EXHIBIT 99.3
ILOG, Inc. Improvement Agreement
IMPROVEMENT AGREEMENT
This Improvement Agreement ("Agreement") is dated for reference purposes
only as of October 26, 1998, and is made by and between SHORELINE 101, LLC
("Landlord") and ILOG, INC. ("Tenant") in connection with that certain Lease
Agreement ("Lease") of even date herewith between Landlord and Tenant
affecting certain real property commonly known as 0000 Xxxxx Xxxxx Xxxxxx, in
the City of Mountain View, County of Santa Xxxxx, State of California.
Landlord and Tenant hereby agree as follows:
1. DEFINITIONS: Throughout this Agreement, the following terms shall
have the following meanings:
A. ARCHITECT: The term "Architect" shall mean LRS Associates
Architecture and Planning of Sunnyvale, California.
B. BUILDING: The term "Building" shall mean the Building Shell
and the Interior Improvements.
C. BUILDING PLANS: The term "Building Plans" shall mean the
Final Building Shell Plans and Final Interior Improvement Plans, as the same
may be modified from time to time by change orders issued and approved by the
parties in accordance with this Agreement.
D. BUILDING SHELL: The term "Building Shell" shall mean (i) a
concrete and steel two (2) story tilt-up building containing approximately
thirty-six thousand (36,000) square feet of floor space (measured in
accordance with American Institute of Architects ("AIA") Document D101,
"Methods of Calculating Areas and Volumes of Buildings"), which shall be
constructed by Landlord in the location and configuration shown on EXHIBIT
"C" to the Lease, including, without limitation, the foundation system and
slab, walls, structural and finished roof, exterior glazing (including
sound-proofing reasonably acceptable to Tenant), hydraulic elevator with
finishes, fire sprinkler uppers, domestic water meter, roof screen, entry
doors, and all improvements necessary for such building to comply with the
Americans with Disabilities Act ("ADA"); (ii) all parking areas (including
striping and ADA-required signage), driveways, curbs, sidewalks, utility
installations, exterior lighting, decorative water facilities, irrigation
systems, landscaping, and other outside area improvements specified on the
Building Plans; and (iii) all other on-site and off-site improvements
required by any governmental authority as a condition of its issuance of any
approval for construction of the Building Shell or the Interior Improvements
(including road widening, resurfacing and striping, signalization, sidewalks,
curbs, lighting and other improvements).
E. FINAL BUILDING SHELL PLANS: The term "Final Building Shell
Plans" shall mean those plans, specifications, and working drawings for the
Building Shell prepared by Architect,
bearing Job No. 19.16.18, dated June 16, 1997, and consisting of pages A-O,
A1, A2.1, A2.2, A3.1, A3.2, A4.1, A4.2, A4.3, A5.0, A6.0, A7.0, A8.0, A9.0,
SP.1 through XX.0, X-0, X-0, X-0, X0 xxxxxxx X00, and L1 through L6.
F. FINAL INTERIOR IMPROVEMENT PLANS: The term "Final Interior
Improvement Plans" shall mean those plans, specifications, and working
drawings for the Interior Improvements prepared and approved by the parties
in accordance with this Agreement.
G. GENERAL CONTRACTOR: The term "General Contractor" shall mean
Wentz Construction.
H. INTERIOR IMPROVEMENT ALLOWANCE: The term "Interior
Improvement Allowance" shall mean the sum of (i) a base amount (the "Base
Allowance") equal to the sum of (a) Nine Hundred Fifty Thousand Dollars
($950,000), plus (b) the aggregate amount of all Soft Costs (including those
reasonably incurred by Tenant), which Base Allowance Landlord must contribute
for the design, development and construction of the Interior Improvements,
PLUS (ii) an additional amount ("the Additional Allowance") equal to Two
Hundred Fifty-Two Thousand Dollars ($252,000), which Additional Allowance
Landlord must, at the option of Tenant, also contribute for the design,
development and construction of the Interior Improvements.
I. INTERIOR IMPROVEMENTS: The term "Interior Improvements" shall
mean all partitions, windows, interior non-load-bearing walls, wall
coverings, HVAC equipment, interior lighting, finished ceilings, interior
utility fixtures, signage, and other improvements and fixtures installed in
the Building Shell to the extent that such improvements and fixtures are
specified on the Final Interior Improvement Plans.
J. INTERIOR IMPROVEMENT COSTS: The term "Interior Improvement
Costs" shall mean the sum of the following: (1) payments to the General
Contractor and its subcontractors for labor and materials furnished pursuant
to any construction contract for construction of the Interior Improvements,
which is entered into by Landlord and approved by Tenant in accordance with
this Agreement; (2) reasonable fees paid by Landlord to architects, engineers
and other construction professionals (other than employees of Landlord) for
services required in connection with the design and construction of the
Interior Improvements; (3) reasonable fees paid by Tenant to architects,
engineers, space planners, designers, inspectors and other construction
professionals (other than fees and costs paid by Tenant to Sigmatech
Facilities and Xxxxxx Associates); (4) utility connection charges incurred by
Tenant (subject to clause (xiii) below); (5) permit and license fees paid by
Tenant for use and occupancy permits required for Tenant to occupy the
Premises; (6) the amounts paid to governmental authorities or agencies for
inspections and issuance of building permits and approvals for the Interior
Improvements (but not that portion of such amounts applicable to, or based on
the value of, the Building Shell); and (7) such other reasonable costs as
Tenant incurs which relate directly to the design, construction and
development of the Interior Improvements (excluding the cost of any security
systems, office furniture systems and moving expenses) and which have been
specified by Tenant to Landlord as Interior Improvement Costs by written
notice(s) given by Tenant
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to Landlord from time to time. In no event shall Interior Improvement Costs
include nor shall Landlord apply any of the Interior Improvement Allowance
toward (i) charges and expenses for changes to the Building Plans which have
not been approved by Tenant; (ii) wages, labor and overhead for overtime and
premium time; (iii) additional costs and expenses incurred by Landlord on
account of any contractor's or subcontractor's default or construction
defects; (iv) principal, interest and fees for construction and permanent
financing; (v) offsite management or other general overhead costs incurred by
Landlord; (vi) bond premiums; (vii) costs for which Landlord has a right of
reimbursement from others (including, without limitation, insurers and
warrantors); (viii) the cost of bringing the Building and the Premises into
compliance with applicable building codes, environmental laws, and other
statutes, laws, rules and regulations; (ix) restoration costs in excess of
insurance proceeds as a consequence of casualties; (x) any penalties and late
charges attributable to Landlord's failure to pay other Interior Improvement
Costs; (xi) Landlord's attorneys', experts' and other fees and costs in
connection with contracts and disputes; (xii) fees or charges by or for
Landlord for construction management, supervision, profit, overhead or
general conditions; (xiii) sewer and water meter hook-up fees and expenses;
and (xiv) costs in excess of the Interior Improvement Cost Estimate, all of
which items described in the foregoing clauses (i) through (xiv) shall be the
sole obligation of Landlord.
K. INTERIOR IMPROVEMENT COST ESTIMATE: The term "Interior
Improvement Cost Estimate" shall mean the total estimated cost of
constructing the Interior Improvements prepared and approved by Landlord and
Tenant in accordance with this Agreement.
L. PRELIMINARY INTERIOR IMPROVEMENT PLANS: The term "Preliminary
Interior Improvement Plans" shall mean those plans and specifications for the
Interior Improvements prepared by the Architect bearing Job No. 21.1826,
dated October 16, 1998, and consisting of pages A-2.1, A-2.2, A-3.1 and
A-3.2, and the LRS Associates Outline Specifications for ILOG, Inc.
consisting of four pages and presented by Architect to Tenant on August 28,
1998, as modified by the memorandum dated October 5, 1998, by Xxxxxxx Xxxxxx
of Sigmatech to the General Contractor.
M. SOFT COSTS: The term "Soft Costs" shall mean the aggregate
amount of all of the following costs, fees and expenses incurred in
connection with the design, construction and development of the Interior
Improvements: (i) all architectural and engineering fees, (ii) all costs of
obtaining governmental approval and permits for the development and
construction of the Interior Improvements, including all building permit
fees, zoning fees, utility connection and use fees, and area fees imposed by
any governmental or quasi-governmental authority or public utility, (iii) the
cost of premiums for surety bonds, if any, including payment and performance
bonds and mechanics' xxxx xxxxx, (iv) fees for any reports necessary in the
design, construction and development of the Interior Improvements, including
environmental impact reports, soils reports, topographical maps, and other
reports, (v) premiums and costs of fire/casualty, liability and builders'
risk insurance coverage, (vi) all costs associated with the testing and
inspection of the Premises, and (vii) fees and expenses of all surveyors,
consultants (including project managers and construction consultants),
accountants, attorneys and others providing professional or extra services in
connection with the preparation and negotiation of the Lease and this
Agreement and/or the design, construction and
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development of the Premises (excluding Tenant's attorneys, project managers
and construction consultants).
N. SUBSTANTIAL COMPLETION: The terms "Substantial Completion"
and "Substantially Completed" shall mean that (i) all necessary governmental
approvals for occupancy of the Building for Tenant's Intended Use have been
obtained (including a final "sign-off" and, if applicable, a certificate of
occupancy); (ii) Tenant has had fifteen (15) days to install its Trade
Fixtures in the Building; (iii) all utilities are hooked up and available for
use; (iv) the Architect has certified that the Building has been constructed
in accordance with the Building Plans; (v) all incomplete or defective
construction, which materially interferes with Tenant's use of the Building,
has been remedied and repaired; and (vi) Landlord has delivered possession of
the Building to Tenant.
O. TENANT'S CONTRIBUTION: The term "Tenant's Contribution" is
defined in paragraph 5A(1).
P. TENANT'S INTENDED USE: The term "Tenant's Intended Use" shall
mean Tenant's legal occupancy of the Premises to operate office, research and
development facilities.
Q. TRADE FIXTURES: The term "Trade Fixtures" shall mean anything
affixed to the Premises and used by Tenant for purposes of trade,
manufacture, ornament or domestic use unless such thing has, by the manner in
which it is affixed, become an integral part of the Premises. Such Trade
Fixtures shall include, without limitation, Tenant's telephone,
telecommunications, data cabling and security systems, furniture, signage,
equipment, and other operating systems located in or used in connection with
the Premises.
2. BUILDING PLANS:
A. FINAL BUILDING SHELL PLANS AND PRELIMINARY INTERIOR
IMPROVEMENT PLANS: Landlord and Tenant each acknowledges that it has
reviewed and approved the Final Building Shell Plans and the Preliminary
Interior Improvement Plans prior to the date of this Agreement.
B. FINAL INTERIOR IMPROVEMENT PLANS AND COST ESTIMATE: On or
before the tenth (10th) business day after the date of this Agreement, (i)
Landlord shall cause the Architect to prepare and deliver to Tenant proposed
final plans, specifications and fully-engineered working drawings for the
Interior Improvements (the "Proposed Final Plans"), which shall be consistent
with and logical evolutions of the Preliminary Interior Improvement Plans,
and (ii) Landlord shall deliver to Tenant a proposed Interior Improvement
Cost Estimate for the Interior Improvements shown on the Proposed Final
Plans, which shall include a detailed line-item budget of all estimated
Interior Improvement Costs. If such proposed Interior Improvement Cost
Estimate is more than One Million Two Hundred Seventy-Seven Thousand Dollars
($1,277,000), then Tenant shall have the right to terminate this Agreement
and the Lease by delivery of written notice to Landlord on or before the
tenth (10th) business day following delivery of the Proposed Final Plans and
such proposed Interior
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Improvement Cost Estimate to Tenant. In addition, if Tenant disapproves the
Proposed Final Plans or proposed Interior Improvement Cost Estimate in any
respect, then within ten (10) business days following receipt of the Proposed
Final Plans and proposed Interior Improvement Cost Estimate, Tenant may
deliver to Landlord its written proposal for the changes necessary, in
Tenant's opinion, to conform the Proposed Final Plans to the approved
Preliminary Interior Improvements Plans or to reduce costs. If Tenant fails
to approve or disapprove the Proposed Final Plans within the allowed time
period, the Proposed Final Plans shall be deemed to be the approved Final
Interior Improvement Plans for the purpose of this Agreement. If Tenant fails
to approve or disapprove the proposed Interior Improvement Cost Estimate
within the allowed time period, the Interior Improvement Cost Estimate
proposed by Landlord shall be deemed to be the approved Interior Improvement
Cost Estimate for the purposes of this Agreement. Landlord shall, and shall
cause the General Contractor to, cooperate reasonably with Tenant and its
representatives in reviewing the Final Proposed Plans and the proposed
Interior Improvement Cost Estimate. If Tenant proposes changes to the
Proposed Final Plans and/or Landlord's proposed Interior Improvement Cost
Estimate, Landlord shall not unreasonably withhold its approval of such
changes and the parties shall confer and negotiate in good faith to reach
agreement on specific required modifications to the Proposed Final Plans and
Landlord's proposed Interior Improvement Cost Estimate as a consequence of
such changes. If Tenant reasonably believes that the cost estimate is
incorrect, it may require that all or any portion of the work be submitted
for competitive bids. The Proposed Final Plans, modified for changes proposed
by Tenant and approved by Landlord pursuant to this paragraph, shall be the
approved Final Interior Improvement Plans and the cost estimate approved by
Tenant shall be the Interior Improvement Cost Estimate for the purposes of
this Agreement.
C. APPLICATION FOR APPROVALS: As soon as the Final Interior
Improvement Plans are approved by Landlord and Tenant, Landlord shall submit
the approved Final Interior Improvement Plans to all appropriate governmental
agencies for their approval and issuance of all required permits. Landlord
shall use reasonable efforts to obtain all governmental approvals and permits
necessary for construction of the Interior Improvements in accordance with
Final Interior Improvement Plans on or before December 4, 1998. Landlord and
Tenant shall initial the Building Plans immediately after all governmental
approvals and permits have been obtained.
D. TERMINATION: If Landlord and Tenant have not previously
agreed upon the Final Interior Improvement Plans, then Tenant, in its sole
discretion, may terminate this Agreement and the Lease by giving Landlord
written notice on or before the later of (i) the third (3rd) business day
after Landlord has delivered to Tenant the Proposed Final Plans and
Landlord's proposed Interior Improvement Cost Estimate, or (ii) November 4,
1998. If Landlord and Tenant have not previously agreed upon the Final
Interior Improvement Plans, then Landlord may terminate this Agreement and
the Lease by giving Tenant written notice on or before the tenth (10th)
business day after Landlord has delivered to Tenant the Proposed Final Plans
and Landlord's proposed Interior Improvement Cost Estimate. In addition, if
all permits required for construction of the Building have not been issued on
or before December 18, 1998, then Tenant, in its sole discretion, may
terminate this Agreement and the Lease by giving Landlord written notice.
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E. CHANGES TO BUILDING PLANS: Effective immediately, with
respect to the Building Shell, and after the Final Interior Improvement Plans
have been approved by Landlord and Tenant as provided above, with respect to
the Interior Improvements, neither party shall have the right to require
extra work or make any modifications with respect to the construction of the
Building, without the prior written consent of the other party as to the
change. Landlord shall not unreasonably withhold or delay its consent to
changes or extra work proposed by Tenant provided that Tenant agrees (i) to
pay the reasonable increase (if any) in Landlord's Interior Improvement Costs
to make such changes or perform such extra work (such costs to be determined
as provided in the definition of Interior Improvement Costs under paragraph
1J), and (ii) if Architect determines that such extra work will delay
Substantial Completion, that any delay in Substantial Completion caused by
such extra work shall advance the "Commencement Date" under the Lease on a
day-for-day basis. Tenant shall not unreasonably withhold or delay its
consent to changes or extra work proposed by Landlord which do not increase
Interior Improvement Costs or delay construction. Tenant may withhold its
consent, in its sole discretion, to any change in the Final Interior
Improvement Plans or Interior Improvement Cost Estimate.
3. CONSTRUCTION CONTRACT:
A. SELECTION OF GENERAL CONTRACTOR: Landlord and Tenant agree
that Wentz Construction shall be the general contractor for the Interior
Improvements (the "General Contractor"). Landlord and the General Contractor
shall enter a construction contract for a fixed price equal to the Interior
Improvement Cost Estimate. The General Contractor shall be the contractor
only of Landlord, and Tenant shall have no liability to the General
Contractor under any construction contract or otherwise with respect to the
Building.
B. SELECTION OF SUBCONTRACTORS: Landlord represents and warrants
that all subcontractors shall be well-qualified and experienced in their
trades and duly licensed by all applicable authorities. Air Systems shall be
the mechanical subcontractor and Young Electric shall be the electrical
subcontractor for the Project. Each subcontractor shall be a contractor only
of the General Contractor and/or Landlord, and Tenant shall have no liability
to any subcontractor under any subcontract or otherwise with respect to the
Building.
4. COMMENCEMENT AND COMPLETION OF BUILDING:
A. LANDLORD'S OBLIGATION TO CONSTRUCT THE BUILDING: Landlord and
Tenant acknowledge that Landlord has already commenced construction of the
Building Shell. Landlord shall continue and diligently prosecute to
completion construction of the Building Shell and shall commence and
thereafter diligently complete construction of the Interior Improvements, and
Landlord shall use reasonable efforts to Substantially Complete the Building
by January 29, 1999.
B. DELIVERY OF POSSESSION: When the Building is Substantially
Complete, Landlord shall deliver possession of the Building to Tenant.
However, Tenant shall have no obligation to accept possession of the Building
or deem the Building to be Substantially Complete
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until the later of (i) the "Commencement Date" under the Lease, (ii) the date
the Building is in fact Substantially Complete, or (iii) January 29, 1999.
5. PAYMENT OF CONSTRUCTION COSTS:
A. TENANT'S CONTRIBUTION TO INTERIOR IMPROVEMENT COSTS:
(1) Landlord shall pay and be solely responsible for all
costs to design, construct and develop the Building Shell. Tenant's only
obligation to pay any cost of constructing the Building shall be limited to
the positive difference, if any, between the Interior Improvement Cost
Estimate approved by Tenant and the Interior Improvement Allowance, such
difference being referred to herein as the "Tenant's Contribution." The
parties acknowledge that, except as provided in Section 5.B regarding
amortization of the Additional Allowance, Tenant shall have no obligation to
pay any cost of constructing any portion of the Building in excess of the
Tenant's Contribution. In particular, but without limitation, Landlord shall
pay and be solely responsible for all Interior Improvement Costs exceeding
the Interior Improvement Cost Estimate approved by Tenant. Tenant shall pay
the Tenant's Contribution as follows: No more frequently than once every
thirty (30) days, Landlord shall deliver to Tenant a copy of the General
Contractor's progress payment request for the Interior Improvements, together
with all supporting documents (including the Architect's applicable
certificate of progress). Within ten (10) days after Tenant's receipt of
such materials, Tenant shall pay Landlord Tenant's Percentage of such
progress payment that is then due and payable to the General Contractor. For
purposes of this paragraph, "Tenant's Percentage" shall equal the percentage
obtained by dividing the Tenant's Contribution by the approved Interior
Improvement Cost Estimate. Within thirty (30) days after the Building is
Substantially Complete and the amount of all Interior Improvement Costs has
been finally determined as provided below, Tenant shall pay Landlord any
portion of the Tenant's Contribution that remains due and unpaid.
(2) As soon as possible after commencement of the Lease,
Tenant shall reasonably designate as Tenant's property Interior Improvements
having a cost approximately equal to the sum of the Tenant's Contribution
plus such other Interior Improvement Costs, if any, as Tenant shall have
paid. Property designated as Tenant's property under the terms of this
paragraph shall constitute Tenant's property for purposes of the Lease, may
be removed from the Building at any time by Tenant, and Tenant shall be
entitled to all investment tax credit, depreciation, and other tax attributes
relating to such property. In determining which Interior Improvements will be
designated as Tenant's property, Tenant shall give preference to those
Interior Improvements which are most readily removable from the Building and
which shall have the greatest utility for Tenant outside of the Building. At
the expiration or sooner termination of the Lease, all Interior Improvements
not designated as Tenant's property under this paragraph shall be surrendered
to Landlord in accordance with the terms of the Lease.
(3) When the Building is Substantially Completed, Landlord shall
submit to Tenant a final and detailed accounting of all Interior Improvement
Costs (the "Excess Costs") in excess of the One Million Eighty Thousand Dollar
($1,080,000) amount (the "Reference Amount")
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as currently budgeted by Landlord to design, construct and develop the
Interior Improvements as described in the Preliminary Interior Improvement
Plans dated August 28, 1998, without modification. Landlord covenants that
the unit costs of all labor and materials constituting Excess Costs shall be
identical to the unit costs of analogous labor and materials used by Landlord
and the General Contractor in calculating the Reference Amount. Tenant may
audit the books, records, and supporting documents of Landlord and the
General Contractor to the extent necessary to determine the accuracy of such
accounting during normal business hours after giving Landlord at least
forty-eight (48) hours written notice. In particular, but without
limitation, Landlord shall, and shall cause the General Contractor to,
substantiate with evidence reasonably satisfactory to Tenant that such unit
costs constituting Excess Costs are identical to those used in calculating
the Reference Amount. Tenant shall bear the cost of such audit, unless such
audit discloses that Landlord has overstated such costs by more than two
percent (2%) of the actual amount of such costs, in which event Landlord
shall pay the costs of Tenant's audit. Landlord shall promptly refund any
overpayments to Tenant, and (subject to paragraph 5A(i)) Tenant shall
promptly pay any underpayments to Landlord.
B. ADJUSTMENT OF BASIC RENT: The Base Allowance shall not
constitute an Operating Expense under the Lease, and Tenant shall not be
required to pay or otherwise reimburse Landlord for any of the Base
Allowance. If, however, Tenant elects to apply any portion of the Additional
Allowance toward Interior Improvement Costs, then Basic Rent payable monthly
under the Lease shall be increased by an amount necessary to amortize the
aggregate amount of the Additional Allowance that Tenant has elected to apply
toward Interior Improvement Costs over the initial seventy-four (74) month
Lease Term, calculated at an annual rate of interest equal to eight percent
(8%). If, to the contrary, the total Interior Improvement Cost is less than
the Base Allowance, then Basic Rent shall be decreased by an amount necessary
to amortize the difference between such total Interior Improvement Cost and
the Base Allowance over the initial seventy-four (74) month Lease Term,
calculated at an annual rate of interest equal to eight percent (8%).
Promptly after Tenant has approved Landlord's final accounting of Interior
Improvement Costs paid out of the Additional Allowance pursuant to paragraph
5A(3), Landlord and Tenant shall execute an amendment to the Lease specifying
such adjustment, if any, in Basic Rent.
C. FINANCING OF BUILDING: Landlord represents and warrants that
Landlord has already closed on financing sufficient to complete construction
of the Building as provided in this Agreement. For purposes of this
Agreement, "closed on" such financing shall mean that Landlord has satisfied
all conditions and performance of all obligations required by Landlord's
lender so that such lender is prepared to fund such financing in accordance
with reasonable and customary construction disbursement procedures
established by such lender.
6. TENANT'S RIGHT TO ENTER: Tenant, and its authorized
representatives, shall have the right to enter the Building at all reasonable
times for the purpose of inspecting the progress of construction of the
Building Shell and the Interior Improvements. Landlord shall give Tenant at
least twenty (20) business days prior written notice of its estimated date
for Substantial Completion of the Building, so that Tenant may cause its
fixtures and equipment to be ordered. When construction of the Building has
proceeded to the point where Tenant's work of installing its fixtures
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and equipment in the Building can be commenced in accordance with good
construction practice, Landlord also shall notify Tenant to that effect and
shall permit Tenant and its authorized representatives and contractors to
have access to the Building for a period of not less than fifteen (15) days
for the purpose of installing Tenant's Trade Fixtures and equipment. In
installing such Trade Fixtures and equipment, Tenant shall use reasonable
efforts to minimize any interference with the General Contractor's work.
7. CONSTRUCTION WARRANTY FOR THE BUILDING: Notwithstanding anything
to the contrary in the Lease, effective upon delivery of the Building to
Tenant, Landlord does hereby warrant (i) that the Building Shell and the
Interior Improvements were constructed in accordance with all applicable
easements, agreements, underwriters' requirements, covenants, conditions and
restrictions and the rules, regulations, requirements, codes, statutes,
ordinances, orders and laws of all governmental and quasi-governmental
authorities having jurisdiction over the Building, (ii) that the Building
Shell and Interior Improvements were constructed in accordance with the
Building Plans and in a good and workmanlike manner; (iii) that all material
and equipment installed in the Building conformed to the Building Plans, was
new and otherwise of good quality and was installed in accordance with all
vendor's and manufacturer's specifications, instructions and requirements;
and (iv) that all material and equipment installed in the Building has been
paid for and is free of liens, security interests or chattel mortgages. All
construction, product and equipment warranties and guarantees obtained by
Landlord shall, to the extent obtainable, provide that such warranties and
guarantees shall also run to the benefit of Tenant and its successors and
assigns. Tenant shall have the benefit of any construction, product and
equipment warranties and guarantees in favor of Landlord that would assist
Tenant in correcting defects and in discharging any of Tenant's obligations
regarding the repair and maintenance of the Premises. Upon written request by
Tenant, Landlord shall inform Tenant of all written construction, product and
equipment warranties and guarantees in favor of Landlord which affect the
Building. Landlord shall cooperate with Tenant in enforcing such warranties
and guarantees and in bringing any suit that may be necessary to enforce
liability (i) at Landlord's sole expense with regard to any defect for which
Landlord is responsible under this paragraph 7 or under the Lease, and (ii)
also with regard to any defect for which Landlord is not responsible under
this paragraph 7 or under this Lease so long as Tenant pays all costs
reasonably incurred by Landlord in doing so. Notwithstanding anything to the
contrary contained in the Lease or this Agreement, Tenant's acceptance of the
Building shall not be deemed a waiver of the foregoing warranty, and Landlord
shall promptly repair all violations of the warranty set forth in this
paragraph at its sole cost and expense.
8. DELIVERY OF POSSESSION, PUNCH LIST AND ACCEPTANCE AGREEMENT: As
soon as the Building is Substantially Completed and Landlord has given Tenant
reasonable prior written notice of the time and date therefor, Landlord and
Tenant shall together walk through the Premises and inspect all of the
Building. After such inspection has been completed, each party shall sign an
acceptance agreement, which shall (i) include a list of all "punch list"
items which the parties agree are to be corrected by Landlord and (ii) shall
state the Commencement Date. Landlord shall use reasonable efforts to
complete and/or repair such "punch list" items within thirty (30) days after
executing the acceptance agreement. The parties' preparation
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of such a "punch list" and execution of an acceptance agreement shall not,
however, be deemed an acceptance by Tenant of the Building as complete or
free from defects and shall not in any way affect Landlord's warranty
obligations under this Agreement.
9. DELIVERY OF DOCUMENTS: Landlord shall deliver to Tenant (i) within
thirty (30) days after the same is obtained by Landlord, any temporary or
permanent certificates of occupancy issued by the City of Mountain View or
Santa Xxxxx County with respect to any of the Building; (ii) within sixty
(60) days after Substantial Completion of the Building, a complete "as-built"
set of Mylar reproducible Building Plans reflecting all approved changes in
the work; and (iii) within thirty (30) days after Substantial Completion of
the Building, complete maintenance and operating manuals for all the
equipment, fixtures and systems that are part of the Building.
10. RISK OF LOSS: Risk of loss of the Building prior to the
Commencement Date of the Lease shall be borne by Landlord. At all times
prior to the Commencement Date of the Lease, Landlord at its sole cost and
expense shall maintain so-called contingent liability and broad form
"builder's risk" insurance with coverage in an amount equal to the
replacement cost of the Building Shell plus the Interior Improvement Cost
Estimate. The insurance policy (i) shall be in a form reasonably
satisfactory to Tenant, (ii) shall be carried with a company reasonably
acceptable to Tenant, (iii) shall provide that such policy shall not be
subject to cancellation or change except after at least ten (10) days prior
written notice to Tenant, and (iv) shall contain a "cross liability"
provision insuring Landlord and Tenant against any loss caused by the
negligence of the other party. Tenant shall be designated as a named insured
on said insurance policy and the "deductible" thereunder shall not exceed Ten
Thousand Dollars ($10,000). If the Building is damaged or destroyed prior to
the Commencement Date of the Lease, Tenant shall have the right to terminate
the Lease, if the Building, in the reasonable opinion of the Architect,
cannot be Substantially Complete prior to March 15, 1999. If the Lease is so
terminated, Tenant shall be entitled to that amount of the builder's risk
insurance proceeds equal to the amount, if any, paid by Tenant in connection
with the construction of the Interior Improvements prior to the termination
date or payable by Tenant for cancellation of any contract for any such work.
If the Building is damaged or destroyed and the Lease is not terminated
pursuant to the terms of the Lease or this Agreement, Landlord shall promptly
and diligently complete construction of the Building in accordance with this
Agreement and all insurance proceeds with respect to the loss shall be paid
to an independent depository, reasonably acceptable to Landlord and Tenant,
for disbursement to the contractors completing the Building as the work
progresses in accordance with customary institutional lending practices.
11. RIGHTS UPON TERMINATION: If the Lease is terminated pursuant to
any provision of this Agreement, then in addition to all other amounts due
Tenant hereunder, all security deposits, prepaid rent, and other monies paid
by Tenant under the terms of the Lease or this Agreement (including, without
limitation, the Tenant's Contribution) shall be returned to Tenant upon
demand and, thereupon, neither party shall have any further rights or
obligations under the terms of the Lease or this Agreement.
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12. MISCELLANEOUS: Time is of the essence of this Agreement. This
Agreement is the result of negotiations among and has been reviewed by all
parties. Accordingly, this Agreement shall be deemed to be the product of
both parties hereto, and no ambiguity shall be construed in favor of or
against either party. This Agreement may not be modified or amended, nor may
any provision hereof be waived, except in a writing signed by the parties to
this Agreement. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns. The captions used in this Agreement
are for convenience only and shall not be considered in interpreting this
Agreement. All capitalized terms used, but not defined, in this Agreement
shall have the meanings ascribed to them in the Lease. In the event of any
conflict between the terms of this Agreement and the Lease, this Agreement
shall prevail.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
intending to be bound thereby.
LANDLORD: TENANT:
SHORELINE 101, LLC, ILOG, INC.,
a California limited liability company a California corporation
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
---------------------------------- ------------------------------
Title: Manager Title: Chief Operating Officer
-------------------------------- ----------------------------
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