
3.2 Scope of Development. Borrower shall rehabilitate the Property in accordance
with the terms and conditions of this Agreement and in compliance with the terms and conditions
of all approvals, entitlements and permits that the City or any other governmental body or City
with jurisdiction over the Project or the Property has granted or issued as of the date hereof or
may hereafter grant or issue in connection with the Project, including without limitation, all
mitigation measures imposed in connection with environmental review of the Project (if any), all
requirements related to preservation of historic resources (if applicable), and all conditions of
approval imposed in connection with any entitlements, approvals or permits (all of the foregoing
approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter
collectively referred to as the “Conditions of Approval”).
The Project will consist of the rehabilitation of the Property, including without limitation,
the improvement of the exterior of the building, add the existing adjacent retail space to the
existing restaurant, make tenant improvements to the interior space, install new furnishings and
equipment, and make improvements to the building façade.
3.3 Reserved.
3.4 Project Approvals. Borrower acknowledges and agrees that execution of this
Agreement by City does not constitute approval for the purpose of the issuance of building
permits for the Project, does not limit in any manner the discretion of City in such approval
Exhibit F
29
1246539-2 7
process, and does not relieve Borrower from the obligation to apply for and obtain all necessary
entitlements, approvals, and permits for the Project, including without limitation, the approval of
architectural plans, the issuance of any certificates regarding historic resources required in
connection with the Project (if any), and the completion of any required environmental review.
Borrower covenants that it shall: (i) obtain all necessary permits and approvals which
may be required by City, City, or any other governmental City having jurisdiction over the
Project or the Property, (ii) comply with all Conditions of Approval, (iii) comply with all
mitigation measures imposed in connection with any environmental review of the Project, and
(iv) not commence construction work on the Project prior to issuance of building permits
required for such work.
City staff shall work cooperatively with Borrower to assist in coordinating the
expeditious processing and consideration of all permits, entitlements and approvals necessary for
development of the Project.
3.5 Fees. Borrower shall be solely responsible for, and shall promptly pay when due,
all customary and usual fees and charges of City in connection with obtaining building permits
and other approvals for the Project, including without limitation, those related to the processing
and consideration of amendments, if any, to the current entitlements, any related approvals and
permits, environmental review, design review, architectural review, historic review, and any
subsequent approvals for the Project or the development of the Property.
3.6 Cost of Construction. Except as expressly set forth herein, Borrower shall be
solely responsible for all direct and indirect costs and expenses incurred in connection with the
design, development and construction of the Project and compliance with the Conditions of
Approval, including without limitation the installation and construction of all off-site or on-site
improvements required by City in connection therewith, and none of such costs and expenses
shall be the obligation of the City or the City.
3.7 Financing Plan. Borrower has submitted to City, and City hereby approves a plan
for financing the Project (hereinafter, “Financing Plan”), indicating all sources of funds
necessary to pay, when due, the estimated costs of construction, including hard and soft
construction costs. Borrower represents and warrants that all such funds have been firmly
committed by Borrower, equity investors or lending institutions, subject only to commercially
reasonable conditions. The Financing Plan is attached hereto as Exhibit B.
3.8 Development Schedule. Borrower shall commence and complete construction of
the Project and shall satisfy all other obligations of Borrower under this Agreement within the
time periods set forth herein, as such time periods may be extended upon the mutual written
consent of the Parties. Subject to force majeure, Borrower shall commence construction of the
Project not later than one (1) month following the Effective Date, and Borrower shall diligently
prosecute to completion the Project in order to allow City to issue a final certificate of occupancy
within six (6) months following commencement of construction work. Subject to force majeure,
Borrower’s failure to commence or complete construction of the Project in accordance with the
time periods specified in this Section 3.8 foregoing shall be a Borrower Event of Default
hereunder.
Exhibit F
30
1246539-2 8
3.9 Rights of Access. For the purpose of ensuring that the Project is developed in
compliance with this Agreement, Borrower shall permit representatives of the City and the City
to enter upon the Property to inspect the Project following 24 hours written notice (except in the
case of emergency in which case such notice as may be practical under the circumstances shall
be provided).
3.10 City Disclaimer. Borrower acknowledges that the City is under no obligation, nor
undertakes or assumes any responsibility or duty to Borrower or to any third party, to in any
manner review, supervise, or inspect the progress of construction or the operation of the Project.
Borrower and all third parties shall rely entirely upon its or their own supervision and inspection
in determining the quality and suitability of the materials and work, the performance of
architects, subcontractors, and material suppliers, and all other matters relating to the
construction and operation of the Project. Any review or inspection undertaken by the City is
solely for the purpose of determining whether Borrower is properly discharging its obligations
under this Agreement, and shall not be relied upon by Borrower or any third party as a warranty
or representation by the City as to the quality of the design or construction of the Improvements
or otherwise.
3.11 Construction Plans. Borrower shall submit to City’s Building Division detailed
construction plans for the Project (the “Construction Plans”). As used herein “Construction
Plans” means all construction documents upon which Borrower and Borrower’s contractors shall
rely in constructing the Project (including, as applicable, landscaping, parking, pedestrian access
and common areas) and shall include, without limitation the following as applicable to the
Project: the site development plan, final architectural drawings, landscaping, exterior lighting
and signage plans and specifications, materials specifications, final elevations, and building plans
and specifications. The Construction Plans shall be based upon the scope of development set
forth herein and upon the approvals issued by the City for the Project, and shall not materially
deviate therefrom without the express written consent of City. Provided that the Construction
Plans are consistent with the requirements of this Agreement, approval of the Construction Plans
by City shall be deemed approval thereof by City.
3.12 Construction Pursuant to Plans. Borrower shall complete the Project in
accordance with the approved Construction Plans, the Conditions of Approval, and all other
permits and approvals granted by the City pertaining to the Project. Borrower shall comply with
all directions, rules and regulations of any fire marshal, health officer, building inspector or other
officer of every governmental agency having jurisdiction over the Property or the Project. Each
element of the work shall proceed only after procurement of each permit, license or other
authorization that may be required for such element by any governmental agency having
jurisdiction. All design and construction work on the Project shall be performed by licensed
contractors, engineers or architects, as applicable.
3.13 Change in Construction Plans. If Borrower desires to make any material change
in the approved Construction Plans, Borrower shall submit the proposed change in writing to the
City for written approval, which approval shall not be unreasonably withheld or delayed if the
Construction Plans, as modified by any proposed change, conform to the requirements of this
Agreement and any approvals issued by City after the Effective Date. Unless a proposed change
is approved by City within thirty (30) days, it shall be deemed rejected. If rejected, the
Exhibit F
31
1246539-2 9
previously approved Construction Plans shall continue to remain in full force and effect. Any
change in the Construction Plans required in order to comply with applicable codes shall be
deemed approved, so long as such change does not substantially nor materially change the
architecture, design, function, use, or amenities of the Project as shown on the latest approved
Construction Plans. . Nothing in this Section is intended to or shall be deemed to modify the
City’s standard plan review procedures.
3.14 Defects in Plans. City not shall be responsible to Borrower or to any third party
for any defect in the Construction Plans or for any structural or other defect in any work done
pursuant to the Construction Plans. Borrower shall indemnify, defend (with counsel approved by
City) and hold harmless the Indemnitees from and against all Claims arising out of, or relating to,
or alleged to arise from or relate to defects in the Construction Plans or defects in any work done
pursuant to the Construction Plans whether or not any insurance policies shall have been
determined to be applicable to any such Claims. Borrower’s indemnification obligations set
forth in this Section shall survive the expiration or earlier termination of this Agreement and the
recordation of a Certificate of Completion. It is further agreed that the City does not, and shall
not, waive any rights against Borrower which they may have by reason of this indemnity and
hold harmless agreement because of the acceptance by City, or Borrower’s deposit with City of
any of the insurance policies described in this Agreement. Borrower’s indemnification
obligations pursuant to this Section shall not extend to Claims arising due to the gross negligence
or willful misconduct of the Indemnitees.
3.15 Certificate of Completion for Project. Promptly after completion of the Project,
issuance of a final Certificate of Occupancy by the City and the written request of Borrower, the
City will provide an instrument (“Certificate of Completion”) so certifying, provided that at the
time such certificate is requested all applicable components of the Project have been completed.
The Certificate of Completion shall be conclusive evidence that Borrower has satisfied its
obligations regarding the Project.
The Certificate of Completion shall be issued substantially in the form attached hereto as
Exhibit D, and at Borrower’s option, shall be recorded in the Official Records. The Certificate
of Completion shall not constitute evidence of compliance with or satisfaction of any obligation
of Borrower to any holder of a deed of trust or mortgage securing money loaned to finance the
Project or any part thereof and shall not be deemed a notice of completion under the California
Civil Code, nor shall such Certificate provide evidence that Borrower has satisfied any obligation
that survives the expiration of this Agreement.
3.16 Equal Opportunity. During the construction of the Project, there shall be no
discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status,
ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in
construction of the Project, and Borrower shall direct its contractors and subcontractors to refrain
from discrimination on such basis.
3.17 Prevailing Wage Requirements. To the full extent required by all applicable state
and federal laws, rules and regulations, if any, Borrower and its contractors and agents shall
comply with California Labor Code Section 1720 et seq. and the regulations adopted pursuant
thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of
Exhibit F
32
1246539-2 10
such provisions. If applicable, Borrower shall submit to City a plan for monitoring payment of
prevailing wages and shall implement such plan at Borrower’s expense.
Borrower shall indemnify, defend (with counsel approved by City) and hold the City and
its respective elected and appointed officers, officials, employees, agents, consultants, and
contractors (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost,
expense (including without limitation attorneys’ fees and costs of litigation), claim, demand,
action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage
(all of the foregoing collectively “Claims”) which directly or indirectly, in whole or in part, are
caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in
connection with, or relate to, the payment or requirement of payment of prevailing wages
(including without limitation, all claims that may be made by contractors, subcontractors or other
third party claimants pursuant to Labor Code Sections 1726 and 1781) or the requirement of
competitive bidding in the construction of the Project, the failure to comply with any state or
federal labor laws, regulations or standards in connection with this Agreement, including but not
limited to the Prevailing Wage Laws, or any act or omission of Borrower related to this
Agreement with respect to the payment or requirement of payment of prevailing wages or the
requirement of competitive bidding, whether or not any insurance policies shall have been
determined to be applicable to any such Claims. It is further agreed that the City does not and
shall not waive any rights against Borrower which they may have by reason of this indemnity
and hold harmless agreement because of the acceptance by City, or Borrower’s deposit with City
of any of the insurance policies described in this Agreement. The provisions of this Section 3.17
shall survive the expiration or earlier termination of this Agreement and the issuance of a
Certificate of Completion for the Project. Borrower’s indemnification obligations set forth in
this Section shall not apply to Claims arising from the gross negligence or willful misconduct of
the Indemnitees.
3.18 Compliance with Laws. Borrower shall carry out and shall cause its contractors
to carry out the construction of the Project in conformity with all applicable federal, state and
local laws, rules, ordinances and regulations, including without limitation, all applicable federal
and state labor laws and standards, the City zoning and development standards, building,
plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code,
and all applicable disabled and handicapped access requirements, including without limitation,
the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section
4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil
Code Section 51, et seq.. Borrower shall indemnify, defend (with counsel approved by City) and
hold harmless the Indemnitees from and against any and all Claims arising in connection with
the breach of Borrower’s obligations set forth in this Section whether or not any insurance
policies shall have been determined to be applicable to any such Claims. It is further agreed that
the City does not and shall not waive any rights against Borrower which they may have by
reason of this indemnity and hold harmless agreement because of the acceptance by City, or
Borrower’s deposit with City of any of the insurance policies described in this Agreement.
Borrower’s indemnification obligations set forth in this Section shall not apply to Claims arising
from the gross negligence or willful misconduct of the Indemnitees. Borrower’s defense and
indemnification obligations set forth in this Section 3.18 shall survive the expiration or earlier
termination of this Agreement and the issuance of a Certificate of Completion for the Project.
Exhibit F
33
1246539-2 11
3.19 Liens and Stop Notices. Prior to the reconveyance of the Deed of Trust, Borrower
shall not allow any lien or stop notice on account of materials supplied to or labor performed on
behalf of Borrower to be recorded against Borrower’s leasehold interest in the Property or any
portion thereof. If a claim of a lien or stop notice is given or recorded affecting the Project,
Borrower shall within twenty (20) days of such recording or service: (a) pay and discharge (or
cause to be paid and discharged) the same; or (b) effect the release thereof by recording and
delivering (or causing to be recorded and delivered) to the party entitled thereto a surety bond in
sufficient form and amount; or (c) provide other assurance satisfactory to City that the claim of
lien or stop notice will be paid or discharged.
3.20 Right of City to Satisfy Liens on the Property. If Borrower fails to satisfy or
discharge any lien or stop notice on the Property pursuant to and within the time period set forth
in Section 3.19 above, the City shall have the right, but not the obligation, to satisfy any such
liens or stop notices at Borrower’s expense and without further notice to Borrower and all sums
advanced by City for such purpose shall be part of the indebtedness secured by the Deed of
Trust. In such event Borrower shall be liable for and shall immediately reimburse City for such
paid lien or stop notice. Alternatively, the City may require Borrower to immediately deposit
with City the amount necessary to satisfy such lien or claim pending resolution thereof. The
City may use such deposit to satisfy any claim or lien that is adversely determined against
Borrower. Borrower shall file a valid notice of cessation or notice of completion upon cessation
of construction of the Project for a continuous period of thirty (30) days or more, and shall take
all other reasonable steps to forestall the assertion of claims or liens against the Property or the
Project. The City may (but has no obligation to) record any notices of completion or cessation
of labor, or any other notice that the City deems necessary or desirable to protect its interest in
the Property and the Project.
3.21 Performance and Payment Bonds.
Prior to commencement of construction work on the Project, Borrower shall cause its
general contractor to deliver to the City copies of payment bond(s) and performance bond(s)
issued by a reputable insurance company licensed to do business in California, each in a penal
sum of not less than one hundred percent (100%) of the scheduled cost of construction of the
Project. The bonds shall name and the City as obligee. In lieu of such performance and payment
bonds, subject to City’s approval of the form and substance thereof, Borrower may submit
evidence satisfactory to the City of the contractor’s ability to commence and complete
construction of the Project in the form of an irrevocable letter of credit, pledge of cash deposit,
certificate of deposit, or other marketable securities held by a broker or other financial
institution, with signature authority of the City required for any withdrawal, or a completion
guaranty in a form and from a guarantor acceptable to City. Such evidence must be submitted to
City in approvable form in sufficient time to allow for City’s review and approval prior to the
scheduled construction start date.
3.22 Insurance Requirements. Borrower shall maintain and shall cause its contractors
to maintain all applicable insurance coverage specified in Article X.
ARTICLE IV
Exhibit F
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1246539-2 12
CITY FINANCIAL ASSISTANCE
4.1 Loan and Note. City agrees to provide a loan to Borrower in the principal amount
of AMOUNT ($XXX,XXX) (the “Loan”) upon the terms and conditions and for the purposes
set forth in this Agreement. The Loan shall be evidenced by a Secured Promissory Note in the
amount of the Loan (the “Note”) dated as of the date of closing (the “Closing Date”) and
executed by Borrower substantially in the form attached hereto as Exhibit E. The Note shall be
secured by a Leasehold Deed of Trust with Assignment of Rents, Security Agreement and
Fixture Filing (the “Deed of Trust”) executed by Borrower as Trustor for the benefit of the City
substantially in the form attached hereto as Exhibit F.
4.2 Interest Rate; Payment Dates; Maturity Date. The outstanding principal balance
of the Note will bear interest at three percent (3%) simple annual interest commencing on
[COMMENCEMENT DATE]. No interest shall accrue prior to the [COMMENCEMENT
DATE]. Monthly payments shall be due and payable in accordance with the terms set forth in the
Note. Commencing on [1 MONTH AFTER COMMENCEMENT DATE] (the “First Payment
Date”), and on the first (1st) day of each calendar month thereafter, Borrower shall make monthly
payments of combined principal and interest until the entire indebtedness evidence hereby is
fully paid, except that all remaining indebtedness, if not sooner paid, shall be due and payable
upon the Maturity Date (defined below). The entire outstanding principal balance of the Loan
together with accrued interest and all other sums due under the City Documents shall be payable
in full on the earlier of (i) the [LOAN TERM YEARS] (XXth) anniversary of the Effective Date,
or (ii) the date upon which the Lease terminates. Notwithstanding the foregoing, the City shall
have the right to accelerate the maturity date and declare all sums payable under the Note
immediately due and payable upon the occurrence of a Borrower Event of Default, including
without limitation, Borrower’s failure to commence or complete construction of the Project
within the times periods specified in Section 3.8.
4.3 Security. As security for repayment of the Note, Borrower shall execute the Deed
of Trust in favor of the City as beneficiary pursuant to which City shall be provided a lien against
Borrower’s leasehold interest in the Property and the Improvements. The Deed of Trust shall be
dated as of the Closing Date, shall be substantially in the form attached hereto as Exhibit F, and
shall be recorded in the Official Records on the Closing Date. The Deed of Trust may be
subordinated only to the Permitted Exceptions and such liens and encumbrances as City shall
approve in writing.
4.4 Use and Disbursement of Proceeds. Borrower shall use the proceeds of the Loan
(the “Loan Proceeds”) solely and exclusively to pay for costs billed to Borrower by third parties
in connection with the design and construction of the Project and such other costs related to the
Project as City may approve in writing. Provided that Borrower has complied with all conditions
precedent to disbursement of the Loan set forth in Section 4.5 and has provided City with a
written requisition specifying the amount and use of the requested Loan Proceeds, accompanied
by copies of evidence of payment of bills and invoices from third parties and such other
documentation as City may reasonably require, the initial disbursement of Loan Proceeds shall
be disbursed to Borrower. Subsequent disbursements shall be made no more than once per
calendar month, upon City’s receipt of written requisitions and supporting documentation.
Exhibit F
35
1246539-2 13
4.5 Conditions to Disbursement of Loan Proceeds.
City’s obligation to fund the Loan and disburse the Loan Proceeds is conditioned upon
the satisfaction (or City’s waiver) of all of the following conditions:
(i) Borrower’s execution and delivery to City of this Agreement, the Note,
the Deed of Trust, and the Memorandum.
(ii) Recordation of the Memorandum and the Deed of Trust in the Official
Records.
(iii) The issuance by an insurer satisfactory to City of an A.L.T.A. lender’s
policy of title insurance (“Title Policy”) for the benefit of City in the amount of the Loan,
insuring that the lien of the Deed of Trust is subject only to exceptions number ________
through _________ identified in that certain Preliminary Report (Order No. ________________)
issued by ___________________________________ Title Company and dated _____________,
(provided that taxes and assessments are paid current as of the closing date), and
such other defects, liens, conditions, encumbrances, restrictions, easements and exceptions as
City may approve in writing (collectively, the “Permitted Exceptions”) and containing such
endorsements as City may reasonably require, with the cost of such Title Policy to be paid by
Borrower. The cost of the Title Policy shall be paid by Borrower.
(iv) Borrower’s delivery to City of each of the following: (i) certificate of
good standing, certified by the Secretary of State indicating that Borrower is properly organized
and authorized to do business in the State of California, (ii) a certified resolution indicating that
Borrower has authorized this transaction and that the persons executing the City Documents on
behalf of Borrower have been duly authorized to do so, and (iii) certified copy of Borrower’s
articles of incorporation and bylaws.
(v) Borrower’s delivery to the City of evidence of property and liability
insurance coverage in accordance with the requirements set forth in Article X.
(vi) Borrower’s delivery to City of evidence reasonable satisfactory to City
that there are no mechanics’ liens or stop notices related to the Property or the Project, and
Borrower’s provision to City of full waivers or releases of lien clams if required by City.
(vii) No material adverse change as determined by City in its reasonable
judgment shall have occurred in the condition of the Property or in the financial or other
condition of Borrower since the date of this Agreement.
(viii) Borrower’s delivery to City of evidence satisfactory to City that Borrower
has obtained all necessary entitlements, permits (including without limitation building permits),
licenses, and approvals required to develop the Project, or that the receipt of such permits is
subject only to such conditions as City shall reasonably approve.
(ix) Borrower’s delivery to City and City approval of: (i) performance bonds
or other assurance of completion reasonably acceptable to City pursuant to the requirements set
forth in Section 3.21; and (iii) construction schedule for the Project.
Exhibit F
36
1246539-2 14
(x) City approval of the Project budget and Financing Plan.
(xi) All other sources of financing for the Project shall have closed or shall
close concurrently with City’s initial disbursement of Loan Proceeds, and Borrower shall have
delivered to City evidence reasonably satisfactory to City that Borrower has secured binding
financing commitments for all Project costs.
(xii) City’s receipt of a written requisition from Borrower specifying the
amount and use of the requested funds, accompanied by copies of third-party invoices, evidence
of Borrower’s payment for services rendered in connection with the Project, and such other
documentation as City shall reasonably require.
4.6 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any other
provision of this Agreement, the City shall have no obligation to disburse or authorize the
disbursement of any portion of the Loan Proceeds following:
(i) the failure of any of Borrower’s representations and warranties made in
this Agreement or in connection with the Loan to be true and correct in all material respects;
(ii) the termination of this Agreement by mutual agreement of the Parties;
(iii) Transfer of Borrower’s interest in the Property or Improvements without
City consent pursuant to Section 4.7;
(iv) the occurrence of a Borrower Event of Default under any City Document
which remains uncured beyond any applicable cure period, or the existence of any condition,
event or act which upon the giving of notice or the passage of time or both would constitute a
Borrower Event of Default under any City Document.
4.7 Prepayment; Acceleration; Limitations on Assignment.
(a) Prepayment. Borrower shall have the right to prepay the Loan at any time
and from time to time, without penalty or premium, provided that any prepayment of principal
must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments
shall be applied first to accrued but unpaid interest and then to principal. In no event shall any
amount due under the Note become subject to any rights of offset, deduction or counterclaim on
the part of Borrower.
(b) Due On Sale or Encumbrance. Unless City agrees otherwise in writing,
the entire unpaid principal balance and all interest and other sums accrued under the Note shall
be due and payable upon the Transfer, absent the prior written consent of City, of all or any part
of Borrower’s interest in the Property or Improvements except as otherwise permitted pursuant
to this Agreement. “Transfer” shall include any assignment, hypothecation, mortgage, pledge,
encumbrance or conveyance of Borrower’s interest in the Property or the Improvements.
(c) Limitations on Assignment. Borrower and its principals have represented
that they possess the necessary expertise, skill and ability to carry out the Project pursuant to this
Agreement. The qualifications, experience, financial capacity and expertise of Borrower and its
Exhibit F
37
1246539-2 15
principals are of particular concern to City. It is because of these qualifications, experience,
financial capacity and expertise that the City has entered into this Agreement with Borrower. No
voluntary or involuntary successor, assignee or transferee of Borrower shall acquire any rights
under this Agreement absent the advance written consent of City, and City shall have no
obligation to make disbursements of Loan Proceeds in the event of a Transfer absent such
written consent.
ARTICLE V
USE OF THE PROPERTY
5.1 Use. Borrower covenants and agrees for itself and its successors and assigns that
the Property shall be used for a retail establishment in compliance with all applicable City zoning
and use restrictions.
5.2 Maintenance. Borrower shall at its own expense, maintain the Property, the
Improvements and related landscaping and common areas in good physical condition, in good
repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with
all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting
the foregoing, Borrower agrees to maintain the Property and the Improvements (including
without limitation, the residential units, common areas, landscaping, driveways, parking areas,
and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping,
graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all
reasonable steps to prevent the same from occurring on the Property or the Improvements.
Borrower shall prevent and/or rectify any physical deterioration of the Property and the
Improvements and shall make all repairs, renewals and replacements necessary to keep the
Property and Improvements in good condition and repair. Borrower shall provide adequate
security services for occupants of the Project.
5.3 Taxes and Assessments. Borrower shall pay all real and personal property taxes,
assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes
assessed against the Property and payable by Borrower, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property;
provided, however, that Borrower shall have the right to contest in good faith, any such taxes,
assessments, or charges. In the event the Borrower exercises its right to contest any tax,
assessment, or charge, the Borrower, on final determination of the proceeding or contest, shall
immediately pay or discharge any decision or judgment rendered against it, together with all
costs, charges and interest.
5.4 Obligation to Refrain from Discrimination. Borrower shall not restrict the rental,
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any
portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability,
marital status, ancestry, or national origin of any person. Borrower covenants for itself and all
persons claiming under or through it, and this Agreement is made and accepted upon and subject
to the condition that there shall be no discrimination against or segregation of any person or
group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
Exhibit F
38
1246539-2 16
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part
thereof, nor shall Borrower or any person claiming under or through Borrower establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in, of, or for the Property or part thereof.
ARTICLE VI
[Reserved.]
ARTICLE VII
[Reserved.]
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 No City Liability; Borrower’s Covenants. City shall not be responsible for the
cost of any soil, groundwater or other environmental remediation or other response activities for
any Hazardous Materials existing or occurring on the Property or any portion thereof, and
Borrower shall be solely responsible for all actions and costs associated with any such activities
required for the development of the Project, the Property, or any portion thereof. Upon receipt of
any notice regarding the presence, release or discharge of Hazardous Materials in, on or under
the Property, or any portion thereof, Borrower (as long as Borrower owns the property which is
the subject of such notice) agrees to timely initiate and diligently pursue and complete all
appropriate response, remediation and removal actions for the presence, release or discharge of
such Hazardous Materials within such deadlines as specified by applicable Environmental Laws.
Borrower hereby covenants and agrees that:
(i) Borrower shall not knowingly permit the Property, the Improvements or
any portion of either to be a site for the use, generation, treatment, manufacture, storage, disposal
or transportation of Hazardous Materials or otherwise knowingly permit the presence or release
of Hazardous Materials in, on, under, about or from the Property or Improvements with the
exception of cleaning supplies and other materials customarily used in construction, operation or
maintenance of residential property and any commercial uses developed as part of the Project,
and used, stored and disposed of in compliance with Hazardous Materials Laws, and
(ii) Borrower shall keep and maintain the Property and Improvements and
each portion thereof in compliance with, and shall not cause or permit the Property or
Improvements or any portion of either to be in violation of, any Hazardous Materials Laws.
8.2 Environmental Indemnification. Borrower shall indemnify, defend (with counsel
approved by City) and hold the Indemnitees harmless from and against any and all Claims
including without limitation any expenses associated with the investigation, assessment,
monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and
Exhibit F
39
1246539-2 17
administrative, enforcement or judicial proceedings resulting, arising, or based directly or
indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage
or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or
from, the Property, or (ii) the failure of Borrower, Borrower’s employees, agents, contractors,
subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous
Materials Laws or the covenants set forth in Section 8.1. The foregoing indemnity shall further
apply to any residual contamination in, on, under or about the Property or affecting any natural
resources, and to any contamination of any property or natural resources arising in connection
with the generation, use, handling, treatment, storage, transport or disposal of any such
Hazardous Materials, and irrespective of whether any of such activities were or will be
undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 8.2
shall survive the issuance of a Certificate of Completion for the Project and the expiration or
earlier termination of this Agreement.
8.2.1 No Limitation. Borrower hereby acknowledges and agrees that
Borrower’s duties, obligations and liabilities under this Agreement, including, without limitation,
under Section 8.2 above, are in no way limited or otherwise affected by any information the City
may have concerning the Property and/or the presence in, on, under or about the Property of any
Hazardous Materials, whether the City obtained such information from the Borrower or from its
own investigations. It is further agreed that theCity does not and shall not waive any rights
against Borrower that they may have by reason of this indemnity and hold harmless agreement
because of the acceptance by City, or the deposit with City by Borrower, of any of the insurance
policies described in this Agreement.
8.3 Hazardous Materials. As used herein, the term “Hazardous Materials” means
any substance, material or waste which is or becomes regulated by any federal, state or local
governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct
or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii)
any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous
substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic
substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified
as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control
Act [15 U.S.C. Section 2601, et seq.]; the Comprehensive Environmental Response,
Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials
Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation
and Recovery Act [42 U.S.C. Section 6901, et seq.], the Federal Water Pollution Control Act [33
U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California
Underground Storage of Hazardous Substances Act [California Health and Safety Code Section
25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety
Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety
Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act
[California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water
Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are
hereafter amended, together with any regulations promulgated thereunder; (iv) any substance,
material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law,
or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant
Exhibit F
40
1246539-2 18
identified as hazardous or toxic and regulated under any other federal, state or local
environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum,
natural gas and synthetic fuel products and by-products.
8.4 Environmental Laws. As used herein, the term “Environmental Laws” means
all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or
common law doctrines, and provisions and conditions of permits, licenses and other operating
authorizations regulating, or relating to, or imposing liability or standards of conduct concerning
(i) pollution or protection of the environment, including natural resources; (ii) exposure of
persons, including employees and agents, to Hazardous Materials (as defined above) or other
products, raw materials, chemicals or other substances; (iii) protection of the public health or
welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical
substances from industrial or commercial activities; (iv) the manufacture, use or introduction into
commerce of chemical substances, including without limitation, their manufacture, formulation,
labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or
disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air,
surface waters, groundwaters or soil, as now or may at any later time be in effect, including but
not limited to the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section
5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.],
the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C.
Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act
[California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances
Account Act [California Health and Safety Code Section 25300, et seq.], the California
Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California
Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section
25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code
Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together
with any regulations promulgated thereunder.
ARTICLE IX
DEFAULTS, REMEDIES AND TERMINATION
9.1 Borrower Event of Default. The following events shall constitute an event of
default on the part of Borrower (“Borrower Event of Default”):
(a) Borrower fails to commence or complete construction of the Project
within the times set forth in Section 3.8, or subject to force majeure, abandons or suspends
construction of the Project prior to completion for a period of sixty (60) days or more;
(b) Borrower fails to pay when due the principal and interest (if any) payable
under the Note and such failure continues for ten (10) days after City notifies Borrower thereof
in writing;
(c) [Reserved.]
Exhibit F
41
1246539-2 19
(d) Borrower fails to maintain insurance on the Property and the Project as
required pursuant to this Agreement, and Borrower fails to cure such default within ten (10)
days;
(e) Subject to Borrower’s right to contest the following charges pursuant to
Section 5.3, if Borrower fails to pay prior to delinquency taxes or assessments due on the
Property or the Improvements or fails to pay when due any other charge that may result in a lien
on the Property or the Improvements, and Borrower fails to cure such default within thirty (30)
days of date of delinquency, but in all events upon the imposition of any such tax or other lien;
(f) A default arises under any loan secured by a mortgage, deed of trust or
other security instrument recorded against Borrower’s interest in the Property or the
Improvements and remains uncured beyond any applicable cure period such that the holder of
such security instrument has the right to accelerate repayment of such loan;
(g) Any representation or warranty contained in this Agreement or in any
application, financial statement, certificate or report submitted to the City in connection with this
Agreement or Borrower’s request for the Loan proves to have been incorrect in any material and
adverse respect when made and continues to be materially adverse to the City;
(h) If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy
Law”), Borrower or any general partner thereof (i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against Borrower or any general partner thereof in
an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator
or similar official for Borrower or any general partner thereof; (iv) makes an assignment for the
benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due;
(i) A court of competent jurisdiction shall have made or entered any decree or
order (1) adjudging the Borrower to be bankrupt or insolvent, (2) approving as properly filed a
petition seeking reorganization of the Borrower or seeking any arrangement for Borrower under
bankruptcy law or any other applicable debtor's relief law or statute of the United States or any
state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the
Borrower in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up
or liquidation of the Borrower;
(j) Borrower shall have assigned its assets for the benefit of its creditors
(other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution
on any substantial part of its property, unless the property so assigned, sequestered, attached or
executed upon shall have been returned or released within sixty (60) days after such event
(unless a lesser time period is permitted for cure under any other mortgage on the Property, in
which event such lesser time period shall apply under this subsection as well) or prior to any
sooner sale pursuant to such sequestration, attachment, or execution;
(k) The Borrower shall have voluntarily suspended its business or Borrower
shall have been dissolved or terminated;
Exhibit F
42
1246539-2 20
(l) An event of default arises under any City Document and remains uncured
beyond any applicable cure period;
(m) Borrower defaults in the performance of any term, provision, covenant or
agreement contained in this Agreement other than an obligation enumerated in this Section 9.1
and unless a shorter cure period is specified for such default, the default continues for ten (10)
days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default
after the date upon which City shall have given written notice of the default to Borrower;
provided however, if the default is of a nature that it cannot be cured within thirty (30) days, a
Borrower Event of Default shall not arise hereunder if Borrower commences to cure the default
within thirty (30) days and thereafter prosecutes the curing of such default with due diligence
and in good faith to completion and in no event later than ninety (90) days after receipt of notice
of the default; or
(n) A default arises under the Lease and remains uncured beyond any
applicable cure period such that the Landlord has the right to terminate the Lease.
9.2 City Default. An event of default on the part of City (“Event of City Default”)
shall arise hereunder if City fails to keep, observe, or perform any of its covenants, duties, or
obligations under this Agreement, and the default continues for a period of thirty (30) days after
written notice thereof from Borrower to City, or in the case of a default which cannot with due
diligence be cured within thirty (30) days, City fails to commence to cure the default within
thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with
due diligence and in good faith to completion.
9.3 City’s Remedies and Rights Upon an Event of Borrower Default. Upon the
occurrence of a Borrower Event of Default and the expiration of any applicable cure period, City
shall have all remedies available to it under this Agreement or under law or equity, including, but
not limited to the following, and City may, at its election, without notice to or demand upon
Borrower, except for notices or demands required by law or expressly required pursuant to the
City Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the Note and interest accrued
thereon immediately due and payable;
(b) Seek specific performance to enforce the terms of the City Documents;
(c) Foreclose on the Property pursuant to the Deed of Trust;
(d) Pursue any and all other remedies available under this Agreement or under
law or equity to enforce the terms of the City Documents and City’s rights thereunder.
9.4 Borrower’s Remedies Upon an Event of City Default. Upon the occurrence of a
City Event of Default, in addition to pursuing any other remedy allowed at law or in equity or
otherwise provided in this Agreement, Borrower may bring an action for equitable relief seeking
the specific performance of the terms and conditions of this Agreement, and/or enjoining,
abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any
other remedy consistent with the purpose of this Agreement, and may pursue any and all other
Exhibit F
43
1246539-2 21
remedies available under this Agreement or under law or equity to enforce the terms of the City
Documents and Borrower’s rights thereunder.
9.5 Remedies Cumulative; No Consequential Damages. Except as otherwise
expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the
exercise by either Party of one or more of such rights or remedies shall not preclude the exercise
by it, at the same or different time, of any other rights or remedies for the same or any other
default by the other Party. Notwithstanding anything to the contrary set forth herein, a Party’s
right to recover damages in the event of a default shall be limited to actual damages and shall
exclude consequential damages.
9.6 Inaction Not a Waiver of Default. No failure or delay by either Party in asserting
any of its rights and remedies as to any default shall operate as a waiver of such default or of any
such rights or remedies, nor deprive either Party of its rights to institute and maintain any action
or proceeding which it may deem necessary to protect, assert or enforce any such rights or
remedies in the same or any subsequent default.
ARTICLE X
INDEMNITY AND INSURANCE.
10.1 Indemnity. Borrower shall indemnify, defend (with counsel approved by City)
and hold Indemnitees harmless from and against any and all Claims, including without
limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection
with Borrower’s or Borrower’s contractors, subcontractors, agents or employees development,
construction, improvement, operation, ownership or maintenance of the Property or the
Improvements, or any part thereof or otherwise arising out of or in connection with Borrower’s
performance under this Agreement. Borrower’s indemnification obligations under this Section
10.1 shall not extend to Claims resulting solely from the gross negligence or willful misconduct
of Indemnitees. The provisions of this Section 10.1 shall survive the issuance of a Certificate of
Completion for the Project and the expiration or earlier termination of this Agreement. It is
further agreed that the City does not and shall not waive any rights against Borrower that they
may have by reason of this indemnity and hold harmless agreement because of the acceptance by
City, or the deposit with City by Borrower, of any of the insurance policies described in this
Agreement.
10.2 Liability and Workers Compensation Insurance.
(a) Borrower and all contractors working on behalf of Borrower on the
Project shall maintain a commercial general liability policy in the amount of One Million Dollars
($1,000,000) each occurrence, Two Million Dollars ($2,000,000) annual aggregate, or such other
policy limits as City may require in its reasonable discretion, including coverage for bodily
injury, property damage, products, completed operations and contractual liability coverage.
Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as
additional insureds.
(b) Borrower and all contractors working on behalf of Borrower shall
maintain a comprehensive automobile liability coverage in the amount of One Million Dollars
Exhibit F
44
1246539-2 22
($1,000,000), combined single limit including coverage for owned and non-owned vehicles and
shall furnish or cause to be furnished to City evidence satisfactory to City that Borrower and any
contractor with whom Borrower has contracted for the performance of work on the Property or
otherwise pursuant to this Agreement carries workers’ compensation insurance as required by
law. Automobile liability policies shall name the Indemnitees as additional insureds.
(c) Upon commencement of construction work and continuing until issuance
of a Certificate of Completion, Borrower and all contractors working on behalf of Borrower shall
maintain a policy of builder's all-risk insurance in an amount not less than the full insurable cost
of the Project on a replacement cost basis naming City as loss payee.
(d) Borrower shall maintain property insurance covering all risks of loss
(other than earthquake), including flood (if required) for 100% of the replacement value of the
Project with deductible, if any, in an amount acceptable to the City, naming the City as loss
payee.
(e) Companies writing the insurance required hereunder shall be licensed to
do business in the State of California. Insurance shall be placed with insurers with a current
A.M. Best's rating of no less than A: VII. The Commercial General Liability and comprehensive
automobile policies required hereunder shall name the Indemnitees as additional insureds.
Builder’s Risk and property insurance shall name City and City as loss payees as their interests
may appear.
(f) Prior to commencement of construction work, Borrower shall furnish City
with certificates of insurance in form acceptable to City evidencing the required insurance
coverage and duly executed endorsements evidencing such additional insured status. The
certificates shall contain a statement of obligation on the part of the carrier to notify City and
City of any material adverse change, cancellation, termination or non-renewal of the coverage at
least thirty (30) days in advance of the effective date of any such material adverse change,
cancellation, termination or non-renewal.
(g) If any insurance policy or coverage required hereunder is canceled or
reduced, Borrower shall, within fifteen (15) days after receipt of notice of such cancellation or
reduction in coverage, but in no event later than the effective date of cancellation or reduction,
file with City and City a certificate showing that the required insurance has been reinstated or
provided through another insurance company or companies. Upon failure to so file such
certificate, City or City may, without further notice and at its option, procure such insurance
coverage at Borrower’s expense, and Borrower shall promptly reimburse City or City for such
expense upon receipt of billing from City or City.
(h) Coverage provided by Borrower shall be primary insurance and shall not
be contributing with any insurance, or self-insurance maintained by City or City, and the policies
shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of
the City and City. Borrower shall furnish the required certificates and endorsements to City prior
to the commencement of construction of the Project, and shall provide City with certified copies
of the required insurance policies upon request of City.
Exhibit F
45
1246539-2 23
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 No Brokers. Each Party warrants and represents to the other that no person or
entity can properly claim a right to a real estate commission, brokerage fee, finder’s fee, or other
compensation with respect to the transactions contemplated by this Agreement. Each Party
agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs
or liabilities arising in connection with a breach of this warranty and representation. The terms
of this Section shall survive the expiration or earlier termination of this Agreement.
11.2 Enforced Delay; Extension of Times of Performance. Subject to the limitations
set forth below, performance by either Party shall not be deemed to be in default, and all
performance and other dates specified in this Agreement shall be extended where delays are due
to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God,
acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental
restrictions or priority, litigation, including court delays, unusually severe weather, acts or
omissions of the other Party, acts or failures to act of the City or any other public or
governmental agency or entity (other than the acts or failures to act of City which shall not
excuse performance by City), or any other cause beyond the affected Party’s reasonable control.
An extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time of the commencement of the cause, if notice by the Party
claiming such extension is sent to the other Party within thirty (30) days of the commencement
of the cause and such extension is not rejected in writing by the other Party within ten (10) days
of receipt of the notice. Neither Party shall unreasonably withhold consent to an extension of
time pursuant to this Section.
Times of performance under this Agreement may also be extended in writing by the
mutual agreement of Borrower and City (acting in the discretion of its City Manager unless he or
she determines in his or her discretion to refer such matter to the City Council of the City (the
“City Council”) for consideration. City and Borrower acknowledge that adverse changes in
economic conditions, either of the affected Party specifically or the economy generally, changes
in market conditions or demand, and/or inability to obtain financing to complete the work of
Improvements shall not constitute grounds of enforced delay pursuant to this Section. Each
Party expressly assumes the risk of such adverse economic or market changes and/or financial
inability, whether or not foreseeable as of the Effective Date.
11.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent
pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective
addresses specified below or to such other address as a Party may designate by written notice
delivered to the other Parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery;
(ii) certified or registered mail, return receipt requested, in which case notice
shall be deemed delivered on receipt if delivery is confirmed by a return receipt;
Exhibit F
46
1246539-2 24
(iii) nationally recognized overnight courier, with charges prepaid or charged
to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by
the delivery service;
(iv) facsimile transmission, in which case notice shall be deemed delivered
upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first-
class or certified mail or by overnight delivery, or (b) a transmission report is generated
reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered
to have been received on the next business day if it is received after 5:00 p.m. recipient’s time or
on a nonbusiness day.
City: City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Facsimile: (650) 829-6623
Borrower: [BUSINESS NAME]
[ADDRESS]
South San Francisco, CA 94080
Attention:[NAME] [EMAIL]
11.4 Attorneys’ Fees. If either Party fails to perform any of its obligations under this
Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation
of any provision hereof, then the prevailing Party in any proceeding in connection with such
dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or
establishing its rights hereunder, including, without limitation, court costs and reasonable
attorneys’ fees and disbursements.
11.5 Waivers; Modification. No waiver of any breach of any covenant or provision of
this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no
waiver shall be valid unless in writing and executed by the waiving Party. An extension of time
for performance of any obligation or act shall not be deemed an extension of the time for
performance of any other obligation or act, and no extension shall be valid unless in writing and
executed by the Party granting the extension. This Agreement may be amended or modified only
by a written instrument executed by the Parties.
11.6 Binding on Successors. Subject to the limitations set forth in Section 4.7, this
Agreement shall bind and inure to the benefit of the Parties and their respective permitted
successors and assigns. Any reference in this Agreement to a specifically named Party shall be
deemed to apply to any permitted successor and assign of such Party who has acquired an
interest in compliance with this Agreement or under law.
11.7 Survival. All representations made by Borrower hereunder and Borrower’s
obligations pursuant to Sections 3.14, 3.17, 3.18, 8.2, 10.1, 11.1, and 11.18 shall survive the
Exhibit F
47
1246539-2 25
expiration or termination of this Agreement and the issuance and recordation of a Certificate of
Completion.
11.8 Construction. The section headings and captions used herein are solely for
convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this
Agreement is the product of negotiation and compromise on the part of both Parties, and the
Parties agree, that since both Parties have participated in the negotiation and drafting of this
Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.
11.9 Action or Approval. Whenever action and/or approval by City is required under
this Agreement, City’s City Manager or his or her designee may act on and/or approve such
matter unless specifically provided otherwise, or unless the City Manager determines in his or
her discretion that such action or approval requires referral to the City Council for consideration.
11.10 Entire Agreement. This Agreement, including Exhibits A through F attached
hereto and incorporated herein by this reference, together with the other City Documents contains
the entire agreement between the Parties with respect to the subject matter hereof, and supersedes
all prior written or oral agreements, understandings, representations or statements between the
Parties with respect to the subject matter hereof.
11.11 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be an original and all of which taken together shall constitute one instrument. The
signature page of any counterpart may be detached therefrom without impairing the legal effect
of the signature(s) thereon provided such signature page is attached to any other counterpart
identical thereto having additional signature pages executed by the other Party. Any executed
counterpart of this Agreement may be delivered to the other Party by facsimile and shall be
deemed as binding as if an originally signed counterpart was delivered.
11.12 Severability. If any term, provision, or condition of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement
shall continue in full force and effect unless an essential purpose of this Agreement is defeated
by such invalidity or unenforceability.
11.13 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to
or shall be deemed to confer upon any person, other than the Parties and their respective
successors and assigns, any rights or remedies hereunder.
11.14 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall
establish the Parties as partners, co-venturers, or principal and agent with one another.
11.15 Non-Liability of Officials, Employees and Agents. No officer, official, employee
or agent of the City shall be personally liable to Borrower or its successors in interest in the event
of any default or breach by City or for any amount which may become due to Borrower or its
successors in interest pursuant to this Agreement.
11.16 Time of the Essence; Calculation of Time Periods. Time is of the essence for
each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in
Exhibit F
48
1246539-2 26
computing any period of time described in this Agreement, the day of the act or event after
which the designated period of time begins to run is not to be included and the last day of the
period so computed is to be included, unless such last day is not a business day, in which event
the period shall run until the next business day. The final day of any such period shall be
deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a
“business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday
under the laws of California.
11.17 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to principles of conflicts of
laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of
San Mateo County, California or in the Federal District Court for the Northern District of
California.
11.18 General Indemnification. Borrower shall indemnify, defend (with counsel
approved by City) and hold harmless Indemnitees from all Claims (including without limitation,
reasonable attorneys’ fees) arising in connection with any claim, action or proceeding to attack,
set aside, void, or annul any approval by the City or any of its agencies, departments,
commissions, agents, officers, employees or legislative body concerning the Project or this
Agreement. The City will promptly notify Borrower of any such claim, action or proceeding,
and will cooperate fully in the defense. The City may, within the unlimited discretion of each,
participate in the defense of any such claim, action or proceeding, and if the City chooses to do
so, Borrower shall reimburse City for reasonable attorneys’ fees and expenses incurred.
SIGNATURES ON FOLLOWING PAGE.
Exhibit F
49
1246539-2 27
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of
the date first written above.
CITY
CITY OF SOUTH SAN FRANCISCO,
A MUNICIPAL CORPORATION
By: __________________________________
Name:________________________________
Title:_________________________________
ATTEST:
By: _________________________________
City Clerk
APPROVED AS TO FORM:
By: _________________________________
City Attorney
BORROWER
[NAME]
____________________
By: ___________________________
Print Name:_______________________
Title: ___________________________
Exhibit F
50
1246539-2 28
Exhibit A
LEGAL DESCRIPTION OF PROPERTY
(Attach legal description.)
Exhibit B
FINANCING PLAN
(Attach Project Financing Plan.)
Exhibit C
FORM OF MEMORANDUM OF LOAN AGREEMENT
(Attach form of Memorandum.)
Exhibit D
FORM OF CERTIFICATE OF COMPLETION
(Attach form of Certificate.)
Exhibit E
FORM OF PROMISSORY NOTE
(Attach form of Promissory Note.)
Exhibit F
FORM OF LEASEHOLD DEED OF TRUST
(Attach form of Leasehold Deed of Trust.)
2301191.1
Exhibit F
51
1246539-2 29
Exhibit A
LEGAL DESCRIPTION OF PROPERTY
(Attach legal description.)
Exhibit F
52
1246539-2 30
Exhibit B
FINANCING PLAN
(Attach Project Financing Plan.)
Exhibit F
53
1246539-2 31
Exhibit C
FORM OF MEMORANDUM OF LOAN AGREEMENT
(Attach form of Memorandum.)
Exhibit F
54
1246539-2 32
Exhibit D
FORM OF CERTIFICATE OF COMPLETION
(Attach form of Certificate.)
Exhibit F
55
1246539-2 33
Exhibit E
FORM OF PROMISSORY NOTE
(Attach form of Promissory Note.)
Exhibit F
56
SECURED PROMISSORY NOTE
$XXX,XXX South San Francisco, California
[DATE]
FOR VALUE RECEIVED, , a
_________________ (“Borrower”) promises to pay to the City of South San Francisco,
a municipal corporation (“City"), in lawful money of the United States of America, the
principal sum of AMOUNT ($XXX,XXX), or so much thereof as may be advanced by
City pursuant to the Downtown Façade and Tenant Improvement Program Loan
Agreement referred to below, together with interest on the outstanding principal balance
in accordance with the terms and conditions described herein.
This Secured Promissory Note (this “Note”) has been executed and delivered
pursuant to an Owner Participation and Loan Agreement dated as of the date hereof by
and between Borrower and City (the "Loan Agreement"), and is subject to the terms
and conditions of the Loan Agreement, which are by this reference incorporated herein
and made a part hereof. Capitalized terms used but not defined herein have the
meaning ascribed to such terms in the Loan Agreement.
This Note is secured by a Leasehold Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date hereof,
executed by Borrower for the benefit of City and encumbering Borrower’s leasehold
interest in the property described therein. City shall be entitled to the benefits of the
security provided by the Deed of Trust and shall have the right to enforce the covenants
and agreements contained herein, in the Deed of Trust, and the Loan Agreement. This
Note, the Deed of Trust and the Loan Agreement are collectively referred to herein as
the “City Documents.”
1. INTEREST RATE; REPAYMENT. Interest shall accrue on the outstanding
principal balance of this Note at the rate of three percent (3%) simple interest per
annum, commencing upon [COMMENCEMENT DATE]. Interest shall be calculated on
the basis of a year of 365 days, and charged for the actual number of days elapsed.
No interest shall accrue prior to [COMMENCEMENT DATE].
2. PAYMENT DATES; MATURITY DATE. Commencing upon [1 MONTH AFTER
COMMENCEMENT DATE] (the “First Payment Date”), and on the first (1st) day of
each calendar month thereafter, Borrower shall make monthly payments of combined
principal and interest until the entire indebtedness evidenced hereby is fully paid, except
that all remaining indebtedness, if not sooner paid, shall be due and payable upon the
Maturity Date (defined below). The amount of the monthly payments to be paid
beginning on the First Payment Date will be an amount equal to the payment necessary
to fully amortize the principal amount of this Note, together with interest at the interest
rate specified in Section 1 above over a [LOAN TERM YEARS] or [PAYMENT
MONTHS] period. The entire outstanding principal balance of this Note, together with
Exhibit F
57
2
accrued interest and all other sums accrued hereunder shall be payable in full on the
earlier of (i) the [LOAN TERM YEARS] (XXth) anniversary of the date of this Note, or (ii)
the termination of the Lease. (the “Maturity Date”). Payments shall be credited first to
any unpaid late charges and other costs and fees then due, then to accrued interest,
and then to principal. In no event shall any amount due under this Note become subject
to any rights, offset, deduction or counterclaim on the part of Borrower.
3. DUE ON TRANSFER OR DEFAULT. The entire unpaid principal balance and all
sums accrued hereunder shall be immediately due and payable upon the Transfer (as
defined in Section 4.7 of the Loan Agreement) absent City consent, of all or any part of
Borrower’s interest in the Property or the Improvements, or any interest therein, or upon
the occurrence of an Event of Default under the Loan Agreement, the Deed of Trust or
this Note, subject to the expiration of any applicable cure period. Without limiting the
generality of the foregoing, this Note shall not be assumable without City’s prior written
consent, which consent may be granted or denied in City’s sole discretion.
4. PREPAYMENT. Borrower may, without premium or penalty, at any time and
from time to time, prepay all or any portion of the outstanding principal balance due
under this Note. Prepayments shall be applied first to any unpaid late charges and
other costs and fees then due, then to accrued but unpaid interest, and then to principal.
5. MANNER OF PAYMENT. All payments on this Note shall be made to City at 400
Grand Avenue, South San Francisco, CA 94080 or such other place as City shall
designate to Borrower in writing, or by wire transfer of immediately available funds to an
account designated by City in writing.
6. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder ("Event of Default"):
(a) Borrower fails to pay when due the principal and interest payable
hereunder and such failure continues for ten (10) days after City notifies Borrower
thereof in writing.
(b) Borrower fails to maintain insurance on the Property and the Project as
required pursuant to the City Documents and Borrower fails to cure such default within
10 days.
(c) Pursuant to or within the meaning of the United States Bankruptcy Code
or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy
Law"), Borrower or any general partner thereof (i) commences a voluntary case or
proceeding; (ii) consents to the entry of an order for relief against Borrower or any
general partner thereof in an involuntary case; (iii) consents to the appointment of a
trustee, receiver, assignee, liquidator or similar official for Borrower or any general
partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in
writing its inability to pay its debts as they become due.
Exhibit F
58
3
(d) A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Borrower or any general partner thereof in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official
for Borrower or any general partner thereof or substantially all of such entity’s assets,
(iii) orders the liquidation of Borrower or any general partner thereof, or (iv) issues or
levies a judgment, writ, warrant of attachment or similar process against the Property or
the Project, and in each case the order or decree is not released, vacated, dismissed or
fully bonded within 60 days after its issuance.
(e) Borrower shall have assigned its assets for the benefit of its creditors
(other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or
execution on any substantial part of its property, unless the property so assigned,
sequestered, attached or executed upon shall have been returned or released within
sixty (60) days after such event (unless a lesser time period is permitted for cure under
any other mortgage on the Property, in which event such lesser time period shall apply
under this subsection as well) or prior to any sooner sale pursuant to such
sequestration, attachment, or execution;
(f) Borrower shall have voluntarily suspended its business or Borrower shall
have been dissolved or terminated;
(g) A default arises under any debt instrument secured by a mortgage or deed
of trust on Borrower’s leasehold interest in the Property and remains uncured beyond
any applicable cure period such that the holder of such instrument has the right to
accelerate payment thereunder.
(h) Subject to Borrower’s right to contest the following charges pursuant to the
City Documents, if Borrower fails to pay prior to delinquency taxes or assessments due
on the Property or the Project or fails to pay when due any other charge that may result
in a lien on the Property or the Project, and Borrower fails to cure such default within
thirty (30) days of date of delinquency, but in all events upon the imposition of any such
tax or other lien.
(i) Any representation or warranty contained in this Agreement or any
application, financial statement, certificate or report furnished in connection with the
Loan or in connection with any request for disbursement of Loan Proceeds proves to
have been false or misleading in any material adverse respect when made.
(j) Borrower defaults in the performance of any term, provision, covenant or
agreement (other than an obligation enumerated in this Section 6) contained in this
Note, the Loan Agreement, or the Deed of Trust, and unless such document specifies a
different cure period for such default, the default continues for ten (10) days in the
event of a monetary default or thirty (30) days in the event of a nonmonetary default
after the date upon which City shall have given written notice of the default to Borrower
(or such longer time as City may agree upon in writing), provided that in each case
Borrower commences to cure the default within thirty (30) days and thereafter
prosecutes the curing of such default with due diligence and in good faith.
Exhibit F
59
4
7. REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at
its option (i) by written notice to Borrower, declare the entire unpaid principal balance of
this Note, together with all accrued interest thereon and all sums due hereunder,
immediately due and payable regardless of any prior forbearance, (ii) exercise any and
all rights and remedies available to it under applicable law, and (iii) exercise any and all
rights and remedies available to City under this Note and the other City Documents,
including without limitation the right to pursue foreclosure under the Deed of Trust.
Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City
including, without limitation, reasonable attorneys' fees, incurred in connection with
City's enforcement of this Note and the exercise of any or all of its rights and remedies
hereunder and all such sums shall be a part of the indebtedness secured by the Deed
of Trust.
8. DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall
automatically be increased without notice to the rate of ten percent (10%) per annum
(the “Default Rate"); provided however, if any payment due hereunder is not paid when
due, the Default Rate shall apply commencing upon the due date for such payment.
When Borrower is no longer in default, the Default Rate shall no longer apply, and the
interest rate shall once again be the rate specified in the first paragraph of this Note.
Notwithstanding the foregoing provisions, if the interest rate charged exceeds the
maximum legal rate of interest, the rate shall be the maximum rate permitted by law.
The imposition or acceptance of the Default Rate shall in no event constitute a waiver of
a default under this Note or prevent City from exercising any of its other rights or
remedies Reserved.
9. MISCELLANEOUS
9.1 WAIVER. The rights and remedies of City under this Note shall be
cumulative and not alternative. No waiver by City of any right or remedy under this Note
shall be effective unless in a writing signed by City. Neither the failure nor any delay in
exercising any right, power or privilege under this Note will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right, power or
privilege by City will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum extent
permitted by applicable law (a) no claim or right of City arising out of this Note can be
discharged by City, in whole or in part, by a waiver or renunciation of the claim or right
unless in a writing, signed by City; (b) no waiver that may be given by City will be
applicable except in the specific instance for which it is given; and (c) no notice to or
demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of
the right of City to take further action without notice or demand as provided in this Note.
Borrower hereby waives presentment, demand, protest, notices of dishonor and of
protest and all defenses and pleas on the grounds of any extension or extensions of the
time of payment or of any due date under this Note, in whole or in part, whether before
or after maturity and with or without notice.
Exhibit F
60
5
9.2 NOTICES. Any notice required or permitted to be given hereunder shall
be given in accordance with Section 11.3 of the Loan Agreement.
9.3 SEVERABILITY. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Note
will remain in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
9.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of
the State of California without regard to principles of conflicts of laws. All persons and
entities in any manner obligated under this Note consent to the jurisdiction of any
federal or state court having in the jurisdiction in which the Property is located (the
“Property Jurisdiction”). Borrower agrees that any controversy arising under or in
relation to the Note or any other Loan Document shall be litigated exclusively in the
Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the
Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall
arise under or in relation to the Note and any other Loan Document. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any such
litigation and waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
9.5 PARTIES IN INTEREST. This Note shall bind Borrower and its
successors and assigns and shall accrue to the benefit of City and its successors and
assigns.
9.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Note are provided for convenience only and will not affect its construction or
interpretation.
9.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City
under this Note is solely that of borrower and lender, and the loan evidenced by this
Note and secured by the Deed of Trust will in no manner make City the partner or joint
venturer of Borrower.
9.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every
provision of this Note.
9.9 JOINT AND SEVERAL OBLIGATION. If Borrower consists of two or more
individuals, the obligations of such individuals hereunder shall be joint and several.
Exhibit F
61
6
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date first written above.
BORROWER
a California Corporation
By:_________________________
Print Name:
Title:
2301207.1
Exhibit F
62
1246539-2 34
Exhibit F
FORM OF LEASEHOLD DEED OF TRUST
(Attach form of Leasehold Deed of Trust.)
Exhibit F
63
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Economic & Community Development Department
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.
LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (“Deed of Trust”) is made as of ______________, by
, a California corporation (“Trustor”) to ________________ Title
Company as trustee (“Trustee”), for the benefit of the City of South San Francisco, a municipal
corporation (“Beneficiary”).
RECITALS
A. (“Owner”) owns fee simple title to the land described in Exhibit A
attached hereto and incorporated herein by this reference (the “Land”). Owner and Trustor have
entered into a lease dated as of [LEASE DATE] (the “Lease”) pursuant to which Trustor leases
the Land and the Improvements for the purposes of operating Trustor’s business.
B. Trustor intends to rehabilitate the improvements located on the Land (the
“Project”).
C. Beneficiary and Trustor have entered into an Downtown Façade and Tenant
Improvement Program Loan Agreement dated as of the date hereof (the “Loan Agreement”)
pursuant to which Beneficiary is providing a loan to Trustor in the amount of AMOUNT
($XXX,XXX) (the “Loan”) for the purpose of partially financing the Project. Trustor has issued
to Beneficiary a secured promissory note dated as of the date hereof (the “Note”) to evidence
Trustor’s obligation to repay the Loan. A Memorandum of the Loan Agreement will be recorded
in the Official Records of San Mateo County concurrently herewith.
C. As a condition precedent to the making of the Loan, Beneficiary has required that
Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien
and security interest in Trustor’s leasehold interest in the Land and the Property (defined below)
to secure repayment of the Note and performance of Trustor’s obligations under the Loan
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows.
Exhibit F
64
1246546-2
2
1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment
and performance of the Secured Obligations defined and described in Section 2, Trustor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the
benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title
and interest which Trustor now has or may later acquire in and to the Land, and all of the
following, whether presently owned or hereafter acquired:
a. All buildings, structures, and improvements, now or hereafter located or
constructed on the Land (“Improvements”);
b. All appurtenances, easements, rights of way, pipes, transmission lines or wires
and other rights used in connection with the Land or the Improvements or as a means of access
thereto, whether now or hereafter owned or constructed or placed upon or in the Land or
Improvements and all existing and future privileges, rights, franchises and tenements of the
Land, including all minerals, oils, gas and other commercially valuable substances which may be
in, under or produced from any part of the Land, and all water rights, rights of way, gores or
strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or
adjoining the Land and Improvements (collectively, “Appurtenances”);
c. All machinery, equipment, fixtures, goods and other personal property of the
Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or
hereafter located at or used in connection with the Land , the Improvements or Appurtenances,
and all improvements, restorations, replacements, repairs, additions or substitutions thereto
(collectively, “Equipment”);
d. All existing and future leases, subleases, licenses, and other agreements relating to
the use or occupancy of all or any portion of the Land or Improvements (collectively, “Leases”),
all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other
payments which may now or hereafter accrue or otherwise become payable thereunder to or for
the benefit of Trustor, including but not limited to security deposits (collectively, “Rents”);
e. All insurance proceeds and any other proceeds from the Land, Improvements,
Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made
with or other security deposits given to utility companies, all claims or demands relating to
insurance awards which the Trustor now has or may hereafter acquire, including all advance
payments of insurance premiums made by Trustor, and all condemnation awards or payments
now or later made in connection with any condemnation or eminent domain proceeding
(“Proceeds”);
f. All revenues, income, rents, royalties, payments and profits produced by the
Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired
by Trustor (“Gross Revenues”);
g. All architectural, structural and mechanical plans, specifications, design
documents and studies produced in connection with development of the Land and construction of
the Improvements (collectively, “Plans”); and
Exhibit F
65
1246546-2
3
h. All interests and rights in any private or governmental grants, subsidies, loans or
other financing provided in connection with development of the Land and construction of the
Improvements (collectively, “Financing”).
All of the above-referenced interests of Trustor in the Land, Improvements, Appurtenances,
Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed
to Trustee or made subject to the security interest herein described are collectively referred to
herein as the “Property.”
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment
and performance of the following (collectively, the “Secured Obligations”): (i) all present and
future indebtedness evidenced by the Note and any amendment thereof, including principal,
interest and all other amounts payable under the terms of the Note; (ii) all present and future
obligations of Trustor to Beneficiary under the Loan Documents (defined below); (iii) all
additional present and future obligations of Trustor to Beneficiary under any other agreement or
instrument acknowledged by Trustor (whether existing now or in the future) which states that it
is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to
Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of
the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all
amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this
Deed of Trust or any other Loan Document as such may be modified, supplemented, amended,
renewed or extended. The Note, the Loan Agreement, and this Deed of Trust are hereafter
collectively referred to as the “Loan Documents.”
3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely,
presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue,
income and proceeds of the Property. This is an absolute assignment and not an assignment for
security only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents,
royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to
any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary
may terminate such license without notice to or demand upon Trustor and without regard to the
adequacy of any security for the indebtedness hereby secured, and may either in person, by
agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property
or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including
those past due and unpaid, and apply the same, less costs and expenses of operation and
collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such
order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits,
revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary
takes possession of the Property. The entering upon and taking possession of the Property, the
collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the
Property and/or is collecting and applying Rents as permitted under this Deed of Trust,
Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every
right and remedy afforded any of them under this Deed of Trust and at law or in equity,
including the right to exercise the power of sale granted hereunder. Regardless of whether or not
Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements,
Exhibit F
66
1246546-2
4
Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for
performing any obligation of Trustor under any Lease, shall not be liable in any manner for the
Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be
responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or
defective condition of the Property or any negligence in the management, repair or control of the
Property. Absent Beneficiary’s written consent, Trustor shall not accept prepayment of Rents for
any rental period exceeding one month.
4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the
Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary. The
parties acknowledge that some of the Property may be determined under applicable law to be
personal property or fixtures. To the extent that any Property may be or be determined to be
personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security
interest in all such Property to secure payment and performance of the Secured Obligations. This
Deed of Trust constitutes a security agreement under the California Uniform Commercial Code,
as amended or recodified from time to time (the “UCC”), covering all such Property. To the
extent such Property is not real property encumbered by the lien granted above, and is not
absolutely assigned by the assignment set forth above, it is the intention of the parties that such
Property shall constitute "proceeds, products, offspring, rents, or profits" (as defined in and for
the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be
modified or supplemented) of the Land and Improvements.
5. Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes
Beneficiary, as secured party, to file such financing statements and amendments thereof and such
continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and
preserve Beneficiary's security interest in the Property and Rents, without requiring any signature
or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all fees and
costs that Beneficiary may incur in filing such documents in public offices and in obtaining such
record searches as Beneficiary may reasonably require. If any financing statement or other
document is filed in the records normally pertaining to personal property, that filing shall not be
construed as in any way derogating from or impairing this Deed of Trust or the rights or
obligations of the parties under it.
Everything used in connection with the Property and/or adapted for use therein and/or which is
described or reflected in this Deed of Trust is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be regarded as part of the estate encumbered by this
Deed of Trust irrespective of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better identification of certain equipment
items capable of being thus identified in a recital contained herein or in any list filed with
Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so
filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the
proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain
proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present
or future lease or rights to income growing out of the use and/or occupancy of the property
conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way
altering any of the rights of Beneficiary as determined by this instrument or impugning the
priority of Beneficiary’s lien granted hereby or by any other recorded document. Such mention
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in any financing statement is declared to be solely for the protection of Beneficiary in the event
any court or judge shall at any time hold, with respect to the matters set forth in the foregoing
clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be
effective against a particular class of persons, including but not limited to the federal government
and any subdivisions or entity of the federal government.
6. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing
pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is
being recorded as a fixture financing statement and filing under the UCC, and covers property,
goods and equipment which are or are to become fixtures related to the Land and the
Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real
estate records of San Mateo County and shall also operate from the date of such filing as a
fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This
Deed of Trust shall also be effective as a financing statement covering minerals or the like
(including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to
be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under
the UCC.
7. Trustor’s Representations, Warranties and Covenants; Rights and Duties of the Parties.
7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor
lawfully possesses and holds a leasehold interest in the Land and the Improvements, (ii) Trustor
has a leasehold interest in all of the Property; (iii) other than as limited by the Loan Documents,
Trustor has the full and unlimited power, right and authority to encumber Trustor’s interests in
the Property with this Deed of Trust and assign the Rents as contemplated herein; (iv) subject
only to encumbrances of record and senior liens permitted pursuant to the Loan Documents or
otherwise approved in writing by Beneficiary (“Permitted Encumbrances”), this Deed of Trust
creates a valid lien on Trustor’s entire interest in the Property; (v) except with respect to
Permitted Encumbrances, Trustor holds a leasehold in the Land and the Improvements pursuant
to the Lease free and clear of all deeds of trust, mortgages, security agreements, reservations of
title or conditional sales contracts, (vi) there is no financing statement affecting the Property on
file in any public office other than as disclosed in writing to Beneficiary; and (vii) the correct
address of Trustor’s chief executive office is specified in Section 10.2.
7.2 Condition of Property. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof: (i) Trustor has not received nor is Trustor aware
that Owner has received any notice from any governmental authority of any threatened or
pending zoning, building, fire, or health code violation or violation of other governmental
regulations concerning the Property that has not previously been corrected; (ii) to Trustor’s
knowledge, no condition on the Land violates any health, safety, fire, environmental, sewage,
building, or other federal, state or local law, ordinance or regulation; (iii) to Trustor’s knowledge,
no contracts, licenses, leases or commitments regarding the maintenance or use of the Property
or allowing any third party rights to use the Property are in force; (iv) to Trustor’s knowledge,
there are no threatened or pending actions, suits, or administrative proceedings against or
affecting the Property or any portion thereof or the interest of Trustor in the Property; (v) to
Trustor’s knowledge, there are no threatened or pending condemnation, eminent domain, or
similar proceedings affecting the Property or any portion thereof; (vi) Trustor has not received
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any notice from any insurer of defects of the Property which have not been corrected; (vii) to
Trustor’s knowledge, there are no natural or artificial conditions upon the Land or any part
thereof that could result in a material and adverse change in the condition of the Land; (viii) all
information that Trustor has delivered to Beneficiary, either directly or through Trustor's agents,
is accurate and complete; and (ix) Trustor or Trustor’s agents have disclosed to Beneficiary all
material facts concerning the Property.
7.3 Authority. Trustor represents and warrants that this Deed of Trust and all other
documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly
authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do
not violate the provisions of any agreement to which Trustor is a party or which affects the
Property. Trustor further represents and warrants that there are no pending, or to Trustor’s
knowledge, threatened actions or proceedings before any court or administrative agency which
may adversely affect Trustor’s ownership of the Property.
7.4 Payment and Performance of Secured Obligations. Trustor shall promptly pay
when due the principal and any interest due on the indebtedness evidenced by the Note, and shall
promptly pay and perform all other obligations of Trustor arising in connection with the Secured
Obligations or the Loan Documents in accordance with the respective terms thereof.
7.5 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance
with Laws. Trustor covenants that it shall use the proceeds of the Loan (“Loan Proceeds”)
solely for purposes authorized by the Loan Documents. Trustor covenants that it shall keep the
Land and Improvements in good repair and condition, and from time to time shall make
necessary repairs, renewals and replacements thereto so that the Property shall be preserved and
maintained. Trustor covenants that it shall comply with all federal, state and local laws,
regulations, ordinances and rules applicable to the Property and the Project, including without
limitation all applicable requirements of state and local building codes and regulations, and all
applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not
remove, demolish or materially alter any Improvement without Beneficiary’s consent, shall
complete or restore promptly and in good and workmanlike manner any building, fixture or other
improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due
all claims for labor performed and materials furnished therefor. Trustor shall use the Land and
the Improvements solely for purposes authorized by the Loan Documents, shall not commit or
allow waste of the Property, and shall not commit or allow any act upon or use of the Property
which would violate any applicable law or order of any governmental authority, nor shall Trustor
bring on or keep any article on the Property or cause or allow any condition to exist thereon
which could invalidate or which would be prohibited by any insurance coverage required to be
maintained on the Property pursuant to the Loan Documents.
7.6 Reserved.
7.7 Inspections; Books and Records. Beneficiary and its agents and representatives
shall have the right at any reasonable time upon reasonable notice to enter upon the Land and
inspect the Property to ensure compliance with the Loan Documents. Trustor shall maintain
complete and accurate books of account and other records (including copies of supporting bills
and invoices) adequate to document the use of the Loan Proceeds and the operation of the
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Property, together with copies of all written contracts, Leases and other instruments which affect
the Property. The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection by Beneficiary at any reasonable time following two business days
prior notice.
7.8 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all
taxes, levies, assessments and other charges affecting the Property that are (or if not paid may
become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the
validity or application of any tax, levy, assessment or charge affecting the Property by
appropriate legal proceedings promptly initiated and conducted in good faith and with due
diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any
part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such
contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably
be required from time to time by Beneficiary; and provided further that Trustor shall timely
make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.
7.9 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances,
whether released of record or not, which are discharged in whole or in part by Beneficiary in
accordance with this Deed of Trust.
7.10 Hazard, Liability and Workers’ Compensation Insurance. At all times during the
term hereof, at Trustor’s expense, Trustor shall keep the Improvements and personal property
now existing or hereafter located on the Property insured against loss by fire, vandalism and
malicious mischief by a policy of standard fire and extended all-risk insurance. The policy shall
be written on a full replacement value basis and shall name Beneficiary as loss payee as its
interest may appear. The full replacement value of the improvements to be insured shall be
determined by the company issuing the policy at the time the policy is initially obtained. Not
more frequently than once every two (2) years, either the Trustor or the Beneficiary shall have
the right to notify the other party that it elects to have the replacement value redetermined by the
insurance company. Subject to the rights of any senior lienholder, the proceeds collected under
any insurance policy may be applied by Beneficiary to any indebtedness secured hereby and in
such order as Beneficiary may determine, or at the option of Beneficiary, the entire amount so
collected or any part thereof may be released to Trustor. Such application or release shall not
cure or waive any default or notice of default hereunder or invalidate any act done pursuant to
such notice. Notwithstanding anything to the contrary set forth herein, provided that Trustor is
not in default under any Loan Document, Trustor shall be permitted to use the proceeds of
insurance to rebuild the Improvements.
7.10.1 Trustor shall at all times during the term hereof, maintain a comprehensive
general liability insurance policy in an amount not less than One Million Dollars ($1,000,000)
each occurrence, Two Million Dollars ($2,000,000) annual aggregate, or such other policy limits
as Beneficiary may require in its reasonable discretion, including coverage for bodily injury,
property damage, products, completed operations and contractual liability coverage. Such policy
or policies shall be written on an occurrence basis and shall name the Beneficiary as an
additional insured. Trustor shall maintain workers’ compensation insurance as required by law.
7.10.2 Trustor shall file with Beneficiary prior to the commencement of the term
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hereof, certificates (or such other proof as Beneficiary may require, including without limitation,
copies of the required insurance policies) evidencing each of the insurance policies and
endorsements thereto as required by this Section, and such certificates (or policies) shall provide
that at least thirty (30) days’ prior written notice shall be provided to Beneficiary prior to the
expiration, cancellation or change in coverage under each such policy.
7.10.3 If any insurance policy required hereunder is canceled or the coverage
provided thereunder is reduced, Trustor shall, within fifteen (15) days after receipt of written
notice of such cancellation or reduction in coverage, but in no event later than the effective date
of cancellation or reduction, file with Beneficiary a certificate showing that the required
insurance has been reinstated or provided through another insurance company or companies.
Upon failure to so file such certificate, Beneficiary may, without further notice and at its option,
procure such insurance coverage at Trustor’s expense, and Trustor shall promptly reimburse
Beneficiary for such expense upon receipt of billing from Beneficiary.
7.10.4 The insurance policies required hereunder shall be issued by insurance
companies authorized to do business in the State of California with a financial rating of at least A
VII status as rated in the most recent edition of Best's Key Rating Guide. Each policy of
insurance shall contain an endorsement requiring the insurer to provide at least 30 days written
notice to Beneficiary prior to change in coverage, cancellation or expiration thereof. If any
insurance policy required pursuant to the Loan Documents is canceled or the coverage provided
thereunder is reduced, Trustor shall, within ten (10) days after receipt of written notice of such
cancellation or reduction in coverage, but in no event later than the effective date of cancellation
or reduction, file with Beneficiary a certificate showing that the required insurance has been
reinstated or provided through another insurance company or companies. Upon failure to so file
such certificate, Beneficiary may, without further notice and at its option, procure such insurance
coverage at Trustor’s expense, and Trustor shall promptly reimburse Beneficiary for such
expense upon receipt of billing from Beneficiary.
7.11 Hazardous Materials. Trustor represents and warrants that except as disclosed to
Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is
free and has always been free of Hazardous Materials (as defined below) and is not and has
never been in violation of any Environmental Law (as defined below); (ii) there are no buried or
partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning,
notice of violation, administrative complaint, judicial complaint, or other formal or informal
notice alleging that conditions on the Land are or have ever been in violation of any
Environmental Law or informing Trustor that the Land is subject to investigation or inquiry
regarding Hazardous Materials on the Land or the potential violation of any Environmental Law;
(iv) there is no monitoring program required by the Environmental Protection Agency or any
other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or
substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land,
whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any
other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has
disclosed to Beneficiary all information, records, and studies in Trustor’s possession or
reasonably available to Trustor relating to the Land concerning Hazardous Materials.
Exhibit F
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Trustor shall not cause or permit any Hazardous Material (as defined below) to be
brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents,
employees, contractors or invitees except for incidental supplies ordinarily used in connection
with the construction, rehabilitation, repair, and operation of commercial developments and in
compliance with all applicable laws, and shall not cause any release of Hazardous Materials into,
onto, under or through the Land. If any Hazardous Material is discharged, released, dumped, or
spilled in, on, under, or about the Land and results in any contamination of the Land or adjacent
property, or otherwise results in the release or discharge of Hazardous Materials in, on, under or
from the Land, Trustor shall promptly take all actions at its sole expense as are necessary to
comply with all Environmental Laws (as defined below).
Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and
hold Beneficiary and its elected and appointed officials, officers, agents and employees
(collectively, “Indemnitees”) harmless from and against any and all loss, claim, liability, damage,
demand, judgment, order, penalty, fine, injunctive or other relief, cost, expense (including
reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or
assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually
“Claim” and collectively “Claims”) arising in connection with the breach of Trustor’s covenants
and obligations set forth in this Section 7.11 or otherwise arising in connection with the presence
or release of Hazardous Materials in, on, under, or from the Property. The foregoing indemnity
includes, without limitation, all costs of investigation, assessment, containment, removal,
remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether
the Land is in compliance with Environmental Laws, all costs associated with bringing the Land
into compliance with all applicable Environmental Laws, and all costs associated with claims for
damages or injury to persons, property, or natural resources.
Without limiting the generality of the foregoing, Trustor shall, at Trustor’s own cost and
expense, do all of the following:
a. pay or satisfy any judgment or decree that may be entered against any Indemnitee
or Indemnitees in any legal or administrative proceeding incident to any matters against which
Indemnitees are entitled to be indemnified under this Deed of Trust;
b. reimburse Indemnitees for any expenses paid or incurred in connection with any
matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and
c. reimburse Indemnitees for any and all expenses, including without limitation out-
of-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection
with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring
and participating in any legal or administrative proceeding.
Trustor’s obligation to indemnify the Indemnitees shall not be limited or impaired by any
of the following, or by any failure of Trustor to receive notice of or consideration for any of the
following: (i) any amendment or modification of any Loan Document; (ii) any extensions of
time for performance required by any Loan Document; (iii) any provision in any of the Loan
Documents limiting Beneficiary's recourse to property securing the Secured Obligations, or
limiting the personal liability of Trustor, or any other party for payment of all or any part of the
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Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by
Trustor under this Deed of Trust or by Trustor or any other party under any Loan Document, (v)
the release of Trustor or any other person, by Beneficiary or by operation of law, from
performance of any obligation under any Loan Document; (vi) the release or substitution in
whole or in part of any security for the Secured Obligations; and (vii) Beneficiary’s failure to
properly perfect any lien or security interest given as security for the Secured Obligations.
The provisions of this Section 7.11 shall be in addition to any and all other obligations
and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled
to indemnification under this Section without regard to whether Beneficiary or that Indemnitee
has exercised any rights against the Property or any other security, pursued any rights against any
guarantor or other party, or pursued any other rights available under the Loan Documents or
applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall
survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the
lien of this Deed of Trust.
Without limiting any of the remedies provided in this Deed of Trust, Trustor
acknowledges and agrees that each of the provisions in this Section 7.11 is an environmental
provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by
Trustor relating to real property security (the “Environmental Provisions”), and that Trustor's
failure to comply with any of the Environmental Provisions will be a breach of contract that will
entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of
Civil Procedure (“Section 736”) for the recovery of damages and for the enforcement of the
Environmental Provisions. Pursuant to Section 736, Beneficiary's action for recovery of
damages or enforcement of the Environmental Provisions shall not constitute an action within
the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money
judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b,
580d, or 726(b) of the California Code of Civil Procedure.
“Hazardous Materials” means any substance, material or waste which is or becomes
regulated by any federal, state or local governmental authority, and includes without limitation
(i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos
and any material containing asbestos; (iii) any substance, material or waste regulated by or listed
(directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”,
“toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant”
in or pursuant to, or similarly identified as hazardous to human health or the environment in or
pursuant to, the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the
Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section
9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section
5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.],
the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C.
Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act
[California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances
Account Act [California Health and Safety Code Section 25300, et seq.], the California
Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California
Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section
Exhibit F
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25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code
Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations
promulgated thereunder; (iv) any substance, material or waste which is defined as such or
regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other
substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated
under any other federal, state or local environmental law, including without limitation, asbestos,
polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.
“Environmental Law” means all federal, state or local statutes, ordinances, rules,
regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions
of permits, licenses and other operating authorizations regulating, or relating to, or imposing
liability or standards of conduct concerning (i) pollution or protection of the environment,
including natural resources; (ii) exposure of persons, including employees and agents, to any
Hazardous Material (as defined above) or other products, raw materials, chemicals or other
substances; (iii) protection of the public health or welfare from the effects of by-products,
wastes, emissions, discharges or releases of chemical substances from industrial or commercial
activities; (iv) the manufacture, use or introduction into commerce of chemical substances,
including without limitation, their manufacture, formulation, labeling, distribution,
transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or
hazardous substances or Hazardous Materials or the remediation of air, surface waters,
groundwaters or soil, as now or may at any later time be in effect, including but not limited to the
Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental
Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous
Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource
Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control
Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California
Underground Storage of Hazardous Substances Act [California Health and Safety Code Section
25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety
Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety
Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act
[California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water
Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are
hereafter amended, together with any regulations promulgated thereunder.
7.12 Notice of Claims; Defense of Security; Reimbursement of Costs.
a. Notice of Claims. Trustor shall provide written notice to Beneficiary of any
uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or
property damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within three
business days of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive
timely notice of, and shall have a right to cure, any default under any other financing document
or other lien affecting the Property and shall use best efforts to ensure that provisions mandating
such notice and allowing such right to cure shall be included in all such documents. Within three
business days of Trustor’s receipt thereof, Trustor shall provide Beneficiary with a copy of any
notice of default Trustor receives in connection with any financing document secured by the
Property or any part thereof.
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b. Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve and
defend the Property and Trustor’s interest in and right of possession of the Property, the security
of this Deed of Trust and the rights and powers of Beneficiary and Trustee created under it,
against all adverse claims.
c. Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable
fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or
Trustee may render in connection with this Deed of Trust, including without limitation, fees and
expenses related to provision of a statement of obligations or related to a reconveyance. Trustor
further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which
may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this
Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or
Trustee or both of them under Sections 7.18 and 8.2, whether or not any lawsuit is filed, or in
defending any action or proceeding arising under or relating to this Deed of Trust, including
reasonable attorneys’ fees and other legal costs, costs of any disposition of the Property under the
power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title.
d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any
change in the address of Trustor and the location of any property, including books and records
pertaining to the Property.
7.13 Indemnification. Trustor shall indemnify, defend (with counsel reasonably
acceptable to Beneficiary), and hold harmless the Trustee and the Indemnitees (as defined in
Section 7.11) from and against all Claims arising directly or indirectly in any manner in
connection with or as a result of (a) any breach of Trustor’s covenants under any Loan
Document, (b) any representation by Trustor in any Loan Document which proves to be false or
misleading in any material respect when made, (c) injury or death to persons or damage to
property or other loss occurring on the Land or in any improvement located thereon, whether
caused by the negligence or any other act or omission of Trustor or any other person or by
negligent, faulty, inadequate or defective design, building, construction or maintenance or any
other condition or otherwise, (d) any claim, demand or cause of action, or any action or other
proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates
to or arises out of the Property, or any Loan Document or any transaction contemplated thereby,
or any failure of Trustor to comply with all applicable state, federal and local laws and
regulations applicable to the Property, provided that no Indemnitee shall be entitled to
indemnification under this Section for matters caused by such Indemnitee's gross negligence or
willful misconduct. The obligations of Trustor under this Section shall survive the repayment of
the Loan and shall be secured by this Deed of Trust. Notwithstanding any contrary provision
contained herein, the obligations of Trustor under this Section shall survive any foreclosure
proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or
reconveyance of this Deed of Trust.
7.14. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to
Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise
of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of
Trust; (ii) Beneficiary's failure or refusal to perform or discharge any obligation or liability of
Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste
Exhibit F
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committed by Trustor, the lessees of the Property or any third parties, or any dangerous or
defective condition of the Property; or (iv) any loss sustained by Trustor or any third party
resulting from any act or omission of Beneficiary in managing the Property after an Event of
Default, unless the loss is caused by the willful misconduct, gross negligence, or bad faith of
Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in
this Section 7.14 and agrees that Trustor shall assert no claim related to any of the foregoing
against Beneficiary.
7.15 Insurance and Condemnation Proceeds. Subject to the rights of any senior
lienholders, any award of damages in connection with any condemnation for public use of, or
injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary who
may apply such moneys to any indebtedness secured hereby in such order as Beneficiary may
determine, or at the option of Beneficiary the entire amount so collected or any part thereof may
be released to Trustor. Such application or release shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice. Notwithstanding the
foregoing, so long as the value of Beneficiary’s lien is not impaired, insurance and/or
condemnation proceeds may be used to repair and/or restore the Improvements.
7.16 Release, Extension, Modification. At any time and from time to time, without
liability therefor and without notice, upon written request of Beneficiary and presentation of this
Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of
the Property, consent to the making of any map or plat of the Land or part thereof, join in
granting any easement or creating any restriction affecting the Property, or join in any extension
agreement or other agreement affecting the lien or charge hereof. At any time and from time to
time, without liability therefor and without notice, Beneficiary may (i) release any person liable
for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the
terms of payment of any Secured Obligation; (iii) accept additional real or personal property of
any kind as security for any Secured Obligation, or (iv) substitute or release any property
securing the Secured Obligations.
7.17 Reconveyance. Upon written request of Beneficiary stating that all of the Secured
Obligations have been paid in full, and upon surrender of this Deed of Trust, and the Note,
Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this
Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any
matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of
Trustee and all recordation fees related to such reconveyance.
7.18 Cure; Protection of Security. Either Beneficiary or Trustee may cure any breach
or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary or
Trustee may also enter the Property and/or do any and all other things which it may in its sole
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: appearing in and/or defending any action or proceeding which purports
to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of
Trust; paying, purchasing, contesting or compromising any encumbrance, charge, lien or claim
of lien which in Beneficiary’s or Trustee’s sole judgment is or may be senior in priority to this
Deed of Trust, such judgment of Beneficiary or Trustee to be conclusive as among Beneficiary,
Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance
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required to be carried hereunder; otherwise caring for and protecting any and all of the Property;
and/or employing counsel, accountants, contractors and other appropriate persons to assist
Beneficiary or Trustee. Beneficiary and Trustee may take any of the actions permitted under this
Section 7.18 either with or without giving notice, except for notices required under applicable
law. Any amounts disbursed by Beneficiary pursuant to this paragraph shall become additional
indebtedness secured by this Deed of Trust.
8. Default and Remedies.
8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default
shall occur under this Deed of Trust upon the occurrence of any one or more of the following
events:
a. Beneficiary’s declaration of an Event of Default under any Loan
Document, subject to the expiration of any applicable cure period set forth in such document;
b. Trustor fails to perform any monetary obligation which arises under this
Deed of Trust, and does not cure that failure within ten (10) days following written notice from
Beneficiary or Trustee;
c. [Reserved.]
d. Trustor fails to maintain the insurance coverage required hereunder or
otherwise fails to comply with the requirements of Section 7.10 hereof and Trustor fails to cure
such default within the time specified in Section 7.10;
e. Subject to Trustor’s right to contest such charges as provided herein,
Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any
other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure
such default within 10 days ;
f. Any representation or warranty of Trustor contained in or made in
connection with the execution and delivery of this Deed of Trust or in any certificate or
statement furnished pursuant hereto or in any other Loan Document proves to have been false or
misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy
Law”), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii)
consents to the entry of an order for relief against Trustor or any general partner thereof in an
involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or
similar official for Trustor or any general partner thereof; (iv) makes an assignment for the
benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due;
h. If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for
Trustor or any general partner thereof or substantially all of such entity’s assets, (iii) orders the
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liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ,
warrant of attachment or similar process against the Property or the Project, and in each case the
order or decree is not released, vacated, dismissed or fully bonded within 60 days after its
issuance;
i. The holder of any other debt instrument secured by a mortgage or deed of
trust on the Property or part thereof declares an event of default thereunder and exercises a right
to declare all amounts due under that debt instrument immediately due and payable, subject to
the expiration of any applicable cure period set forth in such holder’s documents;
j. Trustor fails to perform any obligation arising under this Deed of Trust
other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10)
days after written notice from Beneficiary or Trustee in the event of a monetary default, or
within thirty (30) days after such written notice in the event of a nonmonetary default, provided
that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot
reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if
Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such
cure to completion with due diligence and in good faith and in no event later than sixty (60) days
following receipt of notice of default; or
k. A default arises under the Lease and remains uncured beyond any
applicable cure period such that the landlord has the right to terminate the Lease.
8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at
any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all
of the rights and remedies described below, and may exercise any one or more or all, of the
remedies set forth in any Loan Document, and any other remedy existing at law or in equity or
by statute. All of Beneficiary’s rights and remedies shall be cumulative, and the exercise of any
one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to
collect all expenses incurred in pursuing the remedies provided hereunder, including without
limitation reasonable attorneys’ fees and costs.
a. Acceleration. Beneficiary may declare any or all of the Secured
Obligations, including without limitation all sums payable under the Note and this Deed of Trust,
to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction
for, and obtain appointment of, a receiver for the Property.
c. Entry. Beneficiary, in person, by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part of the Property, and may also
do any and all other things in connection with those actions that Beneficiary may in its sole
discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such
other things may include: taking and possessing copies of all of Trustor’s or the then owner's
books and records concerning the Property; entering into, enforcing, modifying, or canceling
Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting
tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to
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Trustor; completing any unfinished construction; and/or contracting for and making repairs and
alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been
removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor
hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact to perform
such acts and execute such documents as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of Trustor's name
on any instruments.
d. UCC Remedies. Beneficiary may exercise any or all of the remedies
granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for
foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the
covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall
have the discretionary right to cause some or all of the Property, including any Property which
constitutes personal property, to be sold or otherwise disposed of in any combination and in any
manner permitted by applicable law.
8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted,
Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of
its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such
notice to be recorded in the office of the Recorder of each County wherein the Property or some
part thereof is situated as required by law and this Deed of Trust.
Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of
Trust and the Note or other evidence of indebtedness which is secured hereby, together with a
written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions
of law and this Deed of Trust.
Notice of sale having been given as then required by law, and not less than the time then
required by law having elapsed after recordation of such notice of default, Trustee, without
demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale,
either as a whole or in separate parcels and in such order as it may determine, at public auction to
the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee
may, and at Beneficiary’s request shall, postpone sale of all or any portion of the Property by
public announcement at such time and place of sale, and from time to time thereafter may
postpone such sale by public announcement at the time and place fixed by the preceding
postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but
without any covenant or warranty, express or implied. The recitals in such deed of any matters
or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee, or Beneficiary, may purchase at such sale.
After deducting all costs, fees, and expenses of Trustee and of the trust hereby created,
including reasonable attorneys’ fees in connection with sale, Trustee shall apply the proceeds of
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sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms
hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or
persons legally entitled thereto.
Without limiting the generality of the foregoing, Trustor acknowledges and agrees that
regardless of whether or not a default has occurred hereunder, if an Event of Default has
occurred under the Loan Documents, and if in connection with such Event of Default
Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled
to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of
any sale of the Property in connection with such foreclosure shall be used to pay all Secured
Obligations, including without limitation, the outstanding principal balance and all other
amounts due under the Note.
At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid
for and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Beneficiary may settle for the purchase price by
crediting the sales price of the property against the following obligations:
a. First, the portion of the Secured Obligations attributable to the expenses of
sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse
Beneficiary or Trustee under Section 7.12(c); and
b. Second, the remaining balance of all other Secured Obligations in any
order and proportions as Beneficiary in its sole discretion may choose.
8.4 Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the
sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun
by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before
sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time
prior to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums
which would be then due under the Loan Documents if the Secured Obligations had no
acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of
Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by
Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this
Deed of Trust, and in enforcing Beneficiary’s and Trustee’s remedies as provided herein,
including, but not limited to, reasonable attorney’s fees; and (d) Trustor takes such action as
Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s
interest in the Property and Trustor’s obligation to pay the sums secured by this Deed of Trust
shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the
obligations secured hereby shall remain in full force and effect as if no acceleration had
occurred.
9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all
statutes of limitations as a defense to any action or proceeding brought against Trustor by
Beneficiary; (b) the benefit of all laws now existing or which may hereafter be enacted providing
for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of
marshalling in the event of foreclosure; and (d) all presentments, demands for performance,
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notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance
of this Deed of Trust and of the existence, creation, or incurring of new or additional
indebtedness, and demands and notices of every kind.
10. Miscellaneous Provisions.
10.1 Additional Provisions. The Loan Documents grant further rights to Beneficiary
and contain further agreements and affirmative and negative covenants by Trustor which apply
to this Deed of Trust and the Property.
10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be
mailed to Trustor at the address set forth below. That address is also the mailing address of
Trustor as debtor under the UCC. Beneficiary’s address set forth below is the address for
Beneficiary as secured party under the UCC. Except for any notice required under applicable
law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be
made in writing, and sent to the parties at their respective addresses specified below or to such
other address as a party may designate by written notice delivered to the other parties in
accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice shall be deemed delivered upon
receipt;
b. certified or registered mail, return receipt requested, in which case notice
shall be deemed delivered two (2) business days after deposit, postage prepaid in the United
States mail;
c. nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) day after deposit with such courier; or
d. facsimile transmission, in which case notice shall be deemed delivered on
transmittal, provided that a transmission report is generated reflecting the accurate transmission
thereof.
Beneficiary: City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Trustor: [BUSINESS NAME]
[ADDRESS]
[ADDDRESS]
Attention: [NAME]
Trustee: _______________ Title Company
_________________________
_________________________
Attn:____________________
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10.3 Binding on Successors. The terms, covenants and conditions of this Deed of
Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors,
successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided
however this Section 10.3 does not waive any provision of the Loan Documents imposing
restrictions on transfer.
10.4 Substitution of Trustee. Beneficiary may from time to time or at any time
substitute a trustee or trustees to execute the trust hereby created, and when any such substitution
has been filed for record in the office of the Recorder of San Mateo County, it shall be
conclusive evidence of the appointment of such trustee or trustees, and such new trustee or
trustees shall succeed to all of the powers and duties of the Trustee named herein.
10.5 Attorneys’ Fees and Costs. In any action or proceeding to foreclose this Deed of
Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and
Trustee all costs of such action or proceeding, including reasonable attorneys’ fees.
10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be
governed by the laws of the State of California without regard to principles of conflicts of laws.
Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be
litigated exclusively in the jurisdiction where the Land is located (the “Property Jurisdiction”).
The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall
have exclusive jurisdiction over all controversies which shall arise under or in relation to the
Loan Documents. Trustor irrevocably consents to service, jurisdiction, and venue of such courts
for any such litigation, and waives any other venue to which it might be entitled by virtue of
domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held
unenforceable or void, that provision shall be deemed severable from the remaining provisions,
and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of
Trust are for convenience only and are not intended to affect the interpretation or construction of
the provisions herein contained. In this Deed of Trust, whenever the context so requires, the
singular number includes the plural.
10.7 Waiver, Modification and Amendment. Any waiver by Beneficiary of any
obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or
Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to
any act or omission by Trustor shall not be construed as a consent to any other or subsequent act
or omission or to waive the requirement for Beneficiary’s or Trustee’s consent to be obtained in
any future or other instance. No amendment to or modification of this Deed of Trust shall be
effective unless and until such amendment or modification is in writing, executed by Trustor and
Beneficiary. Without limiting the generality of the foregoing, Beneficiary’s acceptance of
payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary
of its right either to require prompt payment when due of all other sums so secured or to declare
default for failure so to pay.
10.8 Action by Beneficiary. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted
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under this Agreement, such action shall be in writing, and such action may be given, made or
taken by Beneficiary’s Executive Director or by any person who shall have been designated by
Beneficiary’s Executive Director, without further approval by the governing board of
Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such
approval, notice, direction, or consent in a timely manner. In any approval, consent, or other
determination by Beneficiary required hereunder, Beneficiary shall act reasonably and in good
faith.
10.9 Joint and Several Liability. If Trustor consists of more than one person or entity,
each shall be jointly and severally liable for the faithful performance of all of Trustor’s
obligations under this Deed of Trust.
10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of
Trust.
11. Leasehold Mortgagee Provisions. The provisions of this Section 11 shall apply in the
event that, and so long as, any portion of the Property consists of Trustor's interest as tenant
under the Lease defined and described in Recital A. As used in this Section 11, the term
“Lease” means the Lease and any extension, renewal or replacement thereof. The lien of this
Deed of Trust shall encumber all of Trustor's rights and interests under and in connection with
the Lease, including without limitation renewal and extension rights, options to expand, and
purchase options (all of which rights shall be collectively referred to herein as the "Leasehold").
11.1 Trustor shall timely perform its obligations in connection with the Lease. Trustor
specifically acknowledges Beneficiary's right, while any default by Trustor under the Lease
remains uncured, to perform the defaulted obligations and take all other actions which
Beneficiary reasonably deems necessary to protect its interests with respect thereto, and Trustor
hereby irrevocably appoints Beneficiary its true and lawful attorney- in- fact in its name or
otherwise to execute all documents, and perform all other acts, which Beneficiary reasonably
deems necessary to preserve its or Trustor's rights with respect to the Leasehold.
11.2 Trustor shall not, without Beneficiary's prior written consent, modify, or cause or
permit the termination of, the Lease, or waive or in any way release the landlord under the Lease
of any obligation or condition.
11.3 Trustor shall notify Beneficiary promptly in writing of (i) the occurrence of any
material default by the landlord under the Lease and (ii) the receipt by Trustor of any notice
claiming the occurrence of any default by Trustor under the Lease or the occurrence of any event
which, with the passage of time or the giving of notice or both, would constitute a default by
Trustor under the Lease (and Trustor shall also promptly deliver a copy of any such notice to
Beneficiary).
11.4 Unless Beneficiary otherwise consents in writing, so long as any Secured
Obligation remains outstanding, neither the fee title to, nor any other estate or interest in, the
Property subject to the Lease shall merge with any Leasehold, notwithstanding the union of such
estates in the landlord or the tenant or in a third party. Any acquisition of the landlord's interest
in the Lease by Trustor or any affiliate of Trustor shall be accomplished in such a manner as to
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avoid a merger of the interests of landlord and tenant unless Beneficiary consents to such merger
in writing.
11.5 If Trustor acquires fee title to any portion of the real property subject to the Lease,
this Deed of Trust shall automatically be a lien on such fee title.
11.6 Trustor shall not subordinate the Lease or Leasehold to any deed of trust or other
encumbrance of, or lien on, any interest in the real property subject to such Leasehold without
the prior written consent of Beneficiary. Any such subordination without such consent shall, at
Beneficiary's option, be void.
11.7 All subleases entered into by Trustor with respect to all or any portion of the
Property (and all existing subleases modified by Trustor) shall provide that such subleases are
subordinate to the lien of this Deed of Trust and any modifications of this Deed of Trust and the
Secured Obligations and that, if Beneficiary forecloses under this Deed of Trust or enters into a
new lease with the landlord under the Lease pursuant to the provisions for a new lease, if any,
contained in the applicable Lease or in any other document or agreement, the subtenant shall
attorn to Beneficiary or its assignee and the sublease shall remain in full force and effect in
accordance with its terms notwithstanding the termination of the Lease.
11.8 Trustor shall exercise any option or right to renew or extend the term of the Lease
at least six months prior to the date of termination of any such option or right, shall give
immediate written notice thereof to Beneficiary, and shall execute, deliver and record any
documents requested by Beneficiary to evidence the lien of this Deed of Trust on such extended
or renewed lease term. If Trustor fails to exercise any such option or right as required herein,
Beneficiary may exercise the option or right as Trustor's agent and attorney-in- fact pursuant to
this Deed of Trust, or in Beneficiary's own name or in the name of and on behalf of a nominee of
Beneficiary, as Beneficiary chooses in its absolute discretion.
11.9 Trustor hereby specifically assigns to Beneficiary, as security for the Secured
Obligations, all prepaid rents and security deposits and all other security which the landlord
under the Lease holds for the performance of Trustor's obligations thereunder.
11.10 Reserved.
11.11 Promptly upon demand by Beneficiary, Trustor shall use reasonable efforts to
obtain from the landlord under the Ground Lease and furnish to Beneficiary an estoppel
certificate of such landlord stating the date through which rent has been paid, whether or not
there are any defaults, and the specific nature of any claimed defaults.
11.12 Trustor shall notify Beneficiary promptly in writing of any request by either party
to the Lease for arbitration, appraisal or other proceedings relating to the Lease and of the
institution of any such proceeding, and shall promptly deliver to Beneficiary a copy of all
determinations in any such proceeding. Beneficiary shall have the right, following written notice
to Trustor, to participate in any such proceeding in association with Trustor or on its own behalf
as an interested party. Trustor shall notify Beneficiary promptly in writing of the institution of
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any legal proceeding involving obligations under the Lease, and Beneficiary may intervene in
any such legal proceeding and be made a party. Trustor shall promptly provide Beneficiary with
a copy of any decision rendered in connection with any such proceeding.
11.13 To the extent permitted by law, the price payable by Trustor or any other party in
the exercise of the right of redemption, if any, from any sale under, or decree of foreclosure of,
this Deed of Trust shall include all rents and other amounts paid and other sums advanced by
Beneficiary on behalf of Trustor as the tenant under the Ground Leases.
11.14 In addition to all other Events of Default described in this Deed of Trust, the
occurrence of any of the following shall be an Event of Default hereunder:
(a) A material breach or default by Trustor under the Lease, subject to any
applicable cure period; or
(b) The occurrence of any event or circumstance which gives the landlord
under the Lease a right to terminate the Lease.
11.15 As used in this Deed of Trust, the "Bankruptcy Code" shall mean 11 U.S.C. §§
101, et seq., as modified and/or recodified from time to time. Notwithstanding anything to the
contrary contained herein with respect to the Lease:
(a) The lien of this Deed of Trust attaches to all of Trustor's rights under
Subsection 365(h) of the Bankruptcy Code, including without limitation any and all elections to
be made thereunder, any and all rights under the Lease which Trustor is entitled to retain
pursuant to 11 U.S.C. § 365(h)(1)(A)(ii) in the event of a rejection under the Bankruptcy Code of
such Lease by the landlord thereunder (or any trustee thereof), and any and all rights of offset
under or as described in 11 U.S.C. § 365(h)(1)(B).
(b) Trustor acknowledges and agrees that, as the beneficiary under this Deed
of Trust and by operation of 11 U.S.C. §365(h)(1)(D), Beneficiary has, and until this Deed of
Trust has been fully reconveyed continuously shall have, whether before or after any default
under any of the Secured Obligations or the taking of any action to enforce any of Beneficiary's
rights and remedies under this Deed of Trust or any foreclosure sale hereunder, the complete,
unfettered and exclusive right, in its sole and absolute discretion, to elect (the "365(h) Election")
whether (i) any Lease that has been rejected under the Bankruptcy Code by the landlord
thereunder (or any trustee therefor) shall be treated as terminated under 11 U.S.C.
§365(h)(1)(A)(i), or (ii) the rights under such Lease that are in or appurtenant to the real
property, as described in 11 U.S.C. §365(h)(1)(A)(ii), should be retained pursuant to that
subsection. To the extent that, notwithstanding the preceding sentence and 11 U.S.C.
§365(h)(1)(D), Trustor now or at any time in the future has any right to make, or to participate in
or otherwise in any manner affect the making of, the 365(h) election with respect to any Lease,
Trustor hereby absolutely assigns and conveys to Beneficiary any and all such rights, and all of
Trustor's right, title, and interest therein, which may be used and exercised by Beneficiary
completely, exclusively, and without any restriction whatsoever, in Beneficiary's sole and
absolute discretion, whether before or after any default upon any of the Secured Obligations, the
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taking of any action to enforce any of Beneficiary's rights and remedies under this Deed of Trust,
or any foreclosure sale hereunder. Trustor hereby unconditionally and irrevocably appoints
Beneficiary as its attorney- in- fact to exercise Trustor's right, if any, to make, or participate in or
otherwise in any matter affect the making of, the 365(h) Election with respect to any Lease.
Trustor shall not in any manner impede or interfere with any action taken by Beneficiary and, at
the request of Beneficiary, Trustor shall take or join in the taking of any action to make, or
participate in or otherwise in any manner affect the making of, the 365(h) Election with respect
to any Lease, in such manner as Beneficiary determines in its sole and absolute discretion.
Unless and until instructed to do so by Beneficiary (as determined by Beneficiary in its sole and
absolute discretion), Trustor shall not take any action to make, or participate in or otherwise in
any manner affect the making of, the 365(h) Election with respect to any Lease, including in
particular, but without limitation, any election to treat any Lease as terminated. Beneficiary shall
have no obligation whatsoever to Trustor or any other person or entity in connection with the
making of the 365(h) Election with respect to any Lease or any instruction by Beneficiary to
Trustor given, withheld or delayed in respect thereof, nor shall Beneficiary have any liability to
Trustor or any other person or entity arising from any of the same.
(c) As security for the Secured Obligations, Trustor hereby irrevocably
assigns to Beneficiary all of Trustor's rights to damages arising from any rejection by any
landlord (or any trustee thereof) of any Lease under the Bankruptcy Code. Beneficiary and
Trustor shall proceed jointly or in the name of Trustor in respect of any claim or proceeding
relating to the rejection of any Lease, including without limitation the right to file and prosecute
any proofs of claim, complaints, motions and other documents in any case in respect of such
landlord under the Bankruptcy Code. This assignment shall continue in effect until all of the
Secured Obligations have been satisfied in full. Any amounts received by Beneficiary or Trustor
as damages arising from the rejection of any Lease as aforesaid shall be applied first to all costs
reasonably incurred by Beneficiary (including attorneys' fees) in connection with this subsection
(c) and then in accordance with other applicable provisions of this Deed of Trust.
(d) If, pursuant to the Bankruptcy Code, Trustor seeks to offset against the
rent reserved in any Lease the amount of any damages caused by the nonperformance of the
landlord's obligations after the rejection by the landlord (or any trustee thereof) of such Lease,
Trustor shall, prior to effecting such offset, notify Beneficiary in writing of its intent to do so,
setting forth the amounts proposed to be offset and, in the event that Beneficiary objects, Trustor
shall not effect any offset of the amounts to which Beneficiary objects. If Beneficiary fails to
object within 10 days following receipt of such notice, Trustor may offset the amounts set forth
in Trustor's notice.
(e) If any legal proceeding is commenced with respect to any Lease in
connection with any case under the Bankruptcy Code, Beneficiary and Trustor shall
cooperatively conduct any such proceeding with counsel reasonably agreed upon between
Trustor and Beneficiary. Trustor shall, upon demand, pay to Beneficiary all costs (including
attorneys' fees) reasonably incurred by Beneficiary in connection with any such proceeding.
(f) Trustor shall immediately notify Beneficiary orally upon learning of any
filing by or against any landlord under any Lease of a petition under the Bankruptcy Code.
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Trustor shall thereafter promptly give written notice of such filing to Beneficiary, setting forth
any information available to Trustor with respect to the date of such filing, the court in which
such petition was filed, and the relief sought therein. Trustor shall promptly deliver to
Beneficiary all notices, pleadings and other documents received by Trustor in connection with
any such proceeding.
11.16 No maintenance, repair or other obligation of Trustor hereunder which relates to
the "Property" shall apply to any Leasehold with respect to which the applicable Lease imposes
such obligation on the landlord so long as (a) Trustor does not own the landlord's interest; (b)
such landlord is performing such obligation in accordance with the terms of such Lease; and (c)
the Lease has not been rejected by the landlord (or any trustee thereof) under the Bankruptcy
Code.
11.17 Trustor shall promptly notify the landlord in writing, in accordance with Section
25359.7 of the California Health and Safety Code and any successor and/or similar statutes (and
shall simultaneously notify Beneficiary in writing), in the event that Trustor knows or has cause
to believe that any Hazardous Substance has come to be located on or beneath the property
leased under the Lease.
11.18 The generality of the provisions of this Deed of Trust shall not be limited by any
provision of this Section 11 that sets forth particular obligations of Trustor as the tenant under
the Ground Leases.
11.19 Trustor hereby represents and warrants to Beneficiary, with respect to the Lease
described in Recital A above (the “Current Lease”), as follows: (a) The Current Lease is in
full force and effect; (b) Trustor owns the entire tenant's interest under the Current Lease and
has the right under the Current Lease to execute this Deed of Trust; and (c) no default under the
Current Lease remains uncured, nor has any event occurred which, with the passage of time or
service of notice or both, would constitute such a default.
SIGNATURES ON FOLLOWING PAGE.
Exhibit F
87
1246546-2
25
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first
written above.
TRUSTOR:
,
a California Corporation
__________________________
By:
Its:
SIGNATURES MUST BE NOTARIZED.
Exhibit F
88
1246546-2
26
STATE OF CALIFORNIA )
)
COUNTY OF SAN MATEO )
On , 20__, before me, ______________________, (here insert name and title of the officer),
personally appeared , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
STATE OF CALIFORNIA )
)
COUNTY OF SAN MATEO )
On , 20__, before me, ______________________, (here insert name and title of the officer),
personally appeared , who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
Exhibit F
89
1246546-2
27
Exhibit A
LAND
(Attach legal description.)
2301187.1
Exhibit F
90