SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE is made as of October 17, 1995, by and between
Green Valley-Xxxx, a Washington general partnership ("Landlord"), and Precision
Echo, Inc., a Delaware corporation ("Tenant").
WITNESSETH:
Recital of Facts:
Tenant entered into a Lease Agreement dated July 20, 1988 by and between Tenant
and Bay 511 Corporation, a California corporation, and such Lease Agreement is
the "Lease". The term of the Lease commenced on August 31, 1988. The Lease was
amended by an Amendment to Lease ("First Amendment") dated July 1, 1993, wherein
the term of the Lease was extended to August 31, 1996.
Landlord, as assignee in interest from Bay 511 Corporation, and Tenant do hereby
amend the Lease and the First Amendment to Lease as provided in this Second
Amendment to Lease as follows:
1. Term: The extended term of the Lease shall commence on October , 1995. Unless
extended further in accordance with paragraph 3 of the Second Amendment to Lease
or sooner terminated in accordance with the Lease, the term of the Lease shall
end on October 31, 2000.
2. Base Rent: Commencing November 1, 1995, the base rent payable by Tenant to
Landlord pursuant to Section 3.1 of the Lease shall be as follows:
(i) During the period commencing November 1, 1995 through October 31, 1996,
the net annual base rental for the Premises shall be three-hundred and
ninety-six thousand dollars ($396,000), payable in advance in equal monthly
installments of thirty-three thousand dollars ($33,000) each on the first day of
every month during such period.
(ii) During the period commencing November 1, 1996 through October 31,
1997, the net annual base rental for the Premises shall be four-hundred and
fifteen thousand eight hundred dollars ($415,800), payable in advance in equal
monthly installments of thirty-four thousand six hundred and fifty dollars
($34,650) each on the first day of every month during such period.
(iii) During the period commencing November 1, 1997 through October 31,
1998, the net annual base rental for the Premises shall be four-hundred
forty-eight thousand eight hundred dollars ($448,800), payable in advance in
equal monthly
installments of thirty-seven thousand four hundred dollars ($37,400) each
on the first day of every month during such period.
(iv) During the period commencing November 1, 1998 through October 31,
1999, the net annual base rental for the Premises shall be four-hundred ninety
five thousand dollars ($495,000), payable in advance in equal monthly
installments of forty-one thousand two-hundred fifty dollars ($41,250) each on
the first day of every month during such period.
(v) During the period commencing November 1, 1999 through October 31, 2000,
the net annual base rental for the Premises shall be five-hundred twenty-eight
thousand dollars ($528,000), payable in advance in equal monthly installments of
forty-four thousand dollars ($44,000) each on the first day of every month
during such period.
3. Right to Extend and Rent for Extended Term: Subject to the provisions of this
paragraph as well as superseding and replacing Section's 2.2 and 3.3 of the
Lease and Paragraph 3 of the First Amendment to Lease, Tenant shall have the
right to extend the term of the Lease for a period of five (5) years and shall
henceforth be referred to as the "Extended Term". Tenant may exercise such right
only by giving Landlord written notice via certified mail of Tenant's exercise
of such right no earlier than May 1, 1999 and no later than October 31, 1999,
and only if no default by Tenant under the Lease exists when Tenant exercises
such right. If Tenant fails to exercise such right in accordance with this
paragraph, such right shall terminate. If Tenant exercises such right in
accordance with this paragraph, the term of the Lease shall be extended for the
Extended Term.
The Extended Term shall be on and subject to all of the agreements, covenants
and conditions in the Lease, except the base rent shall be increased as provided
below. References in the Lease and the First Amendment to Lease shall mean and
include the term of the Lease as extended for the Extended Term in accordance
with this paragraph. If Tenant exercises the right to extended the term of the
Lease for the Extended Term in accordance with this paragraph, Landlord and
Tenant each shall, promptly after Tenant exercises such right, execute and
deliver to the other a subsequent written amendment to the Lease which sets for
the extension of the term of the Lease for the Extended Term as defined, but the
term of the Lease shall be extended for the Extended Term whether or not such
subsequent amendment is executed.
(a) If Tenant exercises the right to extend the term of the Lease for the
Extended Term in accordance with paragraph 3 of this Second Amendment to Lease
the net annual base rental during the Extended Term shall be increased to the
greater of (i) ninety-five percent (95%) of the prevailing fair market rental
value of the Premises, including annual increases, on and subject to covenants
(except the amount of net annual base rental) in the Lease, based on then
current base rent comparables for buildings within the Marriot Business Park in
Santa Xxxxx, or (ii) forty-four thousand dollars ($44,000) each month, plus
prevailing fair market rental increases.
Such fair market analysis or the acceptance of the conditions provided in
paragraph 3(a)(ii) above shall be determined no later than March 1, 2000 and
acknowledged by written agreement between Landlord and Tenant by such date. If
Landlord and Tenant do not agree in writing on such rental for the Extended
Term, such fair market rental value shall be determined by appraisal in
accordance with Paragraph 4 of this Second Amendment to Lease.
Landlord and Tenant each shall, promptly after any determination of the net
annual base rental pursuant to this paragraph or Paragraph 4 of this Second
Amendment to Lease, execute and deliver to the other a written amendment to the
Lease which sets forth the net annual base rental during the Extended Term, but
such net annaul base rental shall become effective whether or not such
amendment is executed. Such net annual base rental shall be payable in advance
in equal monthly installments on the first day of every month during the
Extended Term.
4. Appraisal Procedure: If Landlord and Tenant do not agree on the fair market
rental value of the Premises by the date set forth in Paragraph 3(a) of this
Second Amendment to Lease, as applicable, such fair market rental value shall be
determined as follows: Landlord and Tenant each shall appoint one (1) appraiser
within fifteen (15) days after a written request for appointment of appraisers
has been given by either Landlord or Tenant to the other. If either Landlord or
Tenant fails to appoint its appraiser within such period of fifteen (15) days,
such appraiser shall be appointed by the Superior Court of the State of
California in and for Santa Xxxxx County upon application of the other party.
Each such appraiser shall appraise the Premises and submit his or her written
report setting forth the appraised fair market rental value to Landlord and
Tenant within thirty (30) days after the appointment of both such appraisers
(or as soon thereafter as practicable). If the higher appraised value in such
two (2) appraisals is not more than one hundred ten percent (110%) of the lower
appraised value, the fair market rental value of the Premises shall be the
average of the two (2) appraised values. If the higher appraised value is more
than one hundred ten percent (110%) of the lower appraised value, Landlord and
Tenant shall agree upon and appoint a neutral third appraiser within fifteen
(15) days after both of the first two (2) appraisals have been submitted to
Landlord and Tenant. If Landlord and Tenant do not agree and fail to appoint
such neutral third appraiser within such period of fifteen (15) days, such
neutral third appraiser shall be appointed by the Superior Court of the State of
California in and for Santa Xxxxx County upon application of either Landlord or
Tenant. The neutral third appraiser shall appraise the Premises and submit his
or her written report setting forth the appraised fair market rental value to
Landlord and Tenant within thirty (30) days after his or her appointment (or as
soon thereafter as practicable). The fair market rental value of the Premises
shall be the average of the two (2) appraised values in such three (3)
appraisals that are closest to each other (unless the differences are equal, in
which case the three (3) appraised values shall be averaged). The fair market
rental value of the Premises, determined in accordance with this paragraph,
shall be conclusive and binding upon Landlord and Tenant. Any proceedings in
connection with the determination of the fair market rental value of the
Premises shall
be conducted in Santa Xxxxx County in accordance with California Code of Civil
Procedure sections 1280 and 1294.2 (including section 1283.05) or successor
California laws then in effect relating to arbitration. All appraisers appointed
by Landlord or Tenant, or both of them, shall be members of the American
Institute of Real Estate Appraisers of the National Association of Realtors (or
its successor), or real estate professionals qualified by appropriate training
or experience, and have at least ten (10) years of experience dealing with
commerical real estate. The appraiser shall have no power or authority to amend
or modify this Lease in any respect and their jurisdiction is limited
accordingly. Landlord and Tenant each shall pay the fee and expenses charged by
its appraiser plus one-half of the fee and expenses charged by the neutral third
appraiser. If the fair market rental value of the Premises has not been
determined in accordance with this paragraph on or before the Lease expiration
date, Tenant shall continue to pay the base rent then in effect until the fair
market rental value of the Premises has been determined. Within ten (10) days
after such determination, Tenant shall pay to Landlord any deficiency and
Landlord shall so credit any surplus in the amount of base rent which arose
between the effective date in question and such determination.
5. Landlord's Repairs, Residual Obligations and Improvement Reimbursements:
Landlord shall, at its sole cost and expense, reimburse Tenant for the following
repairs and improvements in the following manner:
(a) Upon execution of this Second Amendment to Lease by Landlord and
assignment of the Lease from Bay 511 Corporation to Landlord, Landlord shall
within five (5) days, reimburse Tenant $21,434.50 as the undistributed residual
fund owed to Tenant to make certain repairs and improvements to the HVAC system
as provided in Paragraph 5 of the First Amendment to Lease.
(b) On or before November 10, 1995, Landlord will reimburse Tenant $33,000
for miscellaneous improvements and expenditures made by Tenant prior to
commencing the Extended Term.
(c) During the term of the Extended Term, Landlord shall reimburse Tenant
$100,000 to cover the cost for (i) the phased replacement of carpeting, (ii)
remodel of bathrooms, (iii) retro-fitting the lighting systems, (iv) repair and
resurfacing the parking lot, (v) roof repairs and (vi) miscellaneous items. The
$100,000 improvement fund will be available for Tenant to use as it deems
necessary for the required improvements, subject to Landlord's reasonable
approval. Landlord will reimburse Tenant within fifteen (15) days from receipt
and approval of Tenants request for reimbursement, which will include copies of
receipts from contractors performing the work along with appropriate conditional
and unconditional lien releases.
6. Additional Provisions: It is understood that the above stated rent is a net
rental per the Lease for the Premises dated July 20, 1988. Tenant shall pay as
additional rent all property taxes, assessments, insurance, utilities, repairs
and all other maintenance of the Premises, as detailed in the Lease. As provided
in the First Amendment to Lease, Tenant
shall have the option to be covered by Landlord's "All Risk" insurance policies
with such premiums being paid by Tenant upon receipt of Landlord's invoice for
same.
7. Representing Brokerage: The parties acknowledge that no real estate
brokerage may claim a fee for this transaction other than J.R. Xxxxxxx,
Inc./Colliers International ("Broker") as provided in a listing agreement
entered into by and between Bay 511 Corporation, predecessor in interest to
Landlord, and Broker. Tenant represents that no other person is representing
Tenant who may claim a commission or finders fee for this transaction.
8. Legal Effect and Conflicts: This Second Amendment to Lease shall be
effective as of the date of its execution by Landlord. Any conflicts between the
original Lease and this Amendment to Lease for the Premises shall be resolved in
such Second Amendments favor. Except as amended by this Second Amendment to
Lease, the Lease is unchanged and, as so further amended, the Lease shall remain
in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this SECOND AMENDMENT
TO LEASE as of the date herein written.
GREEN VALLEY-XXXX,
a Washington general partnership
By: Green Valley Corporation,
a California Corporation
Its: General Partner
By: _______________________________________________ Date: ______________________
Its: ______________________________________________
PRECISION ECHO, INC.,
a Delaware corporation
By: ________________________________________________
Its: _______________________________________________
By: ________________________________________________
Its: _______________________________________________
