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september 6... 1990
HONORABLE CITY COUNCIL
palo Alto. California
Members of the council:
'_port; I, Bri.f
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This report recommends Council approval of an Option to Lease Air
Rights for the Private Development and Lease of Two Additional
Floors of Parking at the Webster-Cowper parking Garage to 5,05
Hamilton Avenue Partners (Developer). The negotiations have been
completed and the final Lease and Lease Option (Exhibit A) are
presented for your approval. The City Attorney has raised some
concerns reqardinq policy issues related to construction of private
i:mproveme.nts on an existing City ilCpirove.ment. In aMition, another
local developer has questiOned staff's method for valuinq the
private improvements. Att.achment 1A summarizes the l1aj·or condi
tions of the lease •
• aekqroup4
on August ll., 1990 .. a draft Option to Lease -505 Hamilton Avenue
Partners -For Air Rights to Two Additional Levels of Parking at
the Webster-Cowper Parking Garage {CMR:466:0} -was p~egented to
council. Staff -was directed to postpone this item to September 10
to allow time for completion of the revie~ period for the Environ
mental rmpact Report~
Since August 13. t~o changes have been made to requirements the
developer must satisfy prior to entering into the Lease as stated
in CMR:466:0:
g. Developer shall provide proof of insurance~ ipcludIng
.ar\bqUake imauranc., as set forth in the Lease.
CMR:49E: 0
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Developer shall have obta.ined the approval of the Public Works
Department respectinq Developer's agreement to pay for i} a
part-tlae project engineer to consult with and advise city
during the design phase of the preaises, and ii) a full-time
proj.ct engineer ARA • construction inspector for the
construction phase of the preDises~
The Lease requires the Developer to obtain earthqUake insurance.
In negotiating the Lease, the Developer agreed to the requirement,
but only if the cost vere reasonable. The City does not bave
eart.bquue insurance on the structure as it I5tands today; however ...
the -full faith and credit-ot the City stands behind the premises.
sta£f believes Ccu.ncil should be aYare that if the cost of the
earthquake insurance becomes excessive and the developer does not
provide it. ... the city would run the risk that insurance .funds 'Would
not be available. to repair or reconstruct the structure in the
event of an earthquake.
There are policy questions raised due to the possibility of damage
to City improvements caused by construction l operation or failure
of the private improvements. The. City Attorney's office has
advised that t.he lease takes the City into joint use of City
land/facilities in a way not fully qoverned: by Policies i!1nd
Procedures 1-11.. (P'P 1-11). p,p 1-11 anticipates leases of
unimproved City p~operty, tenant improvements on unimproved City
property. and leases Qf property including existing City improve
ments. p,p 1-11 does not appear to take into account. the possibil
ity of private improvements being constructed upon, Qr as part ofl
an existing City improvemen~. section 6.1(b) of the lease makes it
clear that the tenant is responsible for damage caused to the
City'li parkinq qarage -d,urinq and by· construction of the top two
floors (referred to in the lease as -Premises·). Bowever. the last
sentence of Section 6.1(b) sets fGrth an important limitation on
the tenant's Obliqations. Tbe tenant is responsible for mainte
nance and repair costs to the Cityls parking qaraqe ~ly to the
extent these costs are CQvered by insurance the tenant is required
to maintain. AocordinglYI the City is le.ft 'Without explicit
recourse aga1ns~ the tenant in ~he event damage to the existing
City parking qarage is caused by an operational problem or
structural failore of the top two floors which is not covered by
one or mGre provisions of the required insurance. _
Section S of the lease deals in more general terms with damage tOI
or destruction of, the i~provements. Essentially, if the top two
floors of the garage are destroyed by an insured calamitYI or if
the cost of repair is less than ~5' of the ~otal replacement cost
of the top two floors I the tenant must cepair the top two floors.
However, if the top two floors (Dr the Cityls parking garage) are
·substantially damaged or destroyed· so that the cost of repair is
CKR:496:0 2
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equal to or greater than 25' of the total replacement cost of the
premises, Qr if the premises are damaged by a cause aqainst which
the tenant is not required to insure, the tenant has D2 Obliqation
to repair the premises or parking garage.
staff addressed this situation, at least partially, by specifying
required: insurance coverage li .. its in Section 1.1 of the lease.
Moreover, Section 11.3 provides the city with the opportunity to
lncr~ase the required insurance amounts for v~rkers' compensation,
automobile liability, qen~ral liability, fire and extended coverage
and qarage keeper's liability insurance. Earthquake coverage is,
however, li.ited so that the tenant need only maintain an earth
quaJte insurance policy insuring the premises and parking garage if
the pruiums are" in t.he tenantl's. reaso-nab1e opinior'l", ·commercially
reasonable.-As a practical matter, this means that the tenant may
choose not to maintain earthqua.ke insurance coveraqe. Accordingly,
the City Attorney's Office believes the tenant vould have no
obliqation to repair the cU:yl's parkirl9 garage if the parking
qaraqe is destroyed as a result of failure of the top two floors
during an earthquake, aS6uming the tenant chose not to provide
earthqUake coverage under the ·cozmercially reasonable-e¥ception
languaqe. As noted above", this u'nique situatlOh ariSing out of the
construction of private improvements upon existinq City improve
~ents does not appear to bave been considered in P.P 1-11 •
.,.igna.nt of , ••••
A second 'area of concern for the City Attorney's Office relates to
Section 12 of the lease pertaining to assignments and encUlllNances.
Basically, section 12 •• Would preclude the City from withholding
its consent to any assignment unless the City has commercial
concerns about the ability of the subtenant to perform under the
lease, or unless the city could demcnstrate that the subtenant
would cause some adverse effect upon the City's propeTty interest
in the land and structures. The lease 'Would l12.t. perJ:1it the City to
refuse consent to an assigruaent based upon, for example, the
possible fact that a subtenant might be involved in business
activities Which are the~selves ~trary to other established City
policies. Accordingly, the ·commercially reasonable-aEsignment
clause takes away from the City a substantial degree of control
over the nature of the tenants ~hich aight otherwise oocupy the
imp~oved City parking garaqe. The city could retain more policy
orIented control over its tenants through an appropriate assignment
clause. More restrictive language would have some impact upon the
t.ransferability. and benee upon the commercial valueI' of the lease.
Sec~ion 6(b) of the option contains an example of more restrictive
assignment language.·
CMR:U5:0 3
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The City bas received 14' letters ot support trom property owners
within the Assessment District (on file in the City Clerk's
Office). However, staft received two letters from Mr. Charles J~
Xeenan, III. that strongly question the city's valuation process
(Attachment 2). Staff ~et vith Mr. Keenan and determined that his
three .ajor concerns vere: 1) proration of air rights. 2) value of
the. project at t.he e.nd: of the lease, and 3) term of the lease.
Staff's position on thee-e threE; areas is as folloW's:
1) Proration of Air Right.: In determining what portion of the
valoe of the parkinq qaragoa in its cODIpleted 1-level state would be
attributable to the two additional levels.,. staff decided ill. 'Weighted:
averaqe would best address the value o~ the leasehold interest.
*4/23 or l'.n
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Staff's decision was based on the tact that the top two levels
yould be the least desirable space tor someone wishing to park at
the 9arage~ Using the st~ff'& method for proration. 17~4 percent
Qf the air rights value is attributable to the top two floors. An
alternative would have been to assume that each level should be
asslqned an equal value and the Developer should pay 28.6 percent
for the air rights. Staff telt the weighted average to be a more
accurate reflection of the actual usage.
2) Value of Project at End of Lease: Mr. Xeenan believes that no
credit Should be qiven tor any assumed val~e of the project at the
end of the lease period. Staft disagrees. The structure bas an
estimated li~e of 50 years. Staff assumes that there would be a
value to the project at the end of the is-year lease period and
Included this value as part of its evaluation of the financial
teras of the lease, thereby using it as a credit to offset what
vould otherwise be higher lease compensation.
3) Ter. of the Lease: ~. ~eenan believes the term of the lease
should be 25 to 30 years inste.acl of t.he 15 years currently
proposed. This issue was specifically discussed by the Council at
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ita July 2 meeting. Council directed staff to negotiate a shorter
tera l~ase. preferably vitb • is to 17 year term.
It is i'llportant to note. in aMitLon. that this project
advertised for bid and there 'Was no interest elq)ressed by
~.enan or any other developer in competi~ for the project.
Ipvironw.n\ll •••••••• R~
An initial study recommending a NegativE: Declaration bas been
completed.
staff R.comp.ndatlop
staff recomnends that the council:
.. as
Mr.
1) Authorize the Mayor to siqn the attached 24-month Option to
Lease Air Riqhts at the Webster-Cowper Garage; and
2} Authorize the Mayor to sign the Lease and any other related
documents upon notice from the Manaqer, Real Property, that
all conditions of the option t? Lease have Z::le.en tully
satisfied.
Respectfully submi~tea,
ll}~~j~Al~
IilJ:LLIA!! FELlXAN
~e~
EKUY 8ARRISON
Director of Finance
Exhibit A: Lease Option and Lease
Related Staff RePOrts: CMR 392:0
CMR 468:0
CMR 466:0
cc: Jr. Baer~ premier Properties w. Russel Davis. Ware , Freidenrich
Charles J. Keenan, III., Xeenan Land Company
CMR:496:0
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Project;
Project Number:. ____ _
OPTION AGREEMENT
This Agreement is made this __ day of September, 1990, by ar.d between the
Oty of Palo Alto, • municipal corpo<ation ('City'), and 50S Hamilton Avenue Partners,
" Callfornla limfted partnmhip, ("Optionee').
RECITALS
A City O"'1lS certain real property (the "Property") located in the CiIJl of
Palo Aha; Santa Oars County, more specifically described on ExhIbit I attached hereto,
whicll ExhIbit is made a part hereof. A five (S) level parldng garage (the "Parking
Garage') owned by City is situated on !be Property. .
B. Optionee desires \0 obtain an aclu""'. option 10 \ease the airspace above
!be Parldng Garage 10 construct and use two levels of additional parking area, in
a=clance with the terms and conditions of the Lease attached hereto as Exlubit Il
(!be "Lease').
c. City agrees 10 grant an exclu&ive option 10 Optionee during which time
Optionee shaH develop .pecific ronstnJction plans for !be additional parking area and
satisfy other conditions set forth hereinbelow prior '" !be \easing of said airspace in
, aooxdance with the Lease.
D. City bas satisfied the requirements 0( its Policy and Procedures 1-11
pertaining 10 the \eased use of CiIJl land and facilities.
NOW TIffiREFORE, in consideration 0( !be premises set forth above, Ibe
parties hereto mutually agree as ronows: .
1. Grant of 0I!Il0p.. Citj hereby grants to Optionee l!Il <.xclu""'. optiOn to
\ease thaI po<tion of the airspace above the Parldng Garage in which the additional
parldng will be constructed, lIpon the terms and subject to the covenants and conditions
set fortl!. below and in the Lease. The additional parking area 10 be constructed by
Optionee should the option granted hereby be exercised shall hereinafter be referred \0
as the "Premises"4
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2. Term of Qption. Tho term 0( this option ,haD be foe • period 0( twelve
(12) months and man commence upon execution 0( this agreement by City and
Optionee.
3. Consideration for Qption. As consideration for Ibe option granted bereby
and if Optionee satisfies an 0( Ibe conditions se t fortb hereinbelow 10 Ibe effectiveness
0( the ~ Optionee agrees 10 construct two levels 0( parking area upon Ibe Parking
Garage and 10 pay the additiocaJ consideration and perform !be additional duties set
forth in the Lease.
4.. Conditions Precedent. This option may not be exercised by Optionee
unless and until each and aD 0( lbe fuDowing conditions, which conditiorn; are imposed
solely for the benefit 0( Optionee, have been satisfied:
Ca) Optionee man have submitted to, and shaD have received apprO'lal
0( its development plans for Ibe Premises from City's Architectural R,,;ew Board,
Planning Commission and City Council. Said plans shan include interior plans,
structural plans, exterior elevations, and parking space configurations.
(b) City's Planning Commission shan have determined that the
proposed development is in confocmance with Ibe City 0( Palo Alto General Plan
pursuant to Section 19.04.050 0( the Palo Alto Municipal Code.
(c) Optionee shaD have received apprO'lal from City's City Council for
an amendment 10 !be existing 'Planned Community' zoning of the Property, and
Optionee ,haD have obtained a building permit for the Premises and any other land
use permits oc entitlement required for implementation 0( the develop",ent plans as
approved by City.
(d) Optionee man have beca granted a variance respecting the beight
and daylight plane 0( the Parking Garage by City's Zoning Administrate.-.
(e) Optionee shaD have complied with the requirements of City',
procedures for implementation 0( the caIifornia Environmental Quality Act 0( 1910, as
may be amended from time 10 time.
(I) Optionee shali have provided to City', Real Property Mministrator
evidence lbat any and aD permits from any and aD agencies having pre.;:onstruction
jurisdiction over the proposed development 0( the Premises, incluamg, but no< limited
to, builomg permits, gracIng permits and bealth permits have been authorized and are
avaiJable.
~) Optionee sban have submitted 10 City's cruef Build""mg Official
certification that the plans !Or any proposed builcmg construction comply, to lbe extent
applicable,. with energy conservation re'l11irements as set f.octh in California
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Administrative COOe, Title 24 foc DOn-residential construction. The form and content
0{ said certificates sball be in ~onfonnancc with the requirements 0{ California
Administrative COOe, Title 24 for non-residential construction.
(h) Optiocee shall bave obtained approval 0{ the Working Drawings
for the proposed development of fr..: rr"mi>cs iron" Cit)'" Dty Engineer and auef
Buikling Official, Working Drawings shall include:
(1) Comple!e architeCtural and engineering working drawings,
induding elevator retrofitting plans;
(2) Complete construction specifications;
(3) Complete construction contract form; and
(4) Proposed construction schedule.
(5) Proposed operationaVmain!enancc plans foc the nse 0{ the
parking garage. -
(i) Optionee shaD bave satisfied Diy'S Real Property AdministratO<
Ibat Optionee bas sufficient finances c< financial commitments 10 implement the
development plans approved by Dty in accordanu with the above.
(j) Optionee, in acco<dancc with Paragraph 7 0{ the attached Lease,
sball bave furnished 10 Oty'. Real Property Administrator, evidence 0{ coverage that
assures City that sufficient monies wilI be available to comple!e the pr~
eonsuuction.
(1:) Optionee shaD have obtained the approval 0{ the City Engineer
respecting Optionee'. agreement to pay for (i) a part-time project engineer 10 consult
with and advise City during the design phase 0{ the Preoises, and Ca) a fun time
project engineer/construction inspecloc for the construction phase 0{ the Premises.
S. Exercise 0{ O$ion-At any time during the option term that Optionee
has satisfied eacll and every condition precedent set forth in Paragrapb • above, 10 the
satisfaction 0{ City, Optionee may exercise this option by giving Oty's Real Property
Administrator ,..,-itten notice 0{ its election 10 do so, accompanied by two properly
executed copies 0{ the attached Lease. City sbaD oxecute the Lease within one month
0{ receipt 0{ the request 10 e.ercise the option in accordance with this paragraph.
6. General G!ndItions.
(0) Review by Cm_ Optionee bereby aclrnowledges that one 0{ the
J'IlIPO'o'" 0{ this option is 10 2ffC<d Optionee and Dty the opportunity to detennine
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whether oc not OptioDee ;,; able 10 meet the various <oDdioo". and oblain the required
approvals as set forth in this Agreement Several ol those <ondioons involve obtaining
review and aFprovaJ from officers, employees or agents ol City. Each ol those reviews
shaD be conducted in an independent manner following issuance of any ne,;essary
notices and conduct of any necessary hearings, and nothing contained herein sball be
deemed to limit the jurisdienon, authority oc discreoon otlJerv.ise possessed by said
o(b"ers, employees 0< agents in the conduct ol such review. Nodllng contained in this
option shall be deemed to imply that ,aid approvals will be forthcoming. and the
failure to isSI!e any such approv?! or permit by any officer, employee 0< agent of City
shall not be deemed in any manner a breach 0( this option.. nor shal! any such denial
give rise to any cWm, Eability, obligaOOn, or cause ol action with respect 10 this option
oc the '\!ached Lease.
City agree, 10 consent 10 any lawful and complete application by Optionee with
respect 10. any permits Of' approvals related 10 activities or improvements approved by
eft}' in accordance with the option which may be require.d by any governmental oc
other reguJatocy agencies aside from City.
(b) Assigruner.. Of Trim,fer Prohibited. Thi, option has been awarded
based on the background and proposals of Optionee; therefore, thi' Option cannot be
sold, assigned or otherwise transferred without pdoc written consent of City wbich
consent may be withheld by City for any reason wbether Of not commerciany Of
otherwise reasonable. To the extent it may be deemed applicable to thi, option, !be
partie. agree that \he foregoing re,tricoon on assignments 'han be construed as an
express 'tandard or condition within the meaning of Civil Code Section 1995"250.
Failure to obtaln City", required. written consent sha1l render said sale, assignment, or
transfer void.
«) Ext.~nsion of QWon. Upon written request of Optionee stating the
reasons therefcr-. the Citfs City Manager. or his or ber .expressly aut1lorized designee,
may, at his or her sole discretion, extend the term of this option as foDews:
(1) City Manager may grant an extension of the lerm of this
option fo< • reasonable period of tim<:. as detenoined by the Gty Manager oc designee
in the event Optionee is deJayed in fulfilling the (onmoons precedent 10 the exercise 01'
this option by reason of any cause not \he fauJt ~ or within the conuol ~ Optionee
0< its agents Of employees; or
(2) Gty Manager may granl an extension 01' Ibe term of the
option for a period not 10 exceed ninety (90) da:y>, in the O'Ienl Optionee is delayed in
fulfilling !be condioons precedenl 10 !be exercise of Ibis opoon for any other reason.
However. the City Manager or designee may grant sucb extension bereunde:r only upon
the foDowing condioons:
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(i) Written re<juest for such cxteIWon shall have been
delivered b)I Option"" 10 City" Real Property Adrninistrat{J( at least fifteen (15) days
-prior to the expiration 01' the option term;
en) Optionee sban submit, lOgether with its request for
extension, evidence 01' its progress /award fulfilling the conditions precedent 10 the
c:cercise 01' this option, documentation 01' its proposed actions and feOSlbllity 01'
satisfy'.ng said conditions within the term 01' Ibe exteIWoD requested and such o!ber
information and material as may be required by the City Manager.
(d) Termination 01' Option. Failure 01' Optionee 10 meet the terms
and conditions 01' this option fully and satisfactorily within !be time limits stated shall
absolutely and conduslvely terminate Optionee', rights hereunder. Upon tamination
hereof without c:cercise 01' the option by Optionee, Optionee shall, .. ithin five (5)
business days 01' receipt 01' re<juest from City" Real Property Administrator, deliver 10
City a properly c:cecuted Quitclaim Deed quitclaiming any and all interest in and 10 the
Property.
Signing 01' a Lease by City and Optionee substantially in the focm 01' Eodubit II,
attached herel<>, sball be deemed a termination 0{ I-llis Option AgrumenL
Ce) Optiorn:e" Ri&Jlt 10 Enter. City hereby grants 10 Optionee, its
agents, emp1oy«s, and assigns, during the term 0{ this option 0< any extension thereof,
the right 10 enter the Property 0< any po.-tion !bereo{ at reasonable times for the
purposes 0{ conducting. at Optionee's own cost and expense, such wiT, geologic, and
engineering investigations as may be re<juired by any public agency required '" approve
any sulxlMsion {J( development 0{ Property by Optionee. Optionee hereby agrees '"
indemnify Cay and bold City, City's agents and employees, free and harmless from any
loss oc liability incurred by reason 0{ such investigation. Optionee agrees", repair at
its sole expense any and all damages caused to the Property by reason 01' any such
investigation 01' investigations.
Ctty, at the sole dIscretion 0{ City', City Manager or his ()£ her exp<essly
authorized designee, shall require Ibat Optionee prO\ide evidence 01' instJrance coverage
in the amounts sel forth in Paragraph 11 01' the Lease prior 10 any wiT, geologic or
other tests or investigations on Property by Optionee, its agents, employees 0<
assignees.
(I) ~ Any notice, tender, or delivery 10 be given in accordance
with this option by ei!ber party 10 the oo",r shaD be given in accordance with
Paragraph 11 0{ the Lease.
(&) Representations. Each party represents 10 the other that it bas
employed no real estate broker or finder in connection with this Agreement and hereby
s.
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agrees to bold the other harmless and free from any Eal:ility in conntttion with any
commission 0< finder's fee alleged to be incurred by it.
(h) &!!liLe AgreemenL This instrument conlains the entire agreement
between the parties relating to the option granted by this AgreemenL Any oral
representations 0< modilicatioos concerning this instrument shaD be of DO focce and
effect ccept in • subsequent modification which is made in writing. and signed by both
parties.
(i) RecoveQ' of Attorneys' Fees. In the event of any controversy.
claim, oc dispute between the parties herel<>, arising out of or relating to this
agreement or the breach thereof. the prevailing party sbaD be entitled to recover from
the losing party reasonable expenses, iDclucfmg attorneys' fees, and otber legal costs.
0) BindIng on Successors. This agreement shaD bind and inure 10 the
benefit of the respective heirs, persooal representatives, "1l<cessors, and assigns of the
parties berelO except as may be expressly provided el5ewhere in this agreerncoL
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IN WITNESS WHEREOF, Ibe parties herelo have executed this Option
.Agreement on the day and year first above written.
OTY:
City of Palo Alto, • Municipal
Corporation
~.~-----------------Mayor
ATIEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
RECOMMENDED FOR APPROVAL:
cruef Transportation Official
Manager, Real Property
~.cn -7.
OPTIONEE:
50S Hamilton Avenue Partner>
• CaJjfornia limited partnen;hip
~ IDAF1,. California limited
partnership, a general partner
~'----------------lames E. Baer
its general partner
~ Cbarles Kfug & Associates, •
California limited partnership
~'----------------Cbarles W. King, Ir. Trustee of
!be Owles W. King, Jr.
Revokable Trust dated
December 11, 1986,
its general partner
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TIlE CITY Of' PALO ALTO,
• municipal corporatioll,
505 HAMlLTON A~ PARTNERS,
• California limIted partn~rsbip.
"Tenanr
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TABLE OF rot-ITENTS
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RFW~ ~~::::::::::::::::::::::: ~::~:::::::::::::::
1. ll!riloK ......................................... ,
3. ~.l!!~.!l!<! .. ,', .................. , ......... ,.
3.1 ~d' Sc.rvfc§....iD.l1~ ••••••••••••• _ ••••••••••
3.2 R.atrictcd Uses. ••••......•••..•..•••. _ .••.....•
3.3 2c-LU1iiVe Use ~ ......••..•••....••••.....••• , .• .: = ... ,., .................... " ................ .
5. ConsjderationlB.c.nt ••••••••••••.•.••.••••.••• _ •• _ •.••
l. Mainlenanct •• + _ •••••••••••••••••••••••••••••••••••
6.1 Structural Mainttnance ~ •..••.......•••••...••.•. _
6.2 NOD-StTUC1UIaT Mai~tmnce .•.......••....••......•
6.3 Condition of Parlin, Garage and I'n:maa ~ ••...••.. '"
6.( CMlTTK'Memt;nt gf Mafnl~ •••.•. , , •••••••••••••
U Qs;pnrit for Mamterumce ••.. _ .....••....••..•.••.•
'7. !:.9OS'trucIiop bY Tenant ....••...... " ••...•.•...••...•
7.1 JgitiaT Cgrulrocliop of Premilics •• ,., •• , •••••••••••••
7.2 Corutmcticn .!ndlQI Al'teratiog bJ Tenant •.............
7.l I¢n.ant) Assurance of C'gnstructfoD Compk®P •.........
7.4 AI Bui" PlAns ., •••....•••••.•• ' •••.•.••.......•
l Pama" lQ or Qrstnx:tion of hnprO\.'ements •••••••••••••••••
1.1 Insured t>amage 9' I&-ttI"uctJog •••••••••••••••••••••
!.2 Nqn-Insured Dr.rnage Dr ~~ • ' ••••••••••••••••
1.3 QaD'll'lgt: 19 nr Dstruct:i0l!. of ~ ParWI GamIN! ••• , •• , ••
&.4 ErleruiQn of 4ase Term •••••••••••••••••••••• , •.
1.5 lnnmTlce Proceeds •••••••••• , ••••••••••••••.••••
,. Owners?!ip of Imprmmcnts •.•....••••......••.........
}D. ~ ••••••••••••••••••••••••••••••••••••••••••
IL ~ ... , .... _ ............................. __ •
11.1 R&quirsd Covs;rage • , ...•...••...........•...••.•
11.2 Eartbczuah CQv!!:ragc. ••••••••••••••••••••••••••••
11..3 Eyi&;nce pf Coverage: Cliapg!;:s •••••••••••••••.•••••
lU UablTrty Not limfte13 ...... " •• , ..•••.....••..•.•
12 Agignlng SublettTJ1& and Enrum~ ., ••••••••••••••••..
121 Encumbrances •..••....••.....................•
122 CondItions Iq..~.~ ••••....••.... , ....•....•
12.3 Transfers of Control •.....•...•.•.......•.......•
12.( Co~nt 10 EocumJ;Jr'.dnces •••••••••••••••••••••••••
]3.. ~h'lii[ ED Tell!lS C'l ~ ~ bjI Tenant •.......•...••....•
13..] ~med'IC:I •.•••...•...•..•....•... , ..•..•
13 2 Biihl.~.. .............................. ,.
133 Ban'kruptcy"~ •..• """"""""""""
1~ ~~~ •.••...•......•....•...........•
14.1 ~C9.n.sent JQ Transfsr •..•... -.••.........••.•
14.2 TeJIDIDaYOD o(J~ ...........................•
15. limitatio.a 0( ~ Le.asefloTd ••••••••••••••••••••.•••••••
16. TE:DII iMtiol:l .. m.lrfQC 6£ruments • ' ••...•. , . , .........••.•
11 HQ~ •....•••.••••.....•.. ,' .. , , ..••..•..•••
1& ~ ... S9~ •....•••..•... , •....••...•..••..
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P,ol= ____ _
"rojed NLlmber. _____ _
nII5 LEASE is made this __ day or ---.J 1990. by and bctweC1l tM:
CITY OF PALO ALTO •• municipal corpor-atiort (~ and 505 HAMILTON
AVENUE PARTNERS,. Calircrnia limited partnership ('T~na1lt').
REm-AU
A. Lessoc OWN" cc:rtaiD real property (tht: "Propc:r;() b:alcd In PaJa ATtn,.
California Il!ld lIlore. pa:rticularlJ desc:ribed on ~~ attaclled :hereto. .A five: (5)
level parflin,s garage (the "P'arlil1g GaragE") owoc:d by Lusar iI presently situated OpoD
tht: Prope.rty.
B. Teruml desires to construct two (2) additional [cvcls (the "Premis:es1 to
Ole presently existing Parllfn& Garage and to me the parking withitl !be Premises
during tbe term of this Lease.
C In ndlange far-Tenaru"" construction of the Premises and certain ot1Je:r
consideration ~ be.re.inbeTow. Lessor dcsi:res to k.ase to Tenant and Tenant
desires I:C kase from Les&ar tk PItm:ises on the terms Uld conditions Ilercinafter set
forth.
D. Lessor j. .... i1Ii:ns; 10 ~ 1llc PremIses 10 Tena.ilt became of Tenant~1
owncnhlp or GCcual of • number of ptopcrtk:! 10 oo-wntown Palo Alto an'] Tenant"s
commitmeru: to umain an owner of downtown property_ Tellilnt acknowledges t11at its
control or dC'WIltowD propc:rties and its :resuJtir1g abiIil}' to caUse the: par~ area ... ithin
the PrU'.is6 to be utiJized t, pcn.ons who wort within such proputies is a material
factor in Lessar~1 ~ntry of tbiI Lease du.e tIl !fu: fimited availabirr1y of parkL.'g In the
downtown area
NOW THEREFORE,. in comilferation r:l these prc~ the parties bt:reto
mutua11J' agree as folkJws.:
1.. fg[l1tscs.. Subjett to tile terms and cond'rtions set fO.rtl! 1:1 chis I.a:5e,
Lessor Ieasd to Tenant IIlnd Tenar<t leases from Lessor 6le Pr~ Upon
completion of cnnstruction or ~ 1'r~i"ses by Tenant, (i) TeTlant shan accept tM
Premises in tflcir "a&--is" c:ondTtioc and (n) l...es.Jar 5JJall gram: tt. Tenant an easement
(the "Ac.ce.u Easemect") over. across and t1trougb the Par"king Garage for pedestrian
aM vehlcular ingreu to and egress from the Premises; durirlg the term of !his Lease.
Tenant sJu.Jt alridc by Lessor'. parting. traffic and directiOIl.iJ f!OW" regulations in nsTng
the kt:ess Euement, incltXfing. ~bout IimHation. L"lJ genc~ applicable regulations
pe.rtaining to the type: of gehicks that may me tM: Parkins; Garage. The hcess
Ellsemt:nt shall be JI"Bnled a5 shown in Exhibit "L .... attaChed bcreto, wIDe1l shan be
recorded and shan entidc Tenanl 10 lise t1le fif'lll (SdJ) kvcJ or 1M Pamng Garage and
the dJioieways, ntmps,. rtalrwap; and cTevafon wiiliira the: l'ar'tinJ G~
2. ~ The Purpose.! of f11is. I...easr: are (1) to provide: for thc:
tonstnKtiOD of addiUonar ,parnng area above tlJe Parlcing Garage which shaD be used
b:y Tenant or ib. lU'blenants during tbc lenu hen::of, but wlli<:1l man be available to the
pubflC during cvcni:n& and weekend bolD"l as prorided herefnbckl'w B1ld 1l'hldI slJaD
I-evert to ~ ~i'nj: G.e tmn "hereof; and (11) to provide far tfle maIntenance of
the Parking Gilr.lSC a.od thc: PleJ:lli5es t, Tenant cfuring c:he lerm of this I..zase in
acrordancc: with the: lenm Sd funh bc:k.... Tenant acbtowkdgcs that dlls Lease and
the parkin. prmicSed hereby Ihall Dc:( constitute a Clean (i) 0Dwa:rd parlcicg
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requirements imposed by Lessor UpoD ft:turc: devt:Topmcllts proposed b) Tenant within
abe City r:I. palo A!to,. or (Il") apInst oI.SSeS!imt.nb. nnder any UoivCrloJl}' Avenue
.As5eMment AIel! rar1ciDg DiJtric1s ... b.idI an: nOW or ",in ill the future be impOsed
against Fropert)' owned or-colltrcI!ed by Tenant. its aui,gns, heirs., JUb!i:idiaries or its ceneral putnen,. incJud"mg. ~ lmi.ation,. Ibt: proper.y bcated I.! 529 Bryant
Street.. 'alo Ma.
3. $qyks: and Vp In furt1lerance of the purposes naled aOOve. tbe
rouowfnJ ~ aod uses WI! be provl~ permmro or prorubited:-
3.1 ~~_ Scnices M!d l.lsu Tenant shaD use the Premises on1J
fOr paRinj; purposes; irl accordance. with the tel'Il5 of this Lease and' !he Aa:es.s
Easement. To furt'her Lessor", goal of mrromi::ting !he use of .r.'aflable parmI! iD
dawn!OWD Palo Aho, Tenant shan u.se its bell effartJ thraug1lout the tt:rm hc:.rcof to
ensure that all of the parkinj: spaces witbiD the Pr.emi':ses an: uttnw! by Tcn&Dt or its
subtena.ms. ThrougboL1l the ICmI of this Lease. Tenant shan prO\'id'e the Parking
Garage and the Premises wUh generaJ maIDlt:naoce and uprup in aerordarKe wItb
Patagrapb , below •
.3.2 Restrjcted Ugs. 1bc above listed' .services and uses ilIan be t!Je
orn, :sc.tYiccs and uses pennitted .. poD ac from tlle Pn:m~ TeDaN agrees DOl to usc:
lbe Prcmise::& for any ~ other tlJan as stated above: liar to engage "in or permiI
any othec bu:s1nea& aaMt:r wilhiD or from L~ Preniisa..
1.3 ExWjyc l..¥, Durin,g ihc: krm, Tenanr: s1IaIl have the
exclusive use d (M Pr.emfses from 7 •. m. truol.lgn , p.m., Mond2:J tJ!.rougn FridaJ 01'
ucll wed.. From' p.m. through 7 am. MCOOaJ tIutrugh Friday and aJl day CQ
weekends, the Pf'emises aba1! be .available 10 the pubrlC far parking pwpos.es. subject 10
any controls or teitrictions ..-'bicl! ml!, be imp.JSOd by Les.sor. Tenant wI! be cntic1ed
to wtaD • security gate Of" otlJer d'eviU to COlltroT IKces:L to the Premises providc::iI that
said' dcvia: aDows Wlimpedc::d &ee.e15 to r:he public during flle peritili vroeB the
~misca arc ttl be lVaJ1abTc 10 the public as dcscribe4 .oo...-c...
4.. :Th!m. The teru::. of this Lease man be fur • period of fiftc::.c:B (15) years,
commencing on compIction or constTUction of tile Premises as described in
laraJrapb 7.1 below. Upon commencemc:m of tbe term. t1Ie parties .s.ha1I mutua!l:y
~ :ra wricing rhe datc on ~ this Lease commenced.
s. ConsTderaticnlR&m.
rn coruid'c::rat1oG far-Tenant's me of the PremIses .&i prCl"lid'cd hereIn.,.
Tenant £hall (i) comtrucl (he Premises ill. acwrdance with l'iL"':agrapn 1 beJow. (nl
perform tfle mainCCJlanoe cbiigaLioru sel fnrtlI in Paragrapb , below, and (iii) POI] to
Lessar Ibe IJll.CW1t of One Hundred FiftJ' Thousand Dollan. (s15G,.IXlO) as amance non
refundable R:nI iIr the Premises.. Said payment of .dvance rent shaD be made: open
completion of amstnK1iOIl of the l'Temisa Lessor .gr~c::s to use the a~ rent
papnel!t c:xclusivcly fur impt".::Nemem anlllar mamtenancr: of pr;Jpt:ny wTthUl the
UniYerslt) Avcnuc AsKs:s.ment DistricL
"1 S_tructural MajlltellBl'\Ce.
(a) &cept as ~ provided' ill Paragrapb '-1(b) below,
Lessor Illan M R:Sponsibfe.. at its saTe cast,. fur mamlerumc:e -.nd repair or the JtrlJC1lue
and m.a.m support .l)'Slems or a.e Par'king GaraJe. mc-ll!dlng, wlthout Iimn.aUon, exterior
painting ~d RpUn aOO replacements r:L structuraJ CQmpo~b. or llIe Parkinf; Garage.
(bJ Tenant s'hdn be feSponsible, at its aoTc cost, fur maintenance
and :repair of tile ~ure and main JUppon sy:51Cms of the Premises., iIK;ludin~
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without :!imitation" exttriOr paintinJ and n:pain and rtpIar.elIl"-'nts of structural
c.ompoDellti of the Pt~mises and dam~ Qused Ia the rarJring Garage dlJ.-1ng and by
conmuctiCD 0( cbe Premises. TelWll: IhaZ! also be: R!ponsible for expc:JUiCS incurred b)"
Leaac ill conoectioa 'Witb the maintCl"lanct: and repair (mcluollll repIac~mc::nI) cL L';e
atruc1ure ud main .rupport l)'lt'!ms 0( Ole Parking Garage to tbe ex1cnt that the costs
of sakI maimenaDa: aJld npa-if are CO'!ered by il'lsuranee p~ocecds from iiauranc.e
.required to be mafntairled hy Tenant p ... ~uant 10 Paragraph 11 berow.
6.2 ~ MainlcnaDce...
(a) E.:.~pt as; descnbed in Paragrapb. 6.1 I above. dl.l.!'fnJ: !he
I
lCrm of !bis Lease TeJ1ani sllaD perform an general maintena.1CC: and c.!eaning within
dle Parking Gange and tlM: Premises, ii1cJuCma: routine inspections and, maintenaN:e
and repair of !he sl~e and the ck~ sys"cem, repair of all)' damage caused by
VcU1daTLSm,. and maintenam::e anCI repair of the elevators within tile Parking Garage ILIld
(he Pum"i$es. subject to JUbpaTagTapb '.2(b) belov;. Elevator equipmeru and hou!ing
wtthi-ft the Parking Garage shn be retJofincd by Tenam at Tena.-u:'s expeme to
acxommodate the Premises. Plans for letrofitfin&; che elevators shall be submitkd to
le.uor far approval before said retrofitting II irupTt::memed. Tenant apr~Ty agrees to
!MInram the: PiUking Garage and the Pre.mises in • safe., dean, and .sanitary conditIon
to \:he reaso.n.abk: satkfaction r:L lLiWr. in compilan-=c: wttI:l an applkable laws and in
compfiaoce witb !'he cleaning and marnler.an.cc standards .set fort:h in &h,btt "D"
attached bereto.. Toe:nant furtkr .a~ to provide .aPJXoved' contafnc.rs far trash and
prbagc: and to ieep the Paiklng Garage and Plemises free and clear-of rnbbisIl M,d
litter. L.e.ssor shan M..e tlJe tight to enter upon and irupe.:t the Prt:mTses at .arJ}' time
far cleanIincss and'safety. NOtwithstaflOl1l3 tlJe .above provisions. Tenant man be
1esp.."'!fl!..Ibk fat damage or repair to the Parking Garage: a' al'Tjl of its .suppnrt S!Sferns
J'csu1ting from Tena.m~1 use of the Parking Garage: or the Prenmes and':not occasioned
by DO!1Jl8I wear and tear.
(b) 1£ tltc elevators seMng the F'arking Garage require major
repalrs cc replacement!. during the last five (5) yean; of the Ic:rm of this uase 2nd the
nseful life of cbc repaired or replaced' item 5 d'etcrnUned to atend be)lofld the Ic:.rm
bereof. the cast of suclI repail'l or r-eptacetnCnl5 5lIan be: borne as fo1k'nvs: Tenafll
shall' pay the portioc cf ruclI ro:st wbicll is equaI to die: ratio of the Dumber of J'UI'3
thea Eemamrng m tbe term d the I.ease Wvitkd by the anticipaled U"Ien..; life cf JuclI
equipment, .8lld Lessor shall pay tbt: remaining amount, provided that Tenant has
Informed Lasor of the need fur sald exprnditun: and Lessor ~ COTlle1lted lheIeta In
~Ong.. Prior 10 the mating d said :repairs or FCpJacemcnt1,. the part~s shall agrel:
upon the Il$CM IiIe of file subject equipmem L:I order to allocate Cht: cost thered
pUfSlJant to the foregoing sent~ I.zs!or sJtalI nOl WlIeasoflably withIloTd its consent
to repaIrs of or .repT~mcDts to tlJc e1e ... alnrs,. and I....essar mall pay any amounts
reqJired Ilereundcr within thirty (30) dap of rec::eJpt cL "TitteR re~est fmm Tena!tl
chc.n:for whic:II reql>e.5t sM1I include an Btvcfr.e d'etaiftnj; t1Ie ron of said rcpam. or
JCp1acements. V'Lessor does nat c:oruent to said sepaIn or replacement); as p~ed
haein, tbeD. n:na."lt shall DOC br: Fequlred to male the mIne and' .s.ha1I be e.JJtitTed' 1.0
1l.II'T.c.OOt:.r the lI:lev.at~ to Lesser al the expIration or earlier ~n:nlDatiOD wecf without
ma'kinl; said' repairs cc-fe-p1acemll:nts:.
(c) TII:tlIUIt wn. from time In tirw ... designate iii. writing to
Lcs.sot • te'presentative af Tenant: wbo shaD be rll:Spol1slble far the day-UHiay operation
and Ieve! of maintenance 8J1d clea:n!iness witbin the Premises.
Cd) I Tenant fails to maintain or male repair or repTacement!.
as required bereIn, l.euor t'lRJ' notify Tenant in writing of said failure. Should Tenant
fail: to correct the: ~tu.aticn wlthl:n • reasonable time: lbc:rcafter. as estal>listJed by
~ Cit)' Manageo CI designee, L.t:ssor'''. Manager, Re:<d PrcratJ may maKe, cc
cause ID br: made, (he n~ corrections and tne coo tlJereof,. including but noc:
limIted to the eost of la'bor, materials, and equlpmcnt Illd. ten percent (10%) clJ.arge
fer ad'rrnniWatioD and' overhead, lh.aD be paid by Tenant wi'thm teD (10) 0a)'S of
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receipt or. statement cl &aid cost from l.nsru •• Manager, JU:al hopert)'. LeMor m.aJ~
.t .its opUoll,. dK>o$c atller nme&:"'t\ incJ~g tcrminatiDr'l of this tease, 1.5 provided
betein,. or-available by law.
II.J Condition. or Parking Gmt'!; and Premises. Prior to oommeocins
construcfioD debe Premises,. Tenant and l.euar iJ'Jan condozet • walk-throup
inspection or Ibe Parli"ll ~ and tbc t:n1r1incc:s from We!me:r and Cowper Struts
Ie .sroe llpon and documeru the Q)l'ldition tlll:reo£. .Prior 10 tlle eol:ll1neru:emerrt of the
term hucaf. Tenant and l.Lssor ..un cond~ • seccod wa!i:.tllrougb inspection ol the
Parking Garage. both "!IltraJ\C¢5 lO a.e Parking Garage and 1M Premises to agret upon
and document Ole corufitiJI:: thereof. and Tem.nt shaI! npair any damage 10 !he
Painn,: Gara&e caused by the COnstruc:tiOIl r:I !be Premises or by tt:lated activities
ocam'rng duzirlg said.:omtruction. FoDO'Wing eac1o. IUCB frupection, Terum! sllan
prepare • wr1r.ea report describing the conditfo.a or the PIUting Garas;e or the Parking
(ja.rage and !he: Premises. as appficable, ..,bich reports s11A1I be submItted CIJ Lessor.
lJDTe$J l.essa" object! to tile content of th: P!ports 'Withic thirty (.30) da)'! of receipt
thereof;. they shaD be coocJus'Ive as 10 ~ condition of (i) the Par"kin& Garage and its
entrance.s 1$ of the Q;lInmeocelIlWt of constructioll, and' rn) the Par'king Garage,. its
en'lnncel and the Pr.emisc:s as of the ccrnmc:numeIlt d the tam. if Lessor o~ 10
the: report:!I the panie.s man 'M1I"lI: togctlJu in good farth to agree Upon the content or
the reports.. At the apir.J.tioll or e.arlie:r termination of tbc term or tbiil Lease,. Tenant
IbaU IUI"rellder ID Lessor (i) the Parms: Ciarage I.Ild its tot.ra:oca. in its condition ti of'
comme.ncement of C{Jnstruction of tbe Premises. aIld (n) the: Premises in their rondition
as of the mmmcnccmeot of the tum of this I...ea.se, reasonal>1e wear aIld tear. t1000,
and' any &ct of ..at ar::cpled
6.4 Commencement of MlIinle.n.ance... Tenam shall commence With ~
maintenance program requlred hereTn for tJle P;arbng Garn~ upon romme.."lCement of'
construction c! tbe Pr-emIses and shan continLle said program throughout the term
herco[ !be maintenance activities st.aD mcTUIk mamt.enance of the entrances to the
Parkin, Gara~ iTom Webster aoo Cowper Suuts. -oouemg t1Ie lam1scaping alnng said
.,Inn=.
'-' Dep91u for MBintenaOl%. Upon a::mpletfon of c.omtruc6CII::t of the
Premises, Tenant shall ddIvu lD Lessoc-fur ~it mio an interest bearing aa:aunt
~oab~ acoc:pfable to Lessor !he rum of 'I1l.irrJ Thousand !);)11an (530,000) (the
~"). The: Deposit s1JaD be maintained tfucughout the lernl of thfs: L~ as a
securit)' ckpo.:sii to e:nrure the pc:rfurmana: of Tenant·, mam:i:ena.nce and repair
obftgatians. Within two (2) weeb after the apiration or earuer termination of tllis
Lea.se., l.e»or s1laD n1easc. fue Deposit, kTIXfin& accrued mlerest thereon, to Tenant
less any sums oeeded to cure defaults by Tenant ill its mafuten.anct and repair
obr:igations bcre1m6e.r.
1.1 Initial Construction of Pr~_m~ Commencing Oil or about
January 10. 1991.. at as otherwise approved by Lusor, Ten.am :l1l.a.D in. an efficiem aTld
worwfite manner. tause to be CQnstructe.t, and instarIed' witbill the J'rernls.es., at no
COil to L.euar aDd m accordance wjtb a~ obtaIned from [~s.sar durin& 'If,:
option period prior ID O:lDuneooemcnt cL construction of the Premises, the .linlJ and'
xvellih levels of Ifu: PoiJ'lin& Ga:raje .,biclI levels soan roru;titule the Pn:mlscs. The
P1emiseJ shaft be comtrutted by 6c.ensed" rontl"ac'tOn "ill ac:cor!1ance .,j11l plans pupared
by Tenalll and' approved by I...essor prior to commencement of construction. LessOt
ac:btawte.dge$ that eonstruction of the Premises. ~ Tenanl "",11 re.~utJ: "in the II!mponuy
unavailabill!)' of the. eTevatOl'3 aoo the fifth bel' cL the ParKing Garage as wdI as
certain additional' pa:rIrin,r: 5paces iz:I tbe l'<trlcing Garale from time to time as necessa:y
fat .seii;mk: reinfar~ment of tne rdT'king Garage. Lessor weby waNes any figJu to
coDect aD}' fu.Ii r.elated to !!Ie unavaJlabilil)' cL the ekYalo!'3 or said parking .spac.es
durin& 6Je eonstruction period. Construction of the: Premises shall be deemed
completed far p~ of dill; WR ..,hea cenified! ill Mitin& as c:ompl~ by Tenant·s
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.rchitect or aencral toIltrIIoCIor suP'U"isinJ said corut:ructioe and',..~ the Lessur·.
representative bas concurred ill wrirLnc -ith ~1I eertificalion.
".2 Cgrutructjgp 'WOI' AJte@tloll by Tenant.
Cal No structures. imjJTovcments,. or faC1lities lha!I be
c:omtructed, erectec!, a'hued. or ~ Within L'Ie Premises without prior written oonsent
of LeSSQl;". City CoUld if require~ by City d. .PaJo Alto procedures or on:fl1la.nco. or
otherwise by Lessor ... Of} Maru.gu. An, tol'llfitJOIlS reta.t1:ng to the manner, method,.
d'eriin, and constructio'a. cr said nructw-es, improvements, or Iac=ilitie! establilhe~ by
Lesso.-iJWI be collditions of thiJ clause U tllOllP originally stated herein.
(b} An impovemellt! ccnstructed by Tena.nl: within the Prem1ses
wI! be const.ruck:d' ill III cfficicnI and' woriertik.e manner by ticensed coo!ractul1l and
m strict compliance with detaited plans and .specifkations appTO"o'ed by Leuc.r·. Crt)'
Council. required by Cny ar PaTo Aha procedures or anm&fl.C6, or otner-..'rse b,y
Lessor ... City ManateT. or cksignec. and' 3pprh:.8bTe Oty of Paro Alto codes BJld
mdirumces.
(e) Tcnan! shall ~posi1 wlth l.zs..\OC"~ prior 10 begiIIIi1ng design
wort 011 ihc: Pt~mtsesr. funds. ~S5al)' to pay fer the services of • pan--time project
engfn.ea 10 .supeMs.e .said &:sign weri:. The estimated cost cf sald' iCNfces wbkh s.ba1I
be 5epos1ted willi Lessor iI F4tecB Thousand Do!1ar5 (,:15.000').-
(d) fenlUJ( shaD pay fur the se.cvices of .a fun-time project
engJllCeI' and , full-time: constructioa fu.~ t'.,) be hired by Lessor fur the duration
of I1lc rorutructiOu plwc of 'the Premises.. An agre.emem to fund tDe ~ rR. tIle
project enginee!' and oot'l5tTUCUoll im.pectnr shaII be appra."C:d by Le.ss.or prilr to
ts.~U8nu of • building penni!: fix 1M Pr.e~.
(e) Upon ecmpletioll of crm~!ruCtion of any ttructure,. Tenant
shall cause its ilJ(;hi1ect or contractor to submit to Lessor", Manager, Rt:aJ Pl:operty. a
CertifICate of lnspc:ct:ioo,"'VCI'ifiinI; that tfle ronstructiCg was completed iii ecnfol'1!W)Ce
wilh TJtlc: 24 of ~ C'aIifornia Code of Regulanons fur nan-residentiaI cons:tnJctj"cn.
7.3 Tmant"' M\ltanr.e of Co/1StJ'lll:ri~_ Completion... Prlr." to
eommcno:mcol of c:onstruc\Ton cL approved facffitl-t:::l,. Of any pb.ase tbcreo!, .... ithin Chc
PremIses by Tenant, Tenant: shan furnish to LcmlI·" Manager, ReaJ Property, a specific
rof"lStJvction sc1led'uJe and ~ t1".at amaes Lessor lhat SU-ffK:iept monIes will be
available to complete: (be proposed coruitnlcticn. The amount of such assurance s.haD
be at least the IOtal estimated constractiou cost t1Jat was lu~mit1ed to and appuved by
Lessor iD acco;dal"iCe with fills Lcuc. E\lidencc of 'Ucll assurance .lha1I tale one of the:
farms ICt cut below, as selected by Tenam B1l.::l' !tJbjec:t to ussor"s le.a.KJnabTe approval,.
and man guarantee Tenant"", full :s.nC! faJthfuI' performance af an the krms,. covenants,
and condttions of thfs l.L3se:
(a) Completion Bon!!;
{bJ Performance,. labor aoo .dl.A!erial bonds, supplied by Tenant"s
cootractar or contractors". provickd said boo&: are lssued" jointly to Tenant and l..e5Jor,
(d) Altematl: means reasoruab1j' acceptable 10 Lc.ssar rue} as
deposit r:L IUffidem fimdJ into apeed' Upoll accounts or imot::StlrJeoa; or
(~) Any combination of the afx7ve.
AD bood: Imd letters r:L erecfd must be iSSlJC:d by • company qualified' lD do
business ill fhc State r1 Caflfamra and aa:cPtGb~ to Lessor". Manager, Real Propt!1y_
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Aft bonds &lid ktten or aeaJt s;haO be ill • form ac-:.eptabfe Ie v...ua:r .... Manager,. Rut
ProperlJ and City AnOlll'eJ, and IhalI insure f.aj1'hfuJ M',d full obs:.rvanee lUI"
~rfotmanee by Tenant of all the terms,. conditions,. covenants.. and agreements relatinj:
to Illc: construction of improvements ill &cootda.~ wilb plans appr~ed by Leuar as
.let Ibttb m thil Lease.
1.e hi Sui) P\.aM. Upon C01!Iplcti01l ill a,~ m.ajor Te!UU'..t constructed'
improveme'lt!,. '!'eoant ahaJI provide: Lessor"s MlI.1Ul&eT, Real Prupc.rty. Mth • compk'ie
set rL n=prodlXible "as fMnlr plans" FCfkctina; ltCtua1 constn.ction within or llpart the
~
8.1 Jmyrr.d t>amare gr Dss!:ruc!iQn. Except as o~ provided ill
Paragr&.p"h &3 below, i'the PremIses are damaged or destroyed by any cause far ""bic"
Tenant is Iequin:d lc maIntaiD insurance lIlldc:r Paragrapb 11 below~ Ten!llll .!hall
repair the: d&m.a1:C or deJt:nlctioa witb re.aJOnabre d!1igr:nce. In luch event,. Chis l.za:;e
s1JaD RmaiD in Fun farce and' effe.."'t.
1.2 Nop-Il'4Urei! Damil$ gr Dc.!;ttuctioJ!. If!be Prcmisd arc
sub$tanDanjr daJnaie(J or cJtstroyed {as definc:,j lleIcmbeT(NI) by &n]' ClIIl5C far whid.
Tenant is DOt Tequired to maintain WIlrnlCe undO" Paragrapb 11 beT""", Tenant may.
at its option.. termInate dli!I Lease by ddivermg WIittcl1 lIotic.e aC termination to Lasar
withia t:hlr1;y (30) !lays fonowfug the date of said dzmage or &strur:tian. For pu!f<l'CS
ol this paragrap1l." the Premi1:es &hall be deemed ".substanfially damage" or destroyed" ,
the ecst or:repair iii equal to or greater than twenty-five percem (25%J r1 !be total
replacemrnt cost af tbe Premises.. If th: PIemises are datnaged by • calISe against
whd Tenant Ii 11m: ~ to Insure ~uI tllc damage is I1Q( equaT to or greater than
twenty-five pera:nt (2:5%J of tM. total ~pIacemcnt W£t a[ tlle Premises or i Tenant
does lIot Strminate dtis Lease 1.5 provided bercInaOOve, Tcnam ahat! repair said
damage witlJ f'C.UOI'lable diligence.
U Dam.ie 1Q Q[ Des.tr~gf 1M raMi! GauH5" If die Parting
Garage is dama8ed' or de:st:royed by any cause for .. 'hid! Tenant ill required to maintaIn
insw"ana: un&r hragrapl! 11 be1ow~ and ll:bc prOCet:dl. from saKI iJl$uran(;e aIlocabte
$C e.e Fa.rling Garage pursua.n;t to l'ar.>graptl 8.5 below Ilte nJ.fficient tu repair the
Par\inj; Garage. Tenant shall make said proceeds availabk to Lessor foe-n:peir of I!le
Parlins; Garage. Le.uar m&J :repair die damage or ~ with reasunabfe
diI1gence and thiI: Lease Ihal! remam in ful'I Coree ariJ elfec'l~ I'" dlc: Pariin& Garage is
damaged or destroyed by aI!JI cause and e.e lnrurance proceeds a1Iocable thereto
putliUADt to Paragr:apb 1.5 bclow are DOC ruf5cient far said repairl, U:SSW" s:.an n.ot be
FCqIUred 10 repair the hrkiDJ. Gll11lie ~ Lesser ,llall be entitkd to r.umInate this
Lease by ckIiverin, writtm n.mcc or termInation to Tenant within thir1y (3OJ dap
foDowfnJ the date r:l the t!alnage. UcJe.ss Lessor krnllnate5 this Lease pursuant to the
lOregoing sentena.,. [.es..,or 6JJa1I Rpair the: &.mage to !he Pariing Garage wilb
Jeillior\abTe dJf~ NotWithstanding the furegoing,. (I) i Lcuar 1o::n:nInates !l:J.is !..easc
and. Ibnowm,: JUdI lermination,. repairs the Parlring G-araje. this Lealie sbaD be
KInstated and sba] a:mtinue KI fuJ] fun::e and effer:l fey dlC Jl:mInde: of the term
IIcreo( IS extended pUl"SUallt 10 Par.tgrapb 8.4 below, aM rn) I ~or elects 10
k:rmmate !!lis (..eag pum.!lnt IXl Chc foregOIng. Tenam shall be: e:J1titled ILl cause the
Lease to COntinlX in effect t, notifyfug Le.s:sQI in wriling with ten (TOJ daJ5 after
rel:emn,: teuor·. notice of tcnnination of Tenant·s DltenOon to make tlJe ~8!)'
.Tepain oil! TenaO(1 e:xperue.. .. Lasar terminates this 1...ease punu.a.nt to the krregomg,
Tenant m.aJJ nOC be tequired to :rebuild or :repair tile Prem~ rn 110 evem ll1aD
Tenant be responsible for IfIe cos:;: of :repairs to ~ Parting ~ to the extent OW
instu:lntt proceeds from insuranu: maintl!iDt:d by Tenant: aoo aDotated 10 the :repair of
the Parking Garage pursuant tI:l .Poil'llgT1l,pb 1.5 krow are insuffiOcnl to cover said
:repair com..
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1.4 fxt.e:nsiqD of 'UK Term In fhe event the P~emlses or the
rarlcinc Ghra,ee are dama&cd or dc:m~ed IlOO this t....eMe .. not k.r1Iliru.ted' as a !esuh
tbuwf. .x. W lUminate4' bur JUbsequc:nt1y re1n$lated pamuanl 10 Paragrapb 13 above,
dlc: Iotrm of Ellis !..use shaD be extended" b the ~ng!b of time tllat the Prcm"i!es or
any portion 'dIc:reaf' lITe DOt oIVaila'ole for me by ~ Tenant as parkin& area.
I.S Jruun.nce 'rocuds. 111 tbc event r:L damage 10 or destructiCD r:L
the Premises 10M/or I!IC: Par'kinJ Chtrage. insurance proceeds sha!l be applied 1O'A'aId
Iepair Illd n:stontiDD ~ iD 11M followint: ratios: (I) 2/7 IDWiUd the Premises allO'
(11) 5(J. toO'wanf the Parlin, Ga~ p;:ovH!ed th&t this Lease is DOt tcrmIn.ated' pursllam
to this P.arngrapb & II l2lis t..eue II wminated pursuant to this Paragraph 8,. any
available ins:un:nce ptoceedl iliaD be d'"lStnbutd to tbe partie.s in thr: fonrn..ing ratios;::
(i) 2{7 to Tenant" and [1I) 5(J to I.essL!t.
t. ~ gt tmprMlcmr.nl!.. An improw.:ment! constructed. erec1ed or
Instaned Ilpal:! the PremiSes WlI be .aoo ~ the ProM of Tenant duritiS !he
term of this Lusc.. Upon QpTration or ear5er rc.rmination or this Lease, sud
Improvements shall 'bea>me t1Je proper1J of I..ewx. must be free: and dear of an Iic:~
claims. ai EabiIit)l Iar labor or materia! L"ld sha.]] Rmain upOn the Premises.
Ttdc to a!I equipment and trade filturcs placed by Tenant upon the Frcmis.es
shaD remain with Tenant,. and Ftplaccmtnts.,. IllbstitutiOns and modifications. tIlercaf
may be made by Tenant lhmugbout the ~ of Chis Lease.. Tenant maJ Je!llOVC rue'll
equipment and fu;tures upoD turnfnation of this Lease. proVl!1ed Inat Tenanc sban
repair 10 the satis.faction r:L !'he LessO( .. OJ &mare 10 tIle Pr-crnises and' imPf()\lClllC"DtJ
caused by.rucll removal, and provid'~ that usual anCI CUSlOIIla1)' Ilgbting. plumbing and'
katina DxtllTCl shaD remain upon ~ Premises upllc termfuatiCII of this Lease.
10. UPIitfes. I.essar shall be ~nsibrc for and sllafl pay. prior to
delinquency. aD cbarges £or utilities supplied ID t:br: Parking Gara~ !!ld file Prem~
11 1=
1J.1 RsguEre(f CoYCragc. Tenant sba.II maintain Insurance aa:;cptable 10
I...r=or in futl fort:e and cffed throtlghoUl ~ term of the luse.. Subject la adjustment
:as. provided' under Paragrapb 11.3,. the policy or policies f;>f msl.l'TaIlCC maintained by
Tenam shaD provide the fOUO'IWing limiu: and eoverages::
(1) "'0= COMPENSATION
(2) COMPREHENSIVE
AUTOMOBD.£ LlABIUTY.
mduding Owned. HiTed, ana
NOll-O.vncd A.utnmobiJcs,
(3) COMPR'EHENSrVE GENERAl..
LIABJU'IY
int:Tudin8 Products and
Completed' OperalioIH., Broad
FOlm Contractual, and PenonaJ
Injury
(4) flRE .. EXTENDED
COVE.R.AGE
MINIMUM llMITS Of: __ UABD ID"
StatutOI)'
Combinc:d SingJc $3.000,000
Umit
Combined SingJe 1l.000.000
Lim1l
Not less crum 100% of !'he replacement
cost r:L an ~urabte improvements
comprisml I:fIe P'&rking Garage and the
l'lcmises. Sue} poUcieJ. must include
Wl:It~ dall"'.age: and debris cleanup
provmons.. ~ditiona! fire: and c:1l!:nd'ecJ
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GaraF1teper'l LeaaJ LiabiTilJ
CovcrBj'C insurilll vtJUcles ira
Tenan1~. paacaiOD
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coverage must be obtained ill
ao;m&nt:e wU.1l. this cla LBe apon
completion of construction C1
inswtation: ~ an, major insurable
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~ co::nprebel\llive aenera] Iil!bility polley des.::nbed abo1!e shall lI!ppTy ocYusjv(:T, tc (he
~mIses and thr: Parking Garage, but no( additianaJ prope.rt;y ~ by TeIlant.
b:tsuraocc man be in run three and effect commendng CD the first da:y of the term P(
this Lea5c:.. Eack ~ poYiq ~uired by tIli! Lease .w.n eontafu the fuD.cwing cTa~:
L "1l1iI: insurance .IhaJI DOt be: C3llc.eD~ limj~d iB scope of c:ovcraae or
nonrenewed lJ:IrtiI after t1rirtJ (30) &!)'S wrinea notice has berD gMO to
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Oty cl Palo Al''lOJReal Estate DMsion
P.O. Boz ]025(J
PaJa A1to" CA 94.303"
2. -All tig11ts of stlbrDption are k.re~ ~ agoilnst the City of PaJo
AJtc and the membcn cL the C"Jfy Cmmcil and elective or appointive
ofli~rJ or empT~ ..,ben acting w11h.in the scope of their employment
or .ppoIn~t..
3, "'I'bt: City 0( PaJa Artc is added as m additional iruiurcd as respects
operations of the named insured at or fi"C'!D the pr:II'.1ses leased from
the City of P.a1o Alta.·
.c. "ill is :agreed that any insur2-'lCe IIIllizltained by Iflc City of Palo Alto will
apply ill QDCSI of; 1J1;f nOl ccntrib",-~ .... ~th i:-s;.a-ance p['O\ljded by this
""Iiq,"
11.2" ~quaTq; Coverage. During ccnrtructian of the Premis~ Tenant
slta1l mainwn iln earu.qua1:c insllRllCt: perleY in:surmg llle Premises m fimD rea.sonahry
acceptabre 10 Lessor. FoDO'Wing ccn-~all of chc Premise$, Te..."lam .. nan maintain an
ea:ttlJqua"kc imur'aDCt poiky insuring the Premisa and tile Partfng Garage ill fOIm
reasonably acceptable to ~. provld~ thai the premiums fur said poTq are, in Tenant',
.JeiUOnabJc: opinion, comme.rtia1ly R:asonable. Tcnaru sT:.al: notLly Lessnr in writing not less
thall ~U1y (30) !Jays priar to ~[Jtinuam:e 0{ c:JII'eI8ge if Tenant elects to d'lSOOtlW:lIlC:
ear.i'quait insurance ooverage due lD the: pi"Crnfums l:he.refor being c:ommerciaITy
llTlfeasoIIabJc..
1l..3 Evjclence of C9veIage: Changes.. Te.nam agrees to deposit with les:5oc ....
Manager, Real PJoputy, OIL or bd'ure rbe effective date 0( t11is Lease. c.utific:.ates of
insw-ance necessary to .satisfy l..essar that t1Je insura."lCe provisions; of dJis Lease ha ... e 'heel!.
comprJed with, and to keep 1UC1i wuranc.e ill effect and die certificates ther¢far on deposit
with Lessor durfug the' entire tUm of Ihi!! Lease. Should Tenant !lot provide eWtence of
Nell requ1red coverage at !em tJ'Jec (3) da}'5 prior til ~ exp1ratiOD c! any oisting
"iraur.ince CO'>'erage,. lessot, rouowfua; 'Wrlttea BOtitt to Tenam. may purcn..se such insuranc.c,.
on be1Ia1f of, and at the DpCI15C of Tenant to prO'.idr: m--mootN. coverage...
l....essar shall: retain Iilc rigbt at any lime to revi.cw !he coverage, form, and amount of
the imurar.ce required by Pilnlgrapb 11 and eac" of its subpamgrapbs. 11; in !lie reasonable
opinron. of lessor's ManilgeT, lm!. Contro~ tile :iru;ur....r.ce plUyiiions in this Lease do not
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provide a&:quatc protc:c:tiOfl far Leunr and' fur lI.embcn; of the pUbTLC ming tile Pr~m~
Less.ar'. Manaaer. Rul ~. may require Ter..ant to cbtam insur.a~ $lJfficient in
coverage" farm, and amount 1Q prOYide adequate prote...-tiOI\,. l..e$sor". requinment3. wn be
rea30nabk and lhall be de$pd Ito asrurt: protection from lind against the md and alent
of riK QQ exUtI at the time: a chanje m rruUTanCll ill requfrtd.
Lessor·. Manaac.t, Rea] Froput]', sb.II fIOtUy Te.n.anI in writm, of dump in tllc:
insul'1lnc:e requirements enabflShe.! pursuant tD Paragrapb: 11 and eacll of its subparagraphs;
and • Tenant docs DOl depos.it ccpU-;s r::L aa:eptable insurance po!kies with Lessor
iIcatporating sudl ebanp ~lhiD 1M) (60) days. of receipt of mclt notice, or in the event
Tenant fails 10 maintain m effect any tequin:d insurance coverage.. this l..easf: 5'hal1 be ill
default wlthaut furthet M6ce to Tenant SuclI failure s.ha] constitute a material. brC2cl1 and
may be grounds for llVlnirlatioll cr this Lease at the option of l..e:s:!.or pursuant to
ParasraPh 13 below.
JL4 ) iabirrty ;-;01 iJrnitcl The prOC'W'fng of ruclI required ilQIicy or po'Iicies
af insunna: sbaD nat be eom:tr'Ued 10 limit Tmant"s liability hereunde: nor to fuffill the
indC--:nni5cation provision and' ~uir~mcnts or dlis Lease. NOtwithstanding said poIio:.y cc
policies ar in.rurance.. Tenant Iha1I: be ohfig::altd fur the fun and' total amount of any dam.a,ge.
il1jury. or lou. caused by oe,iftgc:1la: or nqlect tll[l1leckd llIitII this Lease or witb IlSe or
0CI:UpImC)' of me Premises.
12 A;uignjor. AAlettmg and Encumbt:ring
12...1 Encu!llbnlnc#. Any ~ncun:ibrance.. rransIu • .sublease, or assignment
{calIectiveJy referred 10 as: "E.ncumbranc.ej of Tc:nanfs interest tn the PJcm.ii;es, or any part
or portion ~ shall first be approved m writing by Lumr·s 01]1 Manager or designer..
Arty Encumbrance whlck bas not been appl"O\'e~ bJ Leuor m ~ shan be lIOid.
Occupancy of the PJemUes by • prospective transferee.. subtenant.. or assigr.te before
approval of the transfer, sublea$e.. or assignment by Lc:sror slIan constitutc • bread! of t!liJ
Lease. NotwltMtandlflj: die furegolng and P<lr.lgriIph: 12.4 below .. Latldl'ord acknowledges
Ihat Tenant has entered rato agr~ments ~ DigItal Equipment Corporation, a
Massac'husetts corporation rDigl"taI'} pumJanI: 10 wmcl!. Digital wi!! purchase the propert]l
lncatc:d' 81 529 &ymt Street,. Palo Alto Alld ieasc the propcrl)l bcated at 2S0 University
Avenue, PaJD Aho and,. Ckrefore" Tenam sllaD be entitlcd to as:sigD or sublet its rigbts and
cbfigations bc.rcundcr to Digital, provided t1iat (i) Tenant remafm fiahle fer tfJc performance
of its obr!ptions be:-~dCT. (ii) ill the ~nt or Ii su.~ the form of said sublease iI
reasn.nablJ acceptable 10 Le&sor-, and' rID) iII Ihc tven! of an assignment, the condicom set
fon1l MeN' :in Par.tgnlpll 122 lIavc been satisfied.
12...2 Cpndjticms 10 Ml£nmCTIt. Les.!ior's duty to consen1 to an assrgnmeru. t,'
Tenant of its rigbtl and' obfigatfons hereunder to Digital sllan be condItioned on Ole
foOowmg;
(a) The farm of assignmcot mUS!: be: reasonably acceptabJe to ~
and' consented to "in writing by Lessor.
(b) The form of a.uignmcm must requITe Digilal 1.0 pr{)l.idc: Lessor, at:
I...e.uar·s option,. with writtea cenirlc.ationJ on JaJ1 Ll3ry 15 aJld July 15 of each year during rhe
term with respect to its employees wflo work arithln the bw'kfmp located' i!lt 529 Bryant
Street Rl'Id' ~O Un'iversity Avcllue,. ....ruck ce.rtificaticms sllaD l!cso1bc the fullowing:
(Q tl:1C names of an ~ttlpToyecs ...-cnung Yo'irhfn IBid buiTdings,
and
(IT) lhc !)'pC. rMle and' lia:ns~ ptate Dumber cl ~ vebkb
driven. t, said' emplO}'ees.
]( any empTojees wbo wori. within the buildings located at 529 Bryant or at 250 Univecity at
lUI]' time art determined Ie be using; Ci1J' pe:1Illt par'king wilhio llle eft} of Palo Abo, tlle
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ilWgmncnt 5ha1l' prOYfde fha~ DiJitat, as assignee, s.haJl: be ill &bult hc:reunda 1lX\ unku
0i.gita1 cures laid Ikfa Ill!: as provide\! beTow in Pllrai:rapb 13, Dic;ital sTlaU be: r~qufred to
assign ib rigtlts and obIij:ations an&eJ !he-U::~ bac\: to Tenant.
12.) ImmfiirJ gt CoDtrot • tlJe Tenan: be~unckr is • corporation, a!l
wllncorpC.n.~ u:sotiI.tio!'I or pa.rtnenhip, iIle Encum'brJ.rQ or transrer of any Itock or
iDteresl ill laid corporaooll" UJOCiatio'\ or partnership 1lImc:"!! in 1M aggrcga~ over any
eonsec:u1ive two-}'Ca: period exceeds fifty ~Dt (50%) &haIl be deemed an lWigruneot
within the meanin& of dlis t..eue.
12.4 Comgn to Encumbranc.es. SI1ould' Lwor coru;c:nt to any Encumhrance,
sucla consent lha1l not eonstiMe I ~ r:A. any en the terms. CG¥l:nants,. or cooditit"1'1:S of
this Lease inc:1ud""mc ~"I rip 10 consent to any rub5(-qtJent Encumbrance.. Such kI"Im,
covenants.. or conditions sJaJJ IPP" kl r.acll IUld eve.ry Encumbrana: hereunder and shall be
seve.raDJ biDdlnf; Dpon eacl and every cncu.mbnrnce, asslgIlec, transferee, IJUb!e.nant, 01'" other
~ III intcresc c:JI' Tenant. Any docume:rtt tlI encumber, tnnrlet, rublet,. or assign tlle
Premises or &nJ part thereof wn incorporate dlrectlJ Of bJI feferenc:e an tfle pra.isions of
!biS [..ease.
Le.s.snr agrees CUtI :i will DOl arbitrarilJ .nhhold amscnt to 8!!J e11CHmbrance,. 1)U1
Leuor may with1J~ t:!:::...-ot .. its sore d""LSCretion jf any of t1Je foDov.ing Cllnd'itions exist
Ca) Tenant ar any of its .soo::csson or a!signs iI; m default of any
t.enn, covenant.. or condition cL Ihl1 Lust;. wllellltt DotK:e of default ht!5 or-has :cot buR
&iw!1I: by I.nxr..
(b) The prospective En...-umbrancer does not in Mirin&: indicate that
:ruc1t EneutnbrB.ncc iI IJUbIea. to III tbe ~ covenaI1ts., Illd condItioru of lfIil least;
ee) AI! the ~rms,. ~nantJ,. and conditiO!l:l of ~ prnpost:d
Encumbrance iodt.lding the cons.ickration theRfor of any 3.1ld eveI} kind, bave not beeu
J"e'oIe&led ill 'Writing to ~
(d) Any constructIon R-QulI-cd of Tenant as a condition of thiil Le.a5e
has DOt been completed I.e the satisflldioo. ca Lenar..
(e) The processing fu ~ by l,.es&QI ancJ set furtb in the then
cutTeN: Pale AhQ MIlllkipal Fee Scneduk ba:!I not bu:a paid to Lr-SSOr,
(f) 1f an assignment or subTease is proposed, and Teoanl bas DOl
provided W50I .;-th JUfficient information In permit Lessor to cornplcu:1y evaluate t.'Je
back,groond, skills, fiv.anci.aT pmition, proposed opcratfrtJ plan tbanges and refe.rencc.s or ~
pr~ IWilgnec or subtenant; or
(:) 1f Ibt proposed a:osfgr.ce does lIot have the Rqui'n:d skills,
ezperieoc:e Qr financiaJ rtan.1in1 to provi<k at least dlC same 1eveJ or 5elVic:e &5 Tenam wblcI!
del£nninatioD &haD be ';11IiD ~ reasonable discretion of Lessor's Cit} Man.tger.
'lbe a~ lilt is DOl fncJurive bl1l ill intended to give Tenant 50IDC idea or I1le
circumstances 'Wbut l...euor mIrJ 1lIithJlold' hs comc:nt 10 any Encumbrance.. !..c:ssor reseI'lleS
the: right to withhoTd its. COI'tsCn% to any Encumbrance that wiJt, in U1SQI". rc.asonabfe
opinion, akncly affea: the prcMslon of .set"o1CC rt:!quirecl by Q1is Lc:asc ar adversely affect Lessor·. interest iII and lID [he land and structures t:O'\o'ered by this uasc.. ~tion,. or
DlOf'tGaglng. c:.l (he kase1lo1d interest created by t!lis Lease is expn:ssly pmhibile(J and .any
attempted hypctllecatioll or mortga&IDI shalt be nlln .and void
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11. Default it! Terms of' tJx;: , calf l'N Ie7l!nt.
13.] Pefau1t/Rsroedisl. Should Tenant defauh ill. flle perlorman.;e of any
covcn1lnt,. c:oDditian. or apttmcn! COlltafutd ill Chis Lease and JUdI dcfaul!: ill not corroc1ed
within Ill.ir1J (30) da:p of receipt 01. Minea ootice of d~fauh from tess.or, L.es.sar may.
(a> Terminate this l...ea.se aM an Ji&btl of Tenant and those woo
claim WIde: Tenant,. stemminJ f:om t21iJ t.u:se, IIllaD end at tIle time or IUClI termInation;
(b) .A: Le~·1 sole opfion,. (1..tre any rud! defal1h by pcrfmmance of
any act. Including payment or money. and !he CCfI: tht:reof. pllJl teaS(h"l.ablc administrative
cost,. wn beoomc immediately due and jlBpbIe by Tenant to 1...e~c.r;
{c:} Sed: an aMI:! or suit m equily to enjo1I:! any acts oc-thi!'lgs whlch
may be unIawfuI or in violation of tlle ri&hts of Leuar;
Cd) See1. :man<!amus or other suit, action of ploc~me at Jaw or ill
~1y to ccfcrce ~ risbts against Tenam alId its and any of its officen, agent!, llld
employees and its IISS~ and to compel i ICI perform and carry out its du~ .and
obligations undel r2lc law and itS CO'Vtnants and agreements wid! Lessor as prO'il.Jed !Jcrcin;
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(e} .Pursue any olher }ega! or equitabT.e remedy lJVaJl.abk bJ law or
IpecfficallJ provided ill. o11Ier dauses r:L this uase.
U2 lt~ Ig Cgrc; ~r. in me I:VcDt of. default whidI cannot
reasonablJ be cwe4 withiD ~ (30) ~ Tenant wtl ha...-t: • reasnna":l!e puiod cL. time
(as dcl~ by l...e:ss.or""l Q!:J ManaF) 10 cure !he ddauh. E'.adJ and an aC the remedies
Jivea 10 Lessor he:re~ or by any law IIOVI' or het~ eoact.ed,. are cumu!atiw: and the
a:erciSe Of ODC rf&ht or femedy shaD nol impair tbe right r::I"LeM;x to 1:U:tt:ise any or an
othu.rcmr::dle$.. In a!Se lnJ ..m. actJOII or proceedirlg to enforce any right or exercise any
:remcdJ ;iha!l be brougJrt CB' b\Ua and then discontinued or abandoned, ~ aoo in every:
J.UC1I case,. Luso.r and Tenam mall be RStcred to its and tlJeir former positiOll and rigJ'lb
and remeaLCS as • 110 JUCl! .suit. actiOIl or proceedings. bad bc-'"1l. brought or tai:~R..
13..3 Banl::ruplf)lrlnsoNcDC!.. In addition to .. violation or bread of I.llJ other
ptoviDoc of tbi:s l..ease,. Tenanc .shall be consicSered 10 be m &faull: under this l.easc Ibould
Teuant
(a) voTuntariJJ £1e ar fur.tc: imroJuntanlj filed <l{;ainsl ir: all)' ~tition
under any bankruptcy or inso1vency act or law, provided that in the ca.se of an invoful1tary
peeoon. Tenant .1h.&!l not be ill tkfau1t her~un..ier I Tenant has :rue} petition remov~d .·ithln
ninety (9G) days .after the filin& tlJcre~
(<::) attempt to male a genera! assignment far rhe ~ne5t of creditors.
NotllEn& ill !!lis clause lhal!" affect Lessar~, right to mdemruT}C3tion for liability arisIng
prior to tc:rm.iJ:lAtiOll of !'his l...ease for pel"SO"MJ injUl} 01" prape", damage" PW"lUilIIt ta other
provisions of Ij]i! ~
14.. Bankrupb by Ie ..... ;mt. Neither Tenant·, irlte~ In dlis wse, nar any 1euer
mtcfCII of Tenant in this Luu. nee any c;;s.tate r:L Tena:nt created fly this l..ease. wn pas! to
&nJ trustee. teceNer. ~e far the benefit of creditors.. Tenant: as a debtor-iD-~iOft
or .any oOt.er person or entity (hereinafler alllt",cmel} ;efcrred to as '"Trustee") by operation
of law undel the hws or any Rate h.ning jurisdktion of the peOOIl or properl;¥ d Tenam
linda a.ny banlruptcy procredinl unless Lessor lhall ipecifica1lJ consent to .suci rransfer
{be:reInafta ~fured to as 1"ransfet") CIT a..uj~nt in ...nting. f..eUO]"" conscm to any sue.
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1iI,-lilIu_,-..nlii' i_Till, 'P.;oo;I .......... ' .•. ,----+'
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.~>:~0c...~·~~~· '-;;.. __ ..; .... _~._ ... ~:~L~-~~~ '--_~:'7?i(;~~c..li.~~Jt«Lei!Dti
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Transfer and Lessor"a right: to terminate tht. l..easc under IlnJ banblJp<q proceedings sb.&B
be ~ by !he ronowinJ pangnp'" of "'" ........
14.1 WYx'J t"AngDl tp ITlInIfg:. Lwar &1laD oonsellJ 10 the Transfer only
• the roDO'Wm, Icn:IlI and conditions lJa;oe beea satisfi-o..d:
(a) Trustee ba.s, in writing. ekcteCl to assume B.lld has agreed to
abide by all d the terms and conditions, spcciflC8!1y including the: me restriJ;tioc of tllis
Lease ..nl!iiI IiJ:ty (60) days from :be dale of the order fnl ~
(b) Tel'W1t or Trustee has cured, or provided adeq.uatc assllrance that
&II)' monetary dd.aull amder Jhis; t..eue 'NiJ1 be cured' Within thirf;y (3(1) day.; ol such Transfer;
(c) Tenant or Trustee has compensated U.s.sar or has provided
Lessor .ac:fequate UStInmc.c chat within ten (0) days of socll TllUlSfl:r, l...es:s..x w:iII be:
compensated far anJ pecunia.."l' hss incwred by ussar arising frem the defauh of Tenant or
Trome;
(d) Tenant or Trustee has prmidcl!! us.sor with adequate assurance
or IOJe future performance or cadi and every obligation of Tenant or TruS1ee unJeI Ibis
Lea>e;
(e) !be Trulsfe:r mall DOt hreaclll any proo.isiou in any ot1Je:r lease,.
martpge,. financirlg a&reemelll or ot11er agreement by .... hidl Lessor :ir; bound' relatirl,g to die
lca~ Premises;. and
(f) Tenant or Trustee 'has provlded l..euor ..un sufficient mfClrmation
rqard"lJ'II Trurtee, or any tnown propose!! Jubsequent assignee. to cnabk Les.sor to
determine thElt the Trustee, or an,y tnown proposed subsequem 1l$S1gnee, fill! flle sblh.,
expe:rien<:e and financial' rtandini to SUGCeS5Funy provide the uses and KTVit.es required by
this ~ .... bich dek:rmmll:tlon shan be wrthfD the reasorw.bk d""lSCI'"etjO!l of usso(J C~
Manager.
For the. pwposes of this rubparagrapIll4.J... Lusnr aoo Tenant acl:now!edge that, in
the eon!ext of !be 'batIbuptc)l proceedIng of Tenant. "adequate assuran~" sbal'l, as •
mirJmum,. mean:
(]) Trustee oc Tenant has all!! shan eontllllle to ~e sufficient
une~ aw:ts after die pa)melll of aD &ecured obfigations and a~tr ... tivc
cxpo!:nses lC assure L.es:sar tlJ!l! Tenartt or Trustee Wl-n have sufficient funds to fulfiD the
obligations of TCllanl 01 Trustee lI'Ilder tlJis Lease:; and .
(Z) The Bankruptcy Court wn b.a-ve entered an order
segrcgatin& ruffxielit ca:sb payable 10 Leuur and/or Trustee: shaD }]ave granted .. v.lT'Jd and
perfected first tiell and seeurilJ interest ar4!or mortgage in prope.r1J of Tenant or Trustee,
acceptable ia "'illoe and kind to Lessor securing Ten.ant~J or TIU.'Jtee·s obrJgatioh to cure
mooctary defalllts IlD<kr this Lease Witflfll !be time limits SI".1 fortb above. or Trustee .shan
bavc obtained auarant.ees 18tisfac:ulJ:y ill furm and .rubs-tance to t..cs.sar bom one or more
persons or entities .. 00 satisfy Lui:w .... rtandar'ds of aed'rt worthineu; aru:f
(J} le5sar bas oblaiTled aJl co~ents or waiv~n; [rom an)' third
par1)' required onde.r-any ~ mOTt.l:"'ge, financing acrangc:mcm or ctller agreement b7
.,bklI ~ iii; bound ttl potnnit l...eum' I!l eonseDl to sucD rrarufer..
142 TermTnatiop __ ... Qf . .l.~. ThiS Lease s1laD, at Lc:WX--1 option. terminate ~
any r:I tIM: fonowing eond!tions exiSt:
(a) If Tenant or T~ fai15 to assume: !his !..case m accordaocc:
...;:th the requfrement! ri rubpangrapll 14.I{a) above;
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(b) ]f. Transfer rnectilll each and e.'e!y conditioD sel fol1h m
suhpangrll.pb 14.1 abovc: has Dot beta cumpretC'd wit.hic one hundred t'IIo~n", {120) days 0(
T-mam"s bccomi:na: • De'btor tIl1du ChaptcI 7 r1 the Bankruptcy c.o&. or ~thil! one
1Iundn:d' fw'e:nty (120) days ar (he date ol6!in,! of. peti110n for reorganitatimJ a adjustmcm
of debts 'Wld~ Otapter 11 Dr U cL the :BankTuptty Code;. or
{c} • 0Us Lease: iii BSS1J~ b:J a Tru.~tee appointed ror T eDam ,:zr by
Tenam lIS Dc~-fn..PO$S.eMjon v:OOer tM provlsio.n:J c{ subparagrapb 14.1 above and Tenant
11 Chcrc:aftu E"quidatcd or fik:s a fUD&eqtJenl petition for reorganization or adjustmc:nI cL
debts undc.r Cbaplu 11 IX 13 of the Ban'krup'.I:J Code.
Lessor, eTectioti to teriIllnatc: !his Lu3e .Lltan be delivertd to Tenant in .....nting 00
later than [bfrty (JOJ dap after the occurrence of any of tile above events. I..essot-,hall
lhere~poo be lmmediatdy entitled to posseWon of tile PFCnllsc::s witbot!t fur'tkr obfigation to
Tenant or Trustee,. and this Luse sbaIl be canulJed,. bm Le.ssoc"J rigbl to be compemaled
far damages m suca liquidation proceetrLng shall' SUI".'ive.
l5. ~ of the I Usoo1!t Thil! Lease and' tne tights and' prlvileges granted
Tenant in and to the Premr:ocs ate nlbjcd 10 an CCN"enants.. COl'ldltions,. restrictions,. 1lD~
exceptions of ruord or apparent. j)cTudlng dlose....rucll arc: set out iD ~ preliminary title:
~rt iuueil by California wd Tille Company. daled August 2Cl,. 1990.. as Order
No. 29'8303-TR. Noching contained in t:hls I....ease Of In any &xumcru: re1aterl hereto sbalI be:
~ to imply t:bc: conveyance 10 Tenam of rights in the Premises .miclI exceed !!lose
OWDedby~
16.. Terminafun of Prior Agreemegts. Thill ~ Jupe:-se&s arT}' and aD prill
leases or agr~n1S colercd' into by Lessa for asc: of the Prem"tse$. .AD rue. prior leases
or agrceD'tel'1ts are nun and void
l7. Notices. AD notica; ptJrSUant to this U:&C s.iaD. be address.td 11$ set forth
beklw or IS either party may subsequentlj desIgnate by writtCll notke and s1laII be sent
througb the UllIIcd States mail. first class, postagc prcpi'id,. rertiflC(f witb :return n::cc:ipt
uque>t<d
TOLESSO~
CIty Clerk
City of Palo Abo
P.O. Bar: ]0250
250 Ha.m.iJt.atl Avenue
PaTo Aho, CA 94.303
City of PaJo Aha
Real Estate Division
.P.O. Box 10250
2SO HamJ1ton AYa1tJe
PaIo Alto. CA 943Q3:
TO TENANT,
505 HamiJton Avenue Partnen
c/o Prcmier Properties Management
420 flon::na: Avenue
PaJo Aho, CA 94301
.Ann; James E. Baa
. _ 18. ~n!s t.g J rag;. This Lease includes tbe following, .... hid! are tlIpTCS51y
_wched hereto and by this rdt.ren~ incorporated into this U:8.SC;
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Exm'bit A. -Gc.nu-aJ Canditirn15
Exhibit B -Dcs.criptiO[l of rroputJ
&blbit C ~ E.ucme.rn
ExhibiI D -C1eaninJ: and Maintet\an« Standards
Tbt: icclwioa of clauses in Exhibit A (Gent:ra! Condltions) .. n01 in any ""J mtended to
lel&eD d:re Jirlpartaoce at these daur.es,. bul .. IPCJ"cly done to en:hance the: organizatioo of
~ cIause5 and dUB Le:ase.
iN wrrNESS WHEREOF, the. parties have exr.cut~ this Lease the: dPl' and year
fir:&!:.~ wrir..eR.
The Cit)' r:t Palo Aha,
• mwiicipal tIOIpOT3lioD
I>,r.;-:------Maycc
ATII'Sl:,
I>,r.~=-------------Q,! ac,.
APPROVED AS TO FORM:
REOOMMENDED FOR APPROVAL
Minager. Rial Pmvetty
p 7""'''=,", -
50s Hamilton: Avenue P~rs,
.a CaJifornia funj~ partneull ip
By: JBAFl. California IimHed
partnt.nhlp,. • getlCniI partner
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By~ __ ~~~~ __ ~ ____ __
James E. Baer,
its geIX.r!ll partner
Charles King "-Associates... •
CaIifarcia 6nUted partnenhip.
• general partner
Br~~~~:~~~ __ ~~ __
Charles W. 1Gng, lr .. Trustee c(
1he Clades W. King. 7. .. Revocab[e
Trust. dated Dcceml;ler 17., 1986, its
&ellV1ll partne.t
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GENEIW CONDnJONS
L Q!:;fjnitjom. Lessur d'ld mean the: Cit;y f:L Palo MOo I. mwUcipal ~:rparation.
The City Man.B:ger is bcn:by authorized to laic: any actions under this; Lease on behalf
of Lcuar except ror tumination of this l..ea!e..
Cla~ :in thlI: Lease rd'cr to specific officers or employees of Lesser. Should lbese
posrnons be enmrnate~ or Ibc titles cl\aTJge, I. is UlIl!enlood and' agreed that SUCn references
shan be consi&:~ to be to the DeW title for I'Cmunc:d' positions or-10 tnt" u-placement
offid.aJ de$igro..8.led with the I"Ciporu:tbilitks of .LnJ tJinii.'l.ated pos1tion.
:!. h~·tnoshlplC_9r;p9tj!!lC: Au1harjty !Jld Ua~. If Tc."WJf is • partnership ~
gcoml_
A Rprcsents and 'A1l!Tll!1ts !hal .said partnershfp is I. duly qualified
partnetshfP 'llfllorized to do busine:u m Santa (Jar;a County. and
B. sJ:tal! be joi:r.t1J and severally liab!c for perfonMnCt of t1lC terms a.cd
provisions of I:hl!: Lease..
:i" Tenant ... corporation. c:~, incflVidual signing this Lease OIl belLa!!, of Tenant
n:presents and' ....arranti that:
A he: is. d'u1y Illthor'ized I.l:J do so ill aeccrdance With 8ll aCl'opled ResoTIrtlon
of Tenant"" Board of Dirtctors or in accordance ...utI rJ1e By taws of !be corporation; and
8. Tenam is I. cfu1y quailfied corpcratfun autl:aoriz.cd to do busibes.s in
Santa Can Cmmty.
(. ~ Tcoant: agrees DOl to constru.."'t, malJ1tam.. or aDow 8.!IJ' sJgn to lit: placed
1I'pOIl the Premises ex~pt lIS may be .pproveCl by Ussar or .Lusor .... Archltectunt1 Review
Bciaid Urlapp!"OVed signs. banne:n,. flags. e1C. truIJ be removed by ~ar-.
5" Permits and ~ Tenant mall be requir ed 10 obtain any and an petmiu
and/or kenses MIld Ina]' be required m connection wi1h the operation at; and any
approved Tenam construction llPOn. '!toe Premises ~ sef furth III iIUs Lea.se..
l. Mecllarua" ~ Tenan1 sh~ at all times indemnify 8.Ild' save Lcs.!:oc
ha.rmk&s from aD claIms,. less or liability for labor or rnateria1s supp&d ill connection with
wnstroctiCIl, R:pa1r. alteration,. or lDstallatfon of structures, improvemeots, ~iptnen!, or
facilities withi::l !i)e PremIses, and from the cost of defCJ10mg against suck cTaims, iocluding
1t1Df"nq'!" fees.. Tenam &hal:l providt: ~ ~ II! 1e.a:sI: tea (10) days writtc.s lIotice prmc-
10 commencement of any wort eiclt. couTd pre rise to I medl!l.nk:s' liea or s:lop notke.
Lessor JeS.et\IeS tile right to enter apeD Plem~ fez !be purposes of posting Notkt:s r:L
Non-Responsibility. hi !be e'¥ent I 5en is imposed upon file Premiles as II fCf.ult of sue!:!
eoDStruCtinn. ~Pair.. Irteratioll, or fnsta11ation, Tenam s.1lalI eilt\er.
A ~rd • wlid Rekase of Lien; or
B, Deposit sufficient casb with U~ Co tm'u the: amO\lJll ar ~ c1.aim or
lieD iI qll-eStion and lulborize payment to !he:: went of said d~p01Tt to In) .rubsequeoc
jodgmem bokSa !:hat may.arise ItS I mat1u of pubT:w: record from IltlgaOOll wi:lh regard' to
!ienJIo1der claim; or
Tenant's Initials
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C Procure and record .. bond' iD accord'aru:t ,,1"t1I Soectioa 3143 of the CIVil
Code ... hkII frees. tbc-Premiu:l. from the claim rL ~ lien or from any action brough1 to
fo=loo< !be ....
Sboold Tenant fail to ac.complisll one of the three optional' actions within fifteen
{lS) d'ays after the fiI!in, r:I JUdI I lien. tlJe Lease ,1Ia1J be in def.auJt a.cd may be subject to
im:meal3.tc: 1Iet1ninatrcn..
't J crY' O!P!'lizatiOll ind :R.1lIe:j of Construction. Wends of the IIlaSClJImc: ,gender
Iha'!l. be: deemed IIlnd' tOru:trued' to iDehl&: rom:fative words rL the: fi::mininc: and' Deut~
genJc:rs. Unless the eomal o~ ind'kales.. words impcrtIns thc: Ilingu1ar number lha1l
include the plural ~umbe:r and m versa, anCl wards ImJXlrting persons s.1lan incll.ld'e
corpora.tiollli and associ.a:ion:s,. includinj: pl.lbUc bod"leS, as well as natu..raJ persons.
The tums "bt:reby..," "h~of:... "hereto: "herein,.. "hereunder" and aD)' similar terms, 11$
mc:d' in. this ~ refef 10 t!lis l...e.ase.
All the IcrmS a:OO provisions bereof s1aa1I be construed' ID tffectuate the p~ set
turo. herein,. and III .rustaizI tbc wlidI1J bt.r.eaf..
The. titles and headings aC tM sections r:A frois Luse have been Instrt.ed fur
GOIrtI'tnitnc:e of :rdv'enc.e ow" arc DOt to be ecMldered .. pc.rt bt.reof and' shall DOt ill .atlJ
·"'2.y modify Of restrict I.DJ of the fcrms of pr!Msfons hereof or-be ctlruid'er-ed Dr gfvc..D any
c:ft'eer in eoowuIng ftlis Lease cr lillY provIsion hereof iil ~crtainin, intent,. ,-any qtJfi60D
of mterJ ,'haJI arise..
L Amco4men!.S. This Leue seU filrtb all r:L t1Je Bgrtt!DeII".J and understandin£s
ol the .(lQ1'Iie:$ and any moolficatioll5 must be ....nUea and" properTy ar.cuted by botb parties..
t. t.rruawM Use. Tenant agrees iIlat no imprCJliements s.hall: be erected,. ptar.ed
upon,. operated.. lUll' maintained ~m the PRlDises, DOT any business oon!fucted or ClJ"Tir.o.:l
Oll thereib 1% tberefrom". ill 9ictafiml r:§ the ICrms of 1M uase, cc or any .regulation, order
of law, ltatute, law, or ordinaoce or • pernmc:otal agency llavinl! jurisd"JC1ion aver Tenant"',
use cl the he~
lQ. NagdisgiminatfQD.-Tenant and :its tmp'1oyets shan nat <flSCJimin.ate ~rrut .any
pel1lO!l because of race. reiigian, color, ance.!;try., age, sex. national OrigiD ur pbpka1
"haM1CaP. Tenanl.shall nOi d"lSCrirninall: against Il1lJ' employee or app'ikant for-~mploymeot
'boca1N: cl ratt,. color, TdIgfoa,. 1Ul(:es'Jry., sa, a~ national origin or pbysir;:alllalldicap.
Tenam CO'ItUlants to med all requirements of cJle No AIlo Mll:lD..ipaJ Code perta1ning to
DOnd"tscr!:mination ill employment. I' Tenant 11; found ill 'lriaTatlon of !be: DDr.discrimiruluon
provisions of the State of Caflfnmia Fair Employment. Practices Act or simibr prO\.'lsIorrs of
fe:.ckral law or e:ccal1ivt. ortkt in the oondud crt ill activities under t'hii uas.e by t1Je State of
CaUfomia Fair-Emp"Jo:ymem: Practict;$ Commission DC the equivalent fed'eral agency or
officer. • s}o..ai! thereby be fnLmd ira materul' ~reac1J. m this !...ease. I...essor man thea llave
!he power I:a ClIIocd or suspend rbls l..t.iuc in ..,fJoTe or iD part pursuant ID the \cTIru r:llflis
la><.
lL .I!Y~1@m. Le.uar', tmplOJ"'CO amf agr-nts shan bave ttle right at all
rusonable times Il:l mspec:l rhc: Premi~ to determine i the provisions 01' tbu Lease are
being comp!lcd wUh.
12. HQld liaJmk.a Tenant 'beret, waives all clatms, liability II1d recol.lrse apinst
I...essor indwl'inf: etc rig'bI of contribution fur lDs.s or damage of pe~ns or propu!J win&:
from, ~ out of ar 1B II.1IJ' ..-ay to!I!1ected witll or related' I(l ~5 Lr~ Q.CC:pt cTiUll1I
arisma from cbc ne,ifljtnc.e r:I ll:s5.or. its officus.. 8gena, and' employee&. Tenaru hereby
~e~ to indemnify.. hol.d harmk.ss and defend Lessor, its offi.:t:n, agents, and employees
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aJ8insl: &nJ aM an daJms. "!on. demands. damages. c:0:Bt,. cxpemes or liability emts ~fn, cue
of 1m: operation or mainlena."'lC.e ct. !he Premlses except fer liabillt} aruing out of the
!leeJlgc:na of Les.sor. ill officers.,. agents or empToye:~ including the cost of dc:fel"de of any
'lrwsuiz winl £!Jerefrom.. In the everrt ~ .. named ~ ro-defendant,. T:.n.:J.nt wn DOtifl
Lc:ssar of SUClI faa and shaD rcpreJCnt Leuor :in melt kgaJ aaion unbs Lessor und'ertakes
to reprucnt itself as c:o-ckfendant in IUCII legal ktion. in whrl event Tenant sl'.aJJ: pa]' lo
Lessoc its reasonable itiptio:J costs,. c.:rpc:nses .00 anorneys' fe~
13. Ins pC Am~ Thill Lease may create a pOSSCS5ory interest wnkll iI
IUbjed to the paymtnt of wes 1evfe4 Oil ruclJ interest. II is understood and agreed t:hat aD
wes and assessrneots rmcluding bU1 DOl limited to said ~es:sory mterest tn) ...nic1l
become due and payable upon the PtemIses or upon li..rtures,. equipment, or other proputy
Wtaned' or constructed tbcreon,. lha1I be the tun respomibillty of Tenant and Tcnanl man
pay said ,taxes. and .asses,m)Cnts prior to ddi:n~ncy.
1"-~ In Inlqqt. Unks.s oiliawise pf"Ol.ided in this I..uM:., die terms,.
CO\It:IWlts,. and conditiollS OO1Itairoed herein s1la1I appTJ to and t-ir,d tnt hern., ~
cxerutors. ad'ministra10rs. and a.utgns of aD partiC$ flereto, all of ..nom shan be jointly aIle!
se..-c:raDy liabk hereunder.
15. ~~ Whicl! F..!C\jg; fClf9Dm!\Ce (fgiI:C: Malt.ure),. H c:1t1lcr par1J
'hereto 5haJ1 be &layed or prevented from tlJe performance of any act ~Wred bc.reunder 'b:Y
"teaSOIl of acts r:L God,. re..«rictivt ~!'1Ul1e:otal Iirws or regutaticns, or other a.use wi!h.out:
£Bub and beyond I1le C01ltrol of the party oorrptc:d (financial inBbiHty exc~pt~d).
performance r:L JUCh act WO be excused fur the per1Cd of "'elaJ ano the period £:Jr the
perfarm.ancc: of allJ suc. act dtan be ext.ended far • pu>od equtvaJent 10 the periOCl of such
dcloy.
J6. baiallnvaMjty-M any Ierm, wvenant, ronditfon, 01 provision of tlJil L.ease is
determined 10 be IilvaIiI!. void,. or ~I'.rarceOlbre, by • rourt of competent jurisOlCtion, the
Rmai'nde.r-of ate provisIons hereof shaII remain in fuD force and effect and' sha1l ill no .... ay
be affec1e4, impafred.. or imalKJaled tlJeH~t,.
11_ ""am of BirfJa The failure ol Lessoc or Tenant to insist upon stric!
performance of any of the terms, CO'Venantt.. cc roooHloIU Ilf tl!iJ Lea"c man not be deemed
I waive.r r:i IlnJ rlghI or remedy that Lessor or Tenaru may have., amJ man not be d"eemed I
wajyc:r of tbe right 10 require :sbict perfurm.a.nce af aD terms.. covenants, and conditioa! of
the Lease thereafter, DOT a waIver of any nme'" for the subsequc:nt meacs or default of
.any term,. covenant, or condition r:L tile Lease.
18. Cruts of Su5t2.ining an Artkm fpc Bn;-.ae"h or P;fau~ In the evcm either
I...r::ii5Qf" or Tenant COmInetlCe$ 1c:p1 action against the other claiming: a breacl! or default of
th:s I..ease. tile prevailing party in well 61igalion shaD be el1tillcd to recover from the other
tfle COS! of mstairung sud! action. iocludIng reasonable 8nomeys' fees,. as may be fiu:d by
<he c.-nm.
19.. CondiriM of Prem~ Dooa IennTnation.. Upon termination of this Lease,
~ as ollleNise agreed 10 1:c.rein,. Tenam maD r.edc-1iver poues.siOh of. tlle Premises to
LessQ( m SUbslll1ltiany the IOamc coDdition tha1: existed i:mrn.Wtately after TenanCI completion
of corutructinn thereof; R.alionabl.e wear and tear, tlood, and ilTl)' IK:l of war excepted
20.. Di..!iJ?OSitioc c[Abi!.nd"Qne4 Personal rro~. If Tenant abandoN the Premfses
or III dispossessed t1len:at b)o protem rL law or otherwise. titk: to any penonal" 'property
belonging to TenaTII and left CD UJe Pr.emoo fany-five (45) days after .rucJt ab.mdunmenl or
d"l$pos.ses.sio.o slJaO be deemed" to bve beeq transfened" to t..cssQ[". 1..e5.Srlr shan have the
righf to I.e~ &nd k:J dispo5C of JUCll proper!J without fulbi1it)' chcrefnr to Tecaru or 10
any pe.lSOD cTaimin.a under Tenant, and shaD rune no need 10 acwunt the:rdl""''[".
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21. Q'itdajm or Tenant", mtcrest Uoog Jerminlltion. Upon I.r:nmnatiaD 0( this
Lease for 01[1)' reason.. indud'"ml but DOl limited 10 Ir:fl7'lnaliQIl b«auiic of defaul't tl:Y Tenarn.
Tenant: man. at taaor". teql.lt.S1. execute. IICtr.ow!ed~ and ~ 10 Le~ witllm five (5)
day.I .rtcr rece~ or writklll demand tkrco[, • JOOd' and' sufficiem del:d wberebf all fi&bt..
title.. and inteleost or Tenam ill: the: Pr~ .. quitdaill"led 10 LessoI. SbO\.l!d Tenant fail or
Kfuse 10 1k!iYet I1le tequind deed to Les.sor~ l.e$sar IMJ Prepare and rt'.cord • DOtiGe
recitin& lhc: faiTurc of Tenant to execute, aclnowtedge and deliver JIX:Il deed and said 1I0tice:
,haD be eooclU$Ne e-&fenct cL e.e termination or tlIis l..ta:se, aoCl or a1l right of Tenant or
those daiminI tinder Tenllnt in 8l1d ttl the Pre~
22. r C'w) Riaht~~. Tenant agrees to JkTd and peaceably defrvc:r
~ion or Ille Premises tc Leuor ell the date of tenn;na'lion cf this l..ea\e, ... hatsoc:va
the [QSOtl far 5UdI termInatior~
Lessor shall ~ the risht to re-<.ntu and taie posscs.!lOl] of Ole ~misd Oil the
date: lUCk tuminatioo becomes effective: witflout furthc:r notk.t 0( any kind .and without
insG't\ItkJ1l of summary or-n:guTar legal proceed1n,g5. Termination of r!le uase and n:-C:Dtry
of the Pf'tmises by Lessor sbalI iii DO way alter or dlminisb :my Obr!ption of Tenant under
file Lease Ie1mS ana man: no( corutltute an IlCGCptan~ or surrader.
Teoant waM:s any and an righl of redc:mptiOrl under any aistIn.!t; or future law or
.statute ill 1be event of' cYictiDD from Ot' lfis.po:ucs.s-ion of' the Pr~mi.sc:5 far aD} i'CaSOD or TrI
the event Lessor re-enten and rawfu1!J n:·ta\es pcsse.s5Ton r:ff (he Pr:enUses.
.• 2:.1. CgnfJkt d Interr5l,. Tenam ...urants and rovwants tMt :co officiaJ or
employee cf Lessor DOt' any busiDeSS entity in whicl!. any ~ or employee ri Lessat is
interested has beeR em~ Ill" retained 10 wllcit III .aId In tllc procurirli of this Lease or
will be employed in the perfnrmance of this lnse. w1t1tout t.'tc: dio.l.lTgeoce of sue} fact 10
[.euor. In the eYeD%: that Lessor determines. that me emphymt:nt cL any suell official.
~mpbyec or business enlity iii not c:ompaliblc witb sudl aff"lciars or emp!oyt:e", cfuUc:s as an
ofI"IciaJ or emplo)oee of Lessor, Tenan(, wpon request of Lessor. :s:haII immed:i.iltclJ terminate
,ndi employmeDt. YJolation rL thiS provilion r.onstitlJt¢S • ~n0U5 breac:'h of thts t..ea.se and
Lessor may terminate Ibis Lease pun.uam 10 ihe &erms hereof as I result 0( suck violation.
24. Em!no;;m pPmain In the ~ru. the wboTe or any part of tl!c Jl'Jemtses are
con&.mned by • pYbIic entity 1D '/he lawfUl at1cise of its power cL eminent domain. this
Lease JlWI cease as to the part c:ondc:mned. The dale nf suc-1I lc:rminatiOn s1l.an be the.
effo...""tiYc aate aC pos.sessiou of the wbole or pan at !he PH~~ni-tS.e:ii by die condemnIng public
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.-aalt a pan iii corufemned and the COIldemnaticn of thai part dDeS not substaaUa!1y
impair !Jle capacifJ or I:flC remaInder to be tlKd for the purposes rcqufre-d by this Le.ase,
Tenant s1ut£ continue to be bound by tbe ~rms,. covenants and concfition r:L !fIis 'Le<ue. Jf
t1lC caOOemnatiolJ of a part of the Premise$: substal1tiaIly impafis the capaci1y of the:
~ to 'be used IDr tbe p-urposc:s mq'med by this ~ TenanJ may:
A Terminale this ~ and thereby be a~d of obligations under this
Lease whlc" have DOt accrued as r::A tU !!ate: of pos.se-srion by ille condemning 'pubfic entity;
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B. Continue to OCClJPJ lllc: n:maining Premls~ and tJlCJeby continue to be
bouod by I:hc: ~nns. covenants and conditioro; of this Lease..
Tenant shall prcNide Les.sar .. Tittea .noti~ advising Les~ of Tenant'. cflOke within
~ (30} days '3l the taiin& of pos:ses.siOD of [!,c par:t coDdemned bJ !fie condc:mn:in& pub&
entity.
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Tenanl ~an 'be eJ1titied to and $JWI receNt an compensation related to a.e
c:m~tiOIl 01 .11 01 • part or rhc: 'Premises by t:bc exercise of em~nt 6om.!lm.
2:$. Hap!rdous S!.Jbmnces. No soods, merchJIndlse or ma.t~rW a.hall be k.epl..
stored or told iD }'remises whkll are in any '"1 ap105ivc or haz.ar&U5; an~ no cffcmi¥c OJ
dang:rolll cradc.,. busfnes. ar occupatioo illall bt carried on therein or tlIt:reon. and nothing
sball be done on or from Ptemf&eS clbel than as prO\oicJed for In tllis AJreemeaJ .. hich will
ilcreuc Ibe rate d. or ~ file 'insurance t:pon. the 1'sem1~IDe Par"ritta: Gafait:, DC
upon adjaa:m bw1dingos or: gthe:r nructures of L.,e;s:sor. No m.achinery OJ' apparatus shall: be
wed' or operated' on t111: Prc:mis:es 1AIb:ic1l ,..m m any ""ilJ' iDjure t1le Premises ar ad"pccnt
buildings. prowkd,. "b~. that DOthin& WDtained in tbis paragrapb iball predLl~ Tenant
from briagin&. leepm,. or lAin, au or about the Fr:cmises and Parldng Ganlge.. matcriaTs.
suppr~ cquipmem and mac:hlnely as are tlCcessary or CUStomary in canying out the
requiH:d' or approved optional use:: cl t1Je hemises. In t1Ie evtn! :roclI uses include the
iee,pin, ;;::J![ storage tX inflammable or expTotive $lJ.bstances. suc!I sub5taIJces shan be Jtored iii
dosed' tol'ltainers,. and .s.ha1I be stored,. used or ~d Iil tfle m.!IODel" prdCril>cd by ate
1'egulations of Lessor or .other pllblic body blrvinS Jluilic61)' in the manef~ aod i:1 Itt}' C\lcm,
in U\I: IIlfest possibte. mannc.r.
26. M~enants Are Corufrtiol'lf. At! prQ'\.'isiOns of !he Lease: are QPressTr mat,k:
ccn<!ltions...
v. l..rucs of [maw Nothing m this Uasc, ~ or impTted, is. intended to",
or mall be wo.smd to. oonf'a-a.port Q[ to give to any ~ ex part} othe.r than ~
and Tenant allJ righ~ )'lCmedilC$ or claims onder or by :reason of this Lease or any
covenants" coIlditi01l car stiputatioa b:rcof. An ccvenar.ts,. ftfpu1atiom, promises and
agreements in this Leue s.Mn. be. !or the 101e and adusNe benefit at L..essar and Tenant.
2& Recordatiqn r:K I",se Neitht-r Le:ssar nor Tenant man :record this lL.ase;
~:r~ a .!ihcn-form memor&:l.dum r:xf Le~ ma, be. reco.rd'!d .rt Lessor"'s or Te.naot"'s. -
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CI'ty 011 nut M.TO
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EXHIBIT '8"
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Recordlnl Requated by
and Whea Reco<ded Return '0:
WARE A FRElDENRICH
A Profcssional Coq>ontion
400 Hamilton Avenue
Palo MOo CA 94301
Attention: W. Ruuell Davis
Acg:SS EASEMENT AGREEMENT
This Agreement is made and entered into this _ day of , 1990,
by and between the City of Palo Alto, • municipal corporation ("City") and 50S
Hamilton Avenue Partners, a California limited partnership ("50S Hamilton"}
RECITALS
A. City owns that certain rea! property (the "Property") located in thi: City"of
Palo Alto, County 0( Santa Clara, State of Californja, more particularly described in
Exhibit 'A' attached herc.o and incorporated herein. A five (S) level parldng garage
(the "Parking Garage") owned by City is presently situated upon the Property.
B. Pursuant 10 that certain Lease betw~n City and SOS Hamilton executed
concurrently herewith, 50S Hamilton is leasing the airspace above the Parking Garage
from the City for the purpose 0( constructing two (2) additional levels 0( parking (the
"Premises") 10 be used by 50S Hamilton during the Jease term as described in the
Lease.
C Cif)" and SOS Hamilton desire kJ establish an easement appurtenant 10 the
Premise. over across and wDIlgh the below-described portions of the Parking Garage
for the purposes 0( vehicular. equipment and pedestrian ingress and egress, upon the
terms and candiDons hereinafter set forth.
NOW, tHEREFORE, the parties agree as foD"",,: .
1. Grant of Easement. Subject 10 the terms and cocditions hereinafter 5Cl
forth, City hereby grants 10 50S Hamilton an easement (the "Easement") appurtenant
10 the Premises ""er, across and through the Parlting Garage for the purpose 0(
provid"mg vehicular. equipment and pedestrian ingress 10 and egre .. from the Premise ..
The usemenl .ha~ entitle Tenonl 10 use the driveways, ramps. stairways, pa.sageways,
entrances, elrlts and elevators within the Parking Garage: foe access", and from the
Premises.
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2. Us of &UrmenL 505 Hamiltoo &I\aJI abide by Clty". traffic and
directiooal IIow reJUlations in and around tile Parkins Garase in 1ISt"1 tile Easement,
including. without limitation, any reJUlations pertainin& to the type 0( vehicles IIlaI may
use tile Parkin, Garase which are Deco....., 10 prevent ex~ Ioadl or sir ... I<> the
Parkin& Guale.
3. Term 0( E!!"menL The lenn of tile Ea>emenl shall be equal 10 tile
term 0( tile Le.... The lerm 0( trot Lease is intended 10 be liftun (15) yean.
coaunendni upon tile completion 0( constnJ<tioD 0( tile Premi .... bUI is subject 10
termination or extension in certain events IS described in tile Lease. 50S Hhrniltoo
shall, llpon termination 0( the Lease and upon request by C"1Iy. exe<\lle • quitclaim
deed 10 evXIence the termination 0( the Euemenl al the end 0( its tenn as described
above.
4. Notice .. All notices, consents or approvals required or desired 10 be
given by eitller par1y 10 the other or 10 Iny thlrd Par1y shan be in writing. delivered
penonally or by commercial courier or by Uni,ed Slales mail, postage pre·pajcl,
certified,T.1un! recelp< requ.st.d and .ddr .... d 10:
City:
and
505 Hamilton:
City Clerk
City 0( Palo Alto
P.O. BOIl: 10250
250 Hamilton Av.nue
Palo Alto, California 94303
City 0( Palo Alto
R.a1 Estate DivWon
P.O. BOIl: 10250
250 HamiJlon Avenue
Palo Alto, California 94301
50S Hamn,on Av.nue Partne"
c/o Premier Properties Management
421> Flor.nce Avenue
Falo Alto, California 94301
Either par1y her.1C may change its addr.ss \0 whick DOIice, and communications ar. 10
be senl by Jiving written notic. thereof \0 the other party in conformity with the
provisions 0( thi' paragraph.
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S. ~L The CO\ICnants in this Aireeu(") .haD run wit!! !be land
II!. accorda'lCe with !be yovisioos 0{ Section H68 ol the ~a CMI Code and shan
be bindlllj upoa anof inure 10 !be benefit ol the ~in, successon and .... igns 0{ the
parties herel<>. The covenants 0{ Cty tontained herein ort for the apr ... benefit 0{
the P,emisel and each successive owner 0< Jessee thereoi, and shall be binding upon
Oty lnof eacll StlCUWve owner 0{ the Parking Carage. The covenants ol 505
Hamilton contained herein are for the apress benefit ol the Parking Garage and <ach
JUCU1Sive owner !bereo{ and ,hall be binding upon 50S Hamilton and each successive
owner, Ie""e ()( sublessee 0{ the Premises.
IN WITNESS 'WHEREOF. City and 50S Hamilton have executed this
Aireemenl as of tile date and year tint set forth above.
LESSOR:
The Crty 0( Palo Aho,
a municipal corpor.otion
~~---------------. Mayor
A1TEST:
Br-------______________ __
City Cert
APPROVED AS TO FORM:
CtyAttorncy
505 Hamilton Avenue Partnen,
• CaJiforni.a limited pa."tIIership
By: JBAFl, a California limited
partnership, a general partner
By.~ ______________ __
lame. E. Baer.
its ge""raJ partner
aarles King &t Associates, a
California limited partnership,
a general partner
By.~ ________________ _
aarles W. King, Ir, Trustee of
the aarles W. King. Ir,
Revocable Trust, date~
December 11. 1986, its general
partner
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ORDER NO. 198303 o o
The l.n~ ,eferre4 to berein 1 •• 1t~&ted in the State
of Callforaia, County of Santa Clara, city ~f PALO ALTO
(and t. a.scribea as tollows]
PARCEL OIl! I
fBE NORTHWESTERLY 25 feet of the South.a.terly 80 feet of
tbe So~tbve.terly 107 feet of Lot 1. and the Wortheasterly
tl feet of the Southvesterly lSO feet of the Southeasterly
8a fe~t of Lot 1 and the Northvestetlr 2D feet of Lot 2,
Block 38, al shown upon that certain Map entitled ·Original
Map sbowing subdivision of Oniveralty Park (nov Ralo Alto)
Sante Clara Co., calif.-, wbich Map vas file4 for record 1n
the office of the Recor4er of the County of Santa Clara,
State of California on February 27, 168' In Boo~ D of Maps,
page U.
PARCEL !"WO.
The Northeasterly ~O feet of the So~thvesterly 100 teet of
the Soutbeasterly 100 feet of Lot ., Block 38, IS shown upon
tbat certain map entItled ·Originsl Map shoving s~b4i.lsioa
of University Par}. (no~ Palo Alto) Santa Clara Co •• C&lifornia-,
~hicb MAP wa. filed for record io the office of tbe ~ecorder
of the Co~nty of Santa Ciara. State of California 00 Eeb,rl:l&ry
11, 1689 in Book 0 of Maps, page ".
PARCEL t'HREE:
Tbe Southeasterly n.s feet of the North .. esterly 12Q feet of
the Sout.hwesterly 15-0 feet of Lot 1. Bloc:t 38, •• shown u'pon
tblt cer~ain Map entitleO ·Original Map sbo~lng S~bdlYisicns
of Oniversity park {DOV Palo Alto]~ Santa Clara co, California-,
~bich Map VIS filed for record in the office of the Recorder
of the County of Santa Clars, State of California on rebr~arl
21, 11'9 in Book 0 of M&p" p&ge '9.
~E~cept1ng therefrom the NorthvesteLly 11.5 feet of ~he
Southwe.terly 101 feet ~hereof.
PARCEL FOUR:
fbe Southeasterly 100 feet of the l!Iortheaste,ly ~O fott of
Lot II. Block 38, as sbown cpon ~hat certaia Map entitled
-Original Kap sbowing l~bdl.15ions of C,r,!i'l.rslty Par •• santa
Clara, co •• California-, vbict ~.p v~s filed for record in
the office of the Recorder of ~he county of Santa Clara,
State of California on 'ebr~.ry 27, 1889 in Book 0 of Maps,
page n.
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PARCEL rIVE.
ORDER ~ 298JO)
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The So~tbe •• terly 17.5 feet of the Soutbwesterly 50 teet Of
the Northea.terly 100 feet of Lot I, Block 38, IS Ibown cpon
that certain. MAP entitled ·Ori91nll Map .howioq su,bd191sio.ns
of Onlverllty Plrk (now Palo Alto) Santi Cllr& Co., C41ifornia-,
which Map wa. f'le~ for record in the office of tbe Recorder
of the county of saota Clar., State of California on re~r~ary
21, 1889 in ~k 0 of Xap., page ".
PAllCEL SUI
The Northvesterly IS feet of the So~thwester11 98 feet of
the Northeasterly 143 feet, Lot 21 Block 38 as shown upon
that certain Mlp entitled ·Original Map 5howiDg subdivision
of Oniversity Ralt (nov Palo Alto) Santa Clarl Co., california
'Wbicb map vas file6 fC'_, record in. the office of the recorde!'
of ~be County of Santa Clara r State of California on February
21, 188' in ~t 0 of ~aps, page 6'.
EXCEP'lING TIIEREFROK the Northwesterly 20 feet of the
S~utbwesterly 4) feet thereof.
P~CEL SEVEN:
PORTION or LOT 'I in Block 38, .~ shove upon that certain
~ap entitled ·Original ~ap sbowing lubdivision of Oaiversity
Park (now palo Altol Santa Clara Co •• ~aliforcia·1 Which map
was filed for record in the office of tbe Recorder of tbe
County of Santa Claral State of California on February 21,
1889 in 800t D of Maps. page 6'. and more particularly
descri~ed as follows:
BEGINNING at • point on the Southwesterly lice of Webster
Street. distant there~n 100 feet Soutbeasterly from the
point of intersection of said southwesterly line of Webster
Street with the SOutheasterly line of University Aven~e,
running thence Southeasterly along said Soutbwesterly lice
of Webster Street 50 feetJ thence at Eight angles Southwesterly
100 feet: thence at ri9ht angles Northwesterly 150 feet;
then~e at right angles Northeasterly lOQ feet to the point
of beginning.
PARCEL EIGHT.
The Northwesterly 95 teet of the Northeasterly .5 feet of
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Lot 2 aM the SOllthwesterl.y 50 feet of Lot 1. Block lS as sh-o .. n upon
that certal~ Map entitled ·Original Map Shoving Subdivisions
of Ooiversity Part (now Palo Alto) Santa Clara Co., Califo[cia-I
vbich Map was filed for record in the office of the Recorder
of the County of Santa Cl&ra l State of california on Febrllar1
27, 188' in ~\ 0 of Maps, page 6'.
!ICEPrING THEREFROM tbe Southwesterly 40 feet of tbe South
easterly 105 feet thereof of Lot )1 Bl~k 38, Cnlvelsity
parl ..
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OR!)£R NO. lUlOJ o o
PAAC!L lun I
Portion of tot 4. In Blect )8, as .hown cpon that certalD
~,p entltled ·colver.ity Park-which Map WI' filed for
recora In tbe office of the RecotcSe: of th~ County of Santa
Clatl. State of California. O~ rebrnary 21, llS9 1n Book 0
of Maps. page 6', an4 more particularly de_crlbe6 a. follows:
BEGINNING at the point of interleetion of the Southeasterly
line of Onlversity Avenue, with the SOQthwelterly llne of
weblter Steeet, as said Avenue and Street Ire shown upon the
Map above referred to; cunnIng thence Southwelterly aloog the
said Southeasterly line of Oniveraity Aven~e 100.00 feet;
tbenee leaving sala last named line and running at rigct
angles Southeasterly 100.00 feet to the true point of
beginning of t.his descr Ip,tlo-oJ running; thence froll aaid trlle
point of beginni09 Soutbe.ate,ly at right &091.0 to the
aaid SOlltheilsterJy line of o,niversity Avenue, 50.00 feet..
thence at right angles So~thweltetly 50.00 feet; thence at
rigbt angles Northwesterly 50.00 feet, then~e at right
angles Bortheasterly 50.00 feet to tbe true point of beginning.
PARCEL TEN:
BEGINNING at the most Southerly corner of Lot C. Block 38,
al shown opon that certain ~ap entitled -Oriqlnal Map
shoving SubdivisIon of O,niver.ity Part (nov Palo Alto) Santa
Clara Co., California-, recorded February 21. 1889 In Book 0
of Maps, page 6', Records of Santa Clara County, California;
tbence Northwesterly al~ns the Southvesterly line of said
Lot 4. & diatanee of lOO feet; then~e at rigbt angles
Northeasterly 45 feet} tbe~e at right angles Northwesterly
10,0 feet; t.hen<:e Nott-healtetly alo09' t.he Northwest.erly line
of .aid Lot, 5 feet.; thecce Southeasterly at rigbt angles
200 feetJ thence at right angles SOQtbwesterly ~O feet to
t.be point of beginning, beiog a pertoin Clf Lot. 4.
PARCEL ELEVEN:
PORTIOS"OP LOT ., In Bloct 38, as sbown Qpon tbat certain
Map entitlecS -Original Map sbowinq subdivisioD of University
Park (now Palo Alto) Santa Clara Co., California-. vhich Map
vas filed f(,: recClr4 in the office of t.he Recorder of t.he
County of Santa Clara, State of california on Fe~tUalf 21,
1889 in Boot D of Maps. page ", and more particularly
described as follows1
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OPDER NO. 29a)0)
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BEGINNING at • poiot on the oo~th ••• t.rly line of colver.ity
Avenue distant thereon 200 feet So~tbyesterlJ froa the
lnter.ection of the Soutbwesterl, line of Webster Street
~lth tbe Southeasterly ltne of Dnlver.lty Avenuel thence
Soutbea.terly at right angl •• lOD feet' thence W~rtheasterly
at right angles S teet; thence Worthwesterly at rl~bt anqles
100 teet to said Southelsterly line of Onl~erllty Avenue,
then~e Southwesterly along •• 14 Southeasterly 11ne ~ feet to
the POIN~ or BEGINNING.
PARCEL TWELVE,
PORTION OF ~ 1, Block 38, .s Ihown gpon that certain Map
entitled ·Original Map shoving lubdivisions of University
Part (now Palo Alto) Santa Clara Co., Califorol.-. which "ap
~as file~ fo, reeotd i~ the office of the Recoraer of the
County of santa Clara, State of Californla l on Febroarr 21,
18S9 in Book 0 of Maps, page '9, and more particularly
described as ,follows:
BEGINNING at the point of interlection of the Northwesterly
line ~f Hamilton Avenuel with tbe Southwesterly lin~ ~f
Webster Street, running tbence Southwesterly alonq the said
Northwesterly line of Hamilton Avenue, for a distan~~ ~f
iSQ.OO feet; runnlD9 thence Northwesterly at rigbt angles to
tbe said Nortbwest~rly line of B~lltcn Aven~e and parallel
~ith the said SOuthwesterly line of Webster Street, for a
.distan.ee of 10S.00 feet. to the trae point of begin.ning of
t.his d.scrip,tion; running thence from said trlJe point. of
beginning, Northwesterly end parallel with the saia
Soutbw~ste[ly line of Webster Street for a di.tan~e of 95.00
feet, thenee at rigbt angles SOUthwesterly .n~ parallel with
the sai~ Northwesterly line of Simiiton Aven~e, tor a
di5t.n~e of SO.OO feet, then~e at rigbt angles Soutbeasterly
and parallel ~ith the said SOUth~e.terly line of Webster
Street, tvr G distanee of 9S.00 feet, thence at right angles
Northeasterly and parallel with the said Northwesterly line
of BaMilt~n AvenIJe, for a distan~e of 50.00 feet to the troe
point of begtnni!\9.
TJP/Tll/bf
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Tbc Parkinf: Garqc .. "Wi 'Che Premises daD be tJeancd and maintained ill. ~
1ttith Ik foDO'Win.a:
L Swr.cp!nr krYim The entranc:es aN! all bds or the Parkinf; Gt:rqc: iha!I be
oIVrI'e,pl and aD ttabways ckane4 cmee • week. AdditionaDy. aD ......tkwa)'S around UIc Pa:mn, Gsnze and' walkways 10 Hamnt.on A~ .. cd UnNtrsity Avenue ahaD !:Ie IW'ept once •
'III'U\. ScrvK:el WB ~ the :removal' of u paper, pu., Eaves. dirt I:nd otlJcI delnil and
proP"' .... pouIlbueot
1 Cm!Qd'i,I aN M'in1cn.oo; Sqvjj:s.. Stairwetls and e1enton ihaD be cleaned
ro", (4) 4ayo P"' woe. (T ...... " n"""", F"Oay and 5<m.'Y~ $eM"" ohall mclude
cmpt)'iftJ, ~ an tras.1l. COfllainen. and' p.ropu disposal of material 0Jacin,. ~ and
1bOppin& of .n ltIIIirwe'Cs and tand"mp and ~ any vandalism iDclwflIll graffiti to
Tenant and repair d. daJna&es tause<l tbc:re:bJ.
1 LandigmjDg An planU:os and la.n&capinl 1ITO\IrM! the parkin,£ pra,p: .:hall be
trimmed and cared b' 111 k.uI: once: • mcmlh.
l..esso("lbtiti.b Tenant, lnilia'b;
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Pyrpon:
P!'ahltenjlflce:
Constryct fgg:
[Jtjlities:
InstJrance:
fnoineerha
Ser'iices:
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AmCHKEIII loA
TO [XH18n A
LEAst SUIOWtY
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505 IWIIlTOII AYEHlJ[, PARTIIEU
City of fal. Alt.
SOS Ha~;lto" Avenue, Partners
o
Air rlgMs for two levels or parking lot Cowper-lIeo,ter g.rage_
To construct .~d the exelusi~e use of iarling for levels S &
J at the Copwer-Webster garage_
IS yeors
Ooe time llSO,OOO .~v.nc. payment upon completion of
construction. Rent to be ~sed eXC1~5iyel1 for f~pro~ement
and/or .ai.tenance of property vlt~il the Unlver'it, Avenue
Asse,sment District.
Tenant ~ill be responsible for ill janitorial, sweeping, and
eleVlto-r lIaimtenance for the entire Cawper-Vebster garage
during the IS year teno of the lei,e_
All construction will be it developers cost.
City shan pay for all .tility charge, for 011 levels of
Cowper-Webster garage_
Tenant to fur.l5~ f~surlnce coverage [Deluding Earthqua\e
r.surance for the entire 7 level structure.
Tenant shall pa, for lhe services of • toll-lime ~roject
engloeer and construction f.spect~ t. be .Ired by tit! for
the dur.tlo. of the construction or the prejett.
Tenant s~all be r •• ponsibl. for an, tax •• t~.l ~'Y be tr •• ted
by tenant possessory i~terest fl suhject premises.
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TIWIISPoRTATION
May IIIis ..... IS • !cUcr ol .. ppon Ibr tile lUnc!amcutal coooepr or IJ1 aiI-tigh" projea IS prop00c4 by
Till. Baa lor Ik WebslertCowpe:r praJe. The asae ol ad'usMly Ii M!)' ac;:a:pLablc aDd r would
C'IlCOtiI.raF • 101I.,IQ 'lerm.. i.e..: 3O:rears in 0f4c:J 10 &!DOi'tUIe bi5 UrvcIUDco:r .. as opposed 10 lbe ~
""'" eacounp by rtalf.
'I"bf: propose4 rompeosaUoD. for tbe ail rlgbl5 Jeas.c:bold is. ~ •• ua:epUlbIe.. n.e Ci1)l CouDCil"s.
&crucial) respoIW'bilifJ IS lfIc JO"'"Cl'IUIl, board or Ibc: .Assc:5:5ment Disllia. requ1rcs fair Ind! just
com_lio. fa< _ propcny. The """"'P' Is quite oImpJc: The Disuia OWDS 50,000 sq.we r..t
ollaD4. ~ .. due IQ setbaci:s tequlre4 at tile proposed addilio ... perU:ps 3S,CXXJ square icct iii usabte
10 tile appric:anJ: with aD appraised muc of at 1casI S3.soo.cxn Like any FDUnd: lease (air rfg.lllS lease) ..
)'idd of !jI..1K is 1)'pic:aJ' COlJlpcmaOOIL llds yields u amaaaJ lease ItaC'DDe of S31SJkXI -5350,(0) 10
Ilac ifistria pJus iDcleases. fa fUtW'c years I:>r tIK oost ollMlll. lbe Jessee is thea entitJe4 to aD or Ibe
m.'eDacs he ,eeoerattS from lis 1eDants m either ligbc:r mats or month.'J partinl ICei.. BuDamp willi
partinl are c:ruemeIy att:r3ctM 10 1CDaD1I aad! c:om.man4 s:iprlfkantlJ gea~ Jellts.
1be district carumr: be iiIt rhe philanthropy business rcpf"dlcu 0( tbe DObwty oC the use. Staaford
obaiifts • yield 01 their !fOUDd leases (EI Camino Park) e\ICa Ibougb • paIt is • cbirabk: D5C fD lbc:
comouuuty. .M. added' Ifunc:nsioa: i5 'the faa that tiIC., the propcny owners ..,flo are the cf"!S!1ld lad pay
lbe bGb (bou4s) are ni1l paying rcw-the aea: 24 years lbe $5 • .00.<:0) 0( debl plus inlerest mcurr.e4 10
build dte WebstetJCowper structnrc.. 1Dc:'NISed in that cod • $UltCIW'3l and core improvcmeu.(j; cJcsigned
10 _Ie the addilioual /loon propose4 by Jim 1Iacr.
We mDSl: I'UlII this If"lSlrict iD .. 'busincu like manner, Tberc can be .a rree lund... You arc Klin" oa
belI.a.lf DC the property OW»e~ .. be comprise aDd Nnd the cf'lStrict All air rl"&bts project is &reat IS long
as. Ik-If"IStrlct is oompensatc:d lor their land c:ommemUJ'3le .. ith (be m.arietp1acc.. Tht aotiOtl of I OM
WDe ia·lic:a Jcasc payment 01. S15O,OO) • SSOO,ooo to impfO\le Of)' HaD. DO( tfle cf"1St:rict. is botb IbstardlJ
.,.. and misd"ueaed.. Fl,Iture lease ~aues iIIould be 1lSC4 10 imp1"O\"C district pu.btK: parkin, or 10 pay
c:zistiDI distrid. boDe! inckbledQC:Sl iDc:wTd for bolll tbc Webstcr..Cowper structure Ind the 5ublemlneao
parltiD, ia the 2SO UoM:ru1)l A_be projea.
Ve>y lnZly !'O ....
CUrIes J. JCecnaD IIJ
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KEEYA.."'I" LA."'I"D ()OMPANT
Outlined below are comparative ana/y>is of three financial scenarios for compensating
the parking dis!ricl for an air rigllts lease on !be Cowpc"Webster garage. The ana/y>is
uses a present value methodology so l11.t any se<:nario can be expressed in an apples 10
apples comparison. The reinvestment rate employed is 8%.
The benchmark study is based on a martel valuation for !be land. The second analysis
is based on the applicant', proposal. The third reflects early counciIlIIougllts of •
shorter term but leaving an the remaining clements of !be applicant', proposaL
AssumptieJQS;
Benchmark Transaction
I. 2S year leasehold
2. Land value of 53.soo,OOO (35,000 sq. ft. X lOO/sq. ft.)
3. Annual lease payments starting @ 5300,OOO/yr
.(. Lease payments increase by 4% annually every 5 years
5. Le=e and lessor 10 maintain their rcspcc'Jve structures
6. $2,000,000 curren! l'lI1u.tion of imprOllCments
Appficant', Transaction
I. 2S year leasebold
1_ $150,000 up front payments
3. N" lease payments thereafter
4. Lessee to maintain entire structure
S. Maintenance costs of S30,OOO/yr growing .t 4% annu.Dy every 5 years
6. 52,000,000 current valuation of improyemcnts
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Page -2-
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1. Same as #2 c:xccpe 15 year term
As can be seen from these analysis there are many means of achiaing a market based
transaction. Any combination of larger lease payments, lIIO<e up front cash, {)f shorter
term can be med 10 achieve a market transaction. For example. the app1icant can
make a one time up front fee of 53,450,000 and thereby achieve a marleet transaction
for ahemate 3. Witlo this analysis the applicant can decide tbe hest financial strategy
for his situation, ie..: more up front cash vs. larger lease payments. However .. in the
current proposals the disparity is far too great 10 he considered equitable to d"1Strict.
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JoWiel ,f.ppIk;oo1 M04i6<4Applkalll lp'N'1k!!! 7nnsd.)p Tpm.actiQ9
Day J 3OO,(XXl UIIJ,iJJQ Ial,ooo
$!art
y..,
1 lOO,OOO 30.000 30,000 J JOO,(XXl lO,rol lO,rol f 300,000 30.000 30,000 $ 3OO,rol 30.000 30,000 I 360,000 420000 42,000 7 360.ooJ 4urn 420000 a 361,rol 42,1JOO 42,1JOO t 36l,000 4l,OOO 420000 ){) 360,rol 42,1JOO 420000 11 432,000 30,<400 30,<00 U 432,000 30,400 5Il,4OO 13 432,000 30,400 30,400 J4 432,000 30,400 30,400 15 432,000 30,<400 30,400 ]6 518,400 60,480 1,000,000 17 518,400 60,480 13 518,400 60.480 19 51&,400 <10,480
:10 51f$,400 60.480
2J = n.m 2:! mooo 72,516 .u = 72,5115
U m!n) l2.S16
25 = n.m 26 urn.OOO ~!n)
P ..... ,
v.1u< $4, 7IS5.135 S 944,58S SI,1l3.774