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2 Francisco Bay Area Rapid Transit District (BART) and Doe defendants 1-100, alleges as
3 follows:
6 promises made by BART to TransMart in connection with a series of agreements through which
7 TransMart and BART anticipated and intended that TransMart would act as a master retail
8 vendor for BART over the course of the next 30 to 50 years. Through that relationship,
9 TransMart was to establish multiple retail outlets in stations throughout the BART system and
10 work with the individual retail vendors to execute a comprehensive plan for development of
11 station retail activities. The program included a heavy emphasis on both technology and
12 connectivity, featuring a concierge system through which BART riders would be able to use
13 either their phones and a specially-developed app or concierge kiosks in their local stations to
14 browse, purchase, and arrange for local delivery of goods and services being offered by vendors
17 things, the master-retail-vendor relationship with TransMart would: (i) provide a significant new
18 source of long-term revenue that did not derive from fare increases, state or federal assistance, or
19 other public funds; (ii) allow BART to generate income while maintaining its focus on its
20 primary function of providing transit services; (iii) provide customers with access to goods and
21 services that would improve the ridership experience; and (iv) require minimal supervision or
22 other operational involvement from BART staff once the program was fully launched and
23 operational. From TransMarts perspective, the benefits of the relationship included the
24 generation of significant long-term revenue streams, as well as the exposure and additional
25 opportunities that would have come from creating a unique and cutting-edge transit retail
2 energy in pursuing the project. But once the development of the project was underway, BART
3 reneged on its promises and consistently failed to perform as promised and as agreed in the lease
4 option agreement. Among other things, BART unreasonably withheld approvals of TransMarts
5 submissions under the parties lease option agreement, failed to establish an independent design
6 review committee, and consistently failed to provide timely and consistent feedback in response
7 to design documentation and other submissions that TransMart provided to BART for review
8 and approval. In the end, BARTs unfulfilled promises and inadequate performance under the
10 4. TransMart brings this action to seek compensation for the harms it has suffered as
11 a result of BARTs failed promises and breaches of the parties agreements. Among other
12 things, TransMart seeks to recoup millions of dollars of costs expended in connection with its
13 efforts to develop and launch the project, as well as tens of millions of dollars in lost profits
14 based on the agreements considerable value to TransMart had BART performed as promised
15 and agreed.
16 THE PARTIES
19 and-operated business.
21 transit district established pursuant to California Public Utilities Code section 28500 et seq.
22 BARTs headquarters are located in Oakland, California, and it operates stations and transit
23 services throughout the San Francisco Bay Area, including in Alameda, San Francisco, Contra
26 through 100 and thereby sues such defendants by fictitious names. TransMart is informed and
27 believes that each of the defendants, including each fictitiously-named defendant, is liable in
28 some manner for the events alleged in this complaint. TransMart will amend this complaint to
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1 allege the true names and capacities of these defendants when ascertained.
2 8. TransMart is informed and believes, and thereon alleges, that each of the
3 defendants, including each fictitiously-named defendant, is now and has been at all times herein
4 mentioned the agent, servant, employee, partner, associate, joint venturer, co-participant, and/or
5 principal of each of the remaining defendants, and that each defendant has been, at all times
6 mentioned herein, acting within the scope of such relationship and with the full knowledge,
9 9. The Court has jurisdiction over this matter pursuant to California Code of Civil
10 Procedure section 410.10 by virtue of the fact that this is a civil action in which the matter in
13 Procedure sections 395(a) and 395.5. BART has its principal place of business in Alameda
14 County, and the agreements at issue were to be performed in several Bay Area counties,
16 11. In accordance with California Government Code section 910 et seq., TransMart
17 timely presented its government claim to BART on December 8, 2016. TransMart also
18 submitted a first amended claim on December 9, 2016, and a second amended claim on January
19 3, 2017. As of the filing of this complaint, BART had not responded to TransMarts claim.
20 FACTUAL ALLEGATIONS
22 12. TransMart is informed and believes that BARTs funding is provided primarily
23 through BART rider fares, state and federal assistance, and sales and property tax revenues
25 13. TransMart is informed and believes that a master retail vendor program was
26 attractive to BART for a number of reasons, including that: (i) such a program presents an
27 opportunity to raise funds without increasing BART fares, seeking additional state or federal
28 funding, or going to the public for approval of yet another bond measure; (ii) the master vendor
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1 would control the relationships with the individual station retailers, allowing BART to focus on
2 its primary objective of providing transit services; and (iii) the program presents an opportunity
3 to dramatically improve the ridership experience for BART passengers who primarily associate
4 the BART experience with delays, overcrowding on the trains, and out-of-service equipment
6 14. TransMart is informed and believes that one of the primary obstacles to BARTs
7 development of a master retail vendor program in the past has been its inability to provide
8 timely, coherent, and cohesive direction and feedback to third parties. BART has a variety of
9 different departments and other stakeholders who insist on or are otherwise allowed involvement
10 in BARTs development projects. These include, for example, the real estate and project
11 development departments, as well as marketing, architecture, engineering, and others, all the
12 way down to the local station agents, as well as constituents from the various BART board
14 15. TransMart is informed and believes that BARTs inability to speak to third-party
15 partners with a unified and coherent voice has been an ongoing issue for BART for many years.
16 16. TransMart is informed and believes that the effect of this issue can be seen most
17 recently in the example of the multiple, and costly, defects in BARTs fleet of the future cars,
18 which appear now, just months prior to their original anticipated roll-out date, to require
19 additional efforts to raise money for repairs and/or redesign, through bonds, federal funding,
22 expending significant amounts of money on its long-anticipated Warm Springs Station, which is
23 being staffed by paid full-time employees but remains non-operational because of BARTs
24 inability to timely and effectively address a variety of technical issues raised by new technology
25 in the station.
26 18. With respect to a master retail vendor program specifically, TransMart is also
27 informed and believes that, not long before entering into discussions with TransMart, BART had
28 failed to complete an earlier attempt to establish a master retail vendor relationship. TransMart
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1 is informed and believes that this failure was due to BARTs inability to timely and effectively
2 digest internal opinions and present them in a single, cohesive voice to actual or potential
3 third-party partners.
4 19. BART Director Tom Radulovich specifically referenced this earlier failed
5 attempt to develop a retail master vendor partner during a BART board meeting on January 27,
6 2011, at which the board and staff discussed the TransMart proposal and BARTs ability to
7 effectively partner with a master retail vendor. Among other things, Director Radulovich
8 emphasized the difficulties that BART had experienced in the past in obtaining timely input from
9 BART personnel where multiple interested departments and interests were involved. He
10 observed that BART had been saying no to lots of people for a long time simply because we
11 havent got our ducks lined up internally. Director Radulovich also emphasized that in order
12 for a master-vendor project to work, BART would need to significantly change its practices.
13 And he concluded by observing that, in his opinion, he did not see a way that a master retail
14 vendor program could work under the way that BART currently operates.
16 determined to once again explore the concept of a master retail vendor, BART issued a request
17 for qualifications (RFQ) on October 30, 2009, seeking a master retail vendor who would
18 establish multiple retail outlets and arrange for individual vendors as part of a single,
19 coordinated plan for comprehensive station retail activities at any individual station or group of
20 stations.
21 21. TransMart responded to BARTs RFQ on February 11, 2010. In that response,
22 TransMart expressed its interest in serving as a master retail vendor for the entire BART system,
23 and TransMart provided a thorough response that detailed, among other things, a summary of the
24 TransMart teams relevant work experience and a preliminary statement of TransMarts vision
25 for the project. With respect to that vision, TransMart noted that, [f]rom the riders point of
26 view, we envision a station system of retailers connected virtually through the Internet, so
27 consumers can access the full range of goods and services offered throughout the BART system
28 and its stations.
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1 22. TransMarts response to the RFQ reflected that the company was financially
2 positioned to perform as contemplated under the RFQ and led by successful professionals with
3 local ties and relevant experience. Among other things, TransMart founders had successfully
4 collaborated on many highly-effective sales, marketing, and outreach campaigns including, for
7 representatives a month earlier, the BART board committee that was tasked with handling the
8 RFQ completed its due diligence and concluded that it should recommend that the board proceed
10 24. The BART board approved that recommendation and authorized an exclusive
11 negotiating agreement with TransMart at a meeting on January 27, 2011. At that same meeting,
12 several members of the board expressed their interest and excitement about the prospects of
13 working with TransMart. For example, BART Director Lynette Sweet, who was also the chair
14 of BARTs small business committee, described the project with TransMart as something that
15 actually makes sense and noted that [t]his retail concept can make money for the district, and
17 25. One of the main attractions of TransMarts concept was its emphasis on
18 automated retail and a concierge service that featured an unprecedented technology platform,
19 through which riders would be able to use either their phones and a specially-developed app or
20 concierge kiosks in their local stations to browse, purchase, and arrange for local delivery of
21 goods and services being offered by vendors located throughout the BART system. TransMart
22 personnel were told on many occasions by various BART staff that TransMart was chosen for
24 26. The concierge system is specifically referenced in the exhibits to the parties
25 exclusive negotiating agreement, which was executed on September 12, 2011. The project
26 description for that agreement describes the concierge service as a program and mobile platform
27 that will allow BART riders to order transit products online from their workplace, home or
28 anywhere they happen to be. A concierge (pick-up) service will act as on-site agent collecting
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1 the selected online purchases (including a substantial participation by Bay Area local vendors)
2 and delivering them to the riders designated concierge desk at the station of choice. It also
3 notes that the concierge program would be active in all 43 of the stations covered by the parties
4 agreement.
5 27. The project description for the exclusive negotiating agreement envisions new
6 retail construction, primarily in the form of either staffed or automated kiosks, covering
9 and also includes a provision that provided that BART was to timely respond (i.e., within twenty
11 B. The Significance Of, And BARTs Promises Relating To, An Independent Design
12 Review Committee
13 29. In formulating its vision for the master vendor program, it was critical to
14 TransMart to have in place a system through which its proposed designs and other submissions
15 could be quickly and effectively reviewed, critiqued and revised if necessary, and ultimately
16 approved. The parties envisioned a phased approach to the rollout of the program, and any
17 holdup in an earlier phase could jeopardize future deadlines and, ultimately, the success of the
18 program.
19 30. TransMart personnel made BART staff, including without limitation BARTs
20 Manager of Property Development, Jeff Ordway, aware of this concern on many occasions,
21 including while the parties were negotiating the terms of the lease option agreement that would
23 31. In response to this concern, the parties discussed at length the creation of an
24 independent design review committee, which would be charged with reviewing, responding to,
25 and ultimately approving design documents and other submissions from TransMart.
3 create an independent design review committee, and to use that committee in connection with
4 the approvals that BART was to provide in connection with TransMarts submittals under the
6 34. Mr. Ordway later publicly reiterated and memorialized these commitments in
7 connection with a presentation to the BART Board of Directors on March 27, 2014. As part of
8 that presentation, Mr. Ordway specifically identified as an objective of the program with
9 TransMart the formation of a design review committee. He also specifically emphasized the
10 significance of the design review committee, noted that it was anticipated that the committee
11 would be comprised of three individuals who are not BART employees, and expressed the
12 parties shared understanding that the committee would be up and running within a month or
13 so and that each station in the TransMart program would go through the design review
14 committee for the necessary approvals contemplated by the lease option agreement.
16 35. On October 11, 2012, the BART Board of Directors voted to approve the general
18 36. On June 11, 2013, the parties executed their three-year lease option agreement, a
19 copy of which is attached hereto as Exhibit A. Among other things, that agreement provides as
20 follows:
22 BART shall be obligated to lease the applicable Leased Sites to TransMart, and
23 TransMart shall be obligated to lease the applicable Leased Sites from BART, in
24 accordance with this Option Agreement and the Master Lease, provided that BART shall
25 have no obligation hereunder or under the Master Lease to lease a Leased Site unless and
26 until BART reviews and approves the Phase of the Project applicable to such Leased Site
27 pursuant to CEQA as provided in Section 1.7 [Section 1.3];
28 b. BARTs Approval shall not be unreasonably withheld if such Design
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1 Documentation is in substantial conformity with the Design Standards [Section 1.8];
2 c. BART shall cooperate with TransMart, at TransMarts sole cost and expense,
3 to assist TransMart in obtaining the permits and approvals necessary to allow TransMart
4 to develop the Project, and shall execute such applications and other documents
6 under the Master Lease and reasonably necessary to obtain such permits and approvals
8 d. From and after the date of this Option Agreement, BART and TransMart agree
9 to do such things, perform such acts, and make, execute, acknowledge and deliver such
11 transactions contemplated by this Option Agreement and to carry out the purpose of this
13 37. Following the execution of the lease option agreement, TransMart intensified its
14 efforts to develop the project. TransMart hired third-party consultants to assist with inspection,
15 review, and design, and TransMart expanded its workforce to approximately twenty employees.
16 TransMart also intensified its efforts to develop the technology that would support the concierge
17 service.
18 38. According to Jeff Ordways March 27, 2014 board presentation, TransMarts
19 Tier 1 analysis, which was a preliminary step in the design review and approval process, was
20 approved during this time period, in November of 2013, and, as he put it, TransMarts analysis
22 39. But despite TransMarts considerable efforts and some early approvals from
23 BART, progress on the project was slow through the end of 2013 and the beginning of 2014.
24 This was in large part because BART failed to institute the promised design development
25 committee. Lacking such a committee to coordinate and consolidate opinions within BART,
26 TransMart was left in the untenable position of having to address and respond to a chorus of
27 varying, inconsistent, and often contradictory opinions provided by different departments and
28 interests within BART.
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1 40. By the spring of 2014, BART still had not formed the independent design review
2 committee, and the lack thereof was taking a serious toll on TransMarts ability to timely and
4 41. In an effort to address the lack of a design review committee, TransMart brought
5 to BART a proposal, in March of 2014, to engage in a prototype, or pilot, program, to start the
6 rollout of the master retail program. Although this course of action was not anticipated or
7 addressed in the parties lease option agreement, both TransMart and BART agreed to proceed
8 with a pilot rollout for the program. This pilot rollout included sixteen stations and was to be
9 documented and governed through a permit-to-enter, which the parties agreed to execute in
10 conjunction with the existing lease option agreement. Once that permit-to-enter was issued,
11 TransMart would be allowed to start the construction for the prototype rollout at the pilot
12 stations.
13 42. It was around this time, at the March 27, 2014 board meeting, that Jeff Ordway
14 made the presentation in which he specifically emphasized the importance of the design review
15 committee, noted that it was anticipated that the committee would be comprised of three
16 individuals who are not BART employees, and expressed the parties shared understanding that
17 the committee would be up and running within a month or so and that each station in the
18 TransMart program would go through the design review committee for the necessary approvals
20 43. By May 19, 2014, the design review committee still had not been created, but
22 email that progress was being made and that the member selection hasnt been finalized but we
24 44. In the meantime, TransMart continued to work on the pilot program in the hopes
25 that having an actual, albeit limited, rollout in place that would facilitate the process of getting
26 timely, clear, and consistent responses to TransMarts designs and other submissions.
27 45. On June 27, 2014, Mr. Ordway sent TransMart a pilot program approval letter in
28 which he provided approval to move forward on final design, construction and roll-out of the
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1 program in stations for the prototype phase of the program. He wrote that, [p]er the attached
2 prototype proposal that was submitted and reviewed by BART Line Managers and Planners and
3 the topic of your presentations to them on June 3, 2014 and June 10, 2014; based on the
4 conversations we had during these two meetings we are pleased to provide the approval for
5 TransMart to move forward on final design, construction and roll out of the program in [16]
8 46. Over the course of the next fifteen months, TransMart continued its work on the
9 pilot program, while also preparing its designs and the other documentation required to exercise
10 its first option (the Phase 1 option) under the lease option agreement. During that period, BART
11 still failed to create the promised independent design review committee. And as a result,
12 TransMart was forced to submit round after round of documents and endure lengthy delays in
14 47. By way of example, in a June 12, 2015 email, a TransMart employee, Dora
15 Snider, wrote to BARTs Principal Property Development Officer, Paul Voix, to inquire about
16 the status of BARTs response to TransMarts submissions, noting that we are running out of
17 time and really need to finalize the Permit ASAP. It has been 4 weeks since we first submitted
18 everything on 5/16 and our timeline has vastly slipped. The pods are due to ship to us in a week
19 and we still dont have anything in hand. Ms. Snider followed up with Mr. Voix again several
20 days later, observing that [t]hese Pod designs have been circulating for months upon months to
21 a number of departments at BART and these 11th-hour deliberations are quite frustratingWe
22 dont see the light and dont know how long Bart will drag this on.
24 effectively approved the pilot program and gave TransMart the go-ahead to start implementing
26 49. But at the same time, BART also required TransMart to execute an amendment to
27 the lease option agreement. That amendment left the bulk of the original agreement intact, but
28 changed certain provisions in the Master Lease exhibit relating to insurance coverage for the
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1 project and the availability of consequential damages under the Master Lease. More
2 importantly, however, the amendment also imposed a new set of deadlines for TransMarts
3 exercises of its options under the agreement. The first such deadline, for the Phase 1 stations,
4 was set for December 31, 2015, which was just three months after the September execution of
5 the amendment. A copy of the first amendment to the lease option agreement is attached hereto
6 as Exhibit B.
7 50. TransMart was able to get the pilot program into operation not long thereafter, in
8 November of 2015.
9 51. TransMarts December 31, 2015 deadline to exercise its first option (the Phase 1
10 option) under the lease option agreement, as amended, was then fast approaching, but BART
12 submissions and other requests for comments. This is reflected, for example, in an email from
13 Dora Snider to Paul Voix, dated November 20, 2015, in which she wrote that, [a]s previously
14 discussed, while we will do our best to accommodate reasonable requests and suggestions, it
15 would be impossible to accommodate everyone to make everyone happy, since there are so
17 52. At or around this time, TransMart personnel began to perceive a change in the
18 comments and attitudes of BART staff. Going forward, the delays and inconsistencies from
19 BART staff seemed willful and intentional, as if BART were actively working to create
20 additional obstacles for TransMart. This manifested itself in several ways. Among other things,
21 BART applied to its review of TransMart design documents a heightened level of scrutiny that is
23 demanded that TransMart include in its design documents information that could not possibly be
24 known until closer to the construction phase of the program, when the specific retail tenants
2 December 21, 2015. This left TransMart with just ten days to address and resolve this latest
3 round of comments before the December 31, 2015 deadline to exercise its Phase 1 option.
4 55. Nonetheless, TransMart submitted its Phase 1 documentation and exercised its
5 Phase 1 option on December 30, 2015. The documents submitted at this time had been updated
6 in response to BARTs most recent comments, although they were derived from the same
7 documents that BART had already seen and, in many cases, approved during the extensive
8 back-and-forth discussions that the parties had been engaging in for over a year.
9 56. As required under the amended lease option agreement, TransMarts Phase 1
10 submission was presented in a manner that was consistent with the parties course of dealing up
11 to that point in time, and it included, among other things, 100% Design Documentation, as that
12 term is used and understood in the industry. Any deficiencies in the documentation, or in the
13 presentation thereof, were both minimal and, in any event, a direct result of delays, inconsistent
16 position that TransMarts exercise of its Phase 1 option was not effective because TransMart
17 purportedly failed to satisfy certain conditions precedent to the exercise of the option.
18 58. TransMart disagreed with BARTs interpretation of the terms of the lease option
19 agreement, and also with its position regarding TransMarts submission and its effective
20 exercise of its option. TransMart had provided BART all documentation required under the
21 lease option agreement. Among other things, TransMart provided Design Documentation and
22 Individual Terms Schedules for each of the Phase 1 sites, as well as a 10-year proforma for
24 59. In order to ensure a smooth closing with respect to this Phase 1 option exercise,
25 TransMart proposed an extension of certain relevant timelines (e.g., for the exercise completion
26 date, which the lease option agreement contemplates as occurring within 30 days following
27 TransMarts exercise of an option). This was intended to give BART time to address and resolve
28 any perceived issues prior to closing, and also to set a more realistic timeline for the parties going
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1 forward in light of BARTs repeated failures to perform commitments it had made to TransMart.
2 60. In light of these issues, the parties initiated discussions regarding a second
4 61. While the parties were discussing the possibility of entering into a second
5 amendment to the lease option agreement, BART continued to provide comments and feedback
7 D. The Second Amendment To The Lease Option Agreement And Disputes Thereafter
8 62. In the course of the discussions regarding a potential amendment to the lease
9 option agreement, TransMart again noted the difficulties that it was experiencing as a result of
10 having to account for the opinions (often, contradictory) of so many different departments and
11 interests at BART, rather than working with an independent design review committee. In the
12 hope of finally resolving this issue, TransMart proposed, both in discussions with BART
13 personnel on February 10, 2016, and again in a letter of that same date, that the following
15 (i) The parties will incorporate a detailed schedule of steps necessary to allow
17 with the Option Exercise (as proposed in the attached Exhibit A); and
18 (ii) Due to the submission time, review time by BART and corresponding
19 response time from Transmart required to complete Tier 2 studies, coordination between
20 various BART staff departments such as line management, marketing, architect and
21 engineering, and Transmart and its consultants, the parties wish to propose a more
22 realistic alternative schedule for the Option Exercise Dates for subsequent phases to
23 ensure that the various necessary steps outlined in Exhibit A can be realistically met and
24 better accommodate for multiple phases being simultaneously reviewed by BART staff
3 64. Still hoping to save the project, TransMart reluctantly agreed to the amendment
4 and the parties executed their second amendment to the lease option agreement on February 29,
5 2016. A copy of the second amendment to the lease option agreement is attached hereto as
6 Exhibit C. This amendment set a new exercise date for TransMarts Phase 1 option, pushing that
7 date out to June 10, 2016. But it also added several new provisions that increased TransMarts
8 burden in connection with obtaining BART approvals and exercising its options under the
9 agreement. And it did not include any new provisions or assurances to govern or ensure BARTs
10 active cooperation in the design-approval process going forward. The amendment did not,
11 however, modify the language in section 1.8 of the agreement that provides that BARTs
14 65. Soon after the execution of the second amendment to the lease option agreement,
15 the parties found themselves back in the same routine, as TransMart again encountered the same
17 66. Then, around that same time, in April of 2016, BART unexpectedly and
18 unilaterally purported to cut the space available for Phase 1 retail by more than 50%. This
20 to the viability of this entire project. It also represented an attempt to renege on or modify
21 BARTs approval of TransMarts Tier 1 studies, which BART had provided to TransMart years
23 67. Earlier that same month, TransMart received the final report from an independent
24 third-party appraisal that had been conducted for loan underwriting purposes. According to that
25 report, the expected market value of the project, based solely on TransMarts leasehold interest
26 in the property, was in the range of $75-95 million. A 50% reduction in the scope of Phase 1 of
27 the project amounted to nothing less than an attempt to destroy that value and undermine the
28 entire project.
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1 68. Despite all of this, TransMart continued to submit information and revise its
2 plans in connection with the required design documentation for TransMarts exercise of its
3 Phase 1 option. On April 20, 2016, TransMart submitted revised design documents to address
4 the purported concerns that led to the drastic reduction in Phase 1 retail space. BART rejected
5 those revisions and so, on May 10, 2016, TransMart redesigned its plans to conform to the
6 reduction. BART responded to those redesigned plans on May 26, 2016, by providing a very
7 different set of new comments and proposed revisions. On June 4, 2016, TransMart provided yet
9 69. On June 10, 2016, TransMart exercised its lease option for the Phase 1 stations.
10 With its exercise, TransMart submitted the 100% Design Documentation and engineering
11 drawings for the Phase 1 sites, which included, among other things, responses to BARTs most
12 recent round of comments. TransMart also provided the required Individual Term Schedules for
13 each site, along with references to the dates on which the Tier 1 and Tier 2 studies were approved
14 by BART.
15 70. Three days later, BARTs attorneys sent TransMart a letter that purported to
16 reject TransMarts exercise of its option and, conveniently, cited as justification BARTs
17 self-serving interpretations of the same one-sided provisions in the lease option agreement that
19 71. TransMart disagreed with BARTs determination, in writing, but TransMart also
20 pressed forward in an effort to salvage the project and the work in connection with the Phase 2
21 stations.
22 72. TransMart presented Phase 2 documents on July 22, 2016, addressed and
23 responded to BARTs comments on those documents, and then exercised its option for Phase 2
24 on August 31, 2016. As of that date, TransMart had provided BART with 100% Design
26 schedules by kiosk for each Phase 2 station), an updated market study for Phase 2, an updated
27 10-year proforma for Phase 2, and the Tier 1 and Tier 2 studies for Phase 2.
28 73. Several weeks later, on September 19, 2016, BARTs attorneys sent TransMart a
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1 letter purporting to reject TransMarts exercise of its lease option for the Phase 2 sites.
2 74. TransMart disagreed with BARTs assessment, and it was at this point that the
4 75. TransMarts exercise dates for its options for Phases 3 and 4 were set for
5 September 30, 2016, and October 31, 2016, respectively. Given the nature and extent of the
6 parties disputes as to Phases 1 and 2, TransMart limited the scope of its submissions for Phases
7 3 and 4 to existing retail space because existing space would not require new construction and
8 the types of documentation that were in dispute in connection with Phases 1 and 2.
9 76. TransMart exercised its option for Phase 3 on September 29, 2016, and its option
10 for Phase 4 on October 28, 2016. BARTs attorneys sent rejection letters for these exercises
12 77. During this time period, TransMart remained ready and able to proceed with the
13 project. In a monthly update provided to BART on October 14, 2016, TransMart wrote that we
14 anticipate fully leasing the spaces once we resolve the current dispute with BART and that
15 [b]esides meeting the option exercise requirements, we are making all necessary arrangements
16 to ensure an effective and successful launch of Phases I, II, and III. Requirements such as
17 insurance, funding, pre-construction planning and documentation, and pre-leasing are all in
20 (Breach of Contract)
21 78. TransMart realleges and incorporates by reference each and every allegation of
23 79. TransMart and BART entered into a three-year lease option agreement dated June
26 BART shall be obligated to lease the applicable Leased Sites to TransMart, and
27 TransMart shall be obligated to lease the applicable Leased Sites from BART, in
28 accordance with this Option Agreement and the Master Lease, provided that BART shall
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1 have no obligation hereunder or under the Master Lease to lease a Leased Site unless and
2 until BART reviews and approves the Phase of the Project applicable to such Leased Site
6 c. BART shall cooperate with TransMart, at TransMarts sole cost and expense,
7 to assist TransMart in obtaining the permits and approvals necessary to allow TransMart
8 to develop the Project, and shall execute such applications and other documents
10 under the Master Lease and reasonably necessary to obtain such permits and approvals
12 d. From and after the date of this Option Agreement, BART and TransMart agree
13 to do such things, perform such acts, and make, execute, acknowledge and deliver such
15 transactions contemplated by this Option Agreement and to carry out the purpose of this
17 80. The parties amended the lease option agreement on September 30, 2015, and
18 again on February 29, 2016. These amendments did not change the language cited above, in
19 paragraph 79.
20 81. TransMart did all, or substantially all, of the significant things that the lease
21 option agreement required it to do or, in the alternative, TransMart was excused from having to
22 do those things by virtue of BARTs failure to perform as agreed under the lease option
25 and often conflicting comments that were provided by various BART departments and
6 Design Documentation consistent with the terms of the lease option agreement and the
8 82. BART breached the terms of the lease option agreement and materially interfered
9 with TransMarts ability to exercise its options under the lease option agreement by, among
10 other things:
16 Design Documentation and substantial conformity as they are used in section 1.8 of
19 documents and other items that TransMart submitted to BART for comment or review;
21 coordinated review and approval with respect to designs and other documentation
22 provided by TransMart;
24 coherent fashion;
26 November of 2013, by reducing the amount of retail space available in Phase 1 stations;
27 h. Unilaterally seeking to change the seismic safety standards for the project; and
28 i. Inappropriately rejecting TransMarts demonstration of its ability to fund the
19
OGLOZA FORTNEY LLP
ATTORNEYS AT LAW
COMPLAINT
SAN FRANCISCO
1 costs of constructing the retail facilities for the project.
2 83. As a direct and proximate result of BARTs breaches, TransMart has been
4 84. TransMarts damages include, but are not limited to, millions of dollars in
5 reliance damages that TransMart incurred in connection with its efforts to implement the
6 program, as well as the tens of millions of dollars in lost profits that TransMart stood to realize
7 from the program had BART not breached the parties agreement. According to an independent
8 third-party appraisal of the project, which was conducted in April of 2016, the expected market
9 value of the project, based solely on TransMarts leasehold interest in the property, was in the
10 range of $75-95 million. TransMarts reasonably foreseeable lost profits also include lost
11 advertising profits and lost profits from the concierge system and the app that TransMart
15 85. TransMart realleges and incorporates by reference each and every allegation of
17 86. TransMart and BART entered into a lease option agreement dated June 11, 2013.
18 The parties amended the lease option agreement on September 30, 2015, and again on February
19 29, 2016.
20 87. The lease option agreement contains an implied covenant of good faith and fair
21 dealing. Included in this implied covenant is the promise that BART shall not unreasonably
22 interfere with TransMarts ability to exercise its options under the agreement and/or receive the
24 88. TransMart did all, or substantially all, of the significant things that the lease
25 option agreement required it to do or, in the alternative, TransMart was excused from having to
26 do those things by virtue of BARTs failure to perform as agreed under the lease option
27 agreement. Among other things:
28 a. TransMart personnel worked tirelessly to address and respond to the untimely
20
OGLOZA FORTNEY LLP
ATTORNEYS AT LAW
COMPLAINT
SAN FRANCISCO
1 and often conflicting comments that were provided by various BART departments and
3 b. TransMart paid for and provided BART with the Tier 1 and Tier 2 studies that
10 Design Documentation consistent with the terms of the lease option agreement and the
12 89. To the extent that any of the above items may be considered conditions required
13 for BARTs performance, those conditions had occurred or were excused by BARTs prior
15 90. BART breached the implied covenant of good faith and fair dealing and unfairly
16 interfered with TransMarts right to receive the benefits of the lease option agreement, and the
20 documents and other items that TransMart submitted to BART for comment or review;
22 unreasonable, inconsistent, and inappropriate for the design (as opposed to the
24 d. Drastically cutting back the amount of station space available for use in the
25 program approximately three years after the lease agreement was executed, more than
26 two years after Tier 1 analyses were approved, and just two months before TransMarts
27 Phase 1 option exercise submission was due; and
28 e. Inappropriately rejecting TransMarts demonstration of its ability to fund the
21
OGLOZA FORTNEY LLP
ATTORNEYS AT LAW
COMPLAINT
SAN FRANCISCO
1 costs of constructing the retail facilities for the project.
2 91. As a direct and proximate result of BARTs actions, omissions, and breaches of
3 the implied covenant of good faith and fair dealing, TransMart has incurred damages in an
5 92. TransMarts damages include, but are not limited to, millions of dollars in
6 reliance damages that TransMart incurred in connection with its efforts to implement the
7 program, as well as the tens of millions of dollars in lost profits that TransMart stood to realize
8 from the program had BART not breached the parties agreement. According to an independent
9 third-party appraisal of the project, which was conducted in April of 2016, the expected market
10 value of the project, based solely on TransMarts leasehold interest in the property, was in the
11 range of $75-95 million. TransMarts reasonably foreseeable lost profits also include lost
12 advertising profits and lost profits from the concierge system and the app that TransMart
15 (Promissory Estoppel)
16 93. TransMart realleges and incorporates by reference each and every allegation of
18 94. Both before and after executing the lease option agreement, BART personnel,
19 including without limitation BARTs Manager of Property Development, Jeff Ordway, clearly
21 review committee, and to use that committee in connection with the approvals that BART was to
22 provide in connection with TransMarts submittals under the lease option agreement.
23 95. Mr. Ordway also publicly reiterated and memorialized these commitments in
24 connection with a presentation to the BART Board of Directors on March 27, 2014. As part of
25 that presentation, Mr. Ordway specifically identified as an objective of the program with
26 TransMart the formation of a design review committee. He also specifically emphasized the
27 significance of the design review committee, noted that it was anticipated that the committee
28 would be comprised of three individuals who are not BART employees, and expressed the
22
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COMPLAINT
SAN FRANCISCO
1 parties shared understanding that the committee would be up and running within a month or
2 so and that each station in the TransMart program would go through the design review
3 committee for the necessary approvals contemplated by the lease option agreement.
4 96. TransMart relied on these promises in connection with its negotiation, execution,
5 and performance relating to the lease option agreement. TransMart knew from experience that
6 efficient and consistent review and approval was a critical element in the success of this type of
7 program, and TransMart relied on BARTs assurances about the creation of a design review
8 committee in making its determination about whether and how to proceed with the agreement
9 with BART.
10 97. TransMarts reliance on BARTs promises was both reasonable and foreseeable.
11 98. TransMart was reasonable in relying on BARTs promises because they were
12 provided by, among others, Jeff Ordway, who was BARTs Manager of Property Development.
13 And that reliance is all the more reasonable given that these assurances were also publicly shared
14 with the BART Board of Directors during the March 27, 2014 board meeting.
15 99. TransMarts reliance was also foreseeable. This is because BART either
16 understood or should have understood the significance of a design review committee to the
17 project and to TransMart. BART either knew or should have known that this type of project
18 could easily be derailed by a lack of timely, consistent, and coherent input from the various
19 departments and interests at BART. Director Radulovich expressed concerns about these very
20 issues at a board meeting on January 27, 2011. At that time, he specifically emphasized the
21 difficulties that BART had experienced in the past in obtaining timely input from BART
22 personnel where multiple interested departments were involved. Director Radulovich also
23 emphasized that in order for a master-vendor project to work, BART would need to significantly
24 change its practices. Based on the significance of the formation of a design review committee to
25 the design-approval process and the ultimate success of the project, and in light of the fact that
26 BART was, or should have been, aware of that significance, it was foreseeable that TransMart
27 would rely on BARTs assurances on that topic.
28 100. TransMart has been injured as a result of its reliance on BARTs assurances in
23
OGLOZA FORTNEY LLP
ATTORNEYS AT LAW
COMPLAINT
SAN FRANCISCO
1 that, because BART has failed or refused to create an independent design review committee,
2 TransMart has been forced to seek approvals from BART under precisely the types of chaotic
3 and inconsistent conditions that the parties were initially seeking to avoid. In other words, the
4 lack of a design review committee has sabotaged the project and robbed TransMart of the
5 anticipated benefits of its agreements with BART. Those benefits include, without limitation,
6 the anticipated revenues from TransMarts master vendor relationship with BART, as well as the
7 exposure and additional opportunities that would have come from creating a unique and
8 cutting-edge transit retail program in one of the biggest retail markets in the U.S. TransMart has
9 also been injured through its loss of the significant expenses that were incurred in its efforts to
10 make the program a success, notwithstanding the lack of a design review committee.
12 WHEREFORE, TransMart prays for judgment against defendants, and each of them, as
13 follows:
15 to be proven at trial;
16 2. For an award of TransMarts fees and costs associated with this action, as
17 permitted by statute;
18 3. For an award of TransMarts attorney fees, as permitted under the parties lease
20 4. For such other and further relief as the Court may deem proper.
21
23
24
By: _________________________
25 Darius Ogloza
26 Attorneys for Plaintiff
TRANSMART, INC.
27
28
24
OGLOZA FORTNEY LLP
ATTORNEYS AT LAW
COMPLAINT
SAN FRANCISCO
EXHIBIT A
LEASE OPTION AGREEMENT
between
and
TRANSMART, INC.
704027187v7
TABLE OF CONTENTS
Page
ARTICLE 1 THE OPTION ............................................................................................................. 1
704027187v7 -i-
EXHIBITS
EXHIBIT
Exhibit B Phases
704027187v7 -11-
LEASE OPTION AGREEMENT
RECITALS
A. BART is the owner of that certain transit stations located in the Counties of
Alameda, Contra Costa, San Francisco and San Mateo (collectively, the "Counties"), including
without limitation the transit stations listed on Exhibit A attached hereto (the "Stations").
B. BART and TransMart entered into that certain Exclusive Negotiating Agreement
dated as of September 12, 2011, with respect to a proposal by TransMart to lease portions of one
or more of the Stations for the purpose of constructing and operating thereon certain retail
facilities (the "Retail Facilities").
C. TransMart has requested that BART grant to TransMart an option to lease the
Leased Sites to construct the Retail Facilities on the terms and conditions contained herein.
D. BART is willing to grant TransMart an option to lease the Leased Sites on the
terms and conditions contained herein.
ARTICLE 1
THE OPTION
1.1 Grant of Lease Option. BART hereby irrevocably grants to TransMart an option
to lease from BART, in accordance with this Option Agreement, some or all of the Leased Sites
(the "Option") in specific groups ("Phases") specified on Exhibit B attached hereto, pursuant to a
master retail lease substantially in the form of Exhibit C attached here to (the "Master Lease").
1.2 Term. The term of the Option (the "Option Term") shall commence on the date
of this Option Agreement and shall terminate, with respect to each Phase of the Project, at 5:00
p.m. Pacific time on the date listed as the applicable Exercise Deadline in Exhibit B for such
Phase. This Option Agreement shall terminate in full, if not sooner terminated, on June 10,
2016.
1.3 Exercise. TransMart may exercise the Option only by giving notice to BART of
exercise of the Option (the "Option Notice") with respect to the Leased Sites identified in the
704027187v7 -1-
Option Notice and setting forth the Exercise Completion Date, which shall be a date no later than
thirty (30) days following the date of the Option Notice, in the form of Exhibit D attached hereto,
on or before the expiration of the Option Term for the applicable Phase of the Project, and only if
no uncured default by TransMart exists under this Option Agreement when TransMart gives the
applicable Option Notice. IfTransMart exercises an Option in accordance with this Option
Agreement, BART shall be obligated to lease the applicable Leased Sites to TransMart, and
TransMart shall be obligated to lease the applicable Leased Sites from BART, in accordance
with this Option Agreement and the Master Lease, provided that BART shall have no obligation
hereunder or under the Master Lease to lease a Leased Site unless and until BART reviews and
approves the Phase of the Project applicable to such Leased Site pursuant to CEQA as provided
in Section 1.7. IfTransMart does not exercise an Option in accordance with this Option
Agreement on or before 5:00 p.m. Pacific time on the last day of the Option Term for the
applicable Phase, then TransMart's Option with respect to all Leased Sites included in the
applicable Phase not included in an Option Notice validly given in accordance with this Section
Ll shall terminate, and Trans Mart shall have no further right to lease any Leased Sites in the
applicable Phase not previously leased by TransMart; provided that any Leased Sites in the prior
phases already leased shall not be affected. The Option Term may be extended for Unavoidable
Delays (as such term is defined in the Master Lease (in the form attached hereto as Exhibit C if
not then executed)) up to a total of thirty (30) days, provided that Tenant gives notice of any
claimed Unavoidable Delay to Landlord within twenty (20) days after the date of
commencement of the delay (otherwise any extension of time resulting from such Unavoidable
Delay shall be waived). Any such notice shall include Tenant's estimate of the probable effect
of such delay on Tenant's satisfaction of the conditions precedent described in Article 7 (the
"Conditions Precedent"). Within twenty (20) days after the cessation of the delay, Tenant shall
notify Landlord of the actual number of days of delay Tenant and the actual effect on satisfying
the Conditions Precedent that Tenant is claiming as an Unavoidable Delay hereunder. If
Landlord disputes Tenant's claim as to the Unavoidable Delay, Landlord shall give notice to
Tenant within twenty (20) days. If Landlord and Tenant are unable to resolve their
disagreement, either party shall have the right to submit the matter for dispute resolution in
accordance with the requirements of Article 22 of the Master Lease (in the form attached hereto
as Exhibit C if not then executed).
1.4 Termination of Option Agreement. TransMart shall have the right, at any time
prior to the expiration of the Option Term and at TransMart's sole election, to terminate this
Option Agreement in whole or with respect to certain Leased Sites by giving written notice of
such termination to BART. Upon final termination of this Option Agreement, all obligations of
TransMart and BART under this Option Agreement shall terminate, except those that expressly
survive such termination.
1.5 Default Under Master Lease. In the event TransMart defaults under the Master
Lease (after the passage of any applicable grace or cure period) and BART exercises its right to
terminate the Master Lease as the result of such default, then this Option Agreement shall
automatically terminate effective as of the date the Master Lease terminates, and TransMart shall
have no further right to exercise the Option or lease any Leased Sites from BART.
704027187v7 -2-
1.6 Inspection Rights.
(a) Due Diligence. Prior to the first Exercise Completion hereunder, TransMart,
in good faith and with diligence and in accordance with the terms of this Option Agreement and
at TransMart's sole expense, shall conduct such review and investigation of the physical and
environmental condition of the Stations, the character, quality and general utility of the Stations
for purposes of constructing and operating the Retail Facilities, the zoning, land use,
environmental and building requirements and restrictions applicable to the Project, the feasibility
of the Project, the sources of funds to develop and construct the Project, the availability of all
necessary governmental approvals for development of the Project and the state of title to the
Stations, as TransMart deems appropriate. TransMart shall be responsible for preparing and
paying the cost of any survey, tests or reports required by TransMart. TransMart shall determine
in its sole and absolute discretion whether or not each Leased Site is acceptable to TransMart.
(b) Inspection: Right of Entry. During the Option Term, TransMart shall have
the right to enter upon the Stations, on the terms and conditions and subject to the indemnity and
insurance obligations set forth in one or more permits to enter, for performance thereon of
inspections, surveys, tests, investigations and work permitted by this Agreement or any such
permit to enter.
(c) Third Party Reports. As additional consideration for the Option, TransMart
shall, promptly after completion or receipt thereof, provide BART with copies of all studies, tests
and reports prepared by third parties regarding the physical condition of the Stations and the state
of title to the Stations and any written notices from governmental authorities related to the
Stations. In addition, TransMart shall, promptly upon receipt, provide BART with evidence of
TransMart's receipt of permits and approvals for the construction of any Phase of the Project.
1.7 Approvals. On or before the expiration of the Option Term for each Phase,
TransMart shall apply for and diligently pursue all required development Approvals for each
Leased Site in such Phase. BART shall act as the lead agency for the purposes of each Leased
Site's compliance with CEQA. For each Leased Site, TransMart shall propose a detailed
description of, and shall provide any other information requested by BART regarding, the
proposed Phase of the Project applicable to such Leased Site. BART shall determine, in its sole
discretion, whether such Phase of the Project is exempt from CEQA or requires environmental
review provided BART shall share the basis of its determination in writing with TransMart. In
the event that such Phase of the Project requires environmental review, notwithstanding any
other provision herein (including without limitation the dispute resolution and arbitration
provisions in Section I. I 0 and Section 1.11 ), BART retains the sole and absolute discretion to:
(a) request modification of such Phase of the Project to reduce or avoid significant environmental
impacts; (b) select feasible mitigation measures and/or alternatives to reduce or avoid significant
environmental impacts; (c) balance the benefits of such Phase of the Project against any
significant environmental impacts that cannot be avoided, prior to taking any final action; and/or
(d) select the "no project alternative" and determine not to proceed with the proposed Phase of
the Project. If any action must be taken by a federal agency that requires compliance with the
National Environmental Policy Act ("NEPA"), TransMart shall use its best efforts to ensure that
the federal lead agency completes such compliance with NEPA in a timely fashion. In no event
704027187v7 -3-
shall TransMart be entitled to exercise any Option for a Leased Site if TransMart has not
obtained all necessary Approvals for the applicable Leased Site, including compliance with
CEQA and, if necessary, NEPA, prior to exercise of such Option.
1.8 Design Approvals. Prior to the expiration of the applicable Option Term,
TransMart shall submit to BART, for BART's Approval, documentation that describes the
design scope of any and all Retail Facilities to be constructed on the applicable Leased Sites as
part of such Phase, including concept drawings and one hundred percent (I 00%) design
development architectural and engineering drawings (the "Design Documentation"). BART's
Approval shall not be unreasonably withheld if such Design Documentation is in substantial
conformity with the Design Standards. BART shall either Approve or comment in writing on
said Design Documentation within thirty (30) days following receipt. If BART fails to respond
within such period, TransMart shall send BART a second request, and, if BART fails to respond
in writing to such second request within five (5) Business Days, TransMart may give notice of a
mandatory meeting pursuant to Section I. I 0 to resolve the pending request. If BART responds
with written comments, TransMart shall revise the Design Documentation and resubmit the
Design Documentation to BART within thirty (30) days following receipt ofBART's written
comments. BART shall respond to such revised Design Documentation within fifteen ( 15) days
following receipt. BART's Approval of such revised Design Documentation shall not be
unreasonably withheld. If, after the second submission, TransMart disagrees with revisions
being requested by BART to the Design Documentation, as revised by TransMart, TransMart
shall have the right to request a meeting between the parties, as more particularly described in
Section I. I 0 below, to resolve the dispute.
I. 9 Additional Approvals.
704027187v7 -4-
(b) Permits to Enter. Subject to TransMart's having obtained BART's Approval
of the Construction Documents if TransMart needs access to any portions of a Station outside the
Leased Site area to construct the Retail Facilities, TransMart shall obtain (at TransMart's sole
cost and expense) a permit to enter, on BART's standard form, for such work prior to the
Exercise Completion for such Leased Site.
1.11 Arbitration. In the event that BART and TransMart are unable to resolve at a
Dispute Resolution Meeting any dispute with respect to the Design Documentation or
Construction Documents, the matter in dispute shall be determined by arbitration in Oakland,
California, before a single arbitrator and, unless the parties mutually agree otherwise, shall be
administered by Judicial Arbitration & Mediation Services (JAMS) pursuant to its Streamlined
Arbitration Rules and Procedures in effect on the date of this Option Agreement. A demand for
arbitration shall be made in writing delivered to the other party and filed with the person or entity
administering the arbitration. The party filing a notice of demand for arbitration must assert in
the demand all claims then known to that party on which arbitration is permitted to be demanded.
The award rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof. The arbitrators shall not
have the power to commit errors of law or legal reasoning, and the award may be vacated or
corrected on appeal to a court of competent jurisdiction for any such error. The foregoing
agreement to arbitrate shall be specifically enforceable under applicable law in any court having
jurisdiction thereof. The arbitrator shall determine which party is the prevailing party and shall
award attorneys' fees and costs incurred in the underlying dispute and Arbitration.
704027187v7 -5-
ARTICLE 2
PROJECT DOCUMENTATION
2.1 Project Information. TransMart shall provide the following information and
analysis to BART for its review and approval no later than December I, 2013:
(b) Information regarding the Project sufficient for BART to complete its
environmental review and sufficient for purposes of obtaining the approval (in its sole and
absolute discretion) of BART's Board of Directors, including but not limited to a completed
Environmental Checklist Form (CEQA Guidelines Appendix B) and any additional supporting
information requested by BART;
(d) A preliminary market feasibility study for the Project, including expected
rents and absorption rate for each Leased Site, prepared by a qualified consultant reasonably
acceptable to BART (the "Market Study");
(e) A ten (I 0) year pro forma detailing projected income and expense for the
Project (the "IO-Year Pro Forma"); and
(a) Prior to or concurrently with the delivery of its Option Notice with respect to
any Phase, TransMart shall deliver to BART a revised and updated JO-Year Pro Forma, a revised
and updated Market Study and evidence satisfactory to BART of adequate financing for the
construction and operation of the Retail Facilities to be located on the Leased Sites that are the
subject of the applicable Option Notice.
(b) Commencing on the first day of the first calendar month following the
Effective Date, TransMart shall provide to BART monthly progress reports on all matters
relating to the Project, containing (without limitation) updates on the following: financing;
schematic designs; organizational documents; market analysis; alterations to the Project program
or design; or changes to the I 0-Year Pro Forma previously submitted to BART.
ARTICLE3
CONSIDERATION
704027187v7 -6-
Option Agreement and any amendments or modifications hereto, (b) any consents or approvals
required to be obtained from BART (including, without limitation, CEQA review), and (c) any
reviews or negotiations relating to any financings (including requests for estoppel certificates)
(collectively, "Outside Counsel Fees"). In addition, TransMart agrees to pay actual third-party
costs and in-house staff costs incurred by BART to review the Design Documentation and other
TransMart submittals to BART in connection with the Approvals process (including, without
limitation, CEQA review) for each Leased Site and any hearings or meetings at which BART's
attendance is required by law or requested by TransMart (the "Review Costs"). TransMart
previously has delivered to BART a deposit of twenty-five thousand dollars ($25,000) (the "Fee
Deposit") to be applied by BART to Outside Counsel Fees and Review Costs and for costs
associated with the and Tier 2 Studies. TransMart shall pay the costs of the Tier 1 Studies
directly. BART shall provide TransMart with a monthly accounting and invoice against the Fee
Deposit. If, as anticipated, additional funds are needed to complete the Tier 1 Studies and Tier 2
Studies, BART and TransMart shall jointly develop a budget for efficiently carrying out the Tier
1 Studies and Tier 2 Studies, and TransMart shall provide additional funds as agreed to
supplement the Fee Deposit from time to time within fifteen (15) days of receipt of the monthly
accounting ("Supplementary Funds"). The Fee Deposit and Supplementary Funds shall be non-
refundable except that in the event of an uncured default by BART under this Option Agreement,
in which event TransMart shall be entitled to receive, within thirty (30) days of such default, a
refund of the portions, if any, of the Fee Deposit and/or Supplementary Funds that have been
paid and for which costs have not been incurred. In the event of a Default or voluntary
termination of this Option Agreement by TransMart, BART shall be entitled to retain the Fee
Deposit plus those portions of the Supplementary Funds that have been paid and for which costs
have been incurred, and TransMart shall reimburse BART for any costs incurred as of the date of
TransMart's default or voluntary termination, but for which TransMart has not yet paid
Supplementary Funds. Review Costs shall be paid to BART on a monthly basis within ninety
(90) days following receipt of an invoice and supporting documentation summarizing the costs
for which reimbursement is being sought. If an Option is exercised by TransMart and the related
Exercise Completion occurs, TransMart shall pay the Review Costs with respect to the
applicable Leased Sites to BART after such Exercise Completion within ninety (90) days
following TransMart's receipt of an invoice and supporting documentation summarizing the
costs for which reimbursement is being sought. If any Option is not exercised, or if exercised
but the applicable Exercise Completion does not occur due to the failure of a condition precedent
(other than a BART default), TransMart's default or the mutual agreement of the parties,
TransMart shall pay the Review Costs applicable to such Leased Sites within ninety (90) days
following receipt of an invoice and supporting summary of the costs for which reimbursement is
being sought. If a particular Option is exercised but the related Exercise Completion does not
occur due to a BART default, BART shall not be entitled to reimbursement of any Review Costs
related to the applicable Leased Sites.
ARTICLE 4
TITLE
704027187v7 -7-
Stations and/or the Leased Sites; and (b) an ALTA/ASCM survey of the Stations and/or the
Leased Sites.
(a) TransMart's Title Notice. Within ninety (90) days after the Effective Date
(the "Title Review Period"), TransMart may, if it so elects, cause title to the Stations to be
searched by the Title Company, in which case the Title Company shall issue to Purchaser a
preliminary Title Report (the "Preliminary Report") based upon such search. If TransMart
objects to any exceptions to title disclosed by the Preliminary Report, TransMart may provide
notice to BART ("TransMart's Title Notice") of such objections (collectively, "Title
Objections") prior to the end of the Title Review Period.
(b) BART's Response. BART shall have thirty (30) days after delivery of
TransMart's Title Notice within which to deliver to TransMart a Notice ("BART's Title Notice")
indicating whether BART will eliminate or cure such Title Objections by the Exercise
Completion; provided, however, BART shall be obligated to remove any Title Objections that
constitute a monetary lien against any Leased Site caused, voluntarily or involuntarily to be
placed against the Leased Site by BART or any contractor or agent of BART without
TransMart's consent. IfBART elects to eliminate or cure a Title Objection, the elimination or
curing by BART of the Title Objections shall be completed on or before the Exercise
Completion for the applicable Leased Site. IfBART elects or is obligated to eliminate or cure a
Title Objection but fails to do so by the applicable Exercise Completion, BART shall be in
default hereunder.
(c) Failure to Respond. IfBART (i) does not deliver such BART's Title Notice
within the required time, or (ii) notifies TransMart in BART's Title Notice that BART is unable
or unwilling to cure such Title Objections, TransMart shall have five (5) Business Days to elect
to waive such Title Objections or deliver to BART written notice terminating this Option
Agreement as to the affected Leased Site(s) only. IfTransMart fails to give BART notice of
TransMart's election within the time set forth in the previous sentence, TransMart shall be
deemed to have elected to terminate this Option Agreement with respect to the affected Lease
Site(s) only.
ARTICLES
5.1 BART. The representations and warranties of BART in this Section 5.1 are a
material inducement for TransMart to enter into this Option Agreement. TransMart would not
lease the Leased Sites from BART without such representations and warranties of BART. Such
representations and warranties shall survive the applicable Exercise Completion for a period of
six (6) months. BART represents and warrants to TransMart as of the date of this Option
Agreement as follows:
704027187v7 -8-
(a) Authority. BART is a rapid transit district established pursuant to California
Public Utilities Code 28500, et seq. BART has full power and authority to enter into this Option
Agreement and to perform this Option Agreement. The execution, delivery and performance of
this Option Agreement by BART have been duly and validly authorized by all necessary action
on the part of BART and all required consents or approvals have been duly obtained. This
Option Agreement is a legal, valid and binding obligation of BART, enforceable against BART
in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting the rights of creditors
generally.
(b) Foreign Person. BART is not a "foreign person" as defined in Section 1445
of the Internal Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder.
(c) No Broker. BART has not dealt with any real estate broker or finder in
connection with the lease of the Leased Sites to TransMart or this Option Agreement. BART
agrees to defend, indemnify and hold harmless TransMart from and against any and all liabilities,
claims, demands, damages or costs of any kind (including reasonable attorneys' fees, costs and
expenses) arising from or connected with any broker's or finder's fee or commission or charge
determined to be due by any person arising from or by reason of BART' s conduct with respect to
this transaction.
5.2 TransMart. The representations and warranties ofTransMart in this Section 5.2
are a material inducement for BART to enter into this Option Agreement. BART would not
enter into this Option Agreement or lease any of the Leased Sites to TransMart without such
representations and warranties of TransMart. Such representations and warranties shall survive
the applicable Exercise Completion for a period of six (6) months. TransMart represents and
warrants to BART as of the date of this Option Agreement as follows:
(a) Authority. TransMart is a corporation duly formed and validly existing and
in good standing under the laws of the State of California. TransMart has full power and
authority to enter into this Option Agreement and to perform this Option Agreement. The
execution, delivery and performance of this Option Agreement by TransMart have been duly and
validly authorized by all necessary action on the part ofTransMart and all required consents or
approvals have been duly obtained. This Option Agreement is a legal, valid and binding
obligation ofTransMart, enforceable against TransMart in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting the rights of creditors generally.
(b) No Broker. TransMart has not dealt with any real estate broker or finder in
connection with the lease of the Leased Sites from BART or this Option Agreement. TransMart
agrees to defend, indemnify and hold harmless BART from and against any and all liabilities,
claims, demands, damages or costs of any kind (including attorneys' fees, costs and expenses)
arising from or connected with any broker's or finder's fee or commission or charge determined
to be due by any person arising from or by reason ofTransMart's conduct with respect to this
transaction.
704027187v7 -9-
(c) No Violation. The execution of this Option Agreement and the incurrence of
the obligations set forth in this Option Agreement do not violate any order or ruling of any court
binding on TransMart or any provision of any indenture, agreement or other instrument to which
TransMart is a party or may be bound. Neither the entry into nor the performance of this Option
Agreement will result in the violation, or conflict with, or invalidate, cancel or make inoperative,
or constitute a default under, any charter, bylaw, partnership agreement, trust agreement,
mortgage, deed of trust, indenture, contract, credit agreement, franchise, permit, judgment,
decree, order, easement, restriction or other charge, right or interest applicable to TransMart.
ARTICLE6
COVENANTS
6.1 Cooperation. BART shall cooperate with TransMart, at TransMart's sole cost and
expense, to assist TransMart in obtaining the permits and approvals necessary to allow
TransMart to develop the Project, and shall execute such applications and other documents
requested by TransMart as may be reasonably required to be executed by the landlord under the
Master Lease and reasonably necessary to obtain such permits and approvals.
6.2 Right of First Refusal. IfBART (a) expands its Transit Facilities after the
Effective Date to add any transit stations in addition to the Stations listed on Exhibit A, (b)
renovates any of the Stations in such a manner as to create additional space that is suitable and
appropriate for the installation of Retail Facilities, or (c) replaces Stations during the term of this
Option Agreement (any of the foregoing, an "Expansion Station"), then, in any such case,
TransMart shall have the right of first refusal to add the Expansion Station to this Option
Agreement, pursuant to the terms hereof. BART shall notify TransMart of the availability of any
such Expansion Station at least three (3) months prior to its opening or reopening, and TransMart
shall have the right to exercise the option to add the Expansion Station to this Option Agreement
within thirty (30) days of TransMart's receipt of such notice from BART (the "Expansion Notice
Deadline"). IfTransMart fails to deliver notice to BARTofTransMart's election of such right
by the Expansion Notice Deadline, TransMart shall have no further right to add the applicable
Expansion Station to this Option Agreement.
6.3 Finalizing Master Lease. TransMart and BART shall mutually agree on
conditions and terms for signage, media displays to be inserted into Section 8.11 of the form
Master Lease attached hereto as part of Tier 2 analyses and the design review process, to ensure
that there are no material impacts on BART's Poster Advertising Franchise Agreement. In
addition, BART and TransMart shall agree on the Design Guidelines to be attached as Exhibit C
to the Master Lease within ninety (90) days after the Effective Date.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 BART. The obligations of BART under this Option Agreement to lease any
Leased Site to TransMart are subject to satisfaction of all of the conditions set forth in this
704027187v7 -10-
Section 7. I with respect to such Leased Site. BART may waive any or all of such conditions in
whole or in part, except BART and TransMart acknowledge that BART may not waive the
requirement that TransMart obtain all necessary Approvals for the development of the Project
following completion of environmental review in compliance with CEQA and, if applicable,
NEPA. Any waiver shall be effective only if made in writing. After Exercise Completion, any
condition that has not been satisfied with respect to a Leased Site shall be treated as having been
waived in writing. No such waiver shall constitute a waiver by BART of any of its rights or
remedies if TransMart defaults in the performance of any covenant or agreement to be performed
by TransMart under this Option Agreement or if TransMart breaches any representation or
warranty made by TransMart in Section 5.2. If any condition set forth in this Section 7.1 to
Exercise Completion on any Leased Site is not fully satisfied or waived in writing by BART, this
Option Agreement and the Option shall terminate as to such Leased Site, but not to any of the
remaining Leased Site(s), but without releasing TransMart from liability ifTransMart defaults in
the performance of any covenant or agreement to be performed by TransMart or if TransMart
breaches any representation or warranty made by TransMart before such termination.
(a) On or before the date TransMart delivers the Option Notice for any Leased
Site, TransMart shall have delivered to BART the Tier I Study and the Tier 2 Study for such
Leased Site.
(b) On or before the date TransMart delivers the Option Notice for any Leased
Site, TransMart shall have received all Approvals as may be required for the development of the
applicable Leased Site.
(c) On or before the date TransMart delivers the Option Notice for any Leased
Site, (i) BART shall have completed environmental review in compliance with CEQA for the
Phase of the Project applicable to such Leased Site, subject to the review and approval of
BART's Board of Directors in its sole and absolute discretion as provided in Section 1.7; and (ii)
TransMart shall have obtained any applicable federal agency approvals following compliance
with NEPA by such federal agency.
(d) Not less than forty-five (45) days prior to the scheduled Exercise Completion
for each Leased Site, TransMart shall have delivered to BART evidence reasonably satisfactory
to BART demonstrating TransMart's ability to fund one hundred percent (100%) of the costs of
constructing the Retail Facilities on the applicable Leased Site, including without limitation a
reasonable reserve for construction cost overruns. Examples of such evidence include binding
written loan commitments or other binding commitments to fund construction of the applicable
Retail Facilities in favor ofTransMart, which are Approved by BART in its reasonable
discretion as providing satisfactory evidence of the availability of funding. BART shall respond
to any submission by TransMart pursuant to this Section 7.l(c) within fifteen (15) Business Days
following receipt. If BART fails to respond within such time frame, TransMart may give notice
of a mandatory Dispute Resolution Meeting pursuant to Section I. I 0.
704027187v7 -11-
(f) On each Exercise Completion Date, TransMart shall not be materially in
default in the performance of any material covenant to be performed by TransMart under this
Option Agreement.
(g) TransMart shall have delivered into Escrow the documents specified in
Section 8.4.
(h) On each Exercise Completion Date, all representations and warranties made
by TransMart in Section 5.2 hereof shall be true and correct in all material respects as if made on
and as of the Exercise Completion Date.
(a) On the Exercise Completion Date for any Leased Site, BART shall not be
materially in default in the performance of any material covenant to be performed by BART
under this Option Agreement.
(b) On the Exercise Completion Date for any Leased Site, all representations and
warranties made by BART in Section 5.1 hereof shall be true and correct in all material respects
as if made on and as of the Exercise Completion Date.
(c) BART shall have delivered into Escrow the documents specified in Section
8.3 for each applicable Leased Site.
(d) No casualty shall have occurred causing the cessation or material reduction
in ridership (greater than 50% decrease) ofBART's Transit Operations at the applicable
Station(s) between the date of the Option Notice and the Exercise Completion Date, which
Transit Operations are not scheduled to materially resume within ninety (90) days following the
Exercise Completion Date.
704027187v7 -12-
ARTICLES
CLOSING
8.1 Place and Date. Each Exercise Completion shall occur through an escrow
("Escrow") with North American Title Company (the "Escrow Company"), within thirty (30)
days after BART's receipt of the Option Notice for the applicable Phase (the "Exercise
Completion Date"), or at such other place or on such other date as BART and TransMart agree in
writing. Prior to each Exercise Completion Date, BART and TransMart each shall give
appropriate written escrow instructions, consistent with this Option Agreement, to the Escrow
Company for the Exercise Completion in accordance with this Option Agreement.
8.3 BART's Exercise Completion Obligations. Not later than 1:00 p.m. on the
Business Day prior to the Exercise Completion Date for each Phase, BART shall deliver to the
Escrow Company for recordation or delivery to TransMart (or the party noted below) through
Escrow the following:
(a) Two (2) originals of either the Master Lease (for the first Exercise
Completion) or Individual Terms Schedules for each Lease Site that is the subject of the Exercise
Completion (for all Exercise Completions thereafter), duly executed by BART; and
(b) One (!) original Memorandum of Lease in the form attached hereto as
Exhibit G (the "Memorandum of Lease") for each Leased Site that is the subject of the Exercise
Completion, duly executed and acknowledged by BART.
8.4 TransMart's Exercise Completion Obligations. Not later than 1:00 p.m. on the
Business Day prior to each Exercise Completion Date, TransMart shall deliver to the Escrow
Company for recordation or delivery to BART (or the party noted below) through Escrow the
following:
(a) Two (2) originals of either the Master Lease or Individual Terms Schedules
for each Leased Site that is the subject of the Exercise Completion, as applicable, duly executed
by TransMart;
(b) One (!) original Memorandum of Lease for each Leased Site that is the
subject of the Exercise Completion, duly executed and acknowledged by TransMart;
(c) Such proof of TransMart' s authority and authorization to lease the applicable
Leased Site(s) for the applicable Phase, and such proof of power and authority of the individuals
executing and/or delivering such instruments, documents or certificates on behalf of TransMart
to act for and bind TransMart, as may reasonably be required by BART and the Title Company;
and
704027187v7 -13-
(d) Other funds and documents reasonably required to properly consummate this
transaction.
8.5 Close of Escrow. If on the applicable Exercise Completion Date: the Escrow
Company holds and can deliver the documents described in Sections 8.3 and 8.4, and the Escrow
Company can record the Memorandum of Lease, then the Escrow Company shall:
(a) Record each Memorandum of Lease in the official records of the county in
which the applicable Leased Site is located;
(b) Deliver to BART one(!) fully executed original of the Master Lease or each
Individual Terms Schedule, as applicable, and one(!) conformed copy of each Memorandum of
Lease; and
(c) Deliver to TransMart one(!) fully executed original of the Master Lease or
each Individual Terms Schedule, as applicable, and one (I) conformed copy of each
Memorandum of Lease.
8.6 Termination of Escrow. If the Exercise Completion for a particular Phase does
not take place on or before the applicable Exercise Completion Date as set forth in Section 8.2,
then the Escrow shall terminate, all documents deposited into Escrow shall be returned to the
respective parties and, except as otherwise expressly set forth in Section 7. I, the applicable
Option shall terminate.
8.7 Possession. BART shall deliver possession of the applicable Leased Site(s) to
TransMart on the Exercise Completion Date for the applicable Phase.
8.8 Costs. TransMart shall pay all closing costs, including the County documentary
transfer tax, if any, and the City conveyance tax, if any, in respect of the interest being conveyed
to TransMart, the premium for any title policy issued to TransMart, and any additional coverages
issued to any permitted leasehold mortgagee, any recording fees and the escrow fees charged by
the Escrow Company.
8.9 Prorations. At each Exercise Completion, the current installment of real property
taxes and assessments levied against the applicable Leased Sites, if any, and current utilities for
the applicable Leased Sites shall be prorated between BART and TransMart as of the Exercise
Completion Date on the basis of a thirty-day month.
ARTICLE 9
EMINENT DOMAIN
9 .I Eminent Domain. If, before the Exercise Completion Date, proceedings are
commenced for the taking by exercise of the power of eminent domain of all or a material part of
any Leased Site that, as reasonably determined by TransMart, would render the Leased Site
unsuitable for TransMart's intended use, TransMart shall have the right, by giving Notice to
BART within thirty (30) days after BART gives Notice of the commencement of such
704027187v7 -14-
proceedings to TransMart, to terminate this Option Agreement as to the affected Leased Site or
Leased Sites, in which event this Option Agreement shall terminate as to the affected Leased Site
or Leased Sites. If, before the Exercise Completion Date, proceedings are commenced for the
taking by exercise of the power of eminent domain of less than such a material part of any
Leased Site, or if TransMart has the right to terminate this Option Agreement pursuant to the
preceding sentence but TransMart does not exercise such right, then this Option Agreement shall
remain in full force and effect. BART shall give Notice to TransMart reasonably promptly after
BART' s receiving Notice of the commencement of any proceedings for the taking by exercise of
the power of eminent domain of all or any part of any Leased Site. If necessary, the Exercise
Completion Date shall be postponed until BART has given any Notice to TransMart required by
this Section 9.1 and the period of thirty (30) days described in this Section 9.1 has expired.
ARTICLE 10
GENERAL
10.1 Notices. All notices and other communications under this Option Agreement
shall be properly given only if made in writing and mailed by certified mail, return receipt
requested, postage prepaid, or delivered by hand (including messenger or recognized delivery,
courier or air express service) to the party at the address set forth in this Section 10.1 or such
other address as such party may designate by notice to the other party. Such notices and other
communications shall be effective on the date of receipt (evidenced by the certified mail receipt)
if mailed or on the date of such hand delivery ifhand delivered. If any such notice or other
communication is not received or cannot be delivered due to a change in the address of the
receiving party of which notice was not previously given to the sending party or due to a refusal
to accept by the receiving party, such notice or other communication shall be effective on the
date delivery is attempted. Any notice or other communication under this Option Agreement
may be given on behalf of a party by the attorney for such party.
second copy to: Attn.: Office of the General Counsel (23rd Floor)
704027187v7 -15-
94104
Att: Zahoor Kareem
10.2 Attorneys' Fees. If there is any legal action or proceeding between BART and
TransMart arising from or based on this Option Agreement, the unsuccessful party to such action
or proceeding shall pay to the prevailing party all costs and expenses, including reasonable
attorneys' fees and disbursements, incurred by such prevailing party in such action or proceeding
and in any appeal in connection therewith. If such prevailing party recovers a judgment in any
such action, proceeding or appeal, such costs, expenses and attorneys' fees shall be included in
and as a part of such judgment.
10.3 Governing Law. This Option Agreement shall be construed and enforced in
accordance with the laws of the State of California.
10.4 Construction. BART and TransMart acknowledge that each party and its counsel
have reviewed and revised this Option Agreement and that the rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Option Agreement or any document executed and delivered by either party
in connection with the transactions contemplated by this Option Agreement. The captions in this
Option Agreement are for convenience of reference only and shall not be used to interpret this
Option Agreement.
10.5 Terms Generally. The defined terms in this Option Agreement shall apply
equally to both the singular and the plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed by the phrase
"without limitation." The words "approval," "consent" and "notice" shall be deemed to be
preceded by the word "written."
10.6 Further Assurances. From and after the date of this Option Agreement, BART
and TransMart agree to do such things, perform such acts, and make, execute, acknowledge and
deliver such documents as may be reasonably necessary or proper and usual to complete the
transactions contemplated by this Option Agreement and to carry out the purpose of this Option
Agreement in accordance with this Option Agreement.
704027187v7 -16-
10.7 Partial Invalidity. If any provision of this Option Agreement is determined by a
proper court to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Option Agreement, and this Option Agreement shall
remain in full force and effect without such invalid, illegal or unenforceable provision.
10.8 Waivers. No waiver of any provision of this Option Agreement or any breach of
this Option Agreement shall be effective unless such waiver is in writing and signed by the
waiving party and any such waiver shall not be deemed a waiver of any other provision of this
Option Agreement or any other or subsequent breach of this Option Agreement.
10.9 Assigmnent. TransMart shall not assign or transfer this Option Agreement or any
interest in or part of this Option Agreement. Subject to the foregoing, this Option Agreement
shall benefit and bind BART and TransMart and their respective successors and assigns.
10.10 Miscellaneous. The Exhibits attached to this Option Agreement are made a part
of this Option Agreement. Neither BART nor TransMart shall make any public announcement
of this Option Agreement or the transactions contemplated by this Option Agreement without the
prior consent of the other, except in connection with the submittals and other applications to
public agencies as contemplated or permitted by this Option Agreement or unless any such
announcement is reasonably necessary to comply with applicable law. Time is of the essence of
this Option Agreement. This Option Agreement may not be amended or modified except by a
written agreement signed by BART and TransMart. This Option Agreement and the agreements
attached as exhibits to this Option Agreement, if and when executed, constitute the entire and
integrated agreement between BART and TransMart relating to the lease of the Leased Sites and
supersede all prior agreements, understandings, offers and negotiations, oral or written, with
respect to the lease of the Leased Sites.
10.12 Definitions
(e) "Business Day" means any day other than Saturdays, Sundays and days on
which Federal or California state-chartered banks are closed for business.
(f) "CEQA" means the California Enviromnental Quality Act, Public Resources
Code Section 21000 et seq., as such may be amended from time to time
704027187v7 -17-
(g) "Construction Documents" is defined in Section I .9(a).
G) "Design Standards" means the design standards for the Retail Facilities to be
developed and approved by BART and TransMart prior to September 30, 2013.
(t) "Individual Terms Schedules" shall have the meaning given in the Master
Lease.
(u) "Leased Site" means the premises (if any) leased or to be leased by
TransMart at any individual Station, and "Leased Sites" means all of the premises leased or to be
leased by TransMart, collectively, at the Stations.
704027187v7 -18-
(cc) "Option Agreement" is defined in the Preamble.
(gg) "Permitted Exceptions" means with respect to each Leased Site (i) the
exceptions to title Approved by TransMart under Section 4.2, (ii) all matters shown on any
survey obtained by TransMart or that would have been disclosed by a survey (ifTransMart elects
not to obtain one); (iii) non-delinquent installments of taxes and assessments; (iv) the
Memorandum of Lease; and (v) any other matter that is caused by TransMart or any of its
employees, agents, contractors, representatives or affiliates.
(II) "Project" means the construction and operation of the Retail Facilities on the
Leased Sites under the Master Lease.
(mm) "Project Schedule" means the phasing and logistics plan for the Project
attached hereto as Exhibit C.
704027187v7 -19-
(vv) "Title Objections" is defined in Section 4.2(a).
(xx) "Transit Facilities" means the Stations, and the real and personal property
thereon, including without limitation the rapid transit rail tracks located thereon, the rapid transit
rail vehicles traveling on those tracks and all other facilities used in connection with BART' s
transit functions and the means of access thereto.
(yy) "Transit Operations" means the operation ofBART's rapid transit rail
system and all activities related thereto, including access, ingress, egress, passing through
turnstiles, purchasing tickets and obtaining information, of the users of those vehicles, and the
activities, such as maintaining and operating the Transit Facilities, that are performed by
BART' s employees, agents and contractors.
704027187v7 -20-
IN WITNESS WHEREOF, BART and TransMart have executed this Option Agreement
as of the date first hereinabove written.
By: ~~~--+.-:'-----~~~~~~~
Name: 6 \\\\0:'.>b- ~
Its: ?oc~, ~\-, '\~i ~"\
704027187v7 -21 -
EXHIBIT A
704027187v7 Exhibit A
EXHIBIT B
PHASES
Preliminary Phasing Schedule in advance of Tier I and Tier 2 studies. Post the completion of studies, phasing schedule may be
updated by Tenant
PHASE 1
Downtown Berkeley
Montgomery Street
PHASE 2
Automated Retail Pro ram
PHASE 3 PHASE4
12th Street/Oakland Ashby (Berkeley)
16th Street Mission Castro Valley
19th Street Oakland Colma
24th Street Mission El Cerrito Plaza
Balboa Park Hayward
Bay Fair Lafayette
Civic Center Millbrae
Coliseum/Oakland Airport North Berkeley
Concord North Concord/Martinez
Daly City Orinda
Dublin/Pleasanton Pittsburg/Bay Point
El Cerrito del Norte Richmond
Embarcadero San Bruno
Fremont San Leandro
Fruitva le South Hayward
Glen Park South San Francisco
Lake Merritt (Oakland) Union City
MacArthur (Oakland) West Oakland
Pleasant Hill
Powell Street
Rockridge (Oakland)
Wa lnut Creek
West Dublin
704027187v7 Exhibit B
EXHIBITC
MASTER LEASE
704027!87v7 Exhibit C
MASTER LEASE
between
and
TRANSMART, INC.
703999480v9
TABLE OF CONTENTS
1. DEFINITIONS ..................................................................................................... 1
2. DEMISE............................................................................................................. 11
2.1 Creation of Master Lease .................................................................................... 11
2.2 Leased Sites ........................................................................................................ 12
2.3.1 Acceptance of Leased Sites .................................................................... 12
2.3.2 Title ......................................................................................................... 13
3. TERM ................................................................................................................. 13
3.1 Effective Date ..................................................................................................... 13
3.2.1 Initial Term ............................................................................................. 13
3.2.2 Extension Terms ..................................................................................... 13
3.3 Last Date for Occurrence of Opening Date ........................................................ 13
4. RENT. ................................................................................................................. 14
4.1 Minimum Base Rent.. ......................................................................................... 14
4.2 Percentage Rent .................................................................................................. 14
4.2.l Payment of Percentage Rent.. ................................................................. 14
4.2.2 Quarterly Reports ................................................................................... 14
4.2.3 Annual Statements .................................................................................. 15
4.2.4 Landlord's Right to Audit ...................................................................... 15
4.2.5 Retention of Records .............................................................................. 16
4.3 Sale or Refinancing ............................................................................................ 16
4.4 Additional Rent .................................................................................................. 16
4.5 Place and Manner of Payment.. .......................................................................... 16
4.6 Delinquent Amounts ........................................................................................... 16
4.7 No Abatement of Rent ........................................................................................ 17
4.8 Pre-Existing Concession Agreement Management Services ............................. 17
5. IMPOSITIONS ................................................................................................... 17
5.1 Payment of Impositions ...................................................................................... 17
5.2 Evidence of Payment .......................................................................................... 18
5.3 Reports ................................................................................................................ 18
6. UTILITIES ......................................................................................................... 18
7. CONSTRUCTION OF RETAIL FACILITIES .................................................. 18
7.1 Construction Obligation ..................................................................................... 18
7.2.l Approval of Conceptual Design ............................................................. 19
7.2.2 Timing Requirements ............................................................................. 19
7.2.3 Confirmation of Unavoidable Delays in Construction ........................... 19
7.2.4 Construction Contract Requirements ..................................................... 20
7.3 Cost of Construction ........................................................................................... 20
7.4 Additional Construction Requirements of Tenant .............................................. 20
7.5 Furniture, Fixtures and Equipment.. ................................................................... 20
7.6 Title to Improvements ........................................................................................ 21
7.6.l No Interference with Transit Facilities ................................................... 21
7.6.2 Prior Notice to Tenant ............................................................................ 22
7.7 Inspection During Construction ......................................................................... 22
703999480v9 - I -
7.8 Construction by Tenant ...................................................................................... 22
7.9 Utility Services for Leased Sites ........................................................................ 23
7.10 Substantial Completion of Retail Facilities ........................................................ 23
7.11 SurveysandAs-BuiltPlans ................................................................................ 23
7.12 Zoning and Building Permits .............................................................................. 23
7.13 Coordination ....................................................................................................... 23
8. USE AND OPERATION OF THE LEASED PREMISES ................................ 24
8.1 Purposes .............................................................................................................. 24
8.2 Covenant To Operate .......................................................................................... 24
8.3 No Partnership .................................................................................................... 24
8.4 Compliance with Performance Standards and Landlord's Rules ....................... 25
8.5 Compliance With Legal, Insurance and Other Requirements ............................ 25
8.6 Contest of Legal Requirements .......................................................................... 25
8.7 No Impairment of Landlord's Operation of Station or Transit System .............. 25
8.8 Notice of Inadequate Maintenance ..................................................................... 26
8.9 Conditions Endangering Transit Facilities ......................................................... 26
8.10 Third Party Management .................................................................................... 26
8.11 Signage; Non-Compete ...................................................................................... 27
8.12 Representative of Tenant; Emergency Access ................................................... 27
8.13 Ingress and Egress .............................................................................................. 27
8.14 Security ............................................................................................................... 27
8.15 Identification, Security and Background Checks ............................................... 27
8.16 TOD Partners ...................................................................................................... 28
9. INSURANCE ..................................................................................................... 28
9.1 Insurance Required During Construction and Any Subsequent
Significant Remodeling, Rebuilding and Reconstruction .................................. 28
9.1.1 Builders Risk (Course of Construction) Insurance ................................. 28
9.1.2 Statutory Workers' Compensation Insurance ......................................... 29
9.1.3 Commercial General Liability Insurance ............................................... 29
9.1.4 Comprehensive Automobile Liabilitv Insurance .................................... 30
9.2 Insurance Required After Construction .............................................................. 30
9.2.1 Property Insurance .................................................................................. 30
9.2.2 Statutory Workers' Compensation Insurance ......................................... 31
9.2.3 Insurance Required of Subtenants Licensees and Concessionaires ....... 31
9.3 Modification of Insurance Coverage .................................................................. 32
9.4 Evidence Required .............................................................................................. 32
9.5 Notice of Cancellation ........................................................................................ 32
9.6 Qualifying Insurers ............................................................................................. 32
9.7 Waiver of Subrogation ....................................................................................... 32
9.8 Proceeds .............................................................................................................. 33
9.9 Compliance ......................................................................................................... 33
10. REPAIRS AND MAINTENANCE.................................................................... 33
IO.I Tenant's Ongoing Maintenance Obligation ....................................................... 33
I 0.2 Landlord's Consent Required ............................................................................. 33
I 0.3 Compliance with Article 7.................................................................................. 34
10.4 Landlord's Ongoing Maintenance Obligations .................................................. 34
703999480v9 - 11 -
11. DESTRUCTION AND RESTORATION .......................................................... 34
I I.I Tenant's Repair Obligation ................................................................................ 34
11.3 Rent Abatement .................................................................................................. 35
11.4 Waiver of Statutory Provisions .......................................................................... 35
12. CONDEMNATION ........................................................................................... 35
12.2 Total Taking ....................................................................................................... 35
12.3 Condemnation Award Defined ........................................................................... 36
12.4 Abatement or Reduction of Rent.. ...................................................................... 36
12.5 Lease Provisions Controlling ............................................................................. 36
13. LIENS ................................................................................................................. 36
13.1 Discharge of Liens .............................................................................................. 36
13.2 Notice ofNonresponsibility ............................................................................... 37
13.3 Notice of Liens ................................................................................................... 37
14. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS .............. 37
15. INDEMNIFICATION BY TENANT................................................................. 38
15.I Scope of Indemnification ................................................................................... 38
15.2 Exclusions ........................................................................................................... 39
15.3 Tender of Defense .............................................................................................. 39
15.4 Survival.. ............................................................................................................. 39
16. HAZARDOUS MATERIALS ............................................................................ 39
16. I Definition of Hazardous Materials ..................................................................... 39
16.2 Definition of Environmental Requirements ....................................................... 39
16.3 General Obligations ............................................................................................ 39
16.4 Notice of Violations ........................................................................................... 40
16.5 Tenant Indemnification ...................................................................................... 40
16.6 Permitted Activities ............................................................................................ 40
17. SURRENDER OF THE LEASED PREMISES ................................................. 40
17. I Surrender ............................................................................................................ 40
17.2 Demolition Fund ................................................................................................. 41
18. DEFAULT BY TENANT.................................................................................. 42
18.I Events of Default ................................................................................................ 42
18.2 Landlord's Right to Terminate ........................................................................... 43
18.3 Landlord's Right of Reentry ............................................................................... 44
18.4 Landlord's Right to Relet the Leased Sites ........................................................ 44
18.5 No Automatic Termination................................................................................. 44
19. ASSIGNMENT AND SUBLETTING............................................................... 44
19.I Assignments Requiring Landlord's Approval.. .................................................. 44
19.2 Subletting ............................................................................................................ 45
19.3 Transfer of Partnership or Membership Interest or Corporate Stock or
Assets .................................................................................................................. 45
19.4 Documentation ................................................................................................... 45
19.5 Effect of Invalid Assignment. ............................................................................. 46
20. LANDLORD'S RIGHT TO MORTGAGE AND SELL. .................................. 46
20. I Mortgage by Landlord ........................................................................................ 46
20.2 Sale by Landlord ................................................................................................. 46
20.3 Termination of Landlord's Liability ................................................................... 46
703999480v9 - iii -
21. TENANT'S RIGHT TO HYPOTHECATE LEASE ......................................... 47
21.1 Mortgage by Tenant ........................................................................................... 47
21.2 Leasehold Mortgagee Criteria ............................................................................ 47
21.3 Notice to and Rights of Registered Mortgagees ................................................. 47
21.4 No Merger .......................................................................................................... 48
21.5 No Subordination of Fee .................................................................................... 48
22. ALTERNATIVE DISPUTE RESOLUTION PROCEDURE ............................ 48
22.1 Meet and Confer ................................................................................................. 48
22.1.1 Meeting Request.. ................................................................................... 48
22.1.2 Meeting ................................................................................................... 49
22.1.3 Resolution of Dispute; Resolution Agreement.. ..................................... 49
22.1.4 Failure to Resolve Matter ....................................................................... 49
22.2 Mediation ............................................................................................................ 49
22.2.1 Commencement of Mediation ................................................................ 49
22.2.2 Settlement Agreement ............................................................................ 50
22.2.3 Enforcement ........................................................................................... 50
22.3 Miscellaneous ..................................................................................................... 50
23. NON-DISCRIMINATION ................................................................................. 50
24. MISCELLANEOUS ........................................................................................... 50
24.1 Estoppel Certificates ........................................................................................... 50
24.2 Partial Invalidity ................................................................................................. 50
24.3 Payment of Wages .............................................................................................. 51
24.4 Notices ................................................................................................................ 51
24.5 Quiet Enjoyment.. ............................................................................................... 51
24.6 Holding Over ...................................................................................................... 52
24.7 Tenant Representations ...................................................................................... 52
24.8 Landlord Representations ................................................................................... 53
24.9 Interpretation ...................................................................................................... 53
24.10 Headings ............................................................................................................. 53
24.11 Successors and Assigns ...................................................................................... 53
24.12 Memorandum of Lease ....................................................................................... 53
24.13 Choice of Laws ................................................................................................... 53
24.14 Counterparts ....................................................................................................... 53
24.15 Entire Agreement; Amendment.. ........................................................................ 53
24.16 Commissions ...................................................................................................... 54
24.17 Attorneys' Fees ................................................................................................... 54
24.18 Time is of the Essence ........................................................................................ 54
24.19 No Consequential Damages ............................................................................... 54
24.20 No Discrimination .............................................................................................. 54
24.21 Conflict of Interest.. ............................................................................................ 55
24.22 Right of First Refusal ......................................................................................... 55
25. FAIR MARK.ET RENTAL RATE ..................................................................... 55
25.1 Landlord's Opinion of Fair Market Rental Rate ................................................ 55
25.2 Landlord's Failure to Provide Opinion ............................................................... 56
25.3 Payment of Minimum Base Rent Pending Final Determination ........................ 56
25.4 Arbitration .......................................................................................................... 56
703999480v9 - IV -
25.4.1 Appointment of Arbitrator ...................................................................... 56
25.4.2 Arbitrator's Determination ..................................................................... 57
703999480v9 -v-
MASTER LEASE
RECITALS
A. Landlord is the owner of that certain real property located in Alameda, Contra
Costa, San Francisco and San Mateo Counties, California, including without limitation the
transit stations listed on Exhibit A attached hereto (the "Stations").
B. Tenant has requested that Landlord lease to Tenant portions of one or more of
the Stations (collectively, the "Leased Sites"), on the terms and conditions contained herein, for
the purpose of constructing and operating thereon certain retail facilities (the "Retail
Facilities").
C. Landlord is willing to lease the Leased Sites to Tenant on the terms and
conditions contained herein.
I. DEFINITIONS. For purposes of this Lease, the following defined terms shall
have the meanings given them in this Article.
1.2 "Additional Rent" means that portion of the Rent payable by Tenant
pursuant to Section 4.4.
1.4 "Applicable Station" means the Station in which a specific Leased Site is
located.
703999480v9 -I -
trash and other janitorial services) of the one-foot area extending from the perimeter of each
Leased Site into the applicable Station.
I. 7 "Basis Amount" means all customary hard and soft costs incurred in
connection with the initial Construction of the Retail Facilities by Tenant. Within ninety (90)
days after Substantial Completion of Construction of the applicable Retail Facilities, Landlord
and Tenant shall agree on the Basis Amount for such Retail Facilities and shall document the
agreed-upon amount in writing. If Landlord and Tenant are unable to agree upon the Basis
Amount within such ninety (90) day period, the Basis Amount shall be determined by ADR in
accordance with Section 22 of this Lease.
1.9 "Business Day" or "Business Days" means any day or days other than
Saturdays, Sundays and days on which Federal or California state chartered banks are closed
for business.
1.13 "Consumer Price Index" means the United States Department of Labor,
Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, San
Francisco/Oakland/San Jose, California Average, subgroup "All Items" (1982-84=100). If at
any time during the Term of this Lease said index is terminated or does not have the format
recited in this Section 1.13, Landlord and Tenant shall, by mutual agreement, select a
comparable official index that may be published by the Bureau of Labor Statistics or a
successor or similar governmental agency as may then exist or be most nearly equivalent
thereto.
1.14 "Default Rate" means an interest rate equal to the greater of(a) twelve
percent (12%) per annum, or (b) five percent (5%) above the Prime Rate compounded quarterly
(not to exceed, however, the maximum legal rate then permitted by law).
1.15 "Delay Rental" means the amount so specified in each Individual Terms
Schedule, payable by Tenant to Landlord for delays in meeting the Opening Date deadline for
each Leased Site.
703999480v9 -2-
1.18 "Dispute Resolution Meeting" has the meaning given in Section 22.1.
1.20 "Effective Date" means the date of this Lease, as first above written;
same being the date whereon this Lease became effective.
1.22 "Estimated Demolition Cost" has the meaning given in Section 17.2.
1.24 "Excess Loan Proceeds" means Gross Loan Proceeds, less only (a) the
Qualified Loan Amount, and (b) any reasonable third-party brokerage commissions and other
customary out-of-pocket costs (such as title fees, loan fees, attorneys' fees, engineering fees,
escrow fees and mortgage recording taxes) incurred in obtaining such loan.
1.26 "Expiration Date" means the Initial Expiration Date, as such date may be
extended pursuant to Section 3.2.2.
1.27 "Extension Term" and "Extension Terms" have the meanings given in
Section 3.2.2.
1.28 "FF&E" means the furniture, fixtures and equipment installed in the
Project from time to time by Tenant.
1.29 "Fair Market Rental Rate" has the meaning given in Section 25.1.
1.31 "FMRR Adjustment Date" means the tenth (101h), twentieth (201h),
thirtieth (301h) (if the first Extension Term is exercised in accordance herewith) and fortieth
(401h) (if the second and final Extension Term is exercised in accordance herewith)
anniversaries of the Effective Date.
1.33 "Gross Loan Proceeds" means any proceeds of any loan (other than
loans used for working capital or for the Construction, repair, replacement, refurbishing, or
maintenance of the Retail Facilities, as they may be replaced from time to time) received by
Tenant.
703999480v9 -3-
(A) gross rental income from all Tenant's tenants, subtenants, sublessees, licensees
and concessionaires;
(B) all other gross receipts of whatsoever kind (other than those included in the
foregoing (A) categories) from the operation of the Retail Facilities, including, without
limitation, any rent, license fee or other fees in lieu of rent received from sublessees, licensees
or concessionaires (excluding, however, those sublessees, licensees or concessionaires whose
gross receipts are already included in the calculation of Gross Revenues) to whom space in the
Leased Sites is leased, rented or otherwise made available for business purposes, including,
without limitation, retail space, showcase space, vending machines, video games, movies and
similar concessions.
Credit sales shall be reported as Gross Revenues in the quarter wherein such credit sales
are made. Gross receipts from space made available for displays and the like shall be included
in category (A). In no event shall any item of revenue be included more than once in
calculating Gross Revenues as a result of such item of revenue being inadvertently included by
definition in more than one of the foregoing subcategories of Gross Revenues; resort in such
cases to be had to the Accounting Standards to determine which subcategory of Gross
Revenues is most appropriate for such item of revenue. All Gross Revenues shall be
determined in accordance with the Accounting Standards, net of all allowances or refunds
given, paid or returned in the normal course of business (and consistent with normal and
customary industry practices) by Tenant in the course of obtaining such Gross Revenues
(including, without limitation, overcharges, unsatisfactory service adjustments, and refunds of
disputed concessionaire charges; but not including credit card discounts and so-called
"trade-outs," which shall not be deducted in the determination of Gross Revenues). Any
amounts received, recognized or realized in the nature of the following shall not be included in
the calculation of Gross Revenues:
(ii) gratuities (to the extent same are collected for the
benefit of and paid over to employees of Tenant);
703999480v9 -4-
(v) income earned on any reserves or derived from
securities and other property acquired and held for investment;
1.35 "Gross Sales Proceeds" means the total consideration (whether or not in
the form of cash) received by Tenant in connection with any Transfer subject to the following:
1.35. l Within thirty (30) days after any such Transfer, Tenant shall
provide Landlord with a financial summary of the Transfer showing the sources and uses of the
proceeds thereof;
1.35.3 Within thirty (30) days after the first anniversary of any such
Transfer, Tenant shall deliver to Landlord a financial report of the uses of the proceeds from
such Transfer as of such date, which report shall include reasonably detailed supporting
documentation of such expenditures; any proceeds at such time not allocated or already
expended for Operational Uses shall be reallocated to Gross Sales Proceeds, and Tenant shall
pay Landlord any amounts owed to Landlord as a result of such reallocation concurrently with
the delivery of the report.
1.39 "Initial Expiration Date" has the meaning given in Section 3.2.1.
703999480v9 - 5-
1.41 "Insurance Requirements" means all terms of each insurance policy
carried or required under this Lease to be carried by Tenant and covering or applicable to the
Construction of the Retail Facilities, or to the Leased Sites themselves or any part thereof, all
requirements of the issuers of all such policies, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body exercising similar
functions) applicable to or affecting the Leased Sites or any part thereof.
1.43 "Landlord" means the owner or owners from time to time of all of the
right, title and estate in the Stations and in the lessor's interest in this Lease; on the Effective
Date, Landlord is the San Francisco Bay Area Rapid Transit District.
1.45 "Landlord's Review Period" has the meaning given in Section 25.2.
1.46 "Lease" means this Master Lease, as it may be amended in writing from
time to time by Landlord and Tenant.
1.47 "Lease Year" means each twelve (12) month period occurring during the
Term, the first day of which is the Effective Date, in the case of the first Lease Year, or the
anniversary date of the Effective Date, in the case of each subsequent Lease Year.
1.48 "Leasehold Mortgage" means any Mortgage at any time and from time
to time given by Tenant and constituting a lien, security interest or other encumbrance in and
upon any portion of Tenant's right, title and estate (but not Landlord's right, title and estate) in
the Leased Sites or in this Lease.
1.50 "Leased Sites" means, collectively, the portion of each Station outlined
on the Individual Terms Schedules now or subsequently incorporated into this Lease and the
Retail Facilities located thereon. "Leased Site" means the portion of an individual Station
leased to Tenant under this Lease and the Retail Facilities located thereon.
1.51 "Legal Requirements" means all statutes, codes, laws, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations,
directions and requirements of all federal, state, county, municipal and other governments,
departments, commissions, boards, courts, authorities, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, that now or at any time hereafter are applicable to and
enforceable against the Leased Sites or any part thereof, or any use, manner of use or condition
of the Leased Sites or any part thereof.
703999480v9 -6-
1.52 "Level 1 Felony" means: conviction under the Hertzberg-Alarcon
California Prevention of Terrorism Act (Penal Code 11415 et. seq.); murder; treason;
espionage; rape; kidnapping; assault with a deadly weapon; armed robbery/carjacking;
manufacture, sale, or possession of explosives; placement or possession of destructive device
on a vehicle, public building or passenger train; train wrecking; arson; any attempt or
conspiracy to commit any of the above crimes; any other crime classified as a felony that
Landlord's General Manager determines indicates a propensity for endangering safety and
security of Landlord's employees, patrons or facilities; and similar convictions under any other
state or federal statutes.
1.54 "Lien" means any lien, encumbrance or charge on, or pledge of, the
right, title and estate of Tenant in this Lease or in the Leased Sites, or any part thereof
(excluding, however, any Leasehold Mortgage).
1.59 "Minimum Base Rent" means that portion of Rent payable by Tenant to
Landlord pursuant to Section 4.1 in an amount equal to: (a) twenty-four dollars ($24) per
annum for the first Lease Year and increased (but never decreased) thereafter on the
anniversary of the Effective Date (other than on FMRR Adjustment Dates) by an amount equal
to the increase in the Consumer Price Index for the immediately prior Lease Year, multiplied
by (b) the number of rental square footage (as specified in the Individual Terms Schedules) of
the Leased Sites then included in this Lease. Minimum Base Rent also shall be adjusted on
each FMRR Adjustment Date to the greater of (a) the Minimum Base Rent in effect for the
immediately prior Lease Year, or (b) the Fair Market Rental Rate.
703999480v9 -7-
1.61 "Non-Requesting Party" has the meaning given in Section 22.1.1.
1.64 "Official Records" means the official real property records of the county
in which the applicable Leased Site is located.
1.65 "Opening Date" means the earliest date whereon the Retail Facilities
located on a particular Leased Site shall have been substantially completed, equipped and
licensed and shall have been opened to the public generally for use.
1.67 "Operating Year" means each consecutive twelve (12) month period
during the Term occurring after the Opening Date.
1.68 "Option" means that certain Option to Lease, dated _____, 2013,
between Landlord, as optionor, and Tenant, as optionee.
1.69 "Outside Agreement Date" has the meaning given in Section 25.1.
1.72 "Permits" means each and every building, construction and operating
permit necessary for the construction and for the operation of the Retail Facilities, including,
without limitation, use permits, demolition permits and site permits, and any other
governmental or quasi-governmental approvals that must be issued by any governmental
authority, department, commission, board, official or officer as a condition precedent to the
commencement of Construction of any part of the Retail Facilities.
703999480v9 -8-
1.76 "Plans" has the meaning given in Section 7.2.1.
1. 79 "Prior Loan Amount" means all amounts owing under any obligation
secured by a then existing Leasehold Mortgage that is to be replaced (or if the Leased Site is
not then encumbered by a Leasehold Mortgage, the original principal amount of the last
Leasehold Mortgage encumbering the Leased Site) or other financial obligation of Tenant that
was incurred in the acquisition, development or operation of the Leased Sites or any part
thereof and is secured by an interest in the Leased Sites or any part thereof, which obligation is
to be discharged through payment of the loan proceeds.
1.81 "Qualified Loan Amount" means (a) the greater of the Basis Amount and
the Prior Loan Amount, until a Leasehold Mortgage or other financial obligation of Tenant that
was incurred in the acquisition, development or operation of the Leased Sites or any part
thereof and is secured by an interest in the Leased Sites is equal to or greater than the Basis
Amount; and (b) thereafter, the Prior Loan Amount.
1.84 "Rent" means, collectively, all Minimum Base Rent, Percentage Rent,
Delay Rental, Sales Proceeds Rent and Additional Rent to be paid or discharged by Tenant
under this Lease.
1.85 "Rent Payment Date" means each May 1, August 1, November 1 and
February 1 occurring during the Term, such dates being the first day of the second calendar
month after the end of each Calendar Quarter.
703999480v9 - 9-
1.90 "Revised Demolition Cost Estimate" has the meaning given in Section
17.2.
1.94 "Taking" means a taking of or damage to all or part of any Leased Site,
or any interest therein or right accruing thereto, as the result of or in lieu of condemnation or
eminent domain, and the same shall be deemed to have occurred on the date whereon title vests
in the taking authority or the date whereon such damage occurs.
1.95 "Tenant" means the tenant or tenants hereunder and any subsequent
owner or owners from time to time of all of the right and title of lessee's interest in this Lease.
On the Effective Date, Tenant is TransMart, Inc., a California corporation.
1.97 "Tenant Refinance" means any loan obtained by Tenant and secured by
any interest in the Leased Sites, other than any construction loan obtained by Tenant to
construct the initial Retail Facilities.
1.98 "Tenant's Review Period" has the meaning given in Section 25.1.
1.99 "Term" means the Initial Term, plus any Extension Terms for which
Tenant timely exercises its extension options pursuant to Section 3.2.2.
703999480v9 - 10 -
Price Index calculated by multiplying the relevant 20 I_ dollar amount stated in this Lease by a
fraction, the numerator of which shall be the most recent figure in the Consumer Price Index
published immediately prior to the month in which the relevant calculation is to be made, and
the denominator of which is the Consumer Price Index published for December 20 I_.
2. DEMISE.
2.1 Creation of Master Lease. Landlord, for and in consideration of the rents
and covenants herein specified to be paid and performed by Tenant, hereby demises and leases
to Tenant, and Tenant hereby hires and leases from Landlord, the Leased Sites, for the Term
and upon and subject to the terms and conditions and for the purposes herein set forth. This
Lease constitutes a single, unitary, indivisible, non-severable lease of all the Leased Sites. This
Lease does not constitute separate leases contained in one document each governed by similar
terms. The use of the expression "unitary lease" to describe this Lease is not merely for
convenient reference. It is the conscious choice of a substantive appellation to express the
intent of the parties in regard to an integral part of this transaction. To accomplish the creation
of an individual lease, the parties intend that from an economic point of view each Leased Site
leased pursuant to this Lease constitute one economic unit and that the Rent and all other
provisions of this Lease have been negotiated and agreed to, based on a demise of all the
Leased Sites covered by this Lease as a single, composite, inseparable transaction. Except as
expressly provided in this Lease or in the Individual Terms Schedules for specific isolated
purposes (and in such cases only to the extent expressly so stated), all provisions of this Lease,
including definitions, commencement and expiration dates, rental provisions, use provisions,
renewal provisions, breach, default, enforcement and termination provisions and assignment
and subletting, shall apply equally and uniformly to all of the Leased Sites as one unit and not
severable units. A default of any of the terms or conditions of this Lease occurring with respect
to any Leased Site shall be a default under this Lease with respect to all of the Leased Sites.
Except as expressly provided in this Lease for specific isolated purposes (and in such cases
only to the extent expressly so stated), the provisions of this Lease shall at all times be
construed, interpreted and applied such that the intention of Landlord and Tenant to create a
unitary lease shall be preserved and maintained. For the purposes of any assumption, rejection
or assignment of this Lease under 11 U.S.C. Section 365 or any amendment or successor
section thereof, this is one indivisible and non-severable lease dealing with and covering one
703999480v9 - 11 -
legal and economic unit that must be assumed, rejected or be a true lease and not a secured
financing for Tenant.
2.2 Leased Sites. The Leased Sites initially included in this Lease are
described on Individual Terms Schedules 1 [through _ _ ) attached hereto. Tenant shall
have the right to incorporate additional Leased Sites into this Lease pursuant to and in
accordance with Section 1.3 of the Option. When, and if, additional Leased Sites are added to
this Lease, Landlord and Tenant shall execute a notice, in the form attached hereto as Exhibit B
(the "Expansion Notice"), that incorporates each applicable Leased Site and the Individual
Terms Schedule related thereto into this Lease. From and after the effective date set forth in
the Expansion Notice, Landlord shall deliver to Tenant possession of the Leased Site that is the
subject of such Expansion Notice, and such Leased Site shall be deemed incorporated into this
Lease and subject to all of the terms and conditions hereof, as modified by the Individual
Terms Schedule applicable thereto.
703999480v9 - 12 -
make any repair or alteration to the Leased Sites, to supply in any manner any services,
utilities, maintenance, or insurance to or for the Leased Sites or any improvements located
thereon or therein, or to make any expenditure of funds for any purpose whatsoever in
connection with the Leased Sites, except as is expressly and specifically stated in this Lease.
2.3.2 Title. Tenant has independently inspected the Leased Sites and
examined the status of Landlord's title thereto. Tenant accepts the Leased Sites and the status
of Landlord's title thereto, without warranty or representation by Landlord, subject to the
Permitted Exceptions. The parties intend that possession of the Leased Sites in their "AS IS"
condition.
3. TERM.
3.1 Effective Date. This Lease shall be effective as of, and the Term of this
Lease shall commence on, the Effective Date.
3.2 Term.
3.2.2 Extension Terms. Tenant shall have the option to renew this
Lease for two (2) additional terms often (10) years each (each, an "Extension Term" and,
collectively, the "Extension Terms"), by delivering notice to Landlord of Tenant's option to
extend at least twelve (12) but no more than eighteen (18) months prior to the end of the then
current Term of this Lease. If Tenant timely exercises its right to extend, the Term of this
Lease shall be extended for the applicable ten (I 0) year period, and Tenant shall continue to
lease the Leased Sites on all of the terms and conditions of this Lease, except that after the
second (2nd) Extension Term, Tenant shall have no further extension options under this Lease.
Notwithstanding the foregoing, if an Event of Default exists on the date Tenant exercises its
extension option or the first day of the applicable Extension Term, Tenant shall be deemed to
have elected not to exercise such extension option. If Tenant does not exercise the first
extension option, then the second and final extension option shall automatically terminate, and
Tenant shall have no right to exercise such second and final extension option or to extend the
Term of this Lease beyond the then-applicable Expiration Date.
703999480v9 - 13 -
any Leased Site has not occurred within six (6) months after the applicable Opening Deadline,
then Landlord shall have the right to terminate this Lease with respect to such Leased Site by
giving Notice of such termination to Tenant, in which case Tenant shall deliver such Leased
Site to Landlord in the condition required by Section 17.1 hereof within thirty (30) days after
Tenant's receipt of such Notice, and Tenant shall have no further right to lease such Leased
Site. Landlord and Tenant agree that if Landlord will be harmed ifthe Opening Date for any
Retail Facility does not occur by the deadline specified in the Individual Terms Schedule, but
that such damages would be difficult, if not impossible, to ascertain, and Landlord and Tenant
agree that the Delay Rental is a reasonable estimate of Landlord's actual damages in such
event.
4. RENT.
4.1 Minimum Base Rent. Tenant covenants and agrees to pay to Landlord
Minimum Base Rent, in arrears, in equal quarterly installments on each Rent Payment Date,
prorated for any partial Calendar Quarter, throughout the Term. Notwithstanding the
foregoing, Tenant shall not be obligated to pay Minimum Base Rent for any specific Leased
Site until the earlier to occur of: (a) Substantial Completion of Construction of the initial Retail
Facilities constructed on such Leased Site; or (b) six (6) months after the date the applicable
Leased Site is incorporated into this Lease in accordance with Section 2.2 above.
703999480v9 - 14 -
Landlord a detailed explanation of the reason for the decline, together with such supporting
documentation and a detailed plan of the steps Tenant is taking to reverse such decline as may
be requested by Landlord.
4.2.4 Landlord's Right to Audit. Landlord shall have the right at any
time and from time to time upon reasonable notice to Tenant and at Landlord's expense, to
review and examine at Tenant's main office in San Francisco, California, Tenant's records of
Gross Revenues and Approved Common Area Expenses for any given period. In addition,
Landlord shall have the right, at any time upon reasonable notice to Tenant and at Landlord's
sole expense, to have Tenant's records of Gross Revenues and Approved Common Area
Expenses for any given Operating Year audited at any Leased Site by a disinterested, reputable
firm of certified public accountants who are actively engaged in the practice of their profession
and who are to be selected by Landlord. If any deficiency in Tenant's payment of Percentage
Rent is established pursuant to said audit, Tenant shall within thirty (30) days thereafter either
pay to Landlord the amount of such deficiency together with interest thereon from the date
same was originally due at the rate per annum equal to three percent (3%) plus the "prime rate"
announced from time to time by Wells Fargo Bank, N.A. or any successor bank as its rate
charged to its most creditworthy corporate clients for unsecured loans with maturities of ninety
(90) days or less (the "Prime Rate"), compounded quarterly, but in no event more than the
maximum interest rate permitted by law, or dispute such audit pursuant to the Alternative
Dispute Resolution procedures under Section 22 hereunder by giving Landlord Notice of such
election prior to the end of such thirty (30) day period. As a condition to commencing such
Alternative Dispute Resolution procedures, Tennant shall first deliver the deficiency to
Landlord to be held in trust pending the outcome of such dispute resolution. The Alternative
Dispute Resolution shall be commenced by Tenant, as the Requesting Party, within five (5)
703999480v9 - 15 -
Business Days of Tenant's delivery to Landlord of the dispute Notice referenced above. If the
Prime Rate is discontinued by Wells Fargo Bank, N.A. or undergoes a name change, then the
parties shall select a rate that comes closest in economic comparison to the foregoing Prime
Rate. If the statement of Gross Revenues forming the basis for the Percentage Rent calculation
previously made by Tenant to Landlord is less than the amount of Tenant's Gross Revenues as
shown by Landlord's audit by two percent (2%) or more, then Tenant shall immediately pay to
Landlord the cost of such audit, otherwise, the cost of such audit shall be paid by Landlord. If
the statement of Gross Revenues forming the basis for the Percentage Rent calculation
previously made by Tenant to Landlord is greater than the amount of Tenant's Gross Revenues
as shown by Landlord's audit and further shows that an overpayment of Percentage Rent was
made for the Operating Year so audited, then the amount of any overpayment shall be applied
by Landlord against the next succeeding payments of Percentage Rent coming due.
4.4 Additional Rent. Tenant shall pay and discharge when the same shall
become due, as Additional Rent, all Impositions as set forth in Section 5.1, all insurance
premiums, operating and maintenance charges, utility costs and charges, and other amounts,
liabilities and obligations of every description that Tenant assumes or agrees to pay or
discharge pursuant to this Lease, together with every fine, penalty, interest or other charge that
may be added for non-payment or late payment, whether payable to Landlord or to other
Persons. If Tenant fails to pay or discharge any such amount, liability or obligation, Landlord
shall have all rights, powers and remedies provided herein in the case of non-payment of Rent.
4.5 Place and Manner of Payment. Rent (other than Additional Rent payable
to Persons other than Landlord) shall be paid in lawful money of the United States to Landlord
and mailed to BART, P.O. Box 742638, Los Angeles, CA 90074-2638 (or such other place as
Landlord may designate from time to time by Notice to Tenant).
4.6 Delinquent Amounts. With regard to any payment of any type of Rent
not paid when due, Tenant shall pay to Landlord as a late charge an additional payment equal to
five percent (5 %) of such delinquent payment. Any Rent past due for more than ten (10) days
after its due date (other than the Minimum Base Rent, for which there shall be no grace period)
shall thereafter accrue interest at the Prime Rate plus five (5) percentage points per annum (but
703999480v9 - 16 -
in no event more than the maximum interest permitted by law) in addition to said late charge.
Any failure of Landlord to enforce the foregoing provisions of this Section 4.6 in any instance
shall not constitute a waiver of Landlord's right to enforce same at any subsequent time.
5. IMPOSITIONS.
5.1 Payment of Impositions. During the Term, Tenant shall pay directly to
the taxing authority, as Additional Rent, at least ten (10) days prior to delinquency, all real
property taxes, license and permit fees, sales, use or occupancy taxes, assessments, whether
general or special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever, including but not limited to assessments for public improvements or
benefits that, prior to or during the Term, are assessed or imposed upon or become due and
payable and a lien upon (a) the Leased Sites, or any part thereof or any personal property,
equipment or other facility, used in the operation thereof; (b) the rent or income received by
Tenant from tenants, subtenants, or concessionaires or licensees; (c) any use, possession or
occupancy of the Leased Sites; or (d) this Lease, or this transaction or any document to which
Tenant is a party creating or transferring an estate or interest in the Leased Sites (all of which
taxes, assessments and other governmental charges are hereinafter referred to as
"Impositions"). If at any time during the Term there shall be assessed or imposed (a) a tax or
assessment based upon the rents received by Landlord or by Tenant in connection with the
Leased Sites; (b) a tax or assessment (including but not limited to any municipal, state or
federal levy) measured by or based in whole or in part upon the value of the Leased Sites
and/or the Retail Facilities and imposed upon Landlord or Tenant; (c) a license fee, tax or
assessment measured by the Rent payable under this Lease; (d) taxes, assessments, levies, fees,
rents, licenses, permit charges and other charges of every description levied on or assessed
against the Leased Sites or any part thereof, or imposed on Landlord or Tenant, as a result of a
reduction in, or the abolition of, or in replacement of real property taxes, assessments, levies,
fees, rents or other charges levied on or assessed against the Leased Sites as of the Effective
703999480v9 - 17 -
Date; or (e) a possessory interest tax, then all such taxes, assessments or fees shall also be
deemed to be included within the term "Impositions," and Tenant shall pay and discharge the
same as herein provided. If, by law, any such Imposition is payable, or may at the option of the
taxpayer be paid, in installments, Tenant may pay the same together with any accrued interest
on the unpaid balance of such Imposition in installments as the same respectively become due
and before any fine, penalty, interest or cost may be added thereto for the nonpayment of any
such installment and interest. Any Imposition relating to a fiscal period of the taxing authority,
only a part of which period is included within the Term, shall be prorated as between Landlord
and Tenant so that Landlord shall be responsible for the portion oflmpositions attributable to
any period prior to the commencement of or subsequent to the termination of the Term, and
Tenant shall pay the portion thereof attributable to any period during the Term. Nothing
contained herein shall be deemed to require the payment by Tenant of any income, franchise,
estate, inheritance, succession or capital levy tax of Landlord.
5.3 Reports. As between the parties hereto, Tenant alone shall have the duty
of attending to, making or filing any declaration, statement or report that may be provided or
required by law as the basis of or in connection with the determination, equalization, reduction
or payment of any Imposition that is or that may become payable by Tenant under the
provisions of this Article, and Landlord shall not be or become responsible to Tenant therefor,
nor for the contents of any such declaration, statement or report.
6. UTILITIES.
Tenant shall pay, or cause to be paid, all charges that are incurred by Tenant or that
might be a charge or lien against the Leased Sites for gas, water, electricity, telephone or other
communication service, janitorial service, debris removal or any other utility or service used,
rendered or supplied upon or in connection with the Leased Sites, throughout the Term. Such
charges shall include the cost of installing and metering such utility services. Tenant shall be
responsible for obtaining all such utilities and services directly from the appropriate service
providers, and Tenant acknowledges that Landlord has no obligation to provide any utilities or
other services to Tenant, except as expressly provided in any Individual Terms Schedule.
7.1 Construction Obligation. For each Leased Site, Tenant shall make a
capital investment of not less than the amount set forth in the applicable Individual Terms
Schedule to construct, equip and merchandise the Retail Facilities located therein in accordance
with the detailed plans and specifications therefor as Approved by Landlord in accordance with
Section 7 .2.1. Tenant shall make additional investments over the life of this Lease in
maintaining and/or improving the Retail Facilities. The Retail Facilities shall be constructed by
Tenant within the Leased Sites pursuant to the provisions of this Article 7 and within the time
703999480v9 - 18 -
frames specified for commencement and completion of Construction set forth in the applicable
Individual Terms Schedule.
703999480v9 - 19 -
on the progress of Construction of the Retail Facilities. In the case of a continuing delay, only
one such Notice is necessary. Within twenty (20) days after the cessation of the delay, Tenant
shall submit a Notice of its claim as to the actual number of days of delay and the actual effect
on the progress of Construction that Tenant is claiming as an Unavoidable Delay hereunder. If
Landlord disputes Tenant's claim as to the Unavoidable Delay, Landlord shall give Notice to
Tenant within twenty (20) days. If Landlord and Tenant are unable to resolve their
disagreement, either party shall have the right to submit the matter to ADR in accordance with
the requirements of Article 22.
7.3 Cost of Construction. Tenant shall pay all costs of Construction of the
Retail Facilities. Said costs shall include, but shall not necessarily be limited to, all sums paid
to Tenant's architects, engineers, general contractor, subcontractors, materialmen or laborers
for Construction of the Retail Facilities. Such costs shall include sales taxes, employee fringe
benefits, insurance, the cost of all permits, licenses and required bonds, and all other similar
direct Construction costs.
7.5 Furniture, Fixtures and Equipment. Tenant shall provide all furniture,
fixtures and equipment ("FF&E"), operating equipment and other personal property to be
installed in the Leased Sites. The quality and type of FF &E to be installed in the Leased Sites
shall be consistent with that normally installed in other first-class retail projects containing
uses similar to those permitted at the applicable Leased Site. FF&E includes all items of
furnishings and equipment for all public and employee areas, including, in general, but not
limited to, all items attached to or set within or upon the finished walls or surfaces of the Retail
Facilities. The FF&E installed by Tenant shall be comparable in quality and scope to that
found in other first-class retail projects containing uses similar to those permitted at the
applicable Leased Site at the time Tenant installs its FF&E in the applicable Leased Site. In
addition to the foregoing, should Tenant choose to install cameras and surveillance equipment,
tenant agrees to provide Landlord with access to the system upon Landlord's written request..
703999480v9 - 20 -
Tenant also shall equip the Leased Sites with all other necessary security equipment, including
locks, security grates and panels.
703999480v9 - 21 -
7 .6.2 Prior Notice to Tenant. Prior to exercising any right under
Section 7.6.1 to cure or correct any interference with the operation of the Transit Facilities or
any Station for any period of time whatsoever, except in the case of(a) any interference that
results, as reasonably determined by Landlord, in an emergency condition, or (b) where the
interference is of the same nature or source as interference that previously occurred within the
previous six (6) months (which may or may not have been cured), Landlord shall give written
notice to Tenant and all Registered Mortgagees whose names and addresses Tenant has given
Landlord, which notice shall briefly describe the interference (such notice being hereinafter
referred to as the "Notice of Noncompliance"). In the case of clause (b) above, if Landlord has
not given prior notice, then it shall provide the Notice of Noncompliance at the time of taking
corrective action. Except as may be otherwise provided in this Lease, Tenant shall be
responsible for curing or correcting the interference within a period of three (3) days following
Tenant's receipt of such Notice of Noncompliance; provided, however, that if such cure or
correction cannot reasonably be effected within said three (3) day period, then Tenant or a
Registered Mortgagee shall be required to commence within said three (3) day period action to
effect such cure or correction and thereafter to prosecute diligently and continuously such
action until such cure or correction has been effected. In the event that Tenant or a Registered
Mortgagee so effects such cure or correction following any Notice of Noncompliance, then
Landlord shall not be entitled to cure or correct noncomplying work pursuant to such Notice of
Noncompliance. Notwithstanding the foregoing, Landlord, acting in the name of and for the
account of Tenant, may perform such work as is reasonably necessary to cure or correct such
noncomplying work if Tenant refuses or fails to undertake such actions as are required to be
taken in accordance with this Section 7.6.2 to effect such cure or correction.
703999480v9 - 22 -
of the Retail Facilities specified in the applicable Individual Terms Schedule shall not be
extended by the period of work stoppage(s) declared pursuant to this Section.
7.9 Utility Services for Leased Sites. Tenant hereby agrees that all
appurtenant water, sewer, gas, telephone, electrical and other wires, pipes, equipment and
facilities, and conductors of any kind shall be connected to and constructed in, upon, under, or
above the Leased Sites by Tenant so as not to endanger, unreasonably inconvenience, impair,
or obstruct the Transit Facilities or the Applicable Station or the capacity or flow of any of the
existing utility facilities located therein, except as expressly agreed upon in any Individual
Terms Schedule.
7.12 Zoning and Building Permits. Tenant hereby assumes full responsibility
for obtaining any and all zoning or building permits, certificates of occupancy, licenses, or
other Permits required by any Legal Requirement, for the construction, occupancy and
operation of the Retail Facilities and Leased Sites. Landlord agrees to cooperate with Tenant in
efforts to obtain such permits, certificates, or licenses, provided Tenant shall reimburse any
expenditures of Landlord reasonably necessitated by such cooperation (including, without
limitation, reasonable attorneys' fees and costs oflitigation).
703999480v9 - 23 -
coordination for connections, logistical coordination for transport of materials and other
coordination that may be required, provided doing so does not interfere with the operation of
Landlord's Transit Facilities. Landlord shall cooperate with Tenant, at Tenant's sole cost and
expense, to assist Tenant in obtaining the permits and approvals necessary to allow Tenant to
develop the Retail Facilities, and shall execute such applications and other documents
requested by Tenant as may be reasonably required to be executed by Landlord and reasonably
necessary to obtain such permits and approvals.
8.1 Purposes. Each Leased Site shall be used only for the construction,
operation, maintenance, repair and replacement of the Retail Facilities permitted by the
applicable Individual Terms Schedule (the "Permitted Use"). Tenant shall not use or permit the
use of any Leased Site (or any part thereof) for any purpose other than the Permitted Use
applicable to such Leased Site. Tenant shall not use or refer to the name "San Francisco Bay
Area Rapid Transit District" or "BART" in connection with Tenant's ownership or operation of
the Retail Facilities in any manner or operate the Retail Facilities in any manner so as to
suggest to the public at large that Landlord is involved with the ownership or operation of the
Retail Facilities. Furthermore, Tenant shall not use the "BART" logo or any of Landlord's
trademarks or service marks without Landlord's prior written consent, which may be given or
withheld in Landlord's sole discretion.
703999480v9 - 24 -
prospective profitability of Tenant's operations on the Leased Sites. Landlord shall in no event
be responsible or liable for any loss of profits or business, or for any receivership, assignment
for the benefit of creditors, insolvency or bankruptcy of Tenant, due to the temporary or
permanent cessation, in whole or in part, of Landlord revenue service, or due to any cause
whatsoever, whether or not attributable to Landlord directly or indirectly, in whole or in part.
8.5 Compliance With Legal, Insurance and Other Requirements. In the use
and occupation of the Retail Facilities and the conduct of such business thereon, Tenant, at its
sole cost and expense, shall promptly comply in all material respects and shall cause all persons
claiming by, through or under Tenant and the Leased Sites to promptly comply, with all Legal
Requirements and all Insurance Requirements. Tenant shall not cause or maintain any nuisance
within or on the Leased Sites, allow any sale by auction on the Leased Sites, commit or suffer
to be committed any waste upon the Leased Sites, place any loads upon the floor, walls or
ceiling that endanger the structure of the Station, obstruct the sidewalk, passageways, stairways
or escalators, in front of, within or adjacent to the Stations, or do or permit to be done anything
in any way tending to injure the reputation or appearance of the Stations. Tenant shall be
responsible for any and all customer complaints and/or refunds due its customers and shall
promptly and courteously handle such complaints and/or refunds upon receipt or upon referral
by Landlord.
8.6 Contest of Legal Requirements. Tenant shall have the right to contest by
appropriate proceedings diligently conducted in good faith, in the name of Tenant or Landlord
or both, without cost or expense to Landlord, the validity or application of any Legal
Requirement. If compliance with any such Legal Requirement may be legally delayed pending
the prosecution of any such proceeding without the incurrence of any lien, charge or liability of
any kind against, and without the risk of foreclosure or execution sale of, the applicable Leased
Site or Tenant's interest therein, and without subjecting Tenant or Landlord to any liability,
civil or criminal, for failure so to comply therewith, then, and only then may Tenant delay
compliance therewith until the final determination of such proceeding.
703999480v9 - 25 -
oftime whatsoever the safe and efficient operation of the Transit Facilities and the Applicable
Stations. Tenant hereby assumes full responsibility for insuring that all subtenants of the Retail
Facilities, and the property manager for the Retail Facilities, if any, comply fully and
completely with the requirements of this Section 8.7. All subleases of any portion of the
Leased Sites, management contracts, service contracts, maintenance contracts, concession
contracts, and other similar agreements entered by Tenant with respect to the Leased Sites shall
contain an express covenant that the tenant, manager, concessionaire or other contractor of the
Retail Facilities shall refrain from any activity that would endanger the safety of Landlord's
patrons, endanger the safe and efficient operation of the Transit Facilities and the Applicable
Station, or cause an interruption in Landlord's operation therein. No express covenant by any
said tenant, manager, concessionaire or other contractor of the Retail Facilities shall release
Tenant from its full responsibility and liability under this Lease.
8.10 Third Party Management. If Tenant hires a third party to manage the
Retail Facilities, Landlord shall have the right to Approve the management agreement between
Tenant and such third party manager, which Approval shall not be unreasonably withheld,
703999480v9 - 26-
conditioned or delayed. Jones Lang LaSalle ("JLL") is a preapproved; however, Tenant shall
have no obligation to hire JLL.
8.13 Ingress and Egress. Tenant shall possess the right of ingress to and
egress from the free area of the Stations as may be necessary in fulfillment of the terms of this
Lease, subject to Landlord's rules and regulations; provided, however, that Tenant agrees that
the exercise of such right shall not impede or interfere unduly with the operation of Landlord,
its employees, agents, contractors, patrons, invitees, permittees or other authorized occupants or
users of the Stations. All such ingress and egress shall be during the time the Applicable Station
is open. For purposes of stocking its facilities, Tenant shall have the right to use the Applicable
Station elevators during all hours of operation, except 6:00 A.M. to 9:00 A.M. and 4:00 P .M. to
7:00 P.M. (as such hours may be modified from time to time by Landlord, upon notice to
Tenant). Such elevators shall not be engaged by Tenant for any period of time other than that
reasonably necessary for Tenant to transfer merchandise, equipment and supplies to and from
the Leased Site and in no event shall Tenant unreasonably interfere with the use of any such
elevator by the handicapped. All loading and unloading of elevators shall be done expeditiously
so that the elevators will reasonably be available for Landlord's patrons.
8.14 Security. Tenant shall be responsible for providing security for the
Leased Sites, in coordination and cooperation with Landlord; but shall have no obligation to
provide security for the portions of any Station outside of the Leased Sites.
703999480v9 - 27 -
(b) All Vendor Parties seeking a Vendor Card are required to
undergo a criminal history check administered through the BART Police Department ("BPD").
BPD will collect a set of rolled fingerprints from prospective Vendor Parties that will be
compared with the State of California's Department of Justice ("DOJ") Criminal Offender
Records System. Upon receipt ofDOJ's response, BPD shall notify Landlord's Real Estate
Department of the results of the background check. All DOJ records shall be kept confidential
and maintained by BPD. Any person who has a prior conviction for a Level 1 Felony shall be
permanently barred from obtaining a Vendor Card and from performing work on or at any
Station pursuant to any contract or agreement. Any person who has a prior conviction for a
Level 2 Felony within the prior ten (10) years shall be disqualified from obtaining a Vendor
Card and from performing work on or at any Station pursuant to any contract or agreement.
9. INSURANCE.
703999480v9 - 28 -
insurance prov1s10ns. This coverage shall include an endorsement naming Landlord as a loss
payee as its interests may appear and a copy of this endorsement shall be provided to Landlord.
703999480v9 -29-
(x) The following endorsements, copies of which
shall be provided to Landlord:
703999480v9 - 30 -
the Leased Sites and all machinery, furniture, fixtures and equipment owned by Tenant and
located thereon or used in connection therewith, insured during the Term for the mutual benefit
of Tenant and Landlord as required by this Section 9.2.1.
703999480v9 - 31 -
(a) Liability insurance in substantially the same form, as
required by Section 9 .1.3 of this Lease.
9.5 Notice of Cancellation. All policies shall be endorsed to provide not less
than thirty (30) days' prior written notice of any cancellation, reduction or material change in
coverage. Tenant shall submit certifications annually to Landlord confirming that the insurance
required has been renewed and continues in place.
9.6 Qualifying Insurers. All policies required by this Article shall be issued
by companies that hold a current policyholder alphabetic and financial size category rating of
not less than A: VIII according to Best's Insurance Reports.
703999480v9 - 32 -
Persons, (b) damage to property, (c) damage to the Leased Sites or any part thereof, or
(d) claims arising by reason of any of the foregoing, to the amount and extent that such
damages and/or claims are covered (and only to the extent of such coverage) by insurance
actually carried by either Landlord or Tenant. This provision is intended to restrict each party
(as permitted by law) to recovery against insurance carriers to the extent of such coverage, and
waive fully, and for the benefit of each, any rights and/or claims that might give rise to a right
of subrogation in any insurance carrier.
9.8 Proceeds. With respect to builders' risk (course of construction) and all-
risk property insurance, Landlord shall not interfere with Tenant's adjustment of loss. Such
insurance proceeds, with the exception of business interruption insurance, if any, shall be held
by any Registered Mortgagee, or alternatively by any institutional lender or trust company
satisfactory to Landlord, Tenant and any Registered Mortgagee and shall be applied in
accordance with the provisions of this Lease. Any Registered Mortgagee shall have the right,
to the extent same is granted in its Leasehold Mortgage, to participate in any settlement or
adjustment of losses.
9.9 Compliance. Tenant shall observe and comply with the requirements of
all policies of commercial general liability, property and other policies of insurance at any time
in force with respect to the Leased Sites, and Tenant shall so perform and satisfy the
requirements of the companies writing such policies so that, at all times, companies of good
standing satisfactory to Landlord shall be willing to write or to continue such insurance.
Tenant shall, in the event of any violations or attempted violations of the provisions of this
Section by any subtenant, licensee or other user of any portion of the Leased Sites, take steps,
immediately upon knowledge of such violation or attempted violation, to remedy or prevent the
same, as the case may be.
703999480v9 - 33 -
appearance of such Leased Site, then Tenant shall submit to Landlord for its Approval
documentation that describes the desired repairs, including floor plans, building sections,
building materials and components and the like, to the extent relevant to the particular repair.
10.3 Compliance with Article 7. Any repairs that require the issuance of any
building permit shall be performed in accordance with the provisions of Article 7 of this Lease.
703999480v9 - 34 -
with the adjustment of the loss, shall be insufficient in the judgment of any Registered
Mortgagee or Landlord to pay the entire cost of such restoration, Tenant shall, upon demand of
the Registered Mortgagee or Landlord, either pay the deficiency to the trustee prior to
commencement or continuation of construction or provide adequate security to guarantee the
payment of such costs [ Such security may be in the form of a letter of credit, bank guarantee,
unconditional loan commitment or other guarantee satisfactory to the Registered Mortgagee or
Landlord, as applicable.
11.3 Rent Abatement. In the event of a casualty, Tenant shall not be entitled
to any abatement of Rent
12. CONDEMNATION.
12.1 Partial Condemnation. If (a) there occurs a partial Taking of any Leased
Site in or by condemnation or other eminent domain proceedings pursuant to any law, general
or special, or (b) the use or occupancy of any Leased Site or any part thereof shall be
temporarily requisitioned by any governmental authority, civil or military, then, in either event,
this Lease shall continue in full effect, notwithstanding such partial Taking or requisition.
Tenant shall, at its expense, repair and restore any damage caused by any such partial Taking or
requisition to the Leased Site, so that after the completion of such restoration the Retail
Facilities shall be, as nearly as possible, in a condition as good as the condition thereof
immediately prior to such partial Taking or requisition. Such restoration shall be performed in
accordance with Article 7 of this Lease. In the event of any temporary requisition, Tenant shall
be entitled to receive the entire net award payable by reason of such temporary requisition. The
net award for any partial Taking shall be deposited and disbursed in the same manner as
insurance proceeds are disbursed pursuant to Section 11.2. Upon completion of such
restoration, the balance of such excess proceeds shall be paid to Landlord. If the cost of any
repairs required to be made by Tenant pursuant to this Section shall exceed the amount of the
net award, the deficiency shall be paid by Tenant No payments shall be made to Tenant
pursuant to this Section if any monetary default or Event of Default shall have occurred and be
continuing under this Lease, unless and until such monetary default or Event of Default shall
have been cured or removed.
12.2 Total Taking. In the event of a Taking of any Leased Site of such
magnitude that it is not feasible to restore the Retail Facilities pursuant to Section 12.1, then
703999480v9 - 35 -
such Leased Site shall be excluded from this Lease as of the date of such Taking; Rent and
other charges payable by Tenant hereunder with respect to such Leased Site shall be Prorated
as of the date of the Taking; and Tenant shall be discharged from any responsibility to restore
the Retail Facilities located at such Leased Site. In such event, the award for such Taking shall
be allocated as follows:
12.3 Condemnation Award Defined. For the purposes of this Article, all
amounts paid pursuant to any agreement with any condemning authority that has been made in
settlement of or under threat of any condemnation or other eminent domain proceeding
affecting the Leased Site shall be deemed to constitute an award made in such proceeding.
12.4 Abatement or Reduction of Rent. In the event ofa Taking, Tenant shall
not be entitled to any abatement or reduction of Rent, except as otherwise provided under
Section 12.2.
13. LIENS.
13.1 Discharge of Liens. During the Term of this Lease, Tenant shall not
permit to remain, and shall promptly discharge, at its sole cost and expense, all Liens (other
than Liens created by Landlord) upon the Leased Sites or any part thereof; provided, however,
that the existence of any mechanics' liens or rights thereto shall not constitute a violation of this
Article if payment is not yet due under the contract that is the foundation of such liens or rights
thereto. Tenant shall have the right to contest with due diligence the validity or amount of any
Lien or claimed Lien provided that Tenant has deposited with the court in which the
proceedings are pending cash, or a bond from a reputable corporate surety or other reasonable
assurance of payment by Tenant, made within thirty (30) days after the date of recording of the
Lien, as assurance that any final judgment thereon, or such process as may be issued for the
enforcement thereof, shall be paid and discharged forthwith. On final determination of the Lien
or claim of Lien, Tenant shall immediately pay any judgment rendered with all proper costs and
703999480v9 - 36 -
charges and shall have the Lien released or judgment satisfied at Tenant's own expense. If
Tenant shall fail to do so, Landlord may at its option, and upon thirty (30) days' prior Notice to
Tenant, pay any such final judgment and clear the title to the Leased Sites therefrom. If within
thirty (30) days after the date a Lien is recorded Tenant shall fail to contest with due diligence
the validity or amount of any such Lien or claimed Lien, Landlord may, but shall not be
required to, contest the validity or amount of any such Lien or claimed Lien or settle or
compromise the same without inquiring into the validity of the claim or the reasonableness of
the amount thereof. All such sums paid by Landlord and all expenses incurred by it in
connection therewith shall be Additional Rent and shall be payable to Landlord by Tenant on
demand.
13.2 Notice ofNonresponsibility. Landlord shall have the right at all times to
post and keep posted on the Leased Sites any notices permitted or required by law, or that
Landlord shall deem proper, for the protection of Landlord, the Applicable Station, the Retail
Facilities, and any other party having an interest therein, from mechanics' and materialmen's
liens, and Tenant shall give to Landlord at least ten (I 0) Business Days' prior Notice of
commencement of any Construction on the Leased Sites.
13.3 Notice of Liens. Should any Lien be filed against the Leased Sites or
any portion thereof or should any action of any character affecting the title hereto be
commenced, Tenant shall give Landlord Notice thereof as soon as notice of such Lien or action
comes to the knowledge of Tenant.
If Tenant shall at any time fail to pay any Imposition or other charge in accordance with
Article 5 within the time period therein permitted, or shall fail to pay for or maintain any of the
insurance policies required in Article 9 within the time therein permitted, or shall fail to make
any other payment or perform any other act on its part to be made or performed hereunder
within the time permitted by this Lease, then Landlord, after thirty (30) days' Notice to Tenant
(or, in case of an emergency, on such notice, or without notice, as may be reasonable under the
circumstances), and without waiving or releasing Tenant from any obligation of Tenant
hereunder, may (but shall not be required to): (a) pay such Imposition or other charge payable
by Tenant pursuant to the provisions of Article 5, or (b) pay for and maintain such insurance
policies provided for in Article 9, or (c) make such other payment or perform such other act on
Tenant's part to be made or performed as provided in this Lease. All sums so paid by Landlord
and all costs and expenses incurred by Landlord in connection with the performance of any
such act, together with interest thereon at the Default Rate, calculated from the respective dates
of Landlord's making of each such payment or incurring of each cost or expense, shall
constitute Additional Rent payable by Tenant under this Lease and shall be paid by Tenant to
Landlord on demand. Landlord shall not be limited in the proof of any damages that Landlord
may claim against Tenant arising out of or by reason of Tenant's failure to provide and keep in
force insurance as aforesaid to the amount of the insurance premium or premiums not paid or
incurred by Tenant and that would have been payable upon such insurance, but Landlord also
shall be entitled to recover as damages for such breach the uninsured amount of any loss (to the
extent of any deficiency in the insurance required by the provisions of this Lease), damages,
703999480v9 - 37 -
costs and expenses of suit, including attorneys' fees, suffered or incurred by reason of damage
to, or destruction of, all or any portion of the Leased Sites, occurring during any period in
which Tenant shall have failed or neglected to provide insurance as aforesaid.
703999480v9 - 38 -
15.2 Exclusions. There is hereby expressly excluded from the scope of the
foregoing indemnity any matter resulting solely from the gross negligence or willful
misconduct of Landlord.
15.3 Tender of Defense. If any action or proceeding the subject of this Article
15 is brought against any Landlord Indemnitee, Tenant shall, upon Notice from Landlord and at
Tenant's expense, defend such action or proceeding through counsel reasonably acceptable to
Landlord.
15.4 Survival. The provisions of this Article 15 shall survive the termination
of this Lease.
703999480v9 - 39 -
groundwater at, in, on, under or about the Leased Sites. Tenant shall comply, and shall cause
all Tenant Parties to comply, with all Environmental Requirements applicable to the Leased
Sites, the use or occupancy of the Leased Sites or any operation or activity thereon. Tenant
shall immediately furnish Landlord with copies of any notices or other communications
received from any insurance company or governmental agency or inspection bureau or sent by
or on behalf of Tenant to any Person relating to Environmental Requirements or Hazardous
Materials relating to the Leased Sites or the Transit Facilities or Stations or regarding any
unsafe or unlawful conditions on the Leased Sites.
16.4 Notice of Violations. Tenant shall, within ten (10) days after Tenant's
receipt thereof, give written notice to Landlord of any notice or other communication regarding
any (a) actual or alleged violation of Environmental Requirements by any Tenant Party or with
respect to any Leased Site, (b) actual or threatened migration of Hazardous Materials to or from
such Leased Site, or (c) the existence of Hazardous Materials in or on any Leased Site or any
actual or threatened investigation, inquiry, lawsuit, claim, citation, directive, summons,
proceeding, complaint, notice, order, writ or injunction relating to any of the foregoing.
17.1 Surrender. On the last day of the Term or upon any earlier termination
of this Lease pursuant to the terms hereof, or upon any reentry by Landlord upon the Leased
Sites pursuant to Article 17, Tenant shall surrender the Leased Sites to Landlord in good order,
condition and repair, reasonable wear and tear excepted, free and clear of any Hazardous
703999480v9 - 40 -
Materials and all Liens and encumbrances (including, without limitation, any sublease of this
Lease), other than those, if any, existing on the Effective Date or created by Landlord. Title to
all personal property of Tenant located in or upon the Leased Sites shall remain in Tenant, and
upon the expiration or earlier termination of this Lease the same may, and upon the demand of
Landlord shall, be removed and any resultant damage to the Leased Sites shall be repaired by
and at the expense of Tenant. Landlord may cause any of said personal property that is not
removed from the Leased Sites within thirty (30) days after the date of any termination of this
Lease to be removed from the Leased Sites and stored at Tenant's expense, or, at Landlord's
election said personal property thereafter shall belong to Landlord without the payment of any
consideration, subject to the rights of any Person holding a perfected security interest therein.
Tenant shall execute, acknowledge and deliver to Landlord such instruments of further
assurance in recordable form as in the opinion of Landlord are necessary or desirable to release
and quitclaim to Landlord all right, title and interest of Tenant in and to the Leased Sites.
703999480v9 - 41 -
to pay for the required demolition and debris removal, Tenant shall pay for such shortfall. The
provisions of this Section 17.2 shall survive the expiration of the Term or the earlier
termination of this Lease. In the event this Lease is extended beyond the Expiration Date, and
Tenant has been paying into such Demolition Fund, the payment obligation shall cease until
such time Landlord may exercise again its right five (5) years prior to the new Expiration Date
to demand contributions into the Demolition Fund. At such time, Tenant shall be credited with
all amounts paid to date and its continuing obligation to contribute the Estimated Demolition
Cost or Revised Demolition Cost Estimate, as applicable, shall be reduced by that amount.
703999480v9 - 42 -
(e) if at any time Tenant is unable to purchase (irrespective of
premium cost) any type of insurance required hereunder, or Tenant is able to purchase the type
of insurance but in amounts of liability less than those required hereunder; or
(a) the worth at the time of award of any unpaid Rent that had
been earned at the time of such termination; plus
(b) the worth at the time of award of the amount by which the
unpaid Rent that would have been earned after termination until the time of award exceeds the
amount of such rental loss Tenant proves could have been reasonably avoided; plus
(c) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably avoided as computed pursuant to subdivision
(b) of Section 1951.2(b) of the California Civil Code. For purposes of determining such
amount, Percentage Rent shall be deemed payable by Tenant during each year for the balance
of the Term at the highest rate paid by Tenant during any one (1) of the immediately preceding
five ( 5) Operating Years; plus
As used herein, the words "time of the award" shall mean either the date upon which
Tenant pays to Landlord the amount recoverable by Landlord as hereinabove set forth or the
date of entry of any determination, order or judgment of any court, other legally constituted
body, or any arbitrator(s), determining the amount recoverable, whichever first occurs. Any
claims for damages pursuant to the foregoing provisions shall be immediately enforceable by
Landlord against Tenant by suit and shall be provable in any bankruptcy or insolvency
proceedings involving Tenant. As used in subparagraphs (a) and (b) above, the "worth at the
time of award" is computed by allowing interest at the Default Rate. As used in subparagraph
(c) above, the "worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (I%).
703999480v9 - 43 -
18.3 Landlord's Right of Reentry. If any such Event of Default occurs,
Landlord shall also have the right, with or without terminating this Lease, to reenter the Leased
Sites and remove all Persons and property from the Leased Sites; such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant.
18.4 Landlord's Right to Relet the Leased Sites. In the event of the vacation
or abandonment of any Leased Site by Tenant, or if Landlord shall elect to reenter as provided
in Section 18.3 or shall take possession of the Leased Sites pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Section 18.2, then Landlord may from time to time, without terminating this
Lease, either recover all Rent as it becomes due or relet the Leased Sites or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right to make alterations and
repairs to the Leased Sites. If Landlord elects to so relet, then rentals received by Landlord
from such reletting shall be applied: first, to the payment of any indebtedness other than Rent
due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting;
third, to the payment of the cost of any alterations and repairs to the Leased Sites; fourth, to the
payment of Rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord
and applied in payment of future Rent as the same may become due and payable hereunder.
Should the amount of rental received from such reletting during any month that is applied to the
payment of Rent hereunder be less than that agreed to be paid during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand
therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant also shall
pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such
reletting or in making such alterations and repairs not covered by the rentals received from such
reletting.
703999480v9 - 44-
entity that is financially responsible and experienced in operating retail establishments similar
to the Retail Facilities, and (d) the Transfer complies with other requirements of this Section
19.1. For purposes hereof, an entity shall be deemed to be "financially responsible" if(a) such
entity has a net worth comparable to Tenant's or is owned by an entity with such a net worth
who agrees to guaranty the obligations of its subsidiary or affiliate under this Lease, or (b) it
can demonstrate to Landlord's satisfaction that it can pay the Minimum Base Rent for the
remaining Term, which demonstration may include, without limitation, delivery of a letter of
credit in favor of Landlord for the total amount of such Minimum Base Rent for the entire
period or other security reasonably satisfactory to Landlord. For purposes hereof, such entity
shall be deemed to have the requisite experience and ability to operate the Retail Facilities on
the Leased Sites if such entity has a reputation for honesty and integrity and has a proven
performance record in the type of operations assumed hereunder. For the proposed Transfer to
be effective, the transferee must furnish Landlord with a written and fully executed and
acknowledged assignment and assumption agreement and, if a guaranty is required, with a
written guaranty and a legal opinion of guarantor's attorney, pursuant to which the transferee
agrees to comply with and perform all of the obligations of Tenant under this Lease, the
guarantor guaranties all such obligations and the guarantor's attorney opines that the guarantee
is legal, valid, binding and enforceable in accordance with its terms. All of the foregoing
documents shall be in form and substance acceptable to Landlord and its General Counsel. The
approval by Landlord of one Transfer shall not be deemed to be an approval by Landlord of
any subsequent Transfer.
19.2 Subletting. Tenant shall have the right to sublet retail space in the
Leased Sites (but not all of any Leased Site and not Tenant's entire leasehold estate in any
Leased Site, which shall be governed by Section 19. I above) to subtenants for their occupancy
without the prior Approval of Landlord, provided that the sublease is on a form approved by
Landlord without any material modifications thereto, all uses under such sublease are Permitted
Uses, the sublease otherwise is made subject and subordinate to this Lease, the term of such
sublease does not extend beyond the Term and Tenant delivers a fully executed copy of such
sublease to Landlord prior to its commencement date. No such subletting shall relieve Tenant
of any liability or obligation under this Lease. All subleases shall obligate the subtenants to
comply with all applicable terms of this Lease, including without limitation the obligation to
comply with the Design Guidelines and the Performance Standards.
703999480v9 - 45 -
or any interest therein or sublet the sublet space without Landlord's prior written consent
(which consent shall be subject to the provisions of this Article 18.4), and that the transferee
will comply with all of the provisions of this Lease and that Landlord may enforce the Lease
provisions directly against such transferee. No permitted subletting by Tenant shall be
effective until there has been delivered to Landlord a counterpart of the sublease in which the
subtenant agrees to be and remain jointly and severally liable with Tenant for the payment of
rent pertaining to the sublet space and for the performance of all of the terms and provisions of
this Lease; provided, however, that the subtenant shall be liable to Landlord for rent only in the
amount set forth in the sublease. No permitted Transfer shall be effective unless and until there
has been delivered to Landlord a counterpart of the assigmnent in which the transferee assumes
all of Tenant's obligations under this Lease arising on or after the date of the assigmnent. The
failure or refusal of a subtenant or transferee to execute any such instrument shall not release or
discharge the subtenant or transferee from its liability as set forth above.
20.1 Mortgage by Landlord. Landlord shall have the right at all times to
Mortgage or hypothecate its ownership of the Stations and its lessor's interest in this Lease;
provided, however, that such fee Mortgage or encumbrance shall at all times be subject and
subordinate to this Lease, the leasehold estate of Tenant created hereby, and any Leasehold
Mortgage encumbering this Lease (the mortgagee or beneficiary under any such Mortgage
being called herein the "Fee Mortgagee"). Notwithstanding the foregoing, in the event of a
foreclosure of any such Mortgage, or of any other action or proceeding for the enforcement
thereof, or of any sale thereunder, this Lease will not be barred, terminated, cut off or
foreclosed, nor will the rights and possession of Tenant hereunder be disturbed, if no Event of
Default has occurred. Upon the request of any Fee Mortgagee, Tenant shall execute any
amendment to this Lease that does not, in the reasonable opinion of Tenant's counsel, adversely
affect Tenant's rights hereunder.
20.3 Termination of Landlord's Liability. At such time and each such time as
Landlord shall sell, transfer, assign or convey the entire right, title and estate of Landlord in the
Stations and in this Lease, all obligations and liability on the part of Landlord arising under this
Lease after the effective date of such sale, transfer, assigmnent or conveyance shall terminate as
to the transferor, and thereupon all such liabilities and obligations shall be binding upon such
new owner of the entire right, title and estate of Landlord in the Leased Sites and in this Lease.
703999480v9 - 46 -
21. TENANT'S RIGHT TO HYPOTHECATE LEASE.
21.1 Mortgage by Tenant. Tenant may from time to time execute one or more
Leasehold Mortgages encumbering all or any portion of the right, title and estate of Tenant in
the Leased Sites or in this Lease, provided that such Leasehold Mortgages shall at all times be
subject and subordinate to, and shall not affect or become a lien upon, Landlord's right, title or
estate in the Leased Sites or in this Lease. Such Leasehold Mortgages, in a form Approved by
Landlord, may be recorded in the Official Records. If Tenant shall subject all or a portion of its
right, title or estate in the Leased Sites or in this Lease to a Leasehold Mortgage, and ifthe
Leasehold Mortgagee shall forward to Landlord a copy of such Leasehold Mortgage, together
with a Notice setting forth the name and address of the Leasehold Mortgagee (a Leasehold
Mortgagee who does so shall be referred to as a "Registered Mortgagee" and its Leasehold
Mortgage shall be referred to as a "Registered Mortgage"), then, until such time, if any, that
such Registered Mortgage shall be satisfied in the Official Records, such Leasehold Mortgagee
shall be entitled to the rights and protections set forth in Section 21.3. The obligations secured
by any Leasehold Mortgage shall be payable in full at least one (1) year prior to expiration of
the Term.
703999480v9 - 47 -
by Tenant within any grace or cure periods provided to Tenant hereunder, and Landlord shall
accept such performance on the part of any Registered Mortgagee as though the same had been
done or performed by Tenant. Landlord will take no action to effect a termination of this Lease
by reason of an Event of Default unless such Event of Default has continued beyond the grace
period available to Tenant for curing such Event of Default.
22.1 Meet and Confer. In the first phase of the ADR process, designated
representatives of Tenant and Landlord, shall "meet and confer" (the "Dispute Resolution
Meeting") and attempt to resolve the dispute.
703999480v9 - 48 -
22.1.2 Meeting. If the Dispute Resolution Meeting is requested by
Tenant, the meeting shall be held at Tenant's counsel's office in the San Francisco Bay Area or,
if requested by Landlord, at Landlord's headquarters in Oakland or at Landlord's counsel's
office in the San Francisco Bay Area. The Dispute Resolution Meeting shall be attended on
behalf of Landlord by the Manager of Landlord's Real Estate and Property Development
Department and on behalf of Tenant by a of Tenant. The parties agree
to use good faith efforts to settle the matter in question at the Dispute Resolution Meeting. The
Dispute Resolution Meeting shall be deemed to be settlement negotiations under California
Evidence Code Section 1152 and all offers, communications, conduct, promises and
statements, whether written or oral, made during such Dispute Resolution Meeting shall be
confidential, privileged and inadmissible for any purpose, including impeachment, in any
arbitration or other proceeding involving the parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of
its use at the Dispute Resolution Meeting.
22.2 Mediation.
703999480v9 - 49-
22.2.2 Settlement Agreement. If the parties reach resolution of the
matter as a result of the Mediation, the parties shall enter into a written agreement ("Settlement
Agreement"), which shall set forth in reasonable detail the settlement terms, the action to be
taken (if any) by either party and the period in which such action (if any) is to be completed.
22.3 Miscellaneous. In no event shall Tenant have the right to initiate any
phase of the ADR process with respect to a default or alleged default by Tenant under Section
18.l(d) of this Lease. Furthermore, ifTenant initiates ADR with respect to any defaults or
alleged defaults under: (a) Section 18.l(a); or (b) Section 18.l(c), if such default or alleged
default concerns matters relating to public health or safety or the structural integrity of the
Retail Facilities, then Tenant must cure or continuously attempt to cure the default as a
condition to initiating and continuing the ADR process.
23. NON-DISCRIMINATION.
Tenant covenants by and for itself, and its trustees, administrators, successors and
assigns, and all Persons claiming under or through Tenant, and this Lease is made and accepted
upon and subject to the following conditions: that there shall be no discrimination against or
segregation of any Person or group of Persons, on account of race, religion, sex, or national
origin, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the
Leased Sites or any part thereof, nor shall the Tenant itself, or any Person claiming under or
through Tenant, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use, occupancy, or tenants,
sublessees, subtenants, or vendees in the Leased Sites.
24. MISCELLANEOUS.
24.1 Estoppel Certificates. At any time and from time to time, Landlord and
Tenant, on at least twenty (20) days' prior Notice from the other, shall deliver to the party
making the request a statement in writing certifying that this Lease is unmodified and in full
force and effect (or ifthere shall have been modifications that the same is in full force and
effect as modified and stating the modifications) and the date to which the Rent and any other
deposits or charges have been paid, and stating whether or not, to the best knowledge of the
party executing such certificate, the party requesting such statement is in default in the
performance of any covenant, agreement or condition contained in this Lease and, if so,
specifying each such default of which the executing party may have knowledge.
703999480v9 - 50 -
not be affected thereby, and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
24.3 Payment of Wages. Neither Tenant nor any joint venturer, partner,
member, contractor, subcontractor or assignee shall pay less than prevailing wages for
construction work relating to the Retail Facilities. Tenant shall be responsible for compliance
with this requirement. Prevailing wages shall be determined in accordance with special wage
determination rates for similar projects pursuant to the California Labor Code or pursuant to
wage scales negotiated by Tenant with the union in which employees working on the Retail
Facilities are members. Tenant shall keep its payroll records, and shall require that any joint
venturer, partner, contractor, subcontractor or assignee hereunder keep its payroll records, for
the term of this Lease or for three (3) years after payment of wages subject to this Section 24.3,
whichever occurs first. Landlord shall have the right to review such payroll records during the
term of this Lease upon request therefor in writing.
one copy to: Attn.: Department Manager, Real Estate and Property Development, l 61h
Floor
second copy to: Attn.: Office of the General Counsel, 23'd Floor
24.5 Quiet Enjoyment. Landlord covenants and agrees that Tenant, upon
paying the Rent and all other charges herein provided for and observing and keeping all
703999480v9 - 51 -
covenants, agreements and conditions of this Lease on its part to be observed and kept, shall
from and after the Effective Date quietly have and enjoy the Leased Sites during the Term of
this Lease without hindrance or molestation by anyone claiming by or through Landlord,
subject, however, to the exceptions, reservations and conditions of this Lease.
703999480v9 - 52 -
permit, judgment, decree, order, easement, restriction or other charge, right or interest
applicable to Tenant.
24.9 Interpretation. In all cases the language in all parts of this Lease shall be
construed simply, according to its fair meaning and not strictly for or against Landlord or
Tenant.
24. l 0 Headings. The titles introducing the article and section designations
contained herein are inserted solely for convenience and under no circumstances are they or
any of them to be treated or construed as any part of this instrument.
24.11 Successors and Assigns. Subject to the provisions hereof, this Lease
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Wherever a reference in this Lease is made to either of the parties
hereto, such reference shall be deemed to include, wherever applicable, a reference to the
successors and assigns of such party also, as if in every case so expressed.
24.12 Memorandum of Lease. Upon the request of either party, a short form of
lease referring to this Lease shall be executed by Landlord and Tenant and recorded in the
Official Records.
24.13 Choice of Laws. This Lease, including all exhibits thereto, shall be
construed and enforced in accordance with the laws of the State of California, without
reference to application of conflicts of laws.
703999480v9 - 53 -
discharge or termination is sought. All Exhibits attached to this Lease are hereby incorporated
by reference and made a part hereof.
24.16 Commissions. Landlord and Tenant have dealt with each other directly
in connection with this transaction and no real estate broker, salesperson or finder has the right
to claim a real estate brokerage, salesperson's commission or finder's fee by reason of contact
between the parties brought about by such broker, salesperson or finder. Each party shall hold
and save the other harmless of and from any and all loss, cost, damage, injury or expense
arising out of or in any way related to claims for real estate broker's or salesperson's
commissions or fees based upon allegations made by the claimant that it is entitled to such a fee
from the indemnified party arising out of contact with the indemnifying party or alleged
introductions of the indemnifying party to the indemnified party or the Leased Sites.
24.18 Time is of the Essence. Time is of the essence of this Lease and of each
provision hereof.
24.20 No Discrimination. Tenant does hereby covenant and agree that (a) no
person on the grounds of race, color, religion or national origin shall be excluded from
participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of
the Leased Sites or any part thereof, and (b) that in the construction of the Retail Facilities and
703999480v9 - 54 -
any other improvements on the Leased Sites or the furnishing of services thereon, no person on
the grounds of race, color, religion or national origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to discrimination.
24.22 Right of First Refusal. If Landlord (a) expands its Trausit Facilities after
the Effective Date to add auy transit stations in addition to the Stations listed on Exhibit A, (b)
renovates any of the Stations in such a manner as to create additional space that is suitable and
appropriate for the installation of Retail Facilities, or (c) replaces Stations during the Term (any
of the foregoing, an "Expansion Station"), then, in any such case, Tenant shall have the right of
first refusal to add the Expausion Station to this Lease, pursuaut to terms agreed to by Landlord
and Tenant and documented in an Individual Terms Schedule. Laudlord shall notify Tenant of
the availability of any such Expansion Station at least six (6) months prior to its opening or
reopening, and Tenant shall have the right to exercise the option to add the Expausion Station
to this Lease within ninety (90) days of Tenant's receipt of such notice from Landlord (the
"Expansion Notice Deadline"). If Tenant fails to deliver notice to Landlord of Tenant's
election of such right by the Expansion Notice Deadline, Tenant shall have no further right to
add the applicable Expausion Station to this Lease. If Tenant exercises such right to add the
Expansion Station to this Lease, Landlord and Tenaut shall negotiate diligently and in good
faith the Individual Terms Schedule for the space to be leased by Tenant in such Expausion
Station and any other terms with respect to such space that vary for the terms and provisions of
this Lease, including the date such space will become a Leased Site hereunder.
25.1 Landlord's Opinion of Fair Market Rental Rate. For the purposes of the
Lease, the term "Fair Market Rental Rate" shall mean the annual amount (compared on a per
rentable square foot basis and factoring the Percentage Rent paid hereunder) that Landlord or
other owners of property of similar appearance and store-front appeal in the vicinity of the
Applicable Station have accepted for leases of comparable real estate, for a comparable use as
Tenant. Landlord shall determine the Fair Market Rental Rate by using its good faith
judgment. Landlord shall provide written notice of such amount within one hundred eighty
(180) days prior to the commencement of the applicable Extension Term. Tenant shall have
thirty (30) days ("Tenant's Review Period") after receipt of Landlord's notice of the new rental
rate within which to accept such rental rate or to reasonably object thereto in writing. In the
event Tenant objects, Landlord and Tenant shall attempt to agree upon such Fair Market Rental
Rate, using their good faith efforts. If Landlord and Tenant fail to reach agreement within
thirty (30) days following Tenant's Review Period (the "Outside Agreement Date"), then each
party shall place in a separate sealed envelope its final proposal as to the Fair Market Rental
703999480v9 - 55 -
Rate, and such determination shall be submitted to arbitration in accordance with Section 25.4
below. Failure of Tenant to so elect in writing within Tenant's Review Period shall
conclusively be deemed its approval of the Fair Market Rental Rate determined by Landlord.
25.2 Landlord's Failure to Provide Opinion. In the event that Landlord fails
to timely generate the initial written notice of Landlord's opinion of the Fair Market Rental
Rate that triggers the negotiation period of this Section 25, then Tenant may commence such
negotiations by providing the initial notice, in which event Landlord shall have thirty (30) days
("Landlord's Review Period") after receipt of Tenant's notice of the new rental rate within
which to accept or reject such rental rate. In the event Landlord fails to accept in writing such
rental rate proposed by Tenant, then such proposal shall be deemed rejected, and Landlord and
Tenant shall attempt in good faith to agree upon such Fair Market Rental Rate, using their good
faith efforts. If Landlord and Tenant fail to reach agreement within thirty (30) days following
Landlord's Review Period (which shall be, in such event, the "Outside Agreement Date" in lieu
of the above definition of such date), then each party shall place in a separate sealed envelope
its final proposal as to Fair Market Rental Rate and such determination shall be submitted to
arbitration in accordance with Section 25.4 below.
25.4 Arbitration.
703999480v9 - 56 -
require such briefs as the arbitrator, in his or her sole discretion, determines is necessary. In
addition, Landlord or Tenant may submit to the arbitrator (with a copy to the other party)
within ten (I 0) business days after the appointment of the arbitrator any market data and
additional information that such party deems relevant to the determination of Fair Market
Rental Rate ("FMRR Data"), and the other party may submit a reply in writing within ten
( 10) business days after receipt of such FMRR Data.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first above written.
LANDLORD:
By _ _ _ _ _ _ _ _ _ _ _ _ _ _~_
Its _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
TENANT:
By _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~
Its _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
703999480v9 - 57 -
EXHIBIT A
List of Stations
703999480v9
EXHIBITB
Expansion Notice
This EXPANSION NOTICE is given pursuant to Section 2.2 of the Master Lease dated
as of 20_ (the "Lease"), between the SAN FRANCISCO BAY AREA RAPID
TRANSIT DISTRICT, a rapid transit district established pursuant to Public Utilities Code
section 28500, et seq. ("Landlord"), and TRANS MART, INC., a California corporation
("Tenant"), and is effective as of , 20_ (the "Expansion Effective Date").
Effective as of the Expansion Effective Date, Landlord and Tenant hereby incorporate
into the Lease (a) the Leased Sites described in more detail in Individual Terms Schedules_
through_ attached hereto [start numbering after the last Individual Terms Schedules
already incorporated into Lease] (the "Expansion Sites") located in the following Stations
_ _ _ _ _ _ _ _ _ _ _ [List applicable Stations], and (b) Individual Terms Schedules
_through_ attached hereto. As of the Expansion Effective Date, the Expansion Sites
shall be subject to all of the terms and provisions of the Lease, as modified by the Individual
Terms Schedule applicable thereto.
Tenant acknowledges that the Expansion Sites have been delivered to Tenant as of the
Expansion Effective Date.
Capitalized terms used but not defined herein shall have the meanings given them in the
Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Expansion Notice
as of the Expansion Effective Date.
By: - - - - - - - - - - - - -
Name: - - - - - - - - - - - - -
Its: - - - - - - - - - - - - - -
703999480v9
EXHIBITC
Design Guidelines
[To Be Attached)
703999480v9
EXHIBITD
Performance Standards
Performance standards are intended to create a set of standards that are consistent across all
stations.
Hours of Operation
Tenant(s) are required to be open during the following time brackets
Weekdays
7am-10am
4-7pm
Tenants may at their discretion be open additional hours but only within the hours that BART
currently operates.
Standards of Operation
All employees while on premise to have on their possession their 'Vendor Card' and respective
name tag
Loading/unloading
Tenants and/or suppliers shall have the option to use station elevators during all hours of
operation except 6am-9am and 4pm-7pm for the transfer merchandise, equipment and supplies
to and from the Leased Site.
703999480v9
EXHIBITE
VISION
The San Francisco Bay Area Rapid Transit District (BART or the District) is the steward of a
large-scale public investment, which includes important real property assets essential to the
District's operation. These assets also contribute to the ongoing financial viability of the transit
system. By promoting the coordinated introduction and operation of commercial retail goods and
services at its stations through introduction of a Master Station Retail Vendor ("Master Vendor")
program, the District can generate new revenues for transit, protect the core transit functions of
the stations, and provide a more user-friendly environment for customers.
PURPOSE
The capacity and passenger flows of all BART stations are affected by recent growth in transit
usage and anticipated growth due to the proposed Central Subway connection to the Powell
Street Station, linkage to California High Speed Rail and the new TransBay Terminal, and
ridership increases from BART extensions to East Contra Costa County, the Oakland
International Airport, Warm Springs and Silicon Valley. In addition, there are numerous station
facility functions that need to be considered in pursing additional retail at BART stations,
including station utilities, access improvements, signage, advertising, existing retail and special
entrance agreements.
There are a number of existing policies guiding the current station retail program. The purpose of
this new Station Retail Policy is to provide an updated, comprehensive and coordinated approach
to station retail that takes into consideration the factors listed above, and introduces the Master
Vendor Program .
For the purpose of this Policy, station retail means the sale of goods and services in the non-paid
areas of stations, excluding parking lots. This Policy does not address newspaper sales, public
telephones, telecommunication services, advertising, free speech, special events, direct line
phone services, and other activities that are operated by the District under separate policies or
programs.
The District's new strategy for introducing retail within stations is to implement a Master Vendor
Program, under which one or more Master Vendors will establish multiple retail outlets and
arrange for individual vendors at specified stations. The selected Master Vendors will be
required to fund station capacity and passenger flow analyses (Tier l ), as well as additional
analyses (Tier 2) of potential impacts of retail on station utilities, access improvements, station
facility needs, advertising and existing retail, as a prerequisite to obtaining approval to
implement a comprehensive retail program. These analyses will identify necessary station
improvements and constraints and provide for a comprehensive approach toward retail planning.
The tenant mix and selection of retail will be determined by the Master Vendors, subject to
703999480v9 -1-
approval processes and other limitations set forth in this Station Retail Policy, implementing
mies and procedures, and the District's agreement with such Master Vendors.
Retail under the Master Vendor Program will not necessarily be the exclusive form of retail at
stations. Station retail arrangements that are not within the Master Vendor Program
("Independent Vendors") may continue to be authorized by the District by permit under the
following conditions:
a. At stations in which an Independent Vendor has an existing permit with the District at
the time this Policy is adopted, for the term of such existing pem1it, including options.
After the expiration of the existing permit term, including options, an existing
Independent Vendor may be issued a new pe1mit or other form of extension only if
criteria b., c., or d. below is met.
b. At stations for which there is no Master Vendor.
c. At stations for which there is an existing or pending Master Vendor agreement, and
staff has determined that there is a sufficient period of time for an Independent
Vendor pennit term preceding the commencement of improvements or operations by
the Master Vendor.
d. At stations for which there is an existing or pending Master Vendor agreement, and
the Master Vendor has agreed that the issuance of a specific Independent Vendor
permit is acceptable.
It is anticipated that some Independent Vendors and Master Vendors will reach agreements that
will result in the operations of the Independent Vendors becoming part of the Master Vendor
operations at specified stations, thereby precluding the need for the District to issue separate
permits to such Independent Vendors. However, this Policy does not require that Master
Vendors enter into agreements with Independent Vendors.
A. Financial Considerations
1. In its evaluation of any proposed Master Vendor agreement or Independent Vendor permit,
staff will seek to maximize revenue to the District by evaluating the fmancial performance of
proposed station retail based on sound financial parameters, including the ability of the
proposed retail to generate both base and participation revenues. All retail agreements shall
provide for appropriate escalation of such revenues to the District over time. Potential cost
savings to the District that may be generated due to a vendor's provision of District
improvements (e.g., utilities, faregates, and other equipment) should also be considered in
deciding whether to enter into a station retail agreement.
2. The duration of any station retail agreement shall be sufficient to protect the District's
interests while allowing a commercially reasonable amount of time for a vendor to finance its
capital and operating investments. Performance milestones shall be included in all Master
Vendor agreements, and in Independent Vendor permits as appropriate, to ensure that the
anticipated retail is established within appropriate time frames and meets other specified
703999480v9 -2-
requirements. This is particularly importaut in instances in which a vendor proposes to
introduce retail at multiple stations.
3. Station retail fees paid to the District shall reflect fair market value, based on what other
transit and public agencies are receiving from similar retail arraugements, market
competition, aud/or independent finaucial aualysis.
B. Process Considerations
1. Master Vendor and Independent Vendor proposals are to be solicited through a competitive
process, except in cases where negotiations with a single source would likely result in more
favorable conditions for the District. Single source negotiations may be particularly
appropriate in circumstances in which no retail interest has been expressed over time. Where
appropriate, staff will employ requests for qualifications rather than proposals.
2. All Master Vendor agreements, and any Independent Vendor permits that have terms
exceeding five years, inclusive of options, shall require prior Board approval. This
requirement is applicable whether a Vendor's form of extension is called a new permit,
renewal, or extension.
3. New retail within BART stations is to be introduced only after accotmting for existing and
future station capacity and passenger flow needs. (Tier I analyses)
4. In considering station retail opportunities, staff will examine the financial and physical
impacts upon existing and future station needs for utilities, access, directional aud
infonnation signage, equipment such as ticket or transfer vending machines, maintenance,
and constrnction staging areas. Staff will consider the impact of the proposed retail on
existing retail and advertising. The District will also honor its legal aud fiduciary obligations
related to its institutional and private sector partner interest in adjacent transit-oriented
development retail. (Tier 2 analyses)
5. Master Vendors will be required to fund Tier I and Tier 2 aualyses as a prerequisite to
obtaining approval to implement a comprehensive retail program.
6. Each new Independent Vendor shall pay for a commensurate level of Tier I and Tier 2
analyses according to the level of impacts its business would have on a station, as a
prerequisite to obtaining a permit. This requirement also is applicable to existing
Independent Vendors who wish to obtain a new permit, renewal or other form of extension
following the expiration of their existing permit tenns, including options.
7. The Real Estate Department shall continue to be responsible for the implementation of this
Policy aud the promulgation of mies and procedures related to station retail in collaboration
with other BART departments.
703999480v9 -3-
C. Physical Use Considerations
1. Station retail shall be restricted to the non-paid areas of stations, excluding parking lots.
2. Station retail shall be implemented in snch a manner to encourage passengers to wait for
their trains at the concourse level of stations rather than at station platforms, thereby
improving station capacity and passenger flow.
3. Station retail shall complement the development of livable, walkable, compact and mixed-
use communities at and around BART stations.
4. Retail facilities shall be of high architectural and design quality and complement station
architecture, informational and directional signage, and art.
5. To the fullest extent possible when designing and developing new retail, an attempt should
be made to create new advertisement space and enhance existing advertisement space that
may be used by either BART or its advertising contractor.
6. Station retail shall offer convenient goods and services of high quality that meet BART
customer needs and deliver good value. The overall experience for BART customers should
be enhanced by retail.
7. Station retail shall include a mixture of nationally and locally-owned businesses and small
businesses to ensure financial sustainability and local development opportunity.
8. Where feasible, there shall be minimal or zero waste in the construction of retail facilities
and in the packaging of goods and services.
9. Where feasible, station retail shall use biodegradable or recyclable food packaging, and
provide separate receptacles for recyclables.
10. The sale of food and nonalcoholic beverages is permitted in non-paid station areas; however,
nothing in this Policy shall affect the prohibition of eating and drinking in paid areas and on
the trains.
12. The District reserves the right to provide contract cancellation provisions and disallow
activities and/or the sale or distribution of goods or services that it deems inappropriate,
including but not limited to, activities or sales that are detrimental to the safety or security of
the BART system and its customers.
703999480v9 -4-
EFFECT ON EXISTING STATION RETAIL POLICIES
111e following policies are superseded in their entirety by this Station Retail Policy:
Boan! Action November 17, 1983 - Policy Regarding Exercise ofF1ee Speech, Special
Event Activities, and for Commercial Activities (Concessions)- The second sentence of
the Policy is replaced with the following sentence: "No commercial use of District station
area property shall be authorized for a term in excess of five (5) years, including options or
renewals, without prior Board approval, except for agreements in connection with parking lot
operations, news racks, public telephones, and post office boxes."
Unless specifically superseded or modified as noted above, or except to the extent that they are
inconsistent with this Policy, existing policies with provisions regarding station retail shall
remain in effect.
703999480v9 -5-
SCHEDULE I
Applicable Station:
Leased Site: The space located in the [interior/exterior] of the Station containing
approximately __ square feet of space, the location[ s] of which is depicted on Schedule_-A
attached hereto.
Permitted Uses:
703999480v9 -1-
LANDLORD:
By _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Its----------------
TENANT:
By _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Its----------------
703999480v9 -2-
SCHEDULE 1-A
703999480v9 -3-
EXHIBITD
Dated:
By:
Name: _ _ _ _ _ _ _ _ _ _ _ _ __
Its:
704027187v7 Exhibit D
EXHIBIT B
FIRST AMENDMENT TO LEASE OPTION AGREEMENT
RECITALS
A. TransMart and BART entered into that certain Lease Option Agreement dated as
of June 11 , 2013 (the "Original Agreement"), whereby BART granted to TransMart an option to
lease from BART certain portions of one or more Stations for the purpose of constructing and
operating thereon certain Retail Facilities, all as more particularly described in the Original
Agreement. Capitalized terms used but not defined herein shall have the meanings given them in
the Original Agreement.
B. TransMart and BART wish to modify the Original Agreement to replace Exhibit
B to the Original Agreement and modify certain provisions of the Master Lease attached to the
Original Agreement as Exhibit C, all as more specifically provided herein.
C. TransMart and BART are concurrently entering into that certain Permit to Enter
(the "Permit"), whereby BART will permit TransMati to install certain vending machines, kiosks
and related improvements in specified Stations for a limited time and scope, as provided in the
Permit.
(b) Section 9.1 of the Master Lease is hereby amended by adding a new
Section 9.1.5 that reads as follows: "Professional Liability Insurance for damages arising out of
Tenant's acts, errors or omissions, to the extent Tenant provides any professional services under
this Lease. The policy shall provide a coverage limit of not less than One Million Dollars
($1 ,000,000) per claim/aggregate as respects Tenant's professional services (if any) under this
Lease. Such insurance shall be maintained for a period of not less than two (2) years following
completion of such services."
(c) Section 9.2.3 of the Master Lease is hereby replaced in its entirety with the
following:
- 1-
705760695v9
(a) Liability insurance m substantially the same form, as
required by Sections 9.1.3 and 9.1.5 of this Lease.
(d) Section 9.2 of the Master Lease IS hereby amended by adding new
Subsections 9.2.4 and 9.2.5 that read as follows:
(ii) Contractualliability;
- 2-
705760695v9
(vii) Cross liability and severability of interests clauses
providing that the insurance applies separately to each insured except with respect to the limits of
liability; and
(d) Such insurance shall apply with respect to the Leased Sites
and any elevators or any escalators therein and on, in or about the adjoining passageways.
(e) Section 9.4 of the Master Lease is hereby amended by replacing the first
sentence thereof in its entirety with the following: "Prior to the Effective Date of this Lease and
thereafter not less than thirty (30) days prior to the expiration date of each policy furnished
pursuant to this Article, Tenant shall provide Landlord with a certificate of insurance evidencing
all insurance required to be carried pursuant to this Article, including a copy of all required
endorsements and evidence of payment therefore, and, if requested by Landlord, a complete copy
of each policy."
-3-
705760695v9
(f) Section 9.5 of the Master Lease is hereby amended by replacing the last
sentence thereof in its entirety with the following: "Tenant shall submit certifications annually to
Landlord, Attn: Department Manager, Insurance and Risk Management, San Francisco Bay
Area Rapid Transit District, P.O. Box 12688, Oakland, California, 94604-2688, confirming that
the insurance required has been renewed and continues in place."
(g) Section 9.7 of the Master Lease is hereby replaced in its entirety with the
following: "9.7 Waiver of Subrogation. All policies shall be specifically endorsed to include
the insurer's waiver of subrogation in favor of Landlord, its directors, officers, representatives,
agents and employees, a copy of which shall be provided to Landlord."
(h) The Master Lease is hereby amended by incorporating a new Section 9.10
that reads as follows: "9.1 0 No Limitation. The requirements as to the types and limits of
insurance coverage to be maintained under this Section 9 and any approval of said insurance by
Landlord is not intended to and shall not in any manner limit or qualify the liabilities and
obligations otherwise assumed by Tenant pursuant to this Lease, including but not limited to the
provisions concerning indemnification."
(i) Subsection 18.1 (e) of the Master Lease is hereby replaced in its entirety
with the following: "(e) if at any time (i) any insurance required to be carried by Tenant or its
licensees, concessionaires or subtenants under Section 9 is not maintained in full force and
effect, (ii) Tenant is unable to purchase (irrespective of premium cost) any type of insurance
required hereunder, or (iii) Tenant is able to purchase the type of insurance but in amounts of
liability less than those required hereunder; or"
(j) Section 24.19 of the Master Lease is hereby replaced in its entirety with
the following: "24.19 No Consequential Damages. Notwithstanding anything to the contrary
set forth in this Lease, in no event shall Landlord be liable for consequential, special or punitive
damages under this Lease, and Tenant hereby waives any right it has to claim consequential,
special or punitive damages under or in connection with this Lease."
3. Governing Law. This Amendment shall be governed by the laws of the State of
California.
-4-
705760695v9
-5-
705760695v9
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above.
By: #. ~
--4--w--=--- b
-=----
lts: _ ____:~
_M..P
:. .__ _ _ _ _ __
-6-
705760695v9
EXHIBITB
..
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:. ' . '
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:;~ ,,~;;;~~*tlr'~
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. q~oinc i:>"~
'
Downtown"
' December 31, 2015
December 31, 2015
February 28, 2016
February 28, 2016
Balboa Park December 31, 2015 February 28, 2016
Richmond December 31, 2015 February 28, 2016
Pleasant Hill December 31, 2015 February 28, 2016
North Concord/ December 31, 2015 February 28, 2016
Embarcadero March 31, 2016 May 31, 2016
Powell Street March 31, 2016 May 31, 2016
Civic Center March 31, 2016 May 31, 2016
16th Street Mission March 31, 2016 May 31, 2016
24th Street Mission March 31, 2016 May 31, 2016
12th St./Oakland March 31, 2016 May 31, 2016
Exhibit B-I -
705760695v9
~t;~tion
. Optl9n ~!C~(~lse QpJulng oat~
.
. q~'~(t~f . . . .. .. . .
Exhibit B-2-
705 760695v9
EXHIBIT C
SECOND AMENDMENT TO LEASE OPTION AGREEMENT
RECITALS
A. TransMart and BART entered into that certain Lease Option Agreement dated as
of June 11, 2013, as amended by that certain First Amendment to Lease Option Agreement dated
as of September, 2015 (as amended, the Option Agreement), whereby BART granted to
TransMart an option to lease from BART certain portions of one or more Stations for the
purpose of constructing and operating thereon certain Retail Facilities, all as more particularly
described in the Option Agreement. Capitalized terms used but not defined herein shall have the
meanings given them in the Option Agreement.
B. TransMart and BART wish to modify the Option Agreement to clarify certain
terms and provisions therein and to replace Exhibit B to the Option Agreement and modify
Schedule 1 to the Master Lease, which Master Lease is attached to the Option Agreement as
Exhibit C, all as more specifically provided herein.
(a) The first sentence of Section 1.8 of the Option Agreement is hereby
replaced with the following: Prior to the expiration of the applicable Option Term, TransMart
shall submit to BART, and BART shall have Approved, documentation that describes the design
scope of any and all Retail Facilities to be constructed on the applicable Leased Sites as part of
such Phase, including concept drawings and one hundred percent (100%) design development
architectural and engineering drawings (the Design Documentation). TransMart acknowledges
that it is the responsibility of TransMart to submit the Design Documentation to BART
sufficiently in advance of the applicable Exercise Date to allow BART time to review and
Approve the Design Documentation in accordance with the time frames specified in Section 1.8
of the Option Agreement.
(b) The following is hereby added to the end of Section 1.9 as a new
subsection 1.9(c):
(c) On or before the applicable Exercise Deadline, BART and TransMart shall
have Approved all terms and provisions of the Individual Terms Schedule for
each Lease Site that is the subject of any Exercise Notice. TransMart
acknowledges that it is the responsibility of TransMart to submit its proposal with
respect to each Individual Terms Schedule to BART sufficiently in advance of the
applicable Exercise Date to allow BART time to review and Approve the
-1-
4842-1859-9470.v32
Individual Terms Schedule prior to the expiration of the applicable Exercise
Deadline. TransMart also acknowledges that the terms and provisions of each
Individual Terms Schedule are of significant importance to BART and that BART
is not under any obligation to approve the terms proposed by TransMart with
respect to any Individual Terms Schedule; provided, however, that BART shall
not unreasonably withhold its Approval with respect to any aspects of any
Individual Terms Schedule that materially conform to other approvals provided
by BART with respect to the proposed Retail Facilities for the applicable Leased
Site. For example, if BART has Approved the Design Documentation the
proposed Retail Facilities for a particular Leased Site, BART will not
unreasonably withhold its consent to portions of the Individual Terms Schedule
for such Leased Site that materially conform to such Design Documentation
Approved by BART.
(c) Section 7.1(a) of the Option Agreement is hereby replaced in its entirety
by the following:
(a) On or before the date TransMart delivers the Option Notice for any Leased
Site, TransMart shall have delivered to BART the Tier 1 Study and the Tier 2
Study materials for such Leased Site and BART shall have Approved the Tier 1
Study and the Tier 2 Study and related analysis for such Leased Site.
(d) Section 7.1(d) of the Option Agreement is hereby replaced in its entirety
by the following:
(d) On or before the applicable Exercise Deadline, BART shall have Approved,
in BARTs reasonable discretion, TransMarts ability to fund one hundred percent
(100%) of the costs of constructing the Retail Facilities on the applicable Leased
Site, including without limitation a reasonable reserve for construction cost
overruns. Examples of such evidence include binding written loan commitments
or other binding commitments to fund construction of the applicable Retail
Facilities in favor of TransMart. TransMart acknowledges and agrees that it is
TransMarts obligation to deliver to BART evidence of TransMarts availability
of funding to BART sufficiently in advance of the applicable Exercise Deadline to
allow BART time to review and Approve such evidence of funding availability
prior to the applicable Exercise Deadline in accordance with the time frames set
forth in this Section 7.1(d). BART shall respond to any submission by TransMart
pursuant to this Section 7.1(d) within fifteen (15) Business Days following
receipt. If BART fails to respond within such time frame, TransMart may give
notice of a mandatory Dispute Resolution Meeting pursuant to Section 1.10.
(e) Section 7.1(e) of the Option Agreement is hereby replaced in its entirety
by the following:
-2-
4842-1859-9470.v32
(f) Exhibit B to the Option Agreement is hereby replaced in its entirety with
Exhibit B attached hereto. As a result, the last sentence of section 1.2 is hereby replaced with the
following: This Option Agreement shall terminate in full, if not sooner terminated, on October
31, 2016.
3. Payment of BARTs Fees and Costs. As required by Section 3.1 of the Option
Agreement, and as a condition to the effectiveness of this Amendment, TransMart shall pay to
BART: (a) all Review Costs incurred by BART through December 31, 2015, concurrently with
the execution of this Amendment; and (b) Outside Counsel Fees through the date specified by
BART within thirty (30) days after receipt of from BART of an invoice for such Outside Counsel
Fees.
5. Governing Law. This Amendment shall be governed by the laws of the State of
California.
-3-
4842-1859-9470.v32
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above.
By:
Its:
-4-
4842-1859-9470.v2
EXHIBIT B
Option Exercise
Station Opening Date
Deadline
Exhibit B - 1
4842-1859-9470.v32
Option Exercise
Station Opening Date
Deadline
Exhibit B - 2
4842-1859-9470.v32
SCHEDULE 1
Applicable Station:
Leased Site: The space located in the [interior/exterior] of the Station containing
approximately ____ square feet of space, the location[s] of which is depicted on Schedule__-A
attached hereto.
Permitted Uses:
List of Retail Facilities that must be substantially completed, equipped, licensed and opened to
the public for use to satisfy the Opening Deadline requirement: ________________________
____________________________________________________________.
Schedule 1 - 1
4842-1859-9470.v32
LANDLORD:
By
Its
TENANT:
By
Its
Schedule 1 - 2
4842-1859-9470.v32
SCHEDULE 1-A
Schedule 1-A - 1
4842-1859-9470.v32