EXHIBIT 10.18
[LOGO] XXXXXXXX INVESTMENT CORPORATION
Menlo Park Office Center
0000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000-0000
(000) 000-0000 / Telecopier: (000) 000-0000
December 20, 1993
Mid-Peninsula Bank
000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxxx
President
Re: LEASE FOR 000/000 XXXXXX XXXXXX
Dear Xxxx:
Mid-Peninsula Bank (the "Bank") currently leases 000/000 Xxxxxx Xxxxxx,
Xxxx Xxxx, Xxxxxxxxxx from MPB Associates under an office lease originally
entered into as of March 11, 1987 with PacTel Properties as landlord (the
"Lease"). In November, 1991, the Bank exercised its option to lease the
second floor (430 Cowper Street) for a five-year term, expiring May 31, 1997.
In December, 1992, the Bank exercised its option to extend the lease
term on the ground floor (420 Cowper Street) for an additional four years, also
expiring May 31, 1997.
The owners' existing loan on the property with Citibank, N.A. matures on
January 31, 1994. As a condition to an extension of this financing, Citibank
has required a minimum extension of the Lease for a period of two years, eight
months, to January 31, 2000 (the "Extension Term".) In consideration of the
Bank's agreement to extend the Lease term for both 420 and 430 Cowper to such
date, the owners of the building will commit to the following:
(i) Rent adjustment will be limited to the increase in the Consumer
Price Index (as defined in the Lease) from June, 1992 to commencement of the
Extension Term and once annually thereafter on the anniversary date (June 1).
(ii) Landlord will provide a tenant improvement allowance for paint,
carpet or other interior use of $19,000, estimated as one-half cost for
painting, and recarpeting/new vinyl for the ground floor premises. If the Bank
later extends Lease for at least the balance of a five-year term (two years and
four months or more), an additional $19,000 will be made available to tenant
for reimbursement of monies expended or for additional work at that time. As you
are aware, the terms of your existing lease for the second floor which commenced
in June of 1992 provided you with a $92,000 tenant improvement allowance for
those premises, so no further allowance is required for that area.
Xx. Xxxxx X. Xxxxxxxxxxx
December 20, 1993
Page Two
Xxxxx, the terms of this extension are EXTREMELY FAVORABLE to the Bank,
and under the above scenario, the Bank can be assured that the premises will
remain available for your use until AT LEAST January, 2000, without market rent
increases as the downtown Palo Alto prime rental market continues to tighten. An
informal survey of the current downtown Palo Alto office market by Xxxxxx
("Xxxxx") Dallmar at Cornish & Xxxxx Commercial shows full service lease rates
for comparable premises under recently executed leases ranging from $3.24/sq.
ft. to $3.43/sq. ft. (details attached). Your current rate is $2.86/sq. ft. on
a full service basis, when your rent and building expense payments are
considered. Given the level of improvements, excellent location, and convenient
parking which the Bank enjoys, I believe the terms of our proposed arrangement
are extremely competitive.
Xxxxx, we have really bent over backward to make our proposal a "win/win"
for both of us. With this lease extension, the owners will be able to secure
desirable mortgage financing that makes their continuing commitment to the Bank
equally worthwhile. If this proposal is acceptable to the Bank, please so
indicate by returning a counter-signed copy of this letter to me.
Very truly yours,
MPB ASSOCIATES
By: /s/Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Owners' Representative
ACCEPTED AND AGREED:
MID-PENINSULA BANK
By: /s/Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx
President
Palo Alto
Central Business District
Lease Comparables
12/20/93
1. PUTNAM, HAYES & XXXXXXXX
LEASE SIGNED: 7/30/93
BUILDING: 000 Xxxxxxxx Xxxxxx
PREMISES: 9,098 sq. ft.
LEASE TERM: 4 years
EFFECTIVE RATE: $3.24/sq. ft. Full Service
TENANT IMPROVEMENTS: $5.00/sq. ft.
2. X X XXXXXXX
LEASE SIGNED: 8/l/93
BUILDING: 000 Xxxxxx Xxxxxx
PREMISES: 5,490 sq. ft.
LEASE TERM: 8 years
EFFECTIVE RATE: $3.35/sq. ft. Full Service
TENANT IMPROVEMENTS: $15.00/sq. ft.
3. XXXX & FRIEDENRICH
LEASE SIGNED: 1/20/93
BUILDING: 000 Xxxxxxxx Xxxxxx
PREMISES: 6,096 sq. ft.
LEASE TERM: 2 years
EFFECTIVE RATE: $3.43/sq. ft. Full Service
TENANT IMPROVEMENTS: None.
AMENDMENT TO OFFICE LEASE
THIS AMENDMENT TO OFFICE LEASE (this "Amendment") is entered into as of
the FIRST day of SEPTEMBER, 1995, by MPB ASSOCIATES as "Landlord" and MID-
PENINSULA BANK as "Tenant," with reference to the following:
A. Landlord and Tenant are parties to a certain Office Lease dated
March 11, 1987, originally entered into by Pactel Properties as landlord and
Xxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx, incorporators of Mid-Peninsula Bank, as
tenant, and amended by letter agreement dated December 20, 1993 (as amended, the
"Lease"). Capitalized terms herein, not otherwise defined, shall have the same
meaning as in the Lease.
B. Landlord and Tenant now desire to further amend the Lease to
incorporate into the Premises certain additional space and to account for
changes to the Building HVAC system, all as more fully set forth hereinbelow.
NOW, THEREFORE, for good and valuable consideration, Landlord and Tenant
hereby agree as follows:
1. Effective as of the date hereof, the Premises shall be deemed to
include an additional portion of ground floor area in the Building, which
formerly served as the boiler/mechanical room for the heating system, and which
is located adjacent to the employee kitchen (the "Additional Space"). Landlord
and Tenant have agreed that the Additional Space comprises five hundred (500)
rentable square feet of area and shall be leased to Tenant for a monthly rental
rate of $1.50 per rentable square foot ($750 per month).
2. Tenant has inspected the current condition of the Additional Space
and accepts the same in its current "as-is" condition, without any further
obligation on the part of Landlord to improve the same.
3. Except with respect to the initial rental rate set forth
hereinabove, and the calculation of property tax, insurance and utility cost
"pass-throughs" as described in this Paragraph 3, the Additional Space shall be
leased to Tenant on all the same terms and conditions as the balance of the
Premises. The rentable area of the Additional Space shall not be added to the
rentable area of the existing Premises for the purpose of calculating property
tax, insurance and utility cost pass-throughs.
4. On or about the date hereof, Landlord will have completed a
substantial replacement and upgrade to the Building heating, ventilating and air
conditioning system, at a total expense to Landlord, including related Building
work, of approximately $200,000 (the "HVAC Upgrade"). As a result of the HVAC
Upgrade, the utility-related operating expense
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incurred by the Building is anticipated to significantly decrease from previous
levels. In consideration of Landlord's agreement to perform the HVAC Upgrade at
its sole cost and expense, Tenant has agreed to modify the basis of calculating
the utility cost reimbursement to Landlord set forth in Section 6.01(e) of the
Lease as follows: The gas and electric expense for the Building for the calendar
year 1994 (12/3/93 - 12/5/94) was $26,974, without benefit of any savings from
the HVAC Upgrade. This amount shall be deemed to be the minimum annual gas and
electric expense (the "Minimum Gas and Electric Expense") incurred for each year
of the Lease term hereafter, for purposes of calculating the overall utility
expense reimbursement amount due from Tenant to Landlord under the Lease (which
also includes water, sewer and trash disposal charges). Commencing with the
payment due for the calendar year 1995, the Minimum Gas and Electric Expense
shall be increased by the percentage increase, if any, in the municipal utility
rates for gas and electricity for the calendar year 1995 over the calendar year
1994. Such increased amount shall then be deemed the Minimum Gas and Electric
Expense portion of the total utility charges used to calculate the expense
reimbursement for the succeeding year, subject to increase, if any, calculated
in the same manner as described above. In the event municipal utility rates for
gas and/or electric service should decrease at any time during the Lease term,
the Minimum Gas and Electric Expense shall be adjusted accordingly. This
provision specifically supersedes Section 6.01(e) of the Lease as the basis for
calculating the utility cost reimbursement set forth therein, to the extent
inconsistent herewith.
5. Except as specifically amended hereby, the Lease shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed the Amendment to Office
Lease as of the day and year first above written.
LANDLORD: TENANT:
MPB ASSOCIATES MID-PENINSULA BANK
a tenancy in common a California banking
corporation
By: /s/Xxxxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxxxxxxx
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Its: Owners' Representative Its: President
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