EXHIBIT 10.12
FIRST AMENDMENT TO OFFICE LEASE
This First Amendment to Office Lease ("Amendment") is entered into, and
dated for reference purposes, as of October 31, 2000 by and between METROPOLITAN
LIFE INSURANCE COMPANY, a New York corporation ("Landlord"), as Landlord, and
BRE PROPERTIES, INC., a Maryland corporation ("Tenant"), as Tenant, with
reference to the following facts:
RECITALS
A. Landlord and Tenant entered into that certain written office lease
dated April 24, 2000 (the "Lease"), for certain premises located in the
Building, as more particularly described in the Original Lease (the "Original
Premises").
B. Landlord and Tenant now desire to provide for the lease to Tenant of
certain expansion premises (the "Expansion Space"), subject to all of the
conditions, terms, covenants and agreements provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants set forth herein and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
Section 1. Defined Terms. All capitalized terms not otherwise defined
herein have the meanings set forth in the Lease unless the context clearly
requires otherwise.
Section 2. Security Deposit. Concurrently with execution of this
Amendment, Tenant shall pay to Landlord an additional Security Deposit of
$8,515.80 to be handled by Landlord in accordance with the terms of Article Five
of the Lease.
Section 3. Initial Term. Landlord and Tenant agree that the term of the
lease of the Expansion Space shall be three (3) years (Expansion Space Term).
Section 4. Expansion Space Option to Extend.
(a) Landlord hereby grants Tenant a single option to extend the
initial Term of the lease of the Expansion Space (as described below) for an
additional period of two (2) years (such period may be referred to as the
"Option Term"), as to the Expansion Space as it may then exist, upon and subject
to the terms and conditions of this Section (the "Expansion Space Option To
Extend"), and provided that at the time of exercise of such right: (i) Tenant
must be in occupancy of the Expansion Space and the Original Premises; and (ii)
there has been no material adverse change in Tenant's financial position from
such position as of the date of execution of this Amendment, as certified by
Tenant's Independent certified public accountants, and as supported by Tenant's
certified financial statements, copies of which shall be delivered to Landlord
with Tenant's written notice exercising its right hereunder.
(b) Tenant's election (the "Election Notice") to exercise the
Expansion Space Option To Extend must be given to Landlord In writing no earlier
than the date which is twelve (12) months before the Expansion Space Expiration
Date and no later than the date which is nine (9) months prior to the Expansion
Space Expiration Date. If Tenant either fails or elects not to exercise its
Expansion Space Option to Extend by not timely giving its Election Notice, then
the Expansion Space Option to Extend shall be null and void.
Rider 1 - Page 4
(c) The Option Term shall commence immediately after the expiration
of the Expansion Space Expiration Date. Tenant's leasing of the Expansion Space
during the Option Term shall be upon and subject to the same terms and
conditions contained in the Lease and this Amendment except that (i) the
Expansion Space Monthly Base Rent, the Operating Expenses Base Year, the Taxes
Base Year and parking charges pursuant to this Amendment shall be amended to
equal the "Option Term Rent", defined and determined in the manner set forth in
the immediately following Subsection; (ii) the Expansion Space Security Deposit
shall be increased within fifteen (15) days after the Prevailing Market Rent has
been determined to equal one hundred percent (100%) of the highest monthly
installment of Monthly Base Rent thereunder; (iii) Tenant shall accept the
Expansion Space in its "as is" condition without any obligation of Landlord to
repaint, remodel, repair, improve or alter the Expansion Space or to provide
Tenant any allowance therefor; and (iv) there shall be no further option or
right to extend the term of the Lease of the Expansion Space. If Tenant timely
and properly exercises the Option To Extend, references in this Amendment to the
Expansion Space Term shall be deemed to mean the Expansion Space initial Term as
extended by the Option Term unless the context clearly requires otherwise.
(d) The Expansion Space Option Term Rent shall mean the greater of
(i) the Monthly Base Rent and parking charges payable by Tenant under this
Amendment applicable to the Expansion Space calculated at the rate applicable
for the last full month of the initial Term, with Rent Adjustments based upon
the Operating Expenses Base Year and Taxes Base Year as defined in Section 1.01
of the Lease as amended by this Amendment (collectively, "Preceding Rent") or
(ii) the "Prevailing Market Rent". As used herein Prevailing Market Rent shall
mean the rent and all other monetary payments and escalations, including
consumer price increases, that Landlord could obtain from a third party desiring
to lease the Expansion Space for a term equal to the Expansion Space Option Term
and commencing when the Expansion Space Option Term is to commence under market
leasing conditions, and taking into account the following: the size, location
and floor levels of the Expansion Space; the type and quality of tenant
improvements; age and location of the Project; quality of construction of the
Project; services to be provided by Landlord or by tenant; the rent, all other
monetary payments and escalations obtainable for new leases of space comparable
to the Expansion Space In the Project and in comparable class A office buildings
in downtown Walnut Creek, California, and other factors that would be relevant
to such a third party in determining what such party would be willing to pay
therefor, provided, however, that Prevailing Market Rent shall be determined
without reduction or adjustment for "Tenant Concessions" (as defined below), if
any, being offered to prospective new tenants of comparable space. For purposes
of the preceding sentence, the term "Tenant Concessions" shall include, without
limitation, so-called free rent, tenant improvement allowances and work, moving
allowances, and lease takeovers. The determination of Prevailing Market Rent
based upon the foregoing criteria shall be made by Landlord, in the good faith
exercise of Landlord's business judgment. Within thirty (30) days after Tenant's
exercise of the Expansion Option to Extend, Landlord shall notify Tenant of
Landlord's determination of Expansion Space Option Term Rent for the Expansion
Space. If Landlord's determination of Prevailing Market Rent is greater than the
Preceding Rent, and if Tenant, in Tenant's sole discretion, disagrees with the
amount of Prevailing Market Rent determined by Landlord, Tenant may elect to
revoke and rescind the exercise of the option by giving written notice thereof
to Landlord within thirty (30) days after notice of Landlord's determination of
Prevailing Market Rent.
(e) This Expansion Space Option to Extend is personal to BRE and
shall not be used by, and shall not be transferable or assignable (voluntarily
or involuntarily) to any person or entity.
(f) Upon the occurrence of any of the following events, Landlord
shall have the option, exercisable at any time prior to commencement of the
Expansion Space Option Term, to terminate all of the provisions of this Section
with respect to the Expansion Space Option to Extend, with the effect of
canceling and voiding any prior or subsequent exercise so this Expansion Space
Option to Extend is of no force or effect:
Rider 1 - Page 5
(i) Tenant's failure to timely exercise the Expansion Space
Option to Extend in accordance with the provisions of this Section.
(ii) The existence at the time Tenant exercises the Expansion
Space Option to Extend or at the commencement of the Expansion Space
Option Term of any default on the part of Tenant under the Lease or this
Amendment or of any state of facts which with the passage of time or the
giving of notice, or both, would constitute such a default.
(iii) Tenant's third default under the Lease or this Amendment
prior to the commencement of the Expansion Space Option Term,
notwithstanding that all such defaults may subsequently be cured.
In the event of Landlord's termination of the Expansion Space Option to Extend
pursuant to this Section, Tenant shall reimburse Landlord for all costs and
expenses Landlord incurs in connection with Tenant's exercise of the Expansion
Space Option to Extend including, without limitation, costs and expenses with
respect to any brokerage commissions and attorneys' fees, and with respect to
the design, construction or making of any tenant improvements, repairs or
renovation or with respect to any payment of all or part of any allowance for
any of the foregoing.
(g) Without limiting the generality of any provision of the Lease,
time shall be of the essence with respect to all of the provisions of this
Section.
(h) This Expansion Space Option to Extend is the only option Tenant
has to extend the term of its lease of the Expansion Space. The Expansion Space
shall not be included in the Option to Extend contained in Section 3 of Rider 2
to the Original Lease.
Section 5. Lease of Expansion Space.
(a) Definition and Lease of Expansion Space. Landlord hereby leases
to Tenant and Tenant hereby hires from Landlord the Expansion Space upon and
subject to all of the terms, covenants, conditions of the Lease, except as
expressly provided herein. The Expansion Space consists of space located on the
street level of the Building comprising approximately 3,154 rentable square feet
of space, as more particularly shown on Exhibit A, attached hereto and made a
part hereof.
(b) Commencement Date; Expiration Date. Landlord shall deliver
possession of the Expansion Space to Tenant upon substantial completion of the
Landlord Work, defined in Section 5(d)(ii) below, and the term of the lease of
the Expansion Space shall commence upon such delivery ("the Expansion Space
Commencement Date") and continue for a period terminating three (3) years (the
Expansion Space Expiration Date) from said Expansion Space Commencement Date,
unless sooner terminated pursuant to the terms of the Lease. As of the Expansion
Space Commencement Date, the Expansion Space shall become part of the Premises
upon and subject to all of the terms, covenants and conditions of the Lease,
except as otherwise provided herein and except that (i) Tenant's obligation to
pay Base Annual Rent and Tenant's pro-rata share of Operating Costs and Taxes
with respect to the Expansion Space shall commence upon the Expansion Space
Commencement Date, and (ii) the Premises rentable area, including the Expansion
Space, will be 13,599 square feet.
c) Substantial Completion. The Expansion Space shall be deemed
completed and possession delivered when Landlord has substantially completed
Landlord's work, subject only to the completion of minor items which do not
materially impair the usability of the Expansion Space by Tenant, and Tenant
shall accept the Expansion Space upon notice from Landlord that such Landlord's
Work has been so completed. Landlord shall use its reasonable efforts to advise
Tenant of the anticipated date of substantial completion at least five (5) days
prior to such date, but the failure to give such notice shall not constitute a
default hereunder by Landlord or give rise to any claim for damages by Tenant.
By entry hereunder Tenant accepts the Expansion Space as being in the condition
in which Landlord is obligated to deliver it (subject to completion of
Rider 1 - Page 6
items on Landlord's punchlist, which punchlist items Landlord shall complete in
a diligent manner no later than thirty (30) days following the Expansion Space
Commencement Date).
The Expansion Space Commencement Date, being the date Tenant's
obligation to pay rent hereunder commences, shall be advanced the number of days
said date is postponed by Tenant Delay (as defined in the Lease.) Tenant shall
execute and return to Landlord a letter in the form attached hereto as Exhibit
B, confirming the Expansion Space Commencement Date. In the event that any
portion of the Expansion Space may be lawfully occupied prior to substantial
completion, and if Landlord gives its prior written approval to such early
occupancy, Tenant may take early occupancy of such portion of the Expansion
Space on such date as Landlord and Tenant shall agree, and notwithstanding any
above provisions to the contrary, the Expansion Space Commencement Date and
Tenant's obligation to pay Base Annual Rent with respect to such portion of
Expansion Space shall commence upon occupancy.
(d) AS IS; Landlord Work.
(i) AS-IS. Notwithstanding any provision of the Lease to the
contrary, (1) the Expansion Space is leased to Tenant in its AS IS condition,
without any express or implied representations or warranties of any kind by
Landlord, its brokers, manager or agents, or the employees of any of them
regarding the Expansion Space, and (2) Landlord shall not have any obligation to
construct or install any tenant improvements or alterations or to pay for any
such construction or installation, except as provided in Section 5(d)(ii) below.
(ii) Landlord Work. Within a reasonable time after the
execution of this Amendment, Landlord's contractors shall add additional
electrical, paint all interior partitions of the Expansion Space and replace the
existing carpet utilizing in-stock materials of Tenant's choice, ("Landlord
Work"). Tenant agrees to provide Landlord with a complete electrical plan, which
shall be subject to Landlord's reasonable approval, and Tenant's choices of
paint and carpet within five (5) days of the mutual execution and delivery of
this Amendment. All costs and expenses associated with the Landlord Work shall
be paid by Landlord up to a maximum total amount of $15,770.00 with the costs
and expenses, if any, above said $15,770.00 to be paid by Tenant. In the event
such costs and expenses are less than $15,770.00, Landlord shall retain the
unused balance and shall have no obligation or liability to Tenant with respect
to such excess. Landlord shall also make sure that the HVAC system is in good
working condition and that any broken or damaged ceiling tiles are replaced
prior to said Expansion Space Commencement Date.
Section 6. Certain Amendments to Lease. The Lease is hereby amended
as follows:
(a) Base Annual Rent. During the Term hereof, in addition to
the Base Annual Rent provided in said Lease, monthly installments of Base Annual
Rent shall be due and payable in advance on the first of each month by Tenant
for the Expansion Space at the following rates:
Period from/through Monthly Monthly Rate/SF of Rentable Area
------------------- ------- --------------------------------
Months 01-12 $7,885.00 $2.50
Months 13-24 $8,200.40 $2.60
Months 25-36 $8,515.80 $2.70
(b) Base Taxes Amount and Base Operating Costs Amount.
Notwithstanding anything to the contrary in the Lease: (i) as of the Expansion
Space Commencement Date, Base Operating Costs Amount for the Expansion Space
shall be the amount of Operating Costs paid or accrued during the calendar year
2001 and the Base Taxes Amount for the Expansion Space shall be the amount of
Taxes paid or accrued during the calendar year 2001, and (ii) as of the
Expansion Commencement Date, Tenant's pro-rata share of Operating Costs and
Taxes shall be 3.4023 % for the Premises exclusive of the Expansion Space and,
in addition, 1.0274 % for the Expansion Space.
Rider 1 - Page 7
(c) Parking. During the Expansion Space Term, in addition to the
Parking provided in the Original Lease, Tenant shall have the right to use nine
(9) valet assist parking spaces (each for a single vehicle) initially at the
rate of $60 per space per month. Said initial rate is subject to change in
accordance with Section 2.06 of said Original Lease. All such amounts shall be
payable as additional Rent in the same manner as for payment of monthly
installments of Base Annual Rent.
(d) After-Hours Electrical Service. Landlord shall install at
Tenant's expense a 3-phase emon demon meter and timelock to monitor Tenant's
after-hour KW (kilowatt) usage for the Expansion Space. After-hours shall be any
time outside of the Standard Operating Hours defined in Section 1.03 of the
Lease. Landlord shall invoice Tenant monthly for said after-hour KW usage based
upon the then current utility company rate as taken from the utility bill
received by Landlord, and Tenant shall pay said invoice upon receipt. Electrical
services invoiced to and paid by Tenant under this Section shall not be included
in Operating Expenses under said Lease. Landlord and Tenant acknowledge and
agree that the provisions contained in Article 6.03 of the Existing Lease in
regard to after-hours HVAC service shall not apply to the Expansion Space, but
remain fully applicable with respect to the Original Premises.
Section 7. Brokers. Notwithstanding any other provision of the Lease to
the contrary, Tenant represents that Tenant has not dealt with any real estate
broker, sales person, or finder in connection with this Lease, and no such
person initiated or participated in the negotiation of this Amendment, or showed
the Premises to Tenant. Tenant hereby agrees to indemnify, protect, defend and
hold Landlord and the Indemnitees, harmless from and against any and all
liabilities and claims for commissions and fees arising out of a breach of the
foregoing representation. Landlord agrees to pay any commission to which CB
Richard Ellis, Inc. ("Landlord's Broker") is entitled in connection with this
Amendment pursuant to Landlord's written agreement with such broker.
Section 8. Attorneys' Fees. Each party to this Amendment shall bear its
own attorneys' fees and costs incurred in connection with the discussions
preceding, negotiations for and documentation of this Amendment. In the event
any party brings any suit or other proceeding with respect to the subject matter
or enforcement of this Amendment or the Lease, as amended, the prevailing party
(as determined by the court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief as may be
awarded, be entitled to recover attorneys' fees, expenses and costs of
investigation as actually incurred, including court costs, expert witness fees,
costs and expenses of investigation, and all attorneys' fees, costs and expenses
in any such suit or proceeding (including in any action or participation in or
in connection with any case or proceeding under the Bankruptcy Code, 11 United
States Code Sections 101 et seq., or any successor statutes, in establishing or
enforcing the right to indemnification, in appellate proceedings, or in
connection with the enforcement or collection of any judgment obtained in any
such suit or proceeding).
Section 9. Effect of Headings; Recitals: Exhibits. The titles or headings
of the various parts or sections hereof are intended solely for convenience and
are not intended and shall not be deemed to or in any way be used to modify,
explain or place any construction upon any of the provisions of this Amendment.
Any and all Recitals set forth at the beginning of this Amendment are true and
correct and constitute a part of this Amendment as if they had been set forth as
covenants herein. Exhibits, schedules, plats and riders hereto which are
referred to herein are a part of this Amendment.
Section 10. Force and Effect. Except as modified by this Amendment, the
terms and provisions of the Lease are hereby ratified and confirmed and shall
remain in full force and effect. Should any inconsistency arise between this
Amendment and the Lease as to the specific matters which are the subject of this
Amendment, the terms and conditions of this Amendment shall control. This
Amendment shall be construed to be a part of the Lease and shall be deemed
incorporated in the Lease by this reference.
Section 11. Agreement; Amendment. The Lease as amended by this Amendment
constitutes the full and complete agreement and understanding between the
parties hereto and
Rider 1 - Page 8
shall supersede all prior communications, representations, understandings or
agreements, if any, whether oral or written, concerning the subject matter
contained in the Lease as so amended, and no provision of the Lease as so
amended may be modified, amended, waived or discharged, in whole or in part,
except by a written instrument executed by all of the parties hereto.
Section 12. Authority. Each party represents and warrants to the other
that it has full authority and power to enter into and perform its obligations
under this Amendment, that the person executing this Amendment is fully
empowered to do so, and that no consent or authorization is necessary from any
third party. Landlord may request that Tenant provide Landlord evidence of
Tenant's authority.
Section 13. Counterparts. This Amendment may be executed in duplicates or
counterparts, or both, and such duplicates or counterparts together shall
constitute but one original of the Amendment. Each duplicate and counterpart
shall be equally admissible in evidence, and each original shall fully bind each
party who has executed it.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.
Tenant: BRE PROPERTIES, INC.,
a Maryland corporation
By: _____/s/ LeRoy Carlson_________________
Print Name: ____LeRoy Carlson____________
Title:_____Executive Vice President________
Landlord: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: _____/s/ Donald K. Devine__________________
Print Name: ____Donald K. Devine__________
Title: ______Vice President__________________
Rider 1 - Page 9
EXHIBIT A
EXPANSION SPACE
Rider 1 - Page 10
EXHIBIT B
COMMENCEMENT DATE AGREEMENT
Metropolitan Life Insurance Company, a New York corporation ("Landlord"),
and BRE Properties, Inc., a Maryland corporation ("Tenant"), have entered into a
certain Second Amendment to Office Lease dated as of October 31, 2000 (the
"Amendment").
WHEREAS, Landlord and Tenant wish to confirm and memorialize the Expansion
Space Commencement Date of the Amendment as provided for in Section 5(c) of the
Amendment;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and in the Amendment, Landlord and Tenant agree as follows:
1. Unless otherwise defined herein, all capitalized terms shall have the
same meaning ascribed to them in the Lease.
2. The Expansion Space Commencement Date (as defined in the Amendment) is
November 10, 2000.
3. The Expansion Space Expiration Date (as defined in the Amendment) is
November 9, 2001.
4. Tenant hereby confirms the following:
(a) That it has accepted possession of the Expansion Space pursuant
to the terms of the Amendment.
(b) That the Landlord Work is Substantially Complete; and
(c) That the Amendment is in full force and effect.
5. Except as expressly modified hereby, all terms and provisions of the
Amendment are hereby ratified and confirmed and shall remain in full force and
effect and binding on the parties hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Commencement
Date Agreement and such execution and delivery have been duly authorized.
TENANT: LANDLORD:
BRE PROPERTIES, INC., METROPOLITAN LIFE INSURANCE
a Maryland corporation COMPANY, a New York corporation
By ____/s/ LeRoy Carlson_____________ By _______/s/ Donald K. Devine_______
____LeRoy Carlson_________________ ______Donald K. Devine____________
Print name Print name
Its ____Executive Vice President______ Its ______Vice President______________
Rider 1 - Page 11