EXHIBIT 10.20
SUBLEASE
THIS SUBLEASE (this "Sublease") is made and entered into as of the 23 day
of September, 2003, by and between ADVANCED LOGIC RESEARCH, INC., a Delaware
corporation (hereinafter called "Sublandlord"), and WESTERN DIGITAL CORPORATION,
a Delaware corporation (hereinafter called "Subtenant");
WITNESSETH:
WHEREAS, by that certain Amended and Restated Standard Lease [Single
Tenant - Triple Net] dated as of June 21, 1999 (the "Original Prime Lease"), as
amended by that certain First Amendment to Lease dated as of January 27, 2000
(the "First Amendment"), a copy of which instruments are attached hereto as
Exhibit "A" and by this reference made a part hereof (hereinafter, with all such
amendments, called the "Prime Lease"), MSGW CALIFORNIA I, LLC, a Delaware
limited liability company (hereinafter, together with its successors and
assigns, called "Landlord"), leased to GATEWAY, INC., a Delaware corporation
(formerly known as Gateway 2000, Inc.) three (3) buildings (known as Buildings
1, 2 and 3) located in Lake Forest, Orange County, California, which buildings
contain, collectively, approximately 150,000 Rentable Square Feet (the "Prime
Lease Space").
WHEREAS, pursuant to that certain Assignment of Lease and Assumption
Agreement dated as of June 21, 1999, Gateway, Inc. assigned all of its right,
title and interest in and to the Prime Lease to Sublandlord.
WHEREAS, subject to the consent of Landlord, Subtenant desires to sublease
from Sublandlord, and Sublandlord desires to Sublease to Subtenant, that 50,000
rentable square foot portion of the Prime Lease Space which is comprised of that
building (the "Building") located at 26160 Enterprise Way in Lake Forest, Orange
County, California which is known as Building 3 (the "Premises") which is as
shown on the floor plans attached to this Sublease as Exhibit "B", all upon the
terms and subject to the conditions and provisions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Sublandlord and Subtenant hereby agree as follows:
1. Demise; Use. Sublandlord hereby leases to Subtenant and Subtenant
hereby leases from Sublandlord the Premises for the term and rental and upon the
other terms and conditions hereinafter set forth, to be used and occupied by
Subtenant solely for general office use as permitted under the Prime Lease and
otherwise in compliance with applicable zoning rules, regulations and ordinances
and all covenants, conditions and restrictions of record and for no other use or
purpose.
2. Term. The term of this Sublease shall commence (the "Commencement
Date") on the date upon which this Sublease is fully executed and the Landlord
has delivered its consent hereto, and, unless sooner terminated pursuant to the
provisions hereof, shall terminate on the earlier of January 31, 2012 and the
prior termination of the term of the Prime Lease. As used herein, the phrase
"Lease Year" shall mean the twelve calendar month period commencing on the Rent
Commencement Date (as hereinafter defined) (or, if the Rent Commencement Date is
not the first day of a calendar month, then commencing on the first day of the
calendar month during which the Rent Commencement Date occurs) and each
anniversary thereof, except that (i) the last Lease Year may not be twelve
calendar months and
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shall terminate on the last day of the term of this Sublease, and (ii) the first
Lease Year shall include that period of time from the Commencement Date to and
including the Rent Commencement Date.
3. Base Rent.
(a) As used herein, the Rent Commencement Date shall be that date
which is the earlier of (i) fifteen (15) days following the Commencement Date
(such period being intended as a rent free period for Tenant's planning and
commencement of office improvement buildout and fixture and equipment
installation), and (ii) that date upon which Subtenant commences its business
operations from all or any portion of the Premises. Commencing upon the Rent
Commencement Date, Subtenant shall pay to Sublandlord base annual rental
(hereinafter called "Base Rent") for the Premises as follows (month 1 as noted
in the schedule below shall commence on the Rent Commencement Date):
ANNUAL BASE RENT ANNUAL BASE RENT
RATE PER RENTABLE (BASED ON 50,000 MONTHLY
TIME PERIOD SQUARE FOOT RENTABLE SQUARE FEET) INSTALLMENTS
------------------------------ ----------------- --------------------- --------------
Months 1-4 $ 0.00 $ 0.00 $ 0.00
Months 5-24 $ 12.00 $ 600,000.00 $ 50,000.00
Months 25-48 $ 12.60 $ 630,000.00 $ 52,500.00
Months 49-72 $ 13.23 $ 661,500.00 $ 55,125.00
Months 73-96 $ 13.89 $ 694,500.00 $ 57,875.00
Months 97 - January 31, 2012* $ 14.59 $ 729,500.00* $ 60,791.67*
*Note: Sublandlord and Subtenant acknowledge and agree that as the expiration of
the term of this Sublease is January 31, 2012, the ninth Lease Year (commencing
in month 97 as shown on the schedule above) shall be less than a full twelve
(12) calendar month period and accordingly the Annual Base Rent and Monthly
Installments set forth in the schedule above shall be prorated for the actual
days occurring within the final time period of this Sublease commencing with
Month 97.
Each such installment shall be due and payable in advance on the first day of
each calendar month of the term hereof. Subtenant shall pay the first
installment of Monthly Base Rent due under this Lease concurrently with the
execution of this Sublease by Subtenant. If the term of this Sublease commences
on a day other than the first day of a month or ends on a day other than the
last day of a month, Base Rent for such month shall be prorated; prorated Base
Rent for any such partial first month of the term hereof shall be paid on the
date on which the term commences. Concurrently with the full execution and
delivery of this Sublease by Subtenant, Subtenant shall pay to Sublandlord the
first due installment of monthly Base Rent due and owing under this Sublease
(i.e., that installment of monthly Base Rent due under this Lease for Month 5 as
noted in the schedule above).
(b) All Base Rent and additional rent shall be paid without setoff
or deduction whatsoever and shall be paid to Sublandlord at the following
address: Real Estate Administration, c/o Gateway, Inc. 000 Xxxxxxx Xxxxx X00,
Xxxxx Xxxxx Xxxx, Xxxxx Xxxxxx 00000, or at such other place as Sublandlord may
designate by notice to Subtenant. Notwithstanding anything to the contrary
contained in this Sublease, Sublandlord and Subtenant acknowledge and agree that
in the event of a default by
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Sublandlord, as tenant, under the Prime Lease which remains uncured beyond any
applicable notice and cure period and as a result of which the Landlord directs
Subtenant in writing (with a copy to Sublandlord) to remit the rent payments
under this Sublease directly to the Landlord, then Subtenant shall comply with
the direction of Landlord and any sums so paid to Landlord shall be credited
against the rent payments due under this Sublease; provided, however, in no
event shall the foregoing be deemed to permit the Landlord and Subtenant to
modify in any way the obligations of Subtenant under this Sublease (e.g.,
Landlord shall not be permitted to forgive or waive any obligation of Subtenant
under this Sublease without obtaining the consent of Sublandlord, which consent
Sublandlord shall be entitled to withhold in its sole and absolute discretion).
(c) As set forth for months 1 through 4 in the schedule above,
Sublandlord and Subtenant acknowledge and agree that Sublandlord shall provide
to Subtenant an abatement against Base Rent due hereunder for the purpose of
reimbursing to Subtenant the cost of certain improvements to be performed by
Subtenant within the Premises (any such improvements to be otherwise performed
at Subtenant's sole cost and expense and in strict accordance with the terms and
provisions of this Sublease). Sublandlord and Subtenant acknowledge and agree
that so long as Subtenant is not then in default under this Sublease and as set
forth in the schedule above, Subtenant shall be entitled to an abatement of the
Base Rent due and owing under this Sublease for months 1 through 4 following the
Rent Commencement Date; provided, however, (i) in the event of any such default
during such abatement period as a result of which Subtenant is no longer
entitled to such an abatement, the monthly Base Rent which shall be deemed to be
due during such period of time shall be equal to the amount of such monthly Base
Rent due and owing during months 5 through 24 of the term, and (ii) during such
abatement period, Subtenant shall remain responsible to pay any and all amounts
due and owing under this Sublease for additional rent due hereunder (including,
without limitation, all pass-throughs from the Prime Lease and all utilities
provided to the Premises).
4. Additional Rent; Payments; Interest.
(a) Except for "Monthly Base Rent" (as such term is defined in the
Prime Lease and for the payment of which Subtenant shall have no obligation
under this Sublease), Subtenant shall also pay to Sublandlord all other amounts
payable by Sublandlord under the Prime Lease which are attributable to the
Premises or attributable to Subtenant, its agents, employees, customers or
invitees, including without limitation, the Operating Costs (as such term is
defined herein); provided, however, that the payment of Operating Costs as set
forth below shall not commence until the Rent Commencement Date. By way of
example and not by way of limitation, charges by Landlord for furnishing air
conditioning or heating to the Premises at times in addition to those certain
times specified in the Prime Lease, costs incurred by Landlord in repairing
damage to the Building caused by an employee of Subtenant, increased insurance
premiums due as a result of Subtenant's use of the Premises, and amounts
expended or incurred by Landlord on account of any default by Subtenant which
gives rise to a default under the Prime Lease would be amounts payable by
Subtenant pursuant to this Subsection 4(a).
(b) Each amount due to pursuant to Subsection 4(a) above and each
other amount payable by Subtenant hereunder, unless a date for payment of such
amount is provided for elsewhere in this Sublease, shall be due and payable on
the fifth day following the date on which Landlord or Sublandlord has given
notice to Subtenant of the amount thereof, but in no event later than the date
on which any such amount is due and payable under the Prime Lease.
(c) All amounts other than Base Rent payable to Sublandlord under
this Sublease shall be deemed to be additional rent due under this Sublease. All
past due installments of Base Rent and additional rent shall bear interest from
the date due until paid at the rate specified in the Prime Lease for interest on
late payments, and any and all amounts due and owing under this Sublease by
Subtenant shall
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not be deemed to be "past due" until such failure to pay continues for a period
in excess of five (5) days following the date same is otherwise due under this
Lease.
(d) Subtenant shall pay Landlord on the due dates for services
requested by Subtenant which are billed by Landlord directly to Subtenant rather
than Sublandlord.
(e) Definitions. For purposes of this Sublease and in addition to
the terms defined elsewhere in this Sublease, the following terms shall have the
meanings set forth below:
(1) "Operating Costs" shall mean (a) Operating Expenses (as
defined in Paragraph 6 of the Prime Lease, which Sublandlord and Subtenant
acknowledge and agree shall mean, collectively, Common Area Operating Expenses
and Building Operating Expenses, as defined in the Prime Lease) charged by
Landlord to Sublandlord pursuant to Paragraph 6 of the Prime Lease, and (b) Real
Property Taxes (as defined in paragraph 12 of the Prime Lease) charged by
Landlord to Sublandlord pursuant to Paragraph 12 of the Prime Lease.
(2) "Subtenant's Percentage Share" for purposes of Tenant's
Common Area Percentage (as defined in the Prime Lease) shall mean 33.33% and
"Subtenant's Percentage Share" for purposes of Tenant's Building Percentage (as
defined in the Prime Lease) shall mean 100%. Sublandlord and Subtenant
acknowledge and agree that at such time as such Percentage Shares are being
applied to Operating Costs, Sublandlord shall calculate the amounts owed by
Subtenant hereunder by applying the appropriate Percentage Share to Common Area
Operating Expenses or Building Operating Expenses, as the case may be. For
purposes of Real Estate Taxes, the appropriate Percentage Share shall be applied
to determine Subtenant's obligations hereunder based on the assessed area which
is the basis for the calculation of Real Estate Taxes under the Prime Lease. In
addition to the Base Rent payable pursuant to Section 3 above, from and after
the Rent Commencement Date, for each calendar year of the term, Subtenant, as
additional rent, shall pay Subtenant's Percentage Share of the Operating Costs
payable by Sublandlord for the then current calendar year. Sublandlord shall
give Subtenant written notice of Sublandlord's estimate of the amount of
additional rent per month payable pursuant to this Subsection for each calendar
year promptly following the Sublandlord's receipt of Landlord's estimate of the
Operating Costs payable under the Prime Lease. Thereafter, the additional rent
payable pursuant to this Subsection shall be determined and adjusted in
accordance with the provisions below.
(f) The determination and adjustment of additional rent
contemplated under Subsection 4(e) above shall be made in accordance with the
following procedures:
(1) Upon receipt of a statement from Landlord specifying the
estimated Operating Costs to be charged to Sublandlord under the Prime Lease
with respect to each calendar year, or as soon after receipt of such statement
as practicable, Sublandlord shall give Subtenant written notice of its estimate
of additional rent payable under Subsection 4(e) for the ensuing calendar year,
which estimate shall be prepared based on the estimate received from Landlord
(as Landlord's estimate may change from time to time), together with a copy of
the statement received from Landlord. Sublandlord's estimate of additional rent
to be paid by Subtenant pursuant to this Sublease shall not exceed Subtenant's
Percentage Share of Landlord's estimate delivered to Sublandlord pursuant to the
Prime Lease (as Landlord's estimate may change from time to time). On or before
the first day of each month during each calendar year, Subtenant shall pay to
Sublandlord as additional rent one-twelfth (1/12th) of such estimated amount
together with the Base Rent.
(2) In the event Sublandlord's notice set forth in
Subsection 4(f)(l) is not given in December of the calendar year preceding the
calendar year for which Sublandlord's notice is applicable, as the case may be,
then until the calendar month after such notice is delivered by
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Sublandlord, Subtenant shall continue to pay to Sublandlord monthly, during the
ensuing calendar year, estimated payments equal to the amounts payable hereunder
during the calendar year just ended. Upon receipt of any such post-December
notice Subtenant shall (i) commence as of the immediately following calendar
month, and continue for the remainder of the calendar year, to pay to
Sublandlord monthly such new estimated payments and (ii) if the monthly
installment of the new estimate of such additional rent is greater than the
monthly installment of the estimate for the previous calendar year, pay to
Sublandlord within thirty (30) days of the receipt of such notice an amount
equal to the difference of such monthly installment multiplied by the number of
full and partial calendar months of such year preceding the delivery of such
notice.
(3) Within thirty (30) days after the receipt by Sublandlord
of a final statement of Operating Costs from Landlord with respect to each
calendar year, Sublandlord shall deliver to Subtenant a statement of the
adjustment to be made pursuant to Section 4(f) hereof for the calendar year just
ended, together with a copy of the statement received by Sublandlord from
Landlord. If on the basis of such statement Subtenant owes an amount that is
less than the estimated payments for the calendar year just ended previously
paid by Subtenant, Sublandlord shall credit such excess to the next payments of
rent coming due or, if the term of this Sublease is about to expire, promptly
refund such excess to Subtenant. If on the basis of such statement Subtenant
owes an amount that is more than the estimated payments for the calendar year
just ended previously made by Subtenant, Subtenant shall pay the deficiency to
Sublandlord within thirty (30) days after delivery of the statement from
Sublandlord to Subtenant.
(4) For partial calendar years during the term of this
Sublease, the amount of additional rent payable pursuant to Subsection 4(f) that
is applicable to that partial calendar year shall be prorated based on the ratio
of the number of days of such partial calendar year falling during the term of
this Sublease to 365. The expiration or earlier termination of this Sublease
shall not affect the obligations of Sublandlord and Subtenant pursuant to this
Section 4, and such obligations shall survive and remain to be performed after
any expiration or earlier termination of this Sublease.
(5) Upon reasonable prior written notice to Sublandlord and
at the sole cost and expense of Subtenant, Subtenant shall have the right at any
time and from time to time to require Sublandlord to exercise its rights to
audit Landlord's computation of Operating Costs in accordance with Section 6(e)
of the Prime Lease. In addition, Subtenant or an accounting firm selected by
Subtenant will have the right, by prior written notice ("Audit Notice") to
Sublandlord given within sixty (60) days ("Audit Period") following receipt of
any statement of adjusted Operating Costs, to audit Sublandlord's accounting
records with respect to Operating Costs and the computation of Subtenant's share
thereof, subject to the following terms and conditions: (i) Subtenant shall be
entitled to such audit not more than one (1) time in any Lease Year and shall
only be permitted with respect to the fiscal period immediately prior to the
Audit Notice, (ii) such audit shall take place at the location where Sublandlord
customarily maintains such books and records (which Subtenant acknowledges is
currently in Sublandlord's offices in North Sioux City, South Dakota), (iii)
such audit shall be at the sole cost and expense of Subtenant, except as noted
below, (iv) as a condition to such audit, Subtenant and any other party
undertaking such audit on behalf of Subtenant shall execute and deliver to
Sublandlord a confidentiality agreement respecting such records in form and
content satisfactory to Sublandlord, and (v) Subtenant shall not be permitted to
use a contingent fee auditor. If any such audit or review correctly reveals that
Sublandlord has overcharged Subtenant, then within thirty (30) days after the
results of such audit are made available to Sublandlord, Sublandlord agrees to
reimburse Subtenant the amount of such overcharge; provided, however, in no
event shall Sublandlord be obligated to reimburse any such amounts to Subtenant
if such overcharge arises as a result of the information and/or statements
provided by the Landlord (e.g., if any such overcharge is due to an error passed
through to Subtenant as a result of the statements and/or information obtained
by Sublandlord under the Prime Lease, then in no event shall Subtenant be
entitled
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to a reimbursement of same from Sublandlord). If the audit reveals that
Subtenant was undercharged, then within thirty (30) days after the results of
the audit are made available to Subtenant, Subtenant agrees to reimburse
Sublandlord the amount of such undercharge.
5. Condition of Premises and Construction of Improvements. Except as
may be otherwise expressly set forth in this Sublease, Subtenant hereby
acknowledges and agrees that it is to demise the Premises in an "as-is"
condition and Subtenant's taking possession of the Premises shall be conclusive
evidence as against Subtenant that the Premises were in good order and
satisfactory condition when Subtenant took possession. No promise of Sublandlord
to alter, remodel or improve the Premises has been made by Sublandlord (or any
other party taking by, through or under Sublandlord) to Subtenant, and no
representation respecting the condition of the Premises have been made by
Sublandlord (or any other party taking by, through or under Sublandlord) to
Subtenant except as may be otherwise expressly set forth in this Sublease.
Subtenant hereby represents and warrants that it has made any and all
inspections of the Premises it deems necessary to satisfy itself with respect to
all aspects of the conditions thereof. Upon the expiration of the term hereof,
or upon any earlier termination of the term hereof or of Subtenant's right to
possession, Subtenant shall surrender the Premises in at least as good condition
as at the commencement of the term of this Sublease, ordinary wear and tear
excepted.
6. The Prime Lease.
(a) This Sublease and all rights of Subtenant hereunder and with
respect to the Premises are subject to the terms, conditions and provisions of
the Prime Lease. Subtenant hereby assumes and agrees to perform faithfully and
be bound by, with respect to the Premises, all of Sublandlord's obligations,
covenants, agreements and liabilities under the Prime Lease and all terms,
conditions, provisions and restrictions contained in the Prime Lease except:
(i) for the payment of "Monthly Base Rent" (as such term is
defined in the Prime Lease);
(ii) that Subtenant shall not have any obligations to
construct or install tenant improvements except as may be provided herein; and
(iii) that the following provisions of the Prime Lease do not
apply to this Sublease: any provisions in the Prime Lease allowing or purporting
to allow Sublandlord any rent concessions or abatements or construction
allowances, any provisions allowing Sublandlord to extend or renew the term of
the Prime Lease (including, without limitation, Paragraph 3(b) of the Prime
Lease), any provisions of the Prime Lease providing for any representations
and/or warranties with respect to Hazardous Materials (including, without
limitation, Paragraph 8(d) of the Prime Lease), any provisions relating to
warranties regarding improvements within the Premises (including, without
limitation, Paragraph 14(d) of the Prime Lease), any rights granted to terminate
the Prime Lease due to an interruption in utilities (including, without
limitation, Paragraph 17 of the Prime Lease), any provisions permitting any
right of self-help, offset or termination in the event of any default by
Landlord under the terms and provisions of the Prime Lease (including, without
limitation, the provisions of the last paragraph of Paragraph 23 of the Prime
Lease), any rights to install signage without obtaining the consent of the
Sublandlord and/or Landlord (including, without limitation, Paragraph 34 of the
Prime Lease), any option to purchase the Building or other real property
(including, without limitation, Paragraphs 41, 43 and 44 of the Prime Lease),
any option to lease additional premises (including, without limitation,
Paragraph 42 of the Prime Lease) and any right to terminate the Prime Lease
(including, without limitation, Paragraph 47 of the Prime Lease), and any
provisions of the Work Letter Agreement attached to the Prime Lease as Exhibit C
thereto. Sublandlord acknowledges and agrees that Subtenant shall specifically
have all rights of Sublandlord under the Prime Lease as such rights pertain to
the Premises (i)
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for the use of the roof of the Building (including, without limitation, such
rights as arise under Paragraph 48 of the Prime Lease as applied to the
Premises), and (ii) to install a generator to serve the Building (including,
without limitation, such rights as arise under Paragraph 49 of the Prime Lease),
such generator to be installed within the area located on the attached Exhibit
"C".
(b) Without limitation of the foregoing:
(i) Subtenant shall not make any changes, alterations or
additions in or to the Premises except as otherwise expressly provided herein.
In connection therewith, Sublandlord and Subtenant acknowledge and agree that
Subtenant may desire to make certain alterations, additions and/or improvements
to the Premises following its occupancy thereof. In connection with such work
(hereinafter referred to as the "Subtenant Work"), such work shall be performed
at the sole cost and expense of Subtenant (subject to the rent abatement
provided by Sublandlord in lieu of a construction allowance) and shall strictly
conform to all the terms and provisions of the Prime Lease and this Sublease;
(ii) If Subtenant desires to take any other action and the
Prime Lease would require that Sublandlord obtain the consent of Landlord before
undertaking any action of the same kind, Subtenant shall not undertake the same
without the prior written consent of Sublandlord. Sublandlord may condition its
consent on the consent of Landlord being obtained and may require Subtenant to
contact Landlord directly for such consent;
(iii) All rights given to Landlord and its agents and
representatives by the Prime Lease to enter the Premises shall inure to the
benefit of Sublandlord and their respective agents and representatives with
respect to the Premises, and Subtenant shall also have all the rights, and all
privileges, options, reservations and remedies, granted or allowed to, or held
by, Sublandlord, as Tenant, under the Prime Lease, all of which rights,
privileges, options, reservations and remedies in favor of Subtenant shall be
limited as set forth in this Sublease;
(iv) Sublandlord shall also have all other rights, and all
privileges, options, reservations and remedies, granted or allowed to, or held
by, Landlord under the Prime Lease;
(v) Subtenant shall maintain insurance of the kinds and in
the amounts required to be maintained by Sublandlord under the Prime Lease. All
policies of liability insurance shall name as additional insureds the Landlord
and Sublandlord and their respective officers, directors or partners, as the
case may be, and the respective agents and employees of each of them; and
(vi) Subtenant shall not do anything or suffer or permit
anything to be done which could result in a default under the Prime Lease or
permit the Prime Lease to be canceled or terminated.
(c) Notwithstanding anything contained herein or in the Prime
Lease which may appear to be to the contrary, Sublandlord and Subtenant hereby
agree as follows:
(i) Subtenant shall not, without the prior written consent
of Sublandlord, assign, mortgage, pledge, hypothecate or otherwise transfer or
permit the transfer of this Sublease or any interest of Subtenant in this
Sublease, by operation of law or otherwise, or permit the use of the Premises or
any part thereof by any persons other than Subtenant and Subtenant's employees,
or sublet the Premises or any part thereof. Sublandlord shall not unreasonably
withhold, condition or delay its consent to any such transfer if (1) Subtenant
is not then in default under any of the terms and conditions of this Sublease,
(2) the proposed transferee is sufficiently creditworthy, in Sublandlord's sole
determination, (3) the proposed transferee is not a competitor of Sublandlord or
is a governmental agency, and (4) the
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proposed transferee has experience and reputation which is satisfactory to
Sublandlord (the foregoing reasons are not meant to be an exhaustive list of the
bases upon which Sublandlord may withhold its consent to such a transfer). (B)
Notwithstanding the foregoing, in no event shall Subtenant be obligated to
obtain the consent of Sublandlord in connection with any sub-sublet of all or
any portion of the Premises to any entity which is in control of, under common
control, or controlled by, Subtenant (any such entity is referred to herein as
an "Affiliate") or an assignment of Subtenant's interest hereunder to any
Affiliate of Subtenant or in connection with the merger, consolidation or
reorganization of Subtenant with any other entity or the sale of all or
substantially all of Subtenant's stock or assets provided the following
conditions are met: (1) to the extent that the Landlord's consent under the
Prime Lease is required in connection with such a transfer, Subtenant obtains
same at its sole cost and expense and provides evidence of same to Sublandlord,
(2) Subtenant provides written notice to Sublandlord and Landlord not less than
ten (10) business days prior to the effectiveness of such transfer, (3) in the
case of a sub-sublet or actual assignment of this Sublease (as opposed to a
transfer by operation of law, such as a merger), such sub-subtenant or assignee
enters into an agreement in form and content reasonably satisfactory to
Sublandlord assuming all of the obligations of the Subtenant hereunder, whether
accruing prior to or after the effectiveness of the transfer, (4) there is no
release of the Subtenant in connection with any such transfer, and (5) the net
worth of the Subtenant entity which is liable for the terms and provisions of
this Sublease immediately following such transfer is not less than the net worth
of the Subtenant entity immediately prior to the transfer, and (6) no default
has occurred under this Sublease beyond applicable notice and cure periods (the
transfers noted in this clause (B) are referred to herein as "Permitted
Transfers"). (C) Further, subject to all of the terms of the Prime Lease
(including, without limitation, any obligation imposed on Sublandlord to pay to
Landlord any consideration in connection with a transfer of this Lease as set
forth in Section 24(h) thereof, other than in connection with any Permitted
Transfers, in the event of any assignment of this Sublease or sub-sublease of
the Premises by Subtenant, Subtenant shall pay to Sublandlord fifty percent
(50%) of any consideration received by Subtenant for such assignment or
sub-sublease, as the case may be, net of the reasonable actual out-of- pocket
costs incurred by Subtenant to effect such transfer, in excess of the rent
payable under this Sublease, such payment to be provided to Sublandlord no later
than thirty (30) days after the determination thereof and the date such excess
rent is received by Subtenant;
(ii) neither rental nor other payments hereunder shall xxxxx
by reason of any damage to or destruction of the Premises or the Building or any
part thereof, unless, and then only to the extent that, rental and such other
payments actually xxxxx under the Prime Lease with respect to the Premises on
account of such event;
(iii) Sublandlord and Subtenant acknowledge and agree that in
the event the Prime Lease permits Sublandlord, as the tenant thereunder, to
terminate the Prime Lease in the event of any casualty to the Premises, then in
no event shall Subtenant have the right to exercise any such termination rights
under this Sublease, except that in the event Sublandlord, as the tenant under
the Prime Lease, elects to so exercise such termination rights, then this
Sublease shall terminate at the same time and in the same manner as the Prime
Lease;
(iv) Subtenant shall not have any right to any portion of the
proceeds of any award for a condemnation or other taking, or a conveyance in
lieu thereof, of all or any portion of the Building, the premises subject to the
Prime Lease or the Premises other than, subject to all of the terms of the Prime
Lease, any compensation as may be separately awarded or recoverable by Subtenant
for the taking of Subtenant's furniture, fixtures, equipment and other personal
property within the Premises and for Subtenant's relocation expenses;
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(v) Subtenant shall not have any right to exercise or have
Sublandlord exercise any option under the Prime Lease, including, without
limitation, any option to extend the term of the Prime Lease or lease additional
space; and
(vi) In the event of any conflict between the terms,
conditions and provisions of the Prime Lease and of this Sublease, the terms,
conditions and provisions of this Sublease shall, in all instances, govern and
control.
(d) It is expressly understood and agreed that Sublandlord does
not assume and shall not have any of the obligations or liabilities of Landlord
under the Prime Lease and that Sublandlord is not making the representations,
warranties or indemnifications, if any, made by Landlord in the Prime Lease.
With respect to work, services, repairs and restoration or the performance of
other obligations required of Landlord under the Prime Lease, Sublandlord's sole
obligation with respect thereto shall be to request the same, upon written
request from Subtenant, and to use reasonable efforts, at Subtenant's sole cost
and expense, to obtain the same from Landlord. Sublandlord shall not be liable
in damages, nor shall rent xxxxx hereunder, for or on account of any failure by
Landlord to perform the obligations and duties imposed on it under the Prime
Lease; provided, however, upon reasonable prior written notice from Subtenant
and the delivery to Sublandlord of an indemnification agreement executed by
Subtenant in form reasonably satisfactory to Sublandlord by which Subtenant (i)
agrees to assume and be responsible for any and all costs incurred by
Sublandlord to enforce any of the rights of Sublandlord under the Prime Lease,
and (ii) indemnifies, defends and holds Subtenant and its agents, employees,
officers, directors, shareholders and contractors harmless from and against any
and all loss, cost, damage, expense, claim and/or counterclaim claim whatsoever
(including attorneys' fees and court costs) arising as a result of Sublandlord's
exercise of any of its remedies against Landlord under the Prime Lease,
Sublandlord shall exercise all rights and pursue all remedies available to it
under the Prime Lease by reason of any default by Landlord pertaining to the
Premises and Subtenant shall receive the benefit of any remedies obtained by
Sublandlord from Landlord with respect to the Premises such as abated or reduced
rent or monetary compensation in the same proportion as the Base Rent due under
this Lease bears to the base rent due under the Prime Lease (e.g., if a remedy
under the Prime Lease would permit Sublandlord an abatement of seventy-five
percent (75%) of the base rent due under the Prime Lease, and Subtenant is
entitled to the benefit of such abatement, then notwithstanding the actual
dollar value of such abatement, Subtenant would be entitled to an abatement of
seventy-five percent (75%) of the Base Rent due under this Sublease); provided,
however, (a) in no event shall Subtenant be entitled to any of the rights,
remedies or indemnifications of Landlord under the Prime Lease if the transfer
of same to Subtenant would diminish the ability of Sublandlord to realize the
benefits of same, and (b) notwithstanding the foregoing, Sublandlord and
Subtenant acknowledge and agree that as noted in the Recitals to this Sublease,
the Prime Lease covers additional real property other than the Building, and
accordingly, in no event shall Sublandlord be obligated to pursue any remedy
available to it under the Prime Lease if the pursuit of such remedies would
affect the rights and obligations of Sublandlord with respect to such other real
property. Sublandlord and Subtenant acknowledge and agree that any repair,
maintenance and/or replacement obligations with respect to the Premises which
are the responsibility of the Sublandlord, as tenant under the Prime Lease,
shall be performed by Subtenant at Subtenant's sole cost and expense. In the
event that a condition exists in the Premises that Landlord is obligated to
repair under the terms of the Prime Lease, Subtenant shall so advise
Sublandlord, and Sublandlord, in turn, shall promptly advise Landlord thereof.
Any amounts which are payable by Subtenant hereunder shall be deemed additional
rent due under this Sublease.
(e) Nothing contained in this Sublease shall be construed to
create privity of estate or contract between Subtenant and Landlord, except the
agreements of Subtenant in Sections 10 and 11 hereof in favor of Landlord, and
then only to the extent of the same.
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7. Default by Subtenant.
(a) Upon the happening of any of the following:
(i) Subtenant fails to pay any Base Rent within five (5)
days after receipt of notice of non-payment from Sublandlord except that in no
event shall Sublandlord be obligated to provide written notice of any such
monetary default more than two (2) times in any twelve (12) consecutive month
period, and following such two (2) instances in any such twelve (12) month
period, Subtenant shall be in default hereunder if it fails to pay any Base Rent
within five (5) days after the date same is due hereunder (Sublandlord and
Subtenant acknowledge and agree that the notice provided for in this clause (i)
shall be in lieu of and not in addition to any notice required under California
Code of Civil Procedure, Section 1161 (regarding unlawful detainer), or any
successor statute);
(ii) Subtenant fails to pay any other amount due from
Subtenant hereunder and such failure continues for fifteen (15) days after
notice thereof from Sublandlord to Subtenant;
(iii) Subtenant fails to perform or observe any other covenant
or agreement set forth in this Sublease and such failure continues for thirty
(30) days after notice thereof from Sublandlord to Subtenant; or
(iv) any other event occurs which involves Subtenant or the
Premises and which would constitute a default under the Prime Lease if it
involved Sublandlord or the Prime Lease Space and such default is not cured
within the lesser of (a) thirty (30) days after notice thereof from Sublandlord
to Subtenant, or (b) such period of time as permitted under the Prime Lease to
cure such default.
Subtenant shall be deemed to be in default hereunder, and Sublandlord may
exercise, without limitation of any other rights and remedies available to it
hereunder or at law or in equity, any and all rights and remedies of Landlord
set forth in the Prime Lease in the event of a default by Sublandlord
thereunder.
(b) In the event Subtenant fails or refuses to make any payment or
perform any covenant or agreement to be performed hereunder by Subtenant,
Sublandlord may make such payment or undertake to perform such covenant or
agreement (but shall not have any obligation to Subtenant to do so). In such
event, amounts so paid and amounts expended in undertaking such performance,
together with all costs, expenses and attorneys' fees incurred by Sublandlord in
connection therewith, shall be additional rent hereunder.
8. Nonwaiver. Failure of Sublandlord to declare any default or delay in
taking any action in connection therewith shall not waive such default. No
receipt of moneys by Sublandlord from Subtenant after the termination in any way
of the term or of Subtenant's right of possession hereunder or after the giving
of any notice shall reinstate, continue or extend the term or affect any notice
given to Subtenant or any suit commenced or judgment entered prior to receipt of
such moneys.
9. Cumulative Rights and Remedies. All rights and remedies of
Sublandlord under this Sublease shall be cumulative and none shall exclude any
other rights or remedies allowed by law.
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10. Waiver of Claims and Indemnity.
(a) Subtenant hereby releases and waives any and all claims
against Landlord and Sublandlord and each of their respective officers,
directors, partners, agents and employees for injury or damage to person,
property or business sustained in or about the Building or the Premises by
Subtenant other than by reason of gross negligence or willful misconduct and
except in any case which would render this release and waiver void under law.
(b) Subtenant agrees to indemnify, defend and hold harmless
Landlord and its beneficiaries, Sublandlord and the managing agent of the
Building and each of their respective officers, directors, partners, agents and
employees, from and against any and all claims, demands, costs and expenses of
every kind and nature, including attorneys' fees and litigation expenses,
arising from Subtenant's occupancy of the Premises, Subtenant's construction of
any leasehold improvements in the Premises, or from any breach or default on the
part of Subtenant in the performance of any agreement or covenant of Subtenant
to be performed or performed under this Sublease or pursuant to the terms of
this Sublease, or from any act or neglect of Subtenant or its agents, officers,
employees, guests, servants, invitees or customers in or about the Premises,
except to the extent the liability, costs, damages and/or expenses arise from
the intentional or grossly negligent acts of Sublandlord or its agents,
contractors or employees. In case any such proceeding is brought against any of
said indemnified parties, Subtenant covenants, if requested by Sublandlord, to
defend such proceeding at its sole cost and expense by legal counsel reasonably
satisfactory to Sublandlord.
(c) Sublandlord agrees to indemnify, defend and hold harmless
Subtenant and its officers, directors, partners, agents and employees, from and
against any and all claims, demands, costs and expenses of every kind and
nature, including attorneys' fees and litigation expenses, arising from the
Sublandlord's grossly negligent or willful failure to comply, as required under
this Sublease and which are not the responsibility of Subtenant hereunder,
including, without limitation with respect to applicable governmental
regulations relating to the Building and any release of hazardous substances
into the Building in violation of applicable law by Sublandlord, except to the
extent the liability, costs, damages and/or expenses arise from the intentional
or negligent acts of Subtenant or its agents, contractors or employees.
11. Waiver of Subrogation. Anything in this Sublease to the contrary
notwithstanding, Sublandlord and Subtenant each hereby waive any and all rights
of recovery, claims, actions or causes of action against the other and the
officers, directors, partners, agents and employees of each of them, and
Subtenant hereby waives any and all rights of recovery, claims, actions or
causes of action against Landlord and its agents and employees for any loss or
damage that may occur to the Premises, or any improvements thereto, or any
personal property of any person therein or in the Building, by reason of fire,
the elements or any other cause insured against under valid and collectible fire
and extended coverage insurance policies, regardless of cause or origin,
including negligence, except in any case which would render this waiver void
under law, to the extent that such loss or damage is actually recovered under
said insurance policies.
12. Brokerage Commissions. Each party hereby represents and warrants to
the other that other than Xxxxxx X. Xxxxxxx, Inc. and Xxxx Commercial Real
Estate Services whose commissions shall be payable by Sublandlord) it has had no
dealings with any real estate broker or agent in connection with this Sublease,
and that it knows of no real estate broker or agent who is or might be entitled
to a commission in connection with this Sublease. Each party agrees to protect,
defend, indemnify and hold the other harmless from and against any and all
claims inconsistent with the foregoing representations and warranties for any
brokerage, finder's or similar fee or commission in connection with this
Sublease, if
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such claims are based on or relate to any act of the indemnifying party which is
contrary to the foregoing representations and warranties.
13. Successors and Assigns. This Sublease shall be binding upon and
inure to the benefit of the successors and assigns of Sublandlord and shall be
binding upon and inure to the benefit of the successors of Subtenant and, to the
extent any such assignment may be approved, Subtenant's assigns. The provisions
of Subsection 6(e) and Sections 10 and 11 hereof shall inure to the benefit of
the successors and assigns of Landlord.
14. Entire Agreement. This Sublease contains all the terms, covenants,
conditions and agreements between Sublandlord and Subtenant relating in any
manner to the rental, use and occupancy of the Premises. No prior agreement or
understanding pertaining to the same shall be valid or of any force or effect.
The terms, covenants and conditions of this Sublease cannot be altered, changed,
modified or added to except by a written instrument signed by Sublandlord and
Subtenant.
15. Notices.
(a) In the event any notice from the Landlord or otherwise
relating to the Prime Lease is delivered to the Premises or is otherwise
received by Subtenant, Subtenant shall, as soon thereafter as possible, but in
any event within twenty-four (24) hours, delivei such notice to Sublandlord if
such notice is written or advise Sublandlord thereof by telephone if such notice
is oral.
(b) Notices and demands required or permitted to be given by
either party to the other with respect hereto or to the Premises shall be in
writing and shall not be effective for any purpose unless the same shall be
served either by personal delivery with a receipt requested, by overnight air
courier service or by United States certified or registered mail, return receipt
requested, postage prepaid; provided, however, that all notices of default shall
be served either by personal delivery with a receipt requested or by overnight
air courier service, addressed as follows:
if to Sublandlord: GATEWAY, INC.
Real Estate Administration
000 Xxxxxxx Xxxxx X00
Xxxxx Xxxxx Xxxx, Xxxxx Xxxxxx 00000
and
GATEWAY, INC.
00000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
if to Subtenant: WESTERN DIGITAL CORPORATION
Legal Department
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxx Xxxxxx
With a copy to: WESTERN DIGITAL CORPORATION
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
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Notices and demands shall be deemed to have been given two (2) days after
mailing, if mailed, or, if made by personal delivery or by overnight air courier
service, then upon such delivery. Either party may change its address for
receipt of notices by giving notice to the other party.
16. Authority of Subtenant etc. Subtenant represents and warrants to
Sublandlord that this Sublease has been duly authorized, executed and delivered
by and on behalf of Subtenant and constitutes the valid, enforceable and binding
agreement of Subtenant and of each party constituting Subtenant, each of whom
shall be jointly and severally liable hereunder in accordance with the terms
hereof.
17. Limitation on Liability. Sublandlord shall not be liable for
personal injury or property damage to Subtenant, its officers, agents,
employees, invitees, guests, licensees or any other person in the Premises,
regardless of how such injury or damage may be caused; provided, however, as to
any claims for personal injury, the foregoing shall not limit the liability of
Sublandlord with respect to any personal injury caused by the intentional or
grossly negligent acts of Sublandlord or its agents, contractors or employees.
Any property of Subtenant kept or stored in the Premises shall be kept or stored
at the sole risk of Subtenant. Subtenant shall hold Sublandlord harmless from
any claims arising out of any personal injury or property damage occurring in
the Premises, including subrogation claims by Subtenant's insurance carrier(s).
18. Consents and Approvals. In any instance when Sublandlord's consent
or approval is required under this Sublease, Sublandlord's refusal to consent to
or approve any matter or thing shall be deemed reasonable if, among other
matters, such consent or approval is required under the provisions of the Prime
Lease incorporated herein by reference but has not been obtained from Landlord.
Except as otherwise provided herein, Sublandlord shall not unreasonably withhold
or delay its consent to or approval of a matter if such consent or approval is
required under the provisions of the Prime Lease and Landlord has consented to
or approved of such matter. If Subtenant shall seek the approval by or consent
of Sublandlord and Sublandlord shall fail or refuse to give such consent or
approval, Subtenant shall not be entitled to any damages for any withholding or
delay of such approval or consent by Sublandlord, it being agreed that
Subtenant's sole remedy in connection with an alleged wrongful refusal or
failure to approve or consent shall be an action for injunction or specific
performance shall be available only in those cases where Sublandlord shall have
expressly agreed in this Sublease not to unreasonably withhold or delay its
consent.
19. Consent of Landlord. The obligations of Sublandlord and Subtenant
under this Sublease are conditioned and contingent upon the Landlord consenting
hereto. In the event Landlord's consent is not obtained within thirty (30) days
after the date hereof, this Sublease shall automatically terminate and become
null and void, Sublandlord shall return any security deposit and/or any other
rent or other consideration paid by Subtenant which has not otherwise been
appropriately applied to the payment of Base Rent or other amounts due
hereunder, and neither Sublandlord nor Subtenant shall have any further
obligations or liability hereunder or to each other with respect to the
Premises.
20. Examination. Submission of this instrument for examination or
signature by Subtenant does not constitute a reservation of or option for the
Premises or in any manner bind Sublandlord, and no lease, sublease or obligation
on Sublandlord shall arise until this instrument is signed and delivered by
Sublandlord and Subtenant and the consent of Landlord is obtained as described
in Section 19 above.
21. Security Deposit. Subtenant concurrently with the execution of this
Sublease, shall deposit with Sublandlord the sum of $63,488.31 as security for
the faithful performance by Subtenant of all terms, covenants and conditions of
this Sublease. Such security deposit shall be held by Sublandlord as security
for the faithful performance by Subtenant of all terms, covenants and conditions
of this Sublease. Subtenant agrees that Sublandlord may apply the security
deposit to remedy any failure by Subtenant to
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repair or maintain the Premises or to perform any other terms, covenants and
conditions contained herein or make any payment owing hereunder, all following
the expiration of applicable notice and cure periods. If Subtenant has kept and
performed all terms, covenants and conditions of this Sublease during the term,
Sublandlord will, within thirty (30) days after the expiration hereof, promptly
return the security deposit to Subtenant or the last permitted assignee of
Subtenant's interest hereunder. Should Sublandlord use any portion of the
security deposit to cure any default by Subtenant hereunder, Subtenant shall
forthwith replenish the security deposit to the original amount. Sublandlord
shall not be required to keep the security deposit separate from its general
funds, and Subtenant shall not be entitled to interest on any such deposit.
22. Furniture. Subtenant shall be entitled to use the furniture,
fixtures and equipment located within the Premises as described on Exhibit "D"
attached hereto (the "FFE") at no cost during the term of this Sublease;
provided, however, in no event shall Sublandlord be obligated to remove any such
FFE in the event that Subtenant elects not to use same during the term of this
Sublease. During the term of this Sublease Subtenant shall be responsible to
maintain such FFE in good condition and repair, reasonable wear and tear
excepted, at Subtenant's sole cost and expense. Subtenant further acknowledges
and agrees that Sublandlord is providing such FFE to Subtenant in its "as-is"
condition and is not making any representation or warranty with respect to its
condition to Subtenant hereunder.
23. Parking. During the term of this Sublease, so long as Subtenant is
not in default under this Sublease, Subtenant and its employees shall be
entitled to use Subtenant's Percentage Share (for the Common Area Percentage) of
the parking rights granted to Sublandlord as tenant, under the Prime Lease.
Subtenant acknowledges and agrees that its right to use such parking area shall
be upon the terms and conditions set forth in the Prime Lease, including,
without limitation, any and all rules and regulations promulgated by Landlord
with respect thereto. Sublandlord hereby agrees that other than any pass through
of costs under the Prime Lease or any other rights of the Landlord thereunder,
in no event shall Sublandlord independently impose any parking fee for the use
of such parking spaces.
24. Signage. Subject to all the terms and conditions of this Sublease
and the Prime Lease, Subtenant shall have the right to install interior signage
within the Premises as permitted Sublandlord, as tenant, under the Prime Lease,
and Subtenant shall further be permitted to utilize all of the exterior building
signage permitted Sublandlord with respect to the Building, as tenant under the
Prime Lease subject to obtaining any and all governmental and other approvals
and obtaining Landlord's and Sublandlord's consent thereto. Subtenant's right to
so install such signage shall be at Subtenant's sole cost and expense and shall
require the prior written consent of Sublandlord and Landlord as to the design,
size, location and manner of installation of same, and Sublandlord hereby
covenants and agrees that it shall not unreasonably withhold, condition or delay
such consent. Upon the expiration of the term of this Sublease or the earlier
termination hereof, Subtenant shall be responsible to remove any such signage
and repair any damage caused by same. Such agreement by Subtenant shall survive
the expiration of the term of this Sublease or the earlier expiration hereof.
25. Security. Subject to (i) all of the terms and conditions of this
Sublease, including, without limitation, the terms of Section 6(b)(i) hereof,
and (ii) obtaining the prior written consent of Sublandlord (such consent not to
be unreasonably withheld, conditioned and/or delayed) and Landlord, to the
extent required under the Prime Lease, Subtenant shall have the right to connect
(splice into) all existing security systems and equipment serving the Premises
to operate its own security system for the Premises.
26. Quiet Enjoyment. So long as Subtenant shall observe and perform all
the covenants and agreements of Subtenant set forth in this Sublease, subject to
the terms and conditions of this Sublease, Sublandlord or any other party
claiming by, through or under Sublandlord shall do any act or perform any
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thing which would materially adversely affect Subtenant's peaceful and quiet
enjoyment and possession of the Premises.
IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease
as of the date aforesaid.
"SUBLANDLORD" ADVANCED LOGIC RESEARCH, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxxxxx
--------------------------------
Its: Vice President
STATE OF CALIFORNIA )
)ss.
COUNTY OF SAN DIEGO )
On 9-23-03, before me, Xxxxxxx X. Xxxx, a Notary Public in and for said
state, personally appeared Xxxxxxx Xxxxxxxxxxx, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument, the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxxx X. Xxxx
------------------------------------
Notary Public in and for said State
(NOTARY PUBLIC SEAL)
(SEAL)
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"SUBTENANT" WESTERN DIGITAL CORPORATION,
a Delaware corporation
By: /s/ XXXXX XXXXXX, MCR
--------------------------------
Its: REAL ESTATE SPECIALIST
STATE OF CALIFORNIA )
)ss.
COUNTY OF ORANGE )
On SEPTEMBER 22, 2003, before me, XXXXX X. XXXXXX, a Notary Public in and
for said state, personally appeared XXXXX X. XXXXXX, personally known to me to
be the person whose name is subscribed to the within instrument and acknowledged
to me that she executed the same in her authorized capacity, and that by her
signature on the instrument, the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ XXXXX X. XXXX
------------------------------------
Notary Public in and for said State
(SEAL)
(NOTARY PUBLIC SEAL)
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