EX-10.36
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("FIRST AMENDMENT") is made and entered
into as of the first day of October, 1999, by and between W9/PC REAL ESTATE
LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and IDEC
PHARMACEUTICALS CORPORATION, a Delaware corporation ("TENANT").
RECITALS:
A. Professors Fund I, L.P., an Arizona limited partnership,
Managing Agent for All Spectrum Services, Inc., a California corporation
("ORIGINAL LANDLORD"), and IDEC Pharmaceuticals Corporation, a California
corporation ("ORIGINAL TENANT"), entered into that certain Lease Agreement dated
as of August 13, 1996 (the "LEASE"), whereby Original Landlord leased to Tenant
and Tenant leased from Original Landlord the entire building located at 0000
Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx (the "BUILDING"). Landlord is the
successor-in-interest to Original Landlord and Tenant is the
successor-in-interest to Original Tenant.
B. By this First Amendment, Landlord and Tenant desire to expand
the Premises, extend the Term and to otherwise modify the Lease as provided
herein.
C. Unless otherwise defined herein, capitalized terms as used
herein shall have the same meanings as given thereto in the Lease.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
AGREEMENT:
1. The Existing Premises. Landlord and Tenant agree that pursuant
to the Lease, Landlord currently leases to Tenant and Tenant currently leases
from Landlord the Premises as described in Section 1.1 of the Lease (the
"EXISTING PREMISES").
2. Expansion of the Premises. All of the space in that certain
building located at 0000 xxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx, consisting of 45,117
rentable square feet, as shown on the site plan attached hereto as Exhibit "A"
and made a part hereof, is referred to herein as the "EXPANSION SPACE."
Effective as of the Expansion Commencement Date (as defined below), Tenant shall
lease from Landlord and Landlord shall lease to Tenant the Expansion Space.
Accordingly, effective upon the Expansion Commencement Date, the Existing
Premises shall be increased to include the Expansion Space and all references to
the "Premises" shall mean and refer to the Existing Premises as expanded by the
Expansion Space and all references to the "Building" shall include the building
within which the Expansion Space is located. Landlord and Tenant stipulate that
(i) the Expansion Space contains 45,117 rentable square feet and (ii) the
Existing Premises currently contain 44,754 rentable square feet, but effective
as of December 1, 2003, the Existing Premises shall contain 45,883 rentable
square feet.
The "EXPANSION COMMENCEMENT DATE" shall be the date of Substantial
Completion of the In provements (as those terms are defined in the Tenant Work
Letter attached hereto as Exhibit "B." Landlord may deliver to Tenant a
commencement letter confirming the Expansion Commencement Date and the Basic
Rent schedule during the Extended Term. Provided that Tenant does not dispute
Landlord's determination of the Expansion Commencement Date and the Basic Rent
schedule, Tenant agrees to execute and return to Landlord said commencement
letter within five (5) business days after Tenant's receipt thereof.
3. Extended Lease Term. The Term of the Lease shall be extended
such that the Lease shall terminate at midnight on the date that is one hundred
twenty-three (123) months
following the Expansion Commencement Date ("NEW TERMINATION DATE"). The period
from the Expansion Commencement Date through the New Termination Date is
referred to herein as the "EXTENDED TERM." If the Expansion Commencement Date is
not the first day of the month, then the foregoing one hundred twenty-three
(123) month period shall be measured from the first day of the month following
the Expansion Commencement Date.
4. Monthly Basic Rent. During the Extended Term, Tenant shall pay
Basic Rent for the entire Premises as follows:
PERIOD OF EXTENDED TERM BASIC RENT PER MONTH*
---------------------------- ---------------------
First partial month, if any **
Months 1-3 FREE
Months 4-15 $123,177.72
Months 16-27 $126,873.05
Months 28-39 $130,679.24
Month 40 - November 30, 2003 $134,599.62
December 1, 2003 - Month 51 $136,104.72
Months 52-63 $140,187.86
Months 64-75 $144,393.50
Months 76-87 $148,725.30
Months 88-99 $153,187.06
Months 100-111 $157,782.67
Months 112-123 $162,516.15
During the period from the effective date of this First Amendment
through and including one day before the Expansion Commencement Date, Tenant
shall continue to pay Basic Rent for the Existing Premises in accordance with
the Lease. Notwithstanding that Basic Rent is not payable for months 1-3 of the
Extended Term, Tenant shall, during such period, still be responsible for the
payment of all of its other monetary obligations under the Lease, including
Tenant's Pro Rata Share of Direct Operating Expenses.
5. Tenant's Pro Rata Share. During the Extended Term, Tenant's
Pro Rata Share shall be increased to one hundred percent (100%).
6. Expansion Space Improvements. The Expansion Space shall be
improved by Landlord in accordance with the terms of the Tenant Work Letter
attached hereto as Exhibit "B" and n ade a part hereof. Following completion of
the Improvements, the Improvements shall be deemed "Tenant Improvements" under
the Lease and Tenant shall insure the same pursuant to
------------------
* based on $l.52/sf/mo for 45,117 square feet of space at 0000 Xxxxxx Xxxx and
$1.22/sf/mo for 44,754 square feet of space at 0000 Xxxxxx Xxxx, as adjusted
each year to reflect a three percent (3%) annual increase, with an increase
in rentable square feet of space at 0000 Xxxxxx Xxxx from 44,754 to 45,883,
as of December 1, 2003.
** $123,177.72 multiplied by a fraction, the numerator of which is the number
of days remaining in the month in which the Expansion Commencement Date
occurs (inclusive of the Expansion Commencement Date) and the denominator of
which is the number of days in such month.
Section 12.1(b) of the Lease. Except for Landlord's obligations under the Tenant
Work Letter, Tenant shall accept the Expansion Space in its as-is condition.
Notwithstanding the foregoing: (i) nothing contained in this Section 6
shall be deemed to limit Landlord's repair and maintenance obligations under
Section 7.2 of the Lease; (ii) Landlord shall, at its expense, ensure that as of
the Expansion Commencement Date (a) the exterior of the Premises (including,
without limitation, the roof, exterior walls, foundation and the front door and
threshold) is in compliance with all applicable governmental laws, codes,
ordinances, rules and regulations, including the ADA (provided, however, if
Tenant performs any alterations to the exterior of the Premises, Tenant shall be
responsible for such compliance with respect to such alterations) and (b) the
central plant portion of the HVAC system (with a capacity of approximately 160
tons) and the plumbing (including, without limitation, drains and sewage lines
and, to the extent the same are not being replaced pursuant to the Tenant Work
Letter, the sinks, faucets and toilets), electrical, mechanical and other
building systems serving the Expansion Space, including, without limitation, the
elevator serving the Expansion Space (collectively, the "PRIMARY SYSTEMS") will
be in good working order and comply with all applicable governmental laws,
codes, ordinances, rules and regulations (except the ADA as it pertains to the
interior portions of the Premises); (iii) Landlord shall, at its expense, ensure
that the central plant portion of the HVAC system serving the Expansion Space
remains in good working condition with a capacity of approximately 160 tons
throughout the first year of the Extended Term (however, during said period the
cost of normal maintenance and repairs resulting from normal wear and tear may
be included as a Direct Operating Expense) and (iv) Landlord shall, at its
expense, ensure that the subsurface membrane and related waterproofing and the
roof membrane and related counter-flashing are in good working condition as of
the Expansion Commencement Date and remain in good working condition throughout
the first year of the Extended Term (however, during said period the cost of
normal maintenance, but not the cost of repairs, patches or replacements, may be
included as a Direct Operating Expense, except that repairs, patches or
replacements necessitated by any alterations performed by Tenant may be included
as a Direct Operating Expense). Except as provided above, Tenant shall, at its
expense, comply with all applicable governmental laws, codes, ordinances, rules
and regulations, including requirements of the ADA, with respect to the interior
portions of the Expansion Space.
7. Signage. In addition to Tenant's signage rights currently
provided for under the Lease, Tenant shall be entitled to have the exclusive
right to install signage at the Project identifying Tenant's name, including
building signage and monument signage (the "SIGNAGE"). The graphics, materials,
size, color, design, lettering, lighting (if any), specifications and exact
locations of the Signage (collectively, the "SIGNAGE SPECIFICATIONS") shall be
subject to the prior written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. In addition, the Signage and all
Signage Specifications therefor shall be subject to Tenant's receipt of all
required governmental permits and approvals and shall be subject to all
applicable governmental laws and ordinances. The cost of installation of the
Signage, as well as all costs of design and construction of such Signage and all
other costs associated with such Signage, including, without limitation,
permits, maintenance and repair, shall be the sole responsibility of Tenant.
Should the Signage require maintenance or repairs as determined in Landlord's
reasonable judgment, Landlord shall have the right to provide written notice
thereof to Tenant and Tenant shall cause such repairs and/or maintenance to be
performed within thirty (30) days after receipt of such notice from Landlord.
Should Tenant fail to perform such maintenance and repairs within the period
described in the immediately preceding sentence, Landlord shall have the right
to cause such work to be performed and to charge Tenant, as Additional Rent, for
the reasonable cost of such work. Upon the expiration or earlier termination of
this Lease, Tenant shall remove the Signage and repair any damage caused by the
installation or removal of the Signage. If Tenant fails to remove the Signage
and repair such damage, then Landlord may perform such work, and all reasonable
costs and expenses incurred by Landlord in so performing such work shall be
reimbursed by Tenant to Landlord within ten (10) days after Tenant's receipt of
invoice therefor. The immediately preceding sentence shall survive the
expiration or earlier termination of the Lease.
8. Security Deposit. Tenant has previously deposited with
Landlord Forty Two Thousand Five Hundred Sixteen and 30/100 Dollars ($42,516.30)
as a Security Deposit under the Lease. Concurrently with Tenant's execution of
this First Amendment, Tenant shall deposit with
Landlord an additional Sixty-Eight Thousand Five Hundred Seventy Seven and
84/100 Dollars ($68,577.84), for a total Security Deposit under the Lease of One
Hundred Eleven Thousand Ninety Four and 14/100 Dollars ($111,094.14). Landlord
shall continue to hold the Security Deposit as increased herein in accordance
with the terms and conditions of Section 4.7 of the Lease.
9. Use. Section 1.9 of the Lease is deleted in its entirety and
replaced with the following:
Uses allowed by the City of San Diego Scientific
Research Zoning Ordinance in effect as of the date
of this Lease as the same may be modified from time
to time, but excluding any retail or restaurant use
except for a cafeteria to be used by Tenant's
employees and invitees, and for no other use or
purpose."
10. Option Term. The provisions of Article 42 of the Lease are
amended as follows: (i) the "Option" shall consist of two (2) consecutive
options to renew and the "Extension" shall consist of two (2) periods of five
(5) years each; (ii) Basic Rent for each Extension shall equal ninety five
percent (95%) of the "prevailing market rate" on the commencement date of such
Extension; and (iii) the latest date for exercising an Option shall be ten (10)
months prior to the expiration of the then-current Term. All references in this
First Amendment to the Term or Extended Term shall include any exercised
Extension.
11. Direct Operating Expenses.
Section 4.3(b)(ii)(5) of the Lease is hereby deleted in its entirety
and replaced with the following:
"cost of all insurance relating to the Project, including the cost of
casualty and liability insurance applicable to the Project, together
with Landlord's personal property used in connection therewith, but
excluding (a) the cost of any environmental insurance and (b) twenty
percent (20%) of the cost of any earthquake insurance. The remaining
eighty percent (80%) of the cost of any earthquake insurance shall be
included within Direct Operating Expenses."
Section 4.3(b)(ii)(7) of the Lease is amended by deleting the second
sentence.
Section 4.3(b)(ii) of the Lease is amended by adding the following
provision to the end of said Section:
"Notwithstanding the foregoing, the sum of (i) the wages and salaries
expenses for management/administrative employees under Section
4.3(b)(ii)(1) plus (ii) the management fee under Section 4.3(b)(ii)(7)
(collectively, the "MANAGEMENT COSTS"), shall be the lesser of (a) the
then-current Market Rate or (b) three and one-half percent (3.5%) of
Basic Rent. The "MARKET RATE" is the market rate for Management Costs
charged by independent third-party property management companies of
similar projects in the Sorrento Mesa and Xxxxxx Xxxxx submarkets of
San Diego, as determined by Landlord from time to time. If Tenant
disputes Landlord's determination of the Market Rate, Tenant may give
Landlord written notice thereof (the "DISPUTE NOTICE"). Landlord shall,
within thirty (30) days after receipt of the Dispute Notice, obtain
bids from at least three (3) property management companies satisfying
the criteria set forth above, and the Market Rate shall be deemed to be
the average of such bids for a period of one (1) year from Landlord's
receipt of the Dispute Notice. After the expiration of such one (1)
year period, Landlord may, from time to time, redetermine the Market
Rate, subject to Tenant's right to dispute such determination as set
forth above."
12. Refurbishment Allowance. Landlord agrees to contribute the sum
("REFURBISHMENT ALLOWANCE") of up to One Hundred Eighty Three Thousand Five
Hundred
Thirty-Two Dollars ($183,532.00) to be used for the costs of the refurbishment
of the Tenant Improvements in the Existing Premises incurred by Tenant after the
date hereof. Landlord shall only be obligated to make disbursements from the
Refurbishment Allowance to the extent costs are incurred by Tenant to refurbish
the Tenant Improvements located in the Existing Premises. If the cost of
refurbishing such existing Tenant Improvements does not exceed the Refurbishment
Allowance, Landlord shall retain the difference. Provided Tenant is not in
default under the Lease (and no circumstance exists that would, with notice or
lapse of time, or both, constitute a default under the Lease), Landlord shall,
on November 30, 2003, disburse the Refurbishment Allowance or so much thereof as
Tenant is entitled to, provided that Landlord has received evidence reasonably
satisfactory to Landlord of the costs incurred by Tenant with respect to such
work. If, on November 30, 2003, Tenant has provided the required evidence of
incurred costs but is not entitled to disbursement of the Refurbishment
Allowance because Tenant is in default under the Lease or a circumstance exists
that would, with the giving of notice or lapse of time, or both, constitute a
default under the Lease, then upon the cure of all defaults and circumstances
that could give rise to a default, Landlord shall disburse to Tenant the
Refurbishment Allowance or so much thereof as Tenant is entitled to. In the
event Tenant is entitled to payment of the Refurbishment Allowance, or any
portion thereof, in accordance with this Paragraph 12 and Landlord fails to pay
the same to Tenant within thirty (30) days following Landlord's receipt of
written notice thereof, then Tenant may, in addition to any other remedies
available to Tenant, offset the Refurbishment Allowance, or so much thereof as
Tenant is entitled to, against the next installment(s) of Basic Rent.
13. Parking. All of Tenant's parking rights under Article 18 of
the Lease shall be on an exclusive basis, rather than on a non-exclusive basis.
14. Right of First Negotiation. Article 41 of the Lease is
deleted.
15. Defaults. Tenant hereby represents and warrants to Landlord
that, as of the date of this First Amendment, Tenant is in full compliance with
all terms, covenants and conditions of the Lease and that, to Tenant's
knowledge, there are no breaches or defaults under the Lease by Landlord or
Tenant, and that Tenant knows of no events or circumstances which, given the
passage of time, would constitute a default under the Lease by either Landlord
or Tenant. For purposes of this Paragraph 15, Tenant's knowledge is without
investigation and is limited to the actual knowledge of Xxxx Xxxxxxxxx and Xxxxx
Xxxxx.
16. Brokers. Each party represents and warrants to the other that
no broker, agent or finder negotiated or was instrumental in negotiating or
consummating this First Amendment other than Xxxx Xxxxxxx & Company ("BROKER"),
which Broker shall be compensated by Landlord pursuant to a separate agreement.
Each party further agrees to defend, indemnify and hold harmless the other party
from and against any claim for commission or finder's fee by any person or
entity (other than Broker) who claims or alleges that they were retained or
engaged by the indemnifying party or at the request of such party in connection
with this First Amendment.
17. Notices to Landlord. The address for rent payments to Landlord
set forth in Article 4 of the Lease is deleted and the following is substituted
therefor:
W9/PC Real Estate Limited Partnership
c/o PM Realty Group
0000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
The addresses for notice to Landlord set forth in Section 19.2 of the
Lease are deleted and the following are substituted therefor:
W9/PC Real Estate Limited Partnership
c/o WCB Properties
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Mr. Xxxxxx A Lack
with a copy to:
PM Realty Group
0000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
18. Environmental Indemnity. Landlord represents that, to
Landlord's actual knowledge, without duty of inquiry or investigation, and
except as set forth in that certain Phase 1 Environmental Site Assessment dated
February 26,1998, prepared by Professional Service Industries, Inc., and an
addendum thereto dated September 30, 1998 (the "ENVIRONMENTAL ASSESSMENT"), as
of the date hereof Landlord is unaware of any Hazardous Substances present in,
on, or under the Expansion Space in violation of Environmental Laws except as
disclosed by the Environmental Assessment or the Phase I (as defined in Section
37.3 of the Lease). Tenant acknowledges receipt of the Environmental Assessment
and the Phase I and agrees to keep the same confidential unless disclosure is
required by law or consented to by Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed. Landlord agrees to indemnify,
defend and hold Tenant harmless from and against any and all claims, damages,
fines, judgments, penalties, costs, liabilities or losses and expenses
(including reasonable attorneys' fees and consultant and expert fees) arising
from or related to Hazardous Substances present within, on or under the
Expansion Space prior to the Expansion Commencement Date that are in violation
of then-existing Environmental Laws, excluding, however, any Hazardous
Substances brought onto the Expansion Space by Tenant or any of its agents,
employees or contractors.
19. No Further Modification. Except as set forth in this First
Amendment, all of the terms and provisions of the Lease shall apply with respect
to the Expansion Space and shall remain unmodified and in full force and effect.
Effective as of the date hereof, all references to the "Lease" shall refer to
the Lease as amended by this First Amendment.
IN WITNESS WHEREOF, this First Amendment has been executed as of the
day and year first above written.
"Landlord":
W9/PC REAL ESTATE LIMITED
PARTNERSHIP,
a Delaware limited partnership
By: W9/PC, Inc., a Delaware corporation,
general partner
By: /s/ Xxxxxx Lack
-------------------------------------
Print Name: Xxxxx Lack
Title: Vice President
"Tenant":
IDEC PHARMACEUTICALS CORPORATION,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Print Name: Xxxx Xxxxxxxxx
Title: Vice President
EXHIBIT "A"
SITE PLAN
[SITE PLAN]
SITE PLAN NOT TO SCALE
EXHIBIT "A"
EXHIBIT "B"
TENANT WORK LETTER
SECTION 1
LANDLORD'S INITIAL CONSTRUCTION IN THE EXPANSION SPACE
Landlord has previously constructed the base, shell, and core of the
Expansion Space (the "BASE, SHELL, AND CORE"). In addition, leasehold
improvements to the Expansion Space may have been constructed by or for a
previous tenant. Any renovations to the existing leasehold improvements shall be
designed and constructed pursuant to this Tenant Work Letter, and the cost of
designing and constructing such renovations shall be an Improvement Allowance
Item. Nothing in this Tenant Work Letter will be construed as relieving Landlord
from its obligations under Paragraph 6 of the First Amendment, which obligations
will be performed at Landlord's sole cost and expense.
SECTION 2
IMPROVEMENTS
2.1 Improvement Allowance. Tenant shall be entitled to a one-time
tenant improvement allowance (the "IMPROVEMENT ALLOWANCE") in the amount of
$1,353,510.00 for the costs relating to the design and construction of Tenant's
improvements that are permanently affixed to the Expansion Space (the
"IMPROVEMENTS"). In no event shall Landlord be obligated to make disbursements
pursuant to this Tenant Work Letter in a total amount which exceeds the
Improvement Allowance. Tenant shall not be entitled to any credit for any unused
portion of the Improvement Allowance.
2.2 Disbursement of the Improvement Allowance. Except as otherwise
set forth in this Tenant Work Letter, the Improvement Allowance shall be
disbursed by Landlord (each of which disbursements shall be made pursuant to the
disbursement process set forth in the construction contract), only for the
following items and costs (collectively, the "IMPROVEMENT ALLOWANCE ITEMS"):
2.2.1 Payment of the fees of the "Architect" and the
"Engineers," as those terms are defined in Section 3.1 of this Tenant Work
Letter, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Tenant and Tenant's consultants in connection with the
preparation and review of the "Construction Drawings," as that term is defined
in Section 3.1 of this Tenant Work Letter (with respect to disbursements of the
Improvement Allowance for the fees described in this Section 2.2.1 or in Section
2.2.2 below, Landlord shall make such disbursements within thirty (30) days
following receipt of an invoice therefor);
2.2.2 The payment of plan check, permit and license fees
relating to construction of the Improvements;
2.2.3 The cost of construction of the Improvements;
2.2.4 The cost of any changes in the Base, Shell and Core
when such changes are required by the Construction Drawings or are otherwise
required by law as a result of the construction of the Improvements, such cost
to include all direct architectural and/or engineering fees and expenses
incurred in connection therewith;
2.2.5 The cost of any changes to the Construction Drawings
or Improvements required by applicable building code or any other governmental
law or regulation (collectively, "(CODE");
2.2.6 Sales and use taxes and Title 24 fees;
2.2.7 Construction management fees incurred by Landlord in
an amount not to exceed $45,000.00; and
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings. Tenant has
retained McGraw Xxxxxxx (the "ARCHITECT") to prepare the "Construction
Drawings," as that term is defined in this Section 3.1. Tenant shall retain
engineering consultants reasonably acceptable to Landlord (the "ENGINEERS") to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC and lifesafety work in the Expansion
Space, together with specifications for sprinkler work. The plans and drawings
to be prepared by the Architect and the Engineers hereunder shall be known
collectively as the "CONSTRUCTION DRAWINGS." All Construction Drawings shall be
subject to Landlord's reasonable approval (in no event may Landlord's
disapproval be based upon a requirement that Tenant increase the quality or
quantity of any particular component of the Improvements that would result in an
increase in the cost of constructing the Improvements unless the same is
required to comply with Code). Tenant and Architect shall verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith.
Landlord's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design, Code compliance or
other like matters. Accordingly, notwithstanding that any Construction Drawings
are reviewed by Landlord or its space planner, architect, engineers and
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord's space planner, architect, engineers, and
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the
Construction Drawings.
3.2 Final Space Plan. On or before October 1, 1999, Tenant and the
Architect shall prepare the final space plan for the Improvements (collectively,
the "FINAL SPACE PLAN"), which Final Space Plan shall include a layout and
designation of all offices, rooms and other partitioning, their intended use,
and equipment to be contained therein, and shall deliver the Final Space Plan to
Landlord for Landlord's approval. Landlord shall have two (2) business days
following receipt of the Final Space Plan within which to approve or disapprove
the Final Space Plan. Landlord's failure to approve or disapprove the Final
Space Plan within such two (2) business day period shall be deemed Landlord's
approval. If Landlord reasonably disapproves of any portion of the Final Space
Plan, the parties shall meet, within two (2) business days after Landlord's
disapproval, to agree upon revisions to be made to the Final Space Plan to meet
the reasonable satisfaction of Landlord and Tenant. Tenant shall then cause the
Architect to promptly revise the Final Space Plan to the form agreed upon in
such meeting. Landlord shall then approve or reasonably disapprove the revised
Final Space Plan within the same time period as set forth above, and in the case
of disapproval, the foregoing process shall be repeated until the Final Space
Plan is finally approved by Landlord and Tenant.
3.3 Final Working Drawings. Within twenty-six (26) days following
Landlord's approval of the Final Space Plan (but no earlier than October
27, 1999), Tenant, the Architect arid the Engineers shall submit with the
appropriate governmental authorities "permittable" architectural and engineering
drawings for the Expansion Space, which drawings shall be based upon, and
consistent with, the approved Final Space Plan. Within two (2) weeks following
Landlord's approval of the Final Space Plan (but no earlier than November
12, 1999), Tenant, the Architect and the Engineers shall complete the
architectural and engineering drawings for the Expansion Space, and the
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "FINAL WORKING DRAWINGS"). The Final Working Drawings shall
be based upon, and consistent with, the approved Final Space Plan.
3.4 Permit Process; Change Orders. Tenant shall coordinate with
Landlord in order to allow Landlord, at Landlord's option, to take part in all
phases of the permitting process, and shall supply Landlord, as soon as
reasonably practicable, with all plan check numbers and dates of submittal. If
Tenant desires changes, modifications or alterations in the Final Working
2.2.8 All other reasonable costs to be expended by Landlord
or Tenant that are directly attributable to the construction of the Improvements
(including Tenant's computer and telephone cabling work).
In connection with Landlord's construction of the
Improvements, Landlord shall, at its sole cost and expense, be responsible for,
and in no event shall the Improvement Allowance Items include (and Tenant shall
have no responsibility for) the following:
(i) Costs attributable to work performed by Landlord
prior to Landlord's execution of the First Amendment
or improvements installed by Landlord offsite or
outside of the Premises unless otherwise provided for
by the Construction Drawings (nothing in this clause
(i) shall be construed as limiting Landlord's right
to pass-through such costs as Direct Operating
Expenses to the extent the same are otherwise
permissible under the Lease);
(ii) Extraordinary costs incurred to remove Hazardous
Substances from the Expansion Space or the
surrounding area (unless such Hazardous Substances
were present due to the conduct of Tenant or its
agents, employees or contractors);
(iii) Costs applicable to Construction Drawings changes
requested by governmental authorities which result
from changes requested by Landlord to the extent such
changes increase the total cost of the Improvements;
(iv) Costs applicable to Construction Drawings changes
requested by Landlord to the extent such changes
increase the total cost of the Improvements;
(v) Attorneys' fees incurred in connection with
negotiation of construction contracts or the First
Amendment, and attorneys' fees, experts' fees and
other costs of legal and arbitration proceedings to
resolve construction disputes;
(vi) Premiums for payments, performance, mechanics' lien,
completion, and other bonds;
(vii) Fifty percent (50%) of the premium for any builder's
risk insurance for the Improvements obtained by
Landlord;
(viii) Loan fees, mortgage brokerage fees, interest and
other costs of financing construction costs;
(ix) Costs paid for by warranties and insurance;
(x) Landlord's prorata share of any restoration costs in
excess of insurance proceeds as a consequence of
insured casualties;
(xi) Penalties and late charges attributable to Landlord's
failure to distribute the Improvement Allowance in
accordance with this Tenant Work Letter or any
contract to which Landlord is a party; and
(xii) Costs incurred by Landlord in performing Landlord's
obligations under Paragraph 6 of the First Amendment.
(xiii) Costs incurred by Landlord to repair any defects in
the design, materials and workmanship of the
foundation and structural components of the roof and
walls of the Expansion Space.
Drawings (including, without limitation, changes in the field), the same may be
made only upon the prior verbal or written consent of Landlord, which shall not
be unreasonably withheld or delayed. If necessary due to the nature of the
change to the Final Working Drawings, prior to commencing any such change,
Landlord shall promptly prepare and deliver to Tenant, for Tenant's approval, a
change order ("CHANGE ORDER") setting forth the additional time required to
perform the change and the total cost of such change, which shall include
associated architectural, engineering and Contractor's fees. If Tenant fails to
approve such Change Order in writing within two (2) business days after such
delivery by Landlord, Tenant shall be deemed to have withdrawn the Change Order
and Landlord shall not proceed to perform the change.
3.5 Time Deadlines. Tenant shall cooperate with (i) the Architect,
the Engineers, and Landlord to complete all phases of the Construction Drawings
and the permitting process, and (ii) the Contractor, for approval of the "Cost
Proposal," as that term is defined in Section 4.2, below, in accordance with the
dates set forth herein. Tenant shall meet with Landlord on a weekly basis to
discuss Tenant's progress in connection with the same. The applicable dates for
approval of items, plans and drawings are referred to as the "TIME DEADLINES".
Tenant agrees to comply with the Time Deadlines.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 Contractor. Landlord shall retain a contractor reasonably
acceptable to Tenant (the "CONTRACTOR") to construct the Improvements. Landlord
shall retain Contractor pursuant to a construction contract providing for a
commercially reasonable negotiated fee. The form and substance of such
construction contract and the amount of such fee shall be subject to Tenant's
approval, which approval shall not be unreasonably withheld. Tenant shall
approve or disapprove Landlord's selection of Contractor, the construction
contract and Contractor's fee within two (2) business days following Landlord's
respective submission thereof to Tenant. If Tenant disapproves Landlord's
selection of Contractor, the construction contract or the fee, the parties shall
meet within two (2) business days after each such disapproval to negotiate in
good faith the selection of Contractor, the terms of the construction contract
or fee for Contractor, as applicable. Landlord shall cause Contractor to obtain
at least three (3) bids (when feasible) from subcontractors from each trade, and
select the lowest qualified and responsible bid. Landlord shall promptly submit
a copy of all bids received to Tenant. The construction contract shall (i) name
Tenant as a third party beneficiary of all construction warranties and
guaranties thereunder, (ii) require Contractor to name Tenant as an additional
insured under Contractor's public liability insurance policy and (iii) permit
the assignment of Landlord's rights thereunder to Tenant in the event Landlord
is in default under the Lease as a result of Landlord's failure to perform its
obligations under this Tenant Work Letter.
4.2 Cost Proposal. As soon as practicable after the Final Working
Drawings are completed, Landlord shall provide Tenant with a cost proposal in
accordance with the Final Working Drawings, which cost proposal shall include,
as nearly as possible, the cost of all Improvement Allowance Items to be
incurred by Tenant in connection with the construction of the Improvements (the
"COST PROPOSAL"). Landlord does not guaranty the accuracy of the Cost Proposal.
Tenant shall either (i) approve the Cost Proposal within two (2) business days
of the receipt of the same, or (ii) notify Landlord within two (2) business days
after Tenant's receipt of the Cost Proposal that Tenant will instruct the
Architect to revise the Final Working Drawings to reduce the amount of the Cost
Proposal, in which case such changes shall be made to the Final Working Drawings
in accordance with Section 3.4 above and the revised Working Drawings shall be
provided to the Contractor for repricing whereupon Landlord shall revise the
Cost Proposal for Tenant's approval. This procedure shall be repeated until the
Cost Proposal is up approved by Tenant.
4.3 Construction of Improvements by Landlord's Contractor under
the Supervision of landlord.
4.3.1 Over-Allowance Amount. The term "OVER-ALLOWANCE
AMOUNT" means the difference between (i) the amount of the Cost Proposal and
(ii) the amount of the Improvement Allowance (less any portion thereof already
disbursed by Landlord of in the
items that will not materially interfere with Tenant's ability to conduct
business in the Expansion Space; (ii) the issuance of a certificate of occupancy
(temporary or permanent) for the Expansion Space or other similar evidence of
acceptance of the Improvements from the appropriate local governmental authority
permitting occupancy of the Expansion Space (e.g., an inspector's sign-off); and
(iii) the Primary Systems are in good working order, with the exception of punch
list items that will not materially interfere with Tenant's ability to conduct
business in the Expansion Space. Landlord will give Tenant at least five (5)
days prior written notice of the date that Landlord anticipates Substantial
Completion will occur, and the parties will schedule a mutually acceptable time
on or before such anticipated date of Substantial Completion to conduct a
walk-through of the Expansion Space and prepare a punch list for the
Improvements and the Primary Systems identifying those items that are not in
compliance with the requirements of this Tenant Work Letter or Paragraph 6 of
the First Amendment. Landlord shall correct all items identified on the punch
list with all due diligence.
5.2 Delay of Substantial Completion. Except as provided in this
Section 5, the Expansion Commencement Date shall occur as set forth in Section 2
of the First Amendment. If there shall be a delay or there are delays in the
Substantial Completion as an actual result of any of the following
(collectively, "TENANT DELAYS"):
5.2.1 Tenant's failure to comply with the Time Deadlines;
5.2.2 Tenant's failure to timely approve or disapprove any
matter requiring Tenant's approval within the time frames set forth in this
Tenant Work Letter;
5.2.3 A breach by Tenant of the terms of this Tenant Work
Letter or the Lease (Landlord may only claim a Tenant Delay under this Section
5.2.3 if Landlord delivers written notice to Tenant of the existence of such
delay within two (2) business days following the date Landlord learns of such
delay);
5.2.4 Changes in any of the Construction Drawings because
the same do not comply with Code or other applicable laws (unless such changes
are required as a result of routine plan checks or due to revisions to the
Construction Drawings requested by Landlord or due to concealed conditions,
defects in the Base, Shell and Core or the performance of Landlord's obligations
under Paragraph 6 of the First Amendment);
5.2.5 Tenant's request for changes in the Final Working
Drawings (including, without limitation, any changes made in order to reduce the
amount of the Cost Proposal pursuant to Section 4.2 above);
5.2.6 Tenant's requirement for unique materials,
components, finishes or improvements which are not readily available (Landlord
may only claim a Tenant Delay under this Section 5.2.6 if Landlord delivers
written notice to Tenant of the existence of such delay within two (2) business
days following the date Landlord learns of such delay); or
5.2.7 Any other acts or omissions of Tenant, or its agents,
or employees (provided that any Tenant Delay under this Section 5.2.7 shall not
be deemed to have commenced until Tenant receives written notice identifying the
conduct giving rise to the Tenant Delay).
then, notwithstanding anything to the contrary set forth herein or in the First
Amendment and regardless of the actual date of the Substantial Completion, the
date of Substantial Completion (for purposes of determining the Expansion
Commencement Date) shall be deemed to be the date Substantial Completion would
have occurred if no Tenant Delays had occurred. Notwithstanding the foregoing,
the first ten (10) days of Tenant Delays will not be a considered Tenant Delays
for purposes of determining the Expansion Commencement Date.
SECTION 6
MISCELLANEOUS
6.1 Tenant's Entry Into the Expansion Space Prior to Substantial
Completion. Provided that Tenant and its agents do not interfere with, or delay,
Contractor's work in the Expansion Space. Landlord shall allow Tenant access to
the Expansion Space prior to the Substantial Completion for the purpose of
Tenant viewing construction of the Improvements and installing equipment or
fixtures (including Tenant's data and telephone equipment) in the Expansion
Space. Prior to Tenant's entry into the Expansion Space as permitted by the
terms of this Section 6.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval (which will not be unreasonably withheld or
delayed), which schedule shall detail the timing and purpose of Tenant's entry.
Tenant shall hold Landlord harmless from and indemnify, protect and defend
Landlord against any loss or damage to the Project or Expansion Space and
against injury to any persons caused by Tenant's actions pursuant to this
Section 6.1.
6.2 Tenant's Representative. Tenant has designated Xxxxxx Xxxxxxxx
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.
6.3 Landlord's Representative. Landlord has designated Xxx Xxxxxxx
of Springline Associates, Inc. as its sole representative with respect to the
matters set forth in this Tenant Work Letter, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Tenant Work Letter.
6.4 Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default under the Lease or this
Tenant Work Letter has occurred at any time on or before the Substantial
Completion, then (i) in addition to all other rights and remedies granted to
Landlord pursuant to the Lease, Landlord shall have the right to withhold
payment of all or any portion of the Improvement Allowance and/or Landlord may
cause Contractor to cease the construction of the Improvements (in which case,
Tenant shall be responsible for any delay in the Substantial Completion caused
by such work stoppage as set forth in Section 5.2 of this Tenant Work Letter),
and (ii) all other obligations of Landlord under the terms of this Tenant Work
Letter shall be forgiven until such time as such default is cured pursuant to
the terms of this Lease.
6.5 Tenant's Agents. All of Tenant's agents, contractors, and
subcontractors performing work in, or in connection with, the Expansion Space
(collectively as "TENANT'S AGENT"), shall be subject to Landlord's reasonable
approval (which will be given or denied within one (1) business day after
Landlord's receipt of a request therefor).
6.6 Insurance Requirements. All of Tenant's Agents shall carry
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than One Million Dollars ($1,000,000.00) per incident, One
Million Dollars ($1,000,000.00) in aggregate, and in form and with companies as
are required to be carried by Tenant under the Lease, and the policies therefor
shall insure Landlord and Tenant, as their interests may appear, as well as
Contractor, and shall name as additional insureds all mortgagees of the Project
or any other party designated by Landlord. All insurance maintained by Tenant's
Agents shall preclude subrogation claims by the insurer against anyone insured
thereunder. Such insurance shall provide that it is primary insurance as
respects the Landlord and that any other insurance maintained by Landlord is
excess and noncontributing with the insurance required hereunder.
6.7 Failure to Disburse Improvement Allowance. If Landlord fails
to timely fund any payment of the Improvement Allowance as required by this
Tenant Work Letter, Tenant shall, in addition to all other remedies available to
Tenant, be entitled to deliver written notice thereof to Landlord ("PAYMENT
NOTICE"). If Landlord still fails to fulfill any such obligation within thirty
(30) days after Landlord's receipt of the Payment Notice and if Landlord fails
to deliver written notice to Tenant within such thirty (30) day period
explaining Landlord's reasons that the amounts described in Tenant's Payment
Notice are not due and payable by Landlord ("REFUSAL NOTICE"), Tenant shall, in
addition to all other remedies available to Tenant, be entitled to fund
such amount(s) itself and to offset such amount(s) against the next
installment(s) of Basic Rent. However, Tenant shall not be entitled to any such
offset if Tenant is in default under the Lease (after expiration of any
applicable cure period) at the time that such offset would otherwise be
applicable. If Landlord delivers a Refusal Notice, and if Landlord and Tenant
are not able to agreeon the amounts to be so paid by Landlord, if any, within
thirty (30) days after Tenant's receipt of a Refusal Notice, Landlord or Tenant
may elect to have such dispute resolved by binding arbitration before a retired
judge of the Superior Court of the State of California under the a spices of
JAMS/ENDISPUTE (or any successor to such organization) in San Diego Courty,
California, according to the then rules of commercial arbitration of such
organization. If Tenant prevails in any such arbitration and Landlord fails to
fund such amount or reimburse Tenant, as applicable, within thirty (30) days
thereafter, Tenant shall, in addition to all other remedies available to Tenant,
be entitled to offset the amount determined to be payable by Landlord in such
proceeding against the next installment(s) of Basic Rent.
6.8 Mechanic's Liens. The provisions of Section 7.4 of the Lease
shall not be applicable to any mechanic's liens incurred in connection with
Landlord's construction of the Improvements, unless a mechanic's lien arises
from Tenant's failure to pay the Over-Allowance Amount as required by Section
4.3.1 above.
