0000892569-95-000393.txt : 19950815
0000892569-95-000393.hdr.sgml : 19950815
ACCESSION NUMBER: 0000892569-95-000393
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950814
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DATUM INC
CENTRAL INDEX KEY: 0000027119
STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812]
IRS NUMBER: 952512237
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-06272
FILM NUMBER: 95562112
BUSINESS ADDRESS:
STREET 1: 1363 SO STATE COLLEGE BLVD
CITY: ANAHEIM
STATE: CA
ZIP: 92806
BUSINESS PHONE: 7145336333
MAIL ADDRESS:
STREET 1: 1363 SOUTH STATE COLLEGE BLVD
CITY: ANAHEIM
STATE: CA
ZIP: 92806
10-Q
1
FORM 10-Q
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1995
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ----------------------
Commission file no. 0-6272
DATUM INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2512237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
1363 SOUTH STATE COLLEGE BLVD., ANAHEIM, CA 92806-5790
(Address of principal executive offices) (Zip code)
(714) 533-6333
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. YES X . NO .
----- -----
The registrant had 3,982,188 shares of common stock outstanding as of June
30, 1995.
Total number of sequentially numbered pages contained herein are: _______
-1-
2
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations . . . . 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-2-
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
JUNE 30, December 31,
A S S E T S 1995 1994
----------- ------------
Current assets
Cash and short-term investments $ 36,000 $ 221,000
Accounts receivable 12,049,000 5,978,000
Accounts receivable, unbilled 318,000 326,000
Inventories
Purchased parts 6,067,000 2,081,000
Work-in-process 8,674,000 4,465,000
Finished products 3,450,000 446,000
----------- -----------
18,191,000 6,992,000
Prepaid expenses 703,000 432,000
Deferred income taxes 869,000 869,000
Income tax refund receivable 210,000 216,000
----------- -----------
Total current assets 32,376,000 15,034,000
Plant and equipment
Land 2,040,000 2,040,000
Buildings 4,454,000 4,450,000
Equipment 13,418,000 6,017,000
Leasehold improvements 1,132,000 878,000
----------- -----------
21,044,000 13,385,000
Less accumulated depreciation and amortization 5,956,000 6,310,000
----------- -----------
15,088,000 7,075,000
----------- -----------
Excess of purchase price over net assets acquired 10,684,000 2,413,000
Other assets 46,000 56,000
----------- -----------
$58,194,000 $24,578,000
=========== ===========
See Notes to Condensed Consolidated Financial Statements
-3-
4
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
JUNE 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---------- -------------
Current liabilities
Accounts payable $ 3,037,000 $ 1,598,000
Accrued salaries and wages 1,344,000 1,256,000
Other accrued expenses 1,741,000 476,000
Income taxes payable (247,000) --
Notes payable to bank 9,100,000 3,000,000
Current portion of long-term debt 1,027,000 20,000
----------- -----------
Total current liabilities 16,002,000 6,350,000
----------- -----------
Long-term debt 9,617,000 50,000
----------- -----------
Postretirement benefits 190,000 152,000
----------- -----------
Deferred income taxes 1,143,000 1,143,000
----------- -----------
Stockholders' equity
Common stock, par value $.25 per share
Authorized - 8,000,000 shares
Issued - 3,982,188 shares in 1995
2,668,224 shares in 1994 996,000 667,000
Additional paid-in capital 23,925,000 10,294,000
Retained earnings -
Beginning of period 5,922,000 4,986,000
Net income 385,000 936,000
Cumulative translation adjustment 14,000 --
----------- -----------
End of period 6,321,000 5,922,000
----------- -----------
Total stockholders' equity 31,242,000 16,883,000
----------- -----------
$58,194,000 $24,578,000
=========== ===========
See Notes to Condensed Consolidated Financial Statements
-4-
5
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
Net product sales and
contract revenues $16,853,000 $7,827,000 $26,685,000 $15,290,000
----------- ---------- ----------- -----------
Costs and expenses
Cost of products sold and
contract revenues 9,283,000 4,173,000 14,833,000 8,543,000
Selling 2,523,000 1,308,000 4,119,000 2,516,000
Product development 2,288,000 614,000 3,230,000 1,159,000
General and administrative 1,995,000 1,102,000 3,207,000 2,013,000
Interest expense 520,000 64,000 649,000 121,000
Interest income (3,000) (5,000) (6,000) (8,000)
----------- ---------- ----------- -----------
16,606,000 7,256,000 26,032,000 14,344,000
----------- ---------- ----------- -----------
Income before income taxes 247,000 571,000 653,000 946,000
Income tax provision 102,000 228,000 268,000 378,000
----------- ---------- ----------- -----------
Net income $ 145,000 $ 343,000 $ 385,000 $ 568,000
=========== ========== =========== ===========
Earnings per common and
common equivalent share $ 0.03 $ 0.13 $ 0.11 $ 0.22
=========== ========== =========== ===========
Weighted average number
of common and common
equivalent shares outstanding 4,241,000 2,617,000 3,665,000 2,610,000
=========== ========== =========== ===========
See Notes to Condensed Consolidated Financial Statements
-5-
6
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
------------------------------
JUNE 30, June 30,
1995 1994
------------ -----------
Cash flows from operating activities:
Net income $ 385,000 $ 568,000
------------ ----------
Adjustments to reconcile income to net cash provided by
operating activities:
Depreciation and amortization 1,129,000 378,000
Contribution of the Company's shares of common stock 99,000 85,000
Changes in assets and liabilities, net of acquisition:
Increase in accounts receivable (301,000) (540,000)
(Increase) decrease in accounts receivable,
unbilled - current portion 8,000 (321,000)
Decrease in income tax refund receivable 6,000 ----
Increase in inventories (2,682,000) (578,000)
Increase in prepaid expenses (634,000) (93,000)
Increase in deferred income taxes - current portion ---- (15,000)
Decrease in other assets 10,000 12,000
Increase (decrease) in accounts payable 255,000 (289,000)
Increase (decrease) in accrued expenses 377,000 (14,000)
Decrease in income taxes payable (246,000) (132,000)
Increase in postretirement benefits 38,000 38,000
------------ -----------
Total reconciling items (1,941,000) (1,469,000)
------------ -----------
Net cash used in operating activities (1,556,000) (901,000)
------------ -----------
Cash flows from investing activities:
Book value of equipment disposals 8,000 82,000
Capital expenditures (911,000) (526,000)
Payment for acquisition, net of cash (14,494,000) ----
Other (31,000) ----
------------ -----------
Net cash used in investing activities (15,428,000) (444,000)
------------ -----------
Cash flows from financing activities:
Proceeds from line of credit 6,100,000 875,000
Proceeds from (reductions to) long-term debt and notes payable 10,574,000 (130,000)
Exercise of stock options 125,000 32,000
------------ -----------
Net cash provided by financing activities 16,799,000 777,000
------------ -----------
Net increase (decrease) in cash and cash equivalents (185,000) (568,000)
Cash and cash equivalents at beginning of period 221,000 651,000
------------ -----------
Cash and cash equivalents at end of period $ 36,000 $ 83,000
============ ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
In connection with the acquisition of Efratom, the Company
issued 1,277,778 shares of common stock valued at $13,736,000.
See Notes to Condensed Consolidated Financial Statements
-6-
7
DATUM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the requirements of Form 10-Q and, therefore,
do not include all information and footnotes which would be presented were such
financial statements prepared in accordance with generally accepted accounting
principles, and should be read in conjunction with the audited financial
statements presented in the Company's 1994 Annual Report to Stockholders. In
the opinion of management, the accompanying financial statements reflect all
adjustments which are necessary for a fair presentation of the results for the
interim period presented. The results of operations for such interim period are
not necessarily indicative of results to be expected for the full year.
NOTE B - EARNINGS PER SHARE
Earnings per share is calculated by dividing net earnings by the weighted
average number of common and common equivalent shares outstanding during each
period taking into consideration dilutive effects of common stock equivalents.
-7-
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" presented in the
Company's 1994 Annual Report to Stockholders.
On March 17, 1995, the Company completed its acquisition of Efratom Time and
Frequency Products, Inc. and Efratom Elektronik GmbH (collectively "Efratom")
from Ball Corporation. As a result of the acquisition, the Company has
experienced significant increases in revenues, selling expenses, product
development general and administrative expenses, accounts receivable,
inventories and accounts payable, in the quarter and six months ended June 30,
1995 from the corresponding periods of 1994.
Results of Operations
---------------------
Consolidated net product sales and contract revenues increased 115.3% for the
quarter ended June 30, 1995, when compared to the corresponding quarter of
1994. For the six month period of 1995, the sales increase was 74.5% when
compared to the same two quarters of 1994. The increases were primarily due to
the acquisition of Efratom on March 17, 1995. Contract revenues as a component
of total revenues are not significant.
Cost of products sold and contract revenues as a percentage of product sales
for the quarter ended June 30, 1995, was 55.1%, compared with 53.3% for the
corresponding quarter of 1994. For the six month period of 1995, cost of
products sold as a percentage of sales remained relatively unchanged from the
corresponding six month period of 1994, 55.6% in 1995 compared with 55.8% in
1994. The mix of telecommunication products sold in the quarter contributed to
a lower than average cost in the second quarter of 1994.
Selling expenses increased by $1,215,000 for the quarter ended June 30, 1995
over the similar period in 1994, due to the acquisition of Efratom in March of
1995 and the addition of a telecommunications sales organization in the June
30, 1995 quarter. However, sales expense as a percentage of product sales
decreased to 15.0% for the quarter ended June 30, 1995, from 16.7% for the
corresponding quarter of 1994, due to a larger sales base.
Product development expense as a percentage of product sales increased to 13.6%
for the quarter ended June 30, 1995, compared with 7.8% for the corresponding
quarter of 1994. In the absence of the acquisition of Efratom, product
development expense as a percentage of product sales would have increased from
7.8% to 10.3% due to increased telecommunication product development. In
addition, Efratom product development expense, as a percentage of product
sales, is higher than that of the other divisions of Datum.
General and Administrative expense increased by $893,000 to $1,995,000 for the
quarter ended June 30, 1995. $682,000 of this increase was due to the addition
of Efratom which was not in the corresponding quarter of 1994. In the June 1995
quarter, general and administrative expense as a percentage of product sales
decreased to 11.8%, compared to 14.1% in the corresponding quarter of 1994, due
to a larger sales base.
Interest expense increased from $64,000 for the quarter ended June 30, 1994 to
$520,000 for the June 1995 quarter as a result of the borrowing of $15 million
for part of the Efratom purchase price and up to an additional $7 million to
cover the increased daily working capital needs of the combined operations.
The borrowing level at June 30, 1995 was $19.7 million.
Net income as a percentage of product sales decreased to .9% in the current
quarter from 4.4% in the same quarter of 1994. The mix of products sold, the
added cost of product development and interest expense due to the acquisition
accounted for this differential.
The common and common equivalent shares were affected by the shares issued to
Ball Corporation for the acquisition of Efratom on March 17, 1995 and, to a
lesser extent by the exercise of stock options adding to outstanding shares.
Liquidity and Capital Resources
-------------------------------
Accounts receivable, including accounts receivable unbilled, increased from
$6,304,000 at December 31, 1994 to $12,367,000 at June 30, 1995. The major
reason for the increase is the presence of Efratom receivables of $5,239,000
not applicable on December 31, 1994. The increase in the other Datum companies
is due to increased sales volume in the Timing and Bancomm divisions.
-8-
9
Inventories increased from $6,992,000 at December 31, 1994, to $18,191,000 at
June 30, 1995. The increase is the result of $10,007,000 of Efratom
inventories not present on December 31, 1994.
Accounts payable increased from $1,598,000 at December 31, 1994 to $3,037,000
at June 30, 1995. Efratom accounts payable accounted for $1,156,000 of that
difference.
At June 30, 1995 the Company had working capital of $16,374,000 and a current
ratio of 2.0:1. This compares to working capital of $8,684,000 and a current
ratio of 2.4:1 at December 31, 1994. The decline in the current ratio is the
result of additional financing associated with the Efratom acquisition.
Effective March 17, 1995, the Company entered into a credit arrangement with
its bank for a credit facility to contain (i) an $11,000,000 revolving line of
credit; (ii) a $2,500,000 term loan payable over six (6) years; (iii) a
$2,500,000 term loan amortized over 25 years, payable in five (5) years; (iv) a
$6,000,000 term loan payable over four (4) years. All the loans have interest
payable at the bank's prime rate plus .5% to .75%. The loans are secured by
accounts receivable, inventory, real estate and equipment. The credit
arrangement is effective through June 6, 1996.
The notes payable to the bank of $9,100,000 at June 30, 1995 reflects the
revolving line with the bank which can be increased to a maximum of
$11,000,000. This June 30, 1995 balance includes $4,000,000 utilized for a
portion of the $15,000,000 cash purchase price of Efratom. The additional
usage is to cover the higher levels of accounts receivable and inventory.
The current portion of long-term debt reflects the banking arrangements
described above which are due and payable in the current year.
The acquisition of Efratom was concluded subject to a potential purchase price
adjustment based on a closing date statement of working capital. Ball
Corporation and Datum are finalizing the values necessary to determine the
closing date balance sheet. This is presently an open item which should be
concluded before year end.
Any purchase price adjustment will be reflected in excess of purchase price
over net assets acquired and is not expected to be material to results of
operations.
-9-
10
PART II. OTHER INFORMATION
Items 1 through 3 and Item 5 have been omitted because the related information
is either inapplicable or has been previously reported.
Item 4. Submission of Matters for Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on June 1, 1995.
(b) Set forth below is the name of each director elected at the
meeting and the number of votes cast for their election, the
number of votes withheld and the number of broker non-votes.
Number of Number of Number of
Name Votes "For" Votes "Withheld" Broker "Non-Votes"
---- ----------- ---------------- ------------------
Louis B. Horwitz 3,648,596 9,046 -0-
Dan L. McGurk 3,648,646 8,996 -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
----------- -----------
10.32.2 Amendment to Leases between the Irvine
Company and the Company
10.32.3 Second Amendment to Lease for 4 Cromwell
10.32.4 Second Amendment to Lease for 3 Parker
10.34 Industrial Lease between The Irvine
Company and the Company
27.2 Financial Data Schedule
(b) No current reports on Form 8-K were filed during the quarter covered by
this report.
-10-
11
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATUM INC.
/s/ Louis B. Horwitz Date August 14, 1995
------------------------------------------- ------------------------
Louis B. Horwitz, President
/s/ David A. Young Date August 14, 1995
------------------------------------------- ------------------------
David A. Young, Chief Financial Officer
-11-
12
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page
----------- ----------- ---------------
10.32.2 Amendment to Leases between the Irvine Company
and the Company
10.32.3 Second Amendment to Lease for 4 Cromwell
10.32.4 Second Amendment to Lease for 3 Parker
10.34 Industrial Lease between The Irvine Company and
the Company
27.2 Financial Data Schedule
-12-
EX-10.32.2
2
AMEND TO LEASE BETWEEN IRVINE CO. AND THE COMPANY
1
EXHIBIT 10.32.2
AMENDMENT TO LEASES
I. PARTIES AND DATE.
THIS AMENDMENT is executed as of this 11th day of May, 1995, by and
among THE IRVINE COMPANY, a Michigan corporation ("TIC"), and DATUM, INC., a
Delaware corporation ("Datum").
II. RECITALS.
A. TIC and Datum are Landlord and Tenant, respectively, under that
certain Lease dated September 15, 1986, as amended by that certain Amendment
No. 1 to Lease dated November 26, 1986, and by that certain Second Amendment to
Lease dated concurrently herewith, for space in a building located at 3 Parker,
Irvine, California. Collectively, said Lease as amended is herein referred to
as the "Parker Lease".
B. TIC and Datum are Landlord and Tenant, respectively, under that
certain Lease dated February 3, 1992, as amended by that certain First
Amendment to Lease dated March 15, 1995, and by that certain Second Amendment
to Lease dated concurrently herewith, for space in a building located at 4
Cromwell, Suite 201, Irvine, California (the "Cromwell Premises").
Collectively, said Lease as amended is herein referred to as the "Cromwell
Lease".
C. TIC and Datum are Landlord and Tenant, respectively, under that
certain Lease dated concurrently herewith for space in a building located at
9975 Toledo Way, Irvine, California. Said Lease is herein referred to as the
"Toledo Lease".
III. MODIFICATIONS.
A. Election to Terminate. TIC hereby grants Datum the election to
terminate the Cromwell Lease as of September 1, 1996 (the "Cromwell Lease
Termination Date"), on the terms and conditions set forth herein. Such
election shall be exercised only by written notice delivered to TIC (the
"Election Notice") on or before February 15, 1996. If Datum fails to so
deliver the Election Notice on or before the date specified above, the election
to terminate herein granted shall lapse automatically and there shall be no
further right to terminate the Cromwell Lease. Such election to terminate
shall be exercisable by Datum on the express conditions that: (i) both at the
time of the Election Notice, and thereafter at all times prior to the Cromwell
Lease Termination Date, a default by Datum shall not have occurred under either
the Parker Lease, the Cromwell Lease and/or the Toledo Lease; and (ii) Datum
shall demonstrate to TIC's satisfaction, both at the time of the Election
Notice and as of the Cromwell Lease Termination Date, that Datum's net worth
2
(as determined by generally accepted accounting principles consistently
applied) shall then be at least or greater than Datum's net worth as shown in
Datum's financial statements dated as of December 31, 1994.
The election to terminate herein granted is personal to Datum and any
"Related Party" (as such term is hereinafter defined). If Datum or any Related
Party subleases any portion of the Cromwell Premises or assigns or otherwise
transfers any interest under the Cromwell Lease (other than to a Related Party)
prior to the Election Notice, such election to terminate shall lapse. If Datum
or any Related Party subleases any portion of the Cromwell Premises or assigns
or otherwise transfers any interest of Datum or any Related Party under the
Cromwell Lease (other than to a Related Party) after the Election Notice but
prior to the Cromwell Lease Termination Date, such election to terminate shall
lapse. As used herein, "Related Party" shall mean a corporation with which
Datum may merge or consolidate, or any subsidiary or affiliate of Datum or a
purchaser of substantially all of Datum's assets.
B. Adjustment to Basic Rent under Parker Lease. Upon Datum's giving of the
Election Notice, Item (l) and Paragraph 1 of the Addendum A to the Parker Lease
shall thereupon be deleted in their entirety, and the following shall be
substituted in lieu thereof:
"(1) Monthly Rent: Commencing as of May 1, 1997, the Monthly Rent
shall be Thirty-One Thousand Six Hundred Forty Dollars and Seventy-One
Cents ($31,640.71) per month, based on $.682 per rentable square foot.
Adjustments to Monthly Rent: Commencing as of July 1, 2000, the Monthly
Rent shall be Thirty-Nine Thousand Five Hundred Twenty-Seven Dollars and
Sixty-Nine Cents ($39,527.69) per month, based on $.852 per rentable
square foot."
C. Adjustment to Basic Rent under Toledo Lease. Upon Datum's giving of the
Election Notice, Item 6 of the Basic Lease Provisions of the Toledo Lease shall
thereupon be deleted in its entirety, and the following shall be substituted in
lieu thereof:
"6. Basic Rent for Suite 101: Effective as of the date of the Election
Notice, the Basic Rent for Suite 101 shall be Twenty-Eight Thousand
Seven Hundred Twenty-Two Dollars and Forty-Three Cents ($28,722.43)
per month, based on $.682 per rentable square foot.
Adjustments to Basic Rent for Suite 101: Commencing as of July 1,
2000, the Basic Rent for Suite 101 shall be Thirty-Five Thousand Eight
Hundred Eighty-One Dollars and Ninety-Eight Cents ($35,881.98) per
month, based on $.852 per rentable square foot.
2
3
Basic Rent for Suite 102: Effective as of the date of the Election Notice,
the Basic Rent for Suite 102 shall be Sixteen Thousand Nine Hundred
Thirty-Seven Dollars and Forty-Seven Cents ($16,937.47) per month, based on
$.682 per rentable square foot.
Adjustments to Basic Rent for Suite 102: Commencing as of July 1, 2000,
the Basic Rent for Suite 102 shall be Twenty-One Thousand One Hundred
Fifty-Nine Dollars and Forty-Two Cents ($21,159.42) per month, based on
$.852 per rentable square foot."
Basic Rent under the Toledo Lease for the month in which the Election
Notice is given shall be prorated to the date of the Election Notice.
IV. GENERAL.
A. Effect of Amendments. The Parker, Cromwell and Toledo Leases shall
remain in full force and effect except to the extent that it is modified by this
Amendment.
B. Entire Agreement. This Amendment embodies the entire understanding
between Datum and TIC with respect to the modifications set forth in "III.
MODIFICATIONS" above and can be changed only by a writing signed by both of TIC
and Datum.
C. Counterparts. If this Amendment is executed in counterparts, each is
hereby declared to be an original; all, however, shall constitute but one and
the same amendment. In any action or proceeding, any photographic,
photostatic, or other copy of this Amendment may be introduced into evidence
without foundation.
D. Authority. Each individual executing this Amendment for a corporation
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of the corporation and that this Amendment is binding upon
the corporation in accordance with its terms.
E. Attorneys' Fees. The provisions of the Parker, Cromwell and Toledo
Leases, respecting payment of attorneys' fees shall also apply to this
Amendment.
3
4
V. EXECUTION.
Datum and TIC have executed this Amendment on the date as set forth in
"I. PARTIES AND DATE." above.
TIC: DATUM:
THE IRVINE COMPANY, DATUM, INC.,
a Michigan corporation a Delaware corporation
By /s/ Clarence W. Barker By /s/ Louis B. Horwitz
----------------------------- ------------------------
Clarence W. Barker, Louis B. Horwitz
President, Irvine Industrial Chairman, Chief Executive
Company, a division of Officer and President
The Irvine Company
By /s/ John C. Tsu By /s/ David A. Young
----------------------------- ------------------------
John C. Tsu David A. Young
Assistant Secretary Vice President and
Chief Financial Officer
4
EX-10.32.3
3
SECOND AMENDMENT TO LEASE FOR 4 CROMWELL
1
EXHIBIT 10.32.3
SECOND AMENDMENT TO LEASE
(4 Cromwell, Irvine)
I. PARTIES AND DATE.
This Second Amendment to Lease (the "Second Amendment") dated May 11,
1995, is by and between THE IRVINE COMPANY, a Michigan corporation
("Landlord"), and DATUM, INC., a Delaware corporation ("Tenant").
II. RECITALS.
On February 3, 1992, Landlord and Tenant entered into a lease, as
amended by a First Amendment to Lease dated March 15, 1995 (as amended, the
"Lease") for space in a building located at 4 Cromwell, Suite 201, Irvine,
California ("Premises").
On March 17, 1995, Tenant acquired all of the outstanding stock of
Efratom Time and Frequency Products, Inc., a Colorado corporation ("Efratom"),
and all of Efratom's right, title and interest as the tenant under the Lease.
Landlord and Tenant each desire to modify the Lease to make such
modifications as are set forth in "III. MODIFICATIONS" next below.
III. MODIFICATIONS.
A. Basic Lease Provisions. The Basic Lease Provisions are hereby
amended as follows:
1. Item 9 is hereby deleted in its entirety and the
following shall be substituted in lieu thereof:
"9. Term: The Term of this Lease shall expire at
midnight on October 1997."
2. Effective as of September 1, 1996, Item 10 is
hereby deleted in its entirety and the following shall be
substituted in lieu thereof:
"10. Monthly Rent: Eleven Thousand Three
Hundred Fifty Dollars and Eighty-Four Cents
($11,350.84) per month, based on $.667 per rentable
square foot."
Notwithstanding the adjustment to Monthly Rent set forth in
this Second Amendment, Tenant's obligation to pay its Tenant's
Share of Operating Expenses shall remain unmodified.
2
B. Remainder Space Improvements. Paragraph 8 of the Addendum to
Lease entitled "Remainder Space Improvements" is hereby deleted in its entirety
and shall be of no further force or effect.
C. Option to Extend Term. Tenant's Option to Extend Term, as set
forth in Rider No. 3 to the Lease, is hereby amended to provide that Tenant's
second Option to extend the Term (contained in subsection (A)(ii) of Lease
Rider No. 3) shall remain in full force and effect, except that: (i) the
extension shall commence on November 1, 1997 and shall expire on July 31, 2005;
(ii) the Option shall be exercised only by written notice delivered to Landlord
no less than nine (9) months before the expiration of the Term; (iii) the
Monthly Rent during the extension shall be Eleven Thousand Three Hundred Fifty
Dollars and Thirty-Four Cents ($11,350.34) per month, based on $.667 per
rentable square foot, for the period November 1, 1997 through June 30, 2000,
adjusting to Fourteen Thousand Two Hundred Forty-Three Dollars and Twenty-
Three Cents ($14,243.23) per month, based on $.837 per rentable square foot,
for the period July 1, 2000 through July 31, 2005; and (iv) Tenant shall
demonstrate to Landlord's satisfaction, both at the time of exercise of the
Option and at the commencement of the extension, that Tenant's net worth (as
determined by generally acceptable accounting principles consistently applied)
shall then be at least or greater than Tenant's net worth as shown in Tenant's
financial statements dated as of December 31, 1994.
D. Contingency. Tenant understands and agrees that the
effectiveness of this Second Amendment is conditioned upon the mutual execution
and delivery of a lease agreement between Landlord and Tenant for the premises
located at 9975 Toledo Way, Irvine, California.
E. Assumption and Consent. Tenant has acquired all of Efratom's
right, title and interest under the Lease, and has assumed all of the Tenant's
obligations under the Lease, and Landlord hereby consents to said assignment
and assumption by Tenant.
IV. GENERAL.
A. Effect of Amendments. The Lease shall remain in full force
and effect except to the extent that it is modified by this Second Amendment.
B. Entire Agreement. This Second Amendment embodies the entire
understanding between Landlord and Tenant with respect to the modifications set
forth in "III. MODIFICATIONS" above and can be changed only by a writing
signed by Landlord and Tenant.
C. Counterparts. If this Second Amendment is executed in
counterparts, each is hereby declared to be an original; all, however, shall
constitute but one and the same amendment. In any
2
3
action or proceeding, any photographic, photostatic, or other copy of this
Second Amendment may be introduced into evidence without foundation.
D. Defined Terms. All words commencing with initial capital
letters in this Second Amendment and defined in the Lease shall have the same
meaning in this Second Amendment as in the Lease, unless they are otherwise
defined in this Second Amendment.
E. Corporate and Partnership Authority. If Tenant is a
corporation or partnership, or is comprised of either or both of them, each
individual executing this Second Amendment for the corporation or partnership
represents that he or she is duly authorized to execute and deliver this Second
Amendment on behalf of the corporation or partnership and that this Second
Amendment is binding upon the corporation or partnership in accordance with its
terms.
F. Attorneys' Fees. The provisions of the Lease respecting
payment of attorneys' fees shall also apply to this Second Amendment.
V. EXECUTION.
Landlord and Tenant executed this Amendment on the date as set forth
in "I. PARTIES AND DATE." above.
LANDLORD: TENANT:
THE IRVINE COMPANY, DATUM, INC.,
a Michigan corporation a Delaware corporation
By: /s/ Clarence W. Barker By: /s/ Louis B. Horwitz
------------------------------- -------------------------
Clarence W. Barker, President Louis B. Horwitz,
President, Irvine Industrial Chairman, Chief Executive
Company, a division of Officer and President
The Irvine Company
By: /s/ John C. Tsu By: /s/ David A. Young
------------------------------- --------------------------
John C. Tsu, David A. Young,
Assistant Secretary Vice President and
Chief Financial Officer
3
EX-10.32.4
4
SECOND AMENDMENT TO LEASE FOR 3 PARKER
1
EXHIBIT 10.32.4
SECOND AMENDMENT TO LEASE
(3 Parker, Irvine)
I. PARTIES AND DATE.
This Second Amendment to Lease (the "Second Amendment") dated May 11,
1995, is by and between THE IRVINE COMPANY, a Michigan corporation
("Landlord"), and DATUM, INC., a Delaware corporation ("Tenant").
II. RECITALS.
On September 15, 1986, Landlord and Tenant entered into a standard
form lease, as amended by an Amendment No. 1 to Lease dated November 26, 1986
(as amended, the "Lease") for space in a building located at 3 Parker, Irvine,
California ("Premises").
On March 17, 1995, Tenant acquired all of the outstanding stock of
Efratom Time and Frequency Products, Inc., a Colorado corporation ("Efratom"),
and all of Efratom's rights, title and interest as the tenant under the Lease.
Landlord and Tenant each desire to modify the Lease as set forth in
"III. MODIFICATIONS" next below.
III. MODIFICATIONS.
A. Lease Summary. The Lease Summary provisions are hereby
amended as follows:
1. Item (c) is hereby deleted in its entirety and the
following shall be substituted in lieu thereof:
"(c) Address of Landlord: The Irvine Company
c/o O'Donnell Property Services
One Technology Drive, Suite F-207
Irvine, CA 92718 Attn: Property Manager"
2. Item (k) is hereby deleted in its entirety and the
following shall be substituted in lieu thereof:
"(k) Term: The Term of this Lease shall expire at
midnight on July 31, 2005."
3. Effective as of May 1, 1997, Item (l) and Paragraph 1
of Addendum "A" to Standard Form Lease are hereby deleted in
their entirety and the following shall be substituted in lieu
thereof:
"(l) Monthly Rent: $30,944.80 per month, based on
$.667 per rentable square foot.
2
Adjustments to Monthly Rent: Commencing as of July
1, 2000, the Monthly Rent shall be Thirty-Eight
Thousand Eight Hundred Thirty-One Dollars and
Seventy-Eight Cents ($38,831.78) per month, based on
$.837 per rentable square foot."
B. Option to Extend Term. Tenant's Option to Extend Term, as set
forth in Paragraph 5 of Addendum "A" to Lease, is hereby amended to provide
that Tenant's initial Option to extend the Term is hereby deleted in its
entirety and shall be of no further force or effect, but that Tenant's second
Option to extend the Term shall remain in full force and effect, with the
second extension commencing upon the expiration of the Term of the Lease as
extended pursuant to this Second Amendment provided that Tenant shall exercise
said second Option in accordance with the applicable provisions of said
Paragraph 5, except that (i) said Option shall be exercised only by written
notice delivered to Landlord no less than twelve (12) months before the
expiration of the Term; and (ii) Tenant shall demonstrate to Landlord's
satisfaction, both at the time of exercise of said Option and at the
commencement of the extension, that Tenant's net worth (as determined by
generally accepted accounting principles consistently applied) shall then be at
least or greater than Tenant's net worth as shown in Tenant's financial
statements dated as of December 31, 1994.
C. Tenant's Right of First Offer. Paragraph 6 of Addendum "A" to
Lease entitled "Tenant's Right of First Offer" is hereby deleted in its
entirety and shall be of no further force or effect.
D. Contingency. Tenant understands and agrees that the
effectiveness of this Second Amendment is conditioned upon the mutual execution
and delivery of a lease agreement between Landlord and Tenant for the premises
located at 9975 Toledo Way, Irvine, California.
E. Assignment and Consent. Tenant has acquired all of Efratom's
right, title and interest under the Lease, and has assumed all of the Tenant's
obligations under the Lease, and Landlord hereby consents to such assignment
and assumption by Tenant.
IV. GENERAL.
A. Effect of Amendments. The Lease shall remain in full force
and effect except to the extent that it is modified by this Second Amendment.
B. Entire Agreement. This Second Amendment embodies the entire
understanding between Landlord and Tenant with respect to the modifications set
forth in "III. MODIFICATIONS" above and can be changed only by a writing signed
by Landlord and Tenant.
2
3
C. Counterparts. If this Second Amendment is executed in
counterparts, each is hereby declared to be an original; all, however, shall
constitute but one and the same amendment. In any action or proceeding, any
photographic, photostatic, or other copy of this Second Amendment may be
introduced into evidence without foundation.
D. Defined Terms. All words commencing with initial capital
letters in this Second Amendment and defined in the Lease shall have the same
meaning in this Second Amendment as in the Lease, unless they are otherwise
defined in this Second Amendment.
E. Corporate and Partnership Authority. If Tenant is a
corporation or partnership, or is comprised of either or both of them, each
individual executing this Second Amendment for the corporation or partnership
represents that he or she is duly authorized to execute and deliver this Second
Amendment on behalf of the corporation or partnership and that this Second
Amendment is binding upon the corporation or partnership in accordance with its
terms.
F. Attorneys' Fees. The provisions of the Lease respecting
payment of attorneys' fees shall also apply to this Second Amendment.
3
4
V. EXECUTION.
Landlord and Tenant executed this Amendment on the date as set forth
in "I. PARTIES AND DATE." above.
LANDLORD: TENANT:
THE IRVINE COMPANY, DATUM, INC.,
a Michigan corporation a Delaware corporation
By /s/ Clarence W. Barker By /s/ Louis B. Horwitz
----------------------------- --------------------------
Clarence W. Barker, Louis B. Horwitz
President, Irvine Industrial Chairman, Chief Executive
Company, a division of Officer and President
The Irvine Company
By /s/ John C. Tsu By /s/ David A. Young
----------------------------- --------------------------
John C. Tsu David A. Young
Assistant Secretary Vice President and
Chief Financial Officer
4
EX-10.34
5
INDUSTRIAL LEASE BETWEEN IRVINE CO. AND COMPANY
1
EXHIBIT 10.34
INDUSTRIAL LEASE
BETWEEN
THE IRVINE COMPANY
AND
DATUM INC.
2
INDEX TO LEASE
Page
----
ARTICLE I. BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.1 LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.2 ACCEPTANCE OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 BUILDING NAME AND ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3.1 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3.2 OPTION(S) TO EXTEND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV. RENT AND OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.1 BASIC RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.2 OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4.3 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V. USES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.1 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.2 SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.3 HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.4 ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI. LANDLORD SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.1 UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON AREAS . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.3 USE OF COMMON AREAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.4 PARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.5 CHANGES AND ADDITIONS BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII. MAINTAINING THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.3 ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.4 MECHANIC'S LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.5 ENTRY AND INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.1 RIGHTS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.2 EFFECT OF TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.3 SUBLEASE REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.1 TENANT'S INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.2 LANDLORD'S INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10.3 TENANT'S INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.4 LANDLORD'S NONLIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10.5 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
i
3
ARTICLE XI. DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.1 RESTORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11.2 LEASE GOVERNS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XII. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.1 TOTAL OR PARTIAL TAKING . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12.2 TEMPORARY TAKING . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12.3 TAKING OF PARKING AREA . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS . . . . . . . . . . . . . . . 28
SECTION 13.1 SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 13.2 ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 13.3 FINANCIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XIV. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 14.1 TENANT'S DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 14.2 LANDLORD'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 14.3 LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM . . . . . . . . . . . . . . . . . . . 34
SECTION 14.5 DEFAULT BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 14.6 EXPENSES AND LEGAL FEES . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 14.7 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 14.8 SATISFACTION OF JUDGMENT . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE XV. END OF TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 15.1 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 15.2 MERGER ON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY . . . . . . . . . . . . 36
ARTICLE XVI. PAYMENTS AND NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XVII. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XVIII. BROKER'S COMMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XX. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 20.1 GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 20.2 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.3 JOINT AND SEVERAL LIABILITY . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.4 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.5 TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.6 CONTROLLING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.7 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . . 39
SECTION 20.9 INABILITY TO PERFORM . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 20.10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 20.11 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 20.12 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ii
4
ARTICLE XXI. EXECUTION AND RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 21.1 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER . . . . . . . . . . . . . . . . . . . . 41
SECTION 21.4 RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 21.5 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 21.6 EXECUTED COPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 21.7 EXHIBITS; REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XXII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 22.2 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 22.3 CHANGES REQUESTED BY LENDER . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 22.4 MORTGAGEE PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 22.5 COVENANTS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 22.6 DISCLOSURE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 22.7 SECURITY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 22.8 TERMINATION OF EXISTING LEASE . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 22.9 LANDLORD'S WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 22.10 ANTENNAE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBITS
Exhibit A Floor Plan of the Premises
Exhibit B Environmental Questionnaire
Exhibit C Disclosure Statement
Exhibit D Tenant's Insurance
Exhibit E Rules and Regulations
Exhibit F Subordination, Non-Disturbance and Attornment Agreement
Exhibit X Work Letter
iii
5
INDUSTRIAL LEASE
THIS LEASE is made as of the 11th day of May, 1995, by and between THE
IRVINE COMPANY, a Michigan corporation, hereafter called "Landlord," and DATUM
INC., a Delaware corporation, hereinafter called "Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall
mean and refer to the following collective terms, the application of which
shall be governed by the provisions in the remaining Articles of this Lease.
1. Tenant's Trade Name: N/A
2. Premises: The Premises shall consist of Suite 101 and Suite 102, as
are more particularly described in Section 2.1.
Address of Building: 9975 Toledo Way, Irvine, California 92718
Project Description (if applicable): Bake Technology 1
3. Use of Premises: General office, engineering, light laboratory, light
production, and company lunch room uses, all in accordance with
Applicable Laws and Restrictions (as hereinafter defined) and pursuant
to approvals to be obtained by Tenant from the City, County, and all
relevant governmental agencies and authorities.
4. Commencement Date for Suite 101: August 1, 1995
Commencement Date for Suite 102: January 1, 1996
5. Lease Term for Suite 101: One Hundred Twenty (120) months, plus such
additional days as may be required to cause this Lease to terminate on
the final day of the calendar month.
Lease Term for Suite 102: One Hundred Fifteen (115) months, plus such
additional days as may be required to cause this Lease to terminate on
the final day of the calendar month.
6. Basic Rent for Suite 101: Twenty-Eight Thousand Ninety Dollars and
Seventy-One Cents ($28,090.71) per month, based on $.667 per rentable
square foot.
6
Basic Rent for Suite 101 is subject to adjustment as follows:
Commencing on July 1, 2000, the Basic Rent for Suite 101 shall be
Thirty-Five Thousand Two Hundred Fifty Dollars and Twenty-Six Cents
($35,250.26) per month, based on $.837 per rentable square foot.
Base Rent for Suite 102: Sixteen Thousand Five Hundred Sixty-Four
Dollars and Ninety-Five Cents ($16,564.95) per month, based on $.667
per rentable square foot.
Base Rent for Suite 102 is subject to adjustment as follows:
Commencing July 1, 2000, the Basic Rent for Suite 102 shall be Twenty
Thousand Seven Hundred Eighty-Six Dollars and Ninety Cents
($20,786.90) per month, based on $.837 per rentable square foot.
7. Guarantor(s): None
8. Floor Area of Premises: approximately 66,950 rentable square feet,
consisting of approximately 42,115 rentable square feet for Suite 101
and approximately 24,835 rentable square feet for Suite 102.
9. Security Deposit: $None
10. Broker(s): William B. Armstrong
11. Plan Approval Date: July 1, 1995 as to Suite 101 and November 1, 1995
as to Suite 102
12. Address for Payments and Notices:
LANDLORD TENANT
The Irvine Company Efratom Time and Frequency
c/o O'Donnell Property Products, Inc.
Services 3 Parker
One Technology Drive Irvine, California 92718
Suite F-207
Attn: Property Manager
with a copy of notices to:
IRVINE INDUSTRIAL COMPANY
P.O. Box 6370
Newport Beach, CA 92658-6370
Attn: Vice President, Industrial Operations
13. Tenant's Liability Insurance Limit: $1,000,000
14. Vehicle Parking Spaces: Two Hundred (200)
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ARTICLE II. PREMISES
SECTION 2.1 LEASED PREMISES. Landlord leases to Tenant and
Tenant rents from Landlord the premises shown in Exhibit A (the "Premises"),
including the building identified in Item 2 of the Basic Lease Provisions
(which together with the underlying real property, is called the "Building"),
and containing approximately the floor area set forth in Item 8 of the Basic
Lease Provisions. The Premises is a portion of the project described in Item 2
(the "Project").
SECTION 2.2 ACCEPTANCE OF PREMISES. Tenant acknowledges that
neither Landlord nor any representative of Landlord has made any representation
or warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, except as set forth in this Lease. The
taking of possession or use of the Premises by Tenant for any purpose other
than construction shall conclusively establish that the Premises and the
Building were in satisfactory condition and in conformity with the provisions
of this Lease in all respects, except for those matters which Tenant shall have
brought to Landlord's attention on a written punch list. The list shall be
limited to any items required to be accomplished by Landlord under the Work
Letter (if any) attached as Exhibit X, and shall be delivered to Landlord
within thirty (30) days after the term ("Term") of this Lease commences as
provided in Article III below. If there is no Work Letter, or if no items are
required of Landlord under the Work Letter, by taking possession of the
Premises Tenant accepts the improvements in their existing condition, and
waives any right or claim against Landlord arising out of the condition of the
Premises. Nothing contained in this Section shall affect the commencement of
the Term or the obligation of Tenant to pay rent. Landlord shall diligently
complete all punch list items of which it is notified as provided above.
SECTION 2.3 BUILDING NAME AND ADDRESS. Tenant shall not utilize
any name selected by Landlord from time to time for the Building and/or the
Project as any part of Tenant's corporate or trade name. Landlord shall have
the right to change the name, number or designation of the Building or Project
without liability to Tenant.
ARTICLE III. TERM
SECTION 3.1 GENERAL. The Term shall be for the period shown in
Item 5 of the Basic Lease Provisions and shall commence on the date set forth
in Item 4 of the Basic Lease Provisions (the "Commencement Date").
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SECTION 3.2 OPTION(S) TO EXTEND TERM.
1. Landlord hereby grants to Tenant one (1) option (the
"Option") to extend the Term of the Lease for five (5) years (the "Extension"),
on the same terms and conditions as set forth in the Lease, except that the
Monthly Rent shall be the amount determined as set forth below. Such Option
shall be exercised only by written notice delivered to Landlord at least twelve
(12) months prior to the then- scheduled expiration of the Term of the Lease.
If Tenant fails to deliver to Landlord written notice of the exercise of the
Option within the time period prescribed above, such Option shall lapse, and
there shall be no further right to extend the Term of the Lease. Such Option
shall be exercisable by Tenant on the express conditions that: (i) at the time
of the exercise of such Option, and thereafter at all times prior to the
commencement of such Extension, an Event of Default shall not have occurred
under the Lease, (ii) Tenant has not been ten (10) or more days late in the
payment of Rent more than an total of three (3) times during the Term of the
lease; and (iii) Tenant shall demonstrate to Landlord's satisfaction, both at
the time of exercise of said Option and at the commencement of the extension,
that Tenant's net worth (as determined by generally accepted accounting
principles consistently applied) shall then be at least or greater than
Tenant's net worth as shown in Tenant's financial statements dated as of
December 31,1994. If Tenant properly exercises the Option, "Term", as used
herein and in the Lease, shall be deemed to include the Extension.
2. PERSONAL OPTIONS.
Such Option is personal to Tenant and any Related
Party (as such term is defined in Section 9.1(f) of this Lease). If Tenant or
any Related Party subleases any portion of the Premises or assigns or otherwise
transfers any interest under the Lease prior to the exercise of such Option,
such Option shall lapse. If Tenant or any Related Party subleases any portion
of the Premises or assigns or otherwise transfers any interest of Tenant or any
Related Party under the Lease after the exercise of the Option but prior to the
commencement of the Extension, such Option shall lapse and the Term of the
Lease shall expire as if such Option were not exercised.
3. CALCULATION OF RENT.
The Monthly Rent during the Extension shall be
increased, as of the commencement of the Extension (the "Rental Adjustment
Date") to the "Fair Market Value" of the Premises, determined in the following
manner: Not later than one hundred (100) days prior to the Rental Adjustment
Date, Landlord and Tenant shall meet in an effort to negotiate, in good faith,
the Fair Market Value of the Premises as of the Rental Adjustment Date. If
Landlord and Tenant have not agreed upon the Fair Market Value of the Premises
at least ninety (90) days prior to
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the Rental Adjustment Date, the Fair Market Value shall be determined by the
following appraisal method:
(i) If Landlord and Tenant are not able to agree
upon the Fair Market Value of the Premises within the time period described
above, then Landlord and Tenant shall attempt to agree in good faith upon a
single appraiser not later than seventy-five (75) days prior to the Rental
Adjustment Date. If Landlord and Tenant are unable to agree upon a single
appraiser within such time period, then Landlord and Tenant shall each appoint
one appraiser not later than sixty-five (65) days prior to the Rental
Adjustment Date. Within ten (10) days thereafter, the two appointed appraisers
shall appoint a third appraiser. If the two (2) appraisers are unable to agree
upon and appoint a third appraiser within said ten (10) day period, then either
party may apply to the Judicial Arbitration and Mediation Services in Orange
County, California, for the appointment of a third appraiser. If either
Landlord or Tenant fails to appoint its appraiser within the prescribed time
period, the single appraiser appointed shall determine the Fair Market Value of
the Premises. If both parties fail to appoint appraisers within the prescribed
time periods, then the first appraiser thereafter selected by a party shall
determine the Fair Market Value of the Premises. Each party shall bear the
cost of its own appraiser and the parties shall share equally the cost of the
single or third appraiser if applicable. All appraisers shall have at least
five (5) years' experience in the appraisal of commercial/industrial real
property in the area in which the Premises are located and shall be members of
professional organizations such as MAI or its equivalent.
(ii) For the purposes of such appraisal, the term
"Fair Market Value" shall mean the price that a ready and willing tenant would
pay, as of the Rental Adjustment Date, as monthly rent, to a ready and willing
Landlord of property comparable to the Premises if such property were exposed
for lease on the open market for a reasonable period of time and taking into
account all of the purposes (set forth in Item 3 of the Basic Lease Provisions)
for which such property may be used. If a single appraiser is chosen, then
such appraiser shall determine the Fair Market Value of the Premises.
Otherwise, the Fair Market Value of the Premises shall be the arithmetic
average of the two (2) of the three (3) appraisals which are closest in amount,
and the third appraisal shall be disregarded. Landlord and Tenant shall
instruct the appraiser(s) to complete their determination of the Fair Market
Value not later than thirty (30) days prior to the Rental Adjustment Date. If
the Fair Market Value is not determined prior to the Rental Adjustment Date,
then Tenant shall continue to pay to Landlord the Monthly Rent applicable to
the Premises immediately prior to such Rental Adjustment Date until the Fair
Market Value is determined. When the Fair Market Value of the Premises is
determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten (10) days after receipt of such notice, the
difference between
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the Monthly Rent actually paid by Tenant to Landlord and the new Monthly Rent
determined hereunder. In no event shall the Monthly Rent be reduced below the
Monthly Rent applicable to the Premises immediately prior to the Rental
Adjustment Date."
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1 BASIC RENT. From and after the Commencement Date,
Tenant shall pay to Landlord without deduction or offset a Basic Rent for the
Premises in the total amount shown (including subsequent adjustments, if any)
in Item 6 of the Basic Lease Provisions. Any rental adjustment shown in Item 6
shall be deemed to occur on the specified monthly anniversary of the
Commencement Date, whether or not that date occurs at the end of a calendar
month. The rent shall be due and payable in advance commencing on the
Commencement Date (as prorated for any partial month) and continuing thereafter
on the first day of each successive calendar month of the Term. No demand,
notice or invoice shall be required. An installment of rent in the amount of
one (1) full month's Basic Rent at the initial rate specified in Item 6 of the
Basic Lease Provisions shall be delivered to Landlord concurrently with
Tenant's execution of this Lease and shall be applied against the Basic Rent
first due hereunder.
SECTION 4.2 OPERATING EXPENSES.
(a) Tenant shall reimburse Landlord, as additional rent,
for "Building Costs" and "Property Taxes," as those terms are defined below,
incurred by Landlord in the operation of the Building and Project. For
convenience of reference, Property Taxes and Building Costs shall be referred
to collectively as "Operating Expenses".
(b) Commencing prior to the start of each "Expense
Recovery Period" (as defined below), Landlord shall give Tenant a written
estimate of the amount of Operating Expenses for the Expense Recovery Period.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance, with Basic Rent. If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay cost reimbursements at the rates established for
the prior Expense Recovery Period, if any; provided that when the new estimate
is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimate. For purposes hereof,
"Expense Recovery Period" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30.
(c) Within one hundred twenty (120) days after the end of
each Expense Recovery Period, Landlord shall furnish to Tenant a statement
showing in reasonable detail the actual or prorated
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Property Taxes and Building Costs incurred by Landlord during the period, and
the parties shall within thirty (30) days thereafter make any payment or
allowance necessary to adjust Tenant's estimated payments, if any, to Tenant's
actual owed amounts as shown by the annual statement. Any delay or failure by
Landlord in delivering any statement hereunder shall not constitute a waiver of
Landlord's right to require Tenant to pay Operating Expenses pursuant hereto.
Any amount due Tenant shall be credited against installments next coming due
under this Section 4.2, and any deficiency shall be paid by Tenant together
with the next installment. If Tenant has not made estimated payments during
the Expense Recovery Period, any amount owing by Tenant pursuant to subsection
(a) above shall be paid to Landlord in accordance with Article XVI. Tenant or
its authorized employee or licensed accountant (but in no event shall such
accountant be employed on a contingency basis by Tenant) shall have the right
to inspect the books and records of Landlord relating to the Operating Expenses
at any time within sixty (60) days after receipt of such statement after giving
reasonable prior written notice to Landlord. Landlord's records shall be made
available for inspection by Tenant within 72 hours after receipt of written
notice from Tenant. Unless Tenant asserts specific errors in such statement
within ninety (90) days after receipt thereof, such statement shall be deemed
conclusively to be correct and binding on the Tenant. If any audit performed
by Tenant pursuant to this paragraph discloses an overstatement of Operating
Expenses by more than five percent (5%), Landlord shall reimburse Tenant for
the reasonable cost of such audit.
(d) Even though the Lease has terminated and the Tenant
has vacated the Premises, when the final determination is made of Property
Taxes and Building Costs for the Expense Recovery Period in which the Lease
terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid. Conversely, any overpayment made in the event
expenses decrease shall be rebated by Landlord to Tenant.
(e) The term "Building Costs" shall include all
reasonable expenses of operation and maintenance of the Building and of the
Building's proportionate share of the Project, if applicable (determined as the
rentable square footage of the Building divided by the rentable square footage
of all space in the Project), to the extent such expenses are not billed to and
paid directly to Tenant, and shall include the following charges by way of
illustration but not limitation: water and sewer charges; insurance premiums
or reasonable premium equivalents should Landlord elect to self-insure any risk
that Landlord is authorized to insure hereunder; license, permit, and
inspection fees; heat; light; power; air conditioning; amortization of capital
investments reasonably intended to produce a reduction in operating charges or
energy conservation; supplies; materials; equipment; tools; the cost of any
environmental, insurance, tax or other consultant utilized by Landlord in
connection with the Building and/or Project; establishment of reasonable
reserves for
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replacements and/or repair of Common Area improvements (if applicable),
equipment and supplies; costs (including without limitation amortization of
capital investments) incurred in connection with compliance with any laws or
changes in laws necessary to bring the Building and/or Project into compliance
with applicable laws and building codes enacted subsequent to the completion of
construction of the Building; labor; reasonably allocated wages and salaries,
fringe benefits, and payroll taxes for administrative and other personnel
directly applicable to the Building and/or Project, including both Landlord's
personnel and outside personnel; any expense incurred pursuant to Sections 6.1,
6.2, 6.4, 7.2, and 10.2; and a reasonable overhead/management fee. It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord. A copy of
Landlord's unaudited statement of expenses shall be made available to Tenant
upon request.
(f) The term "Property Taxes" as used herein shall
include the following: (i) all real estate taxes or personal property taxes,
as such property taxes may be reassessed from time to time; and (ii) other
taxes, charges and assessments which are levied with respect to this Lease or
to the Building and/or the Project, and any improvements, fixtures and
equipment and other property of Landlord located in the Building and/or the
Project, except that general net income and franchise taxes imposed against
Landlord shall be excluded; and (iii) any tax, surcharge or assessment which
shall be levied in addition to or in lieu of real estate or personal property
taxes, other than taxes covered by Article VIII; and (iv) costs and expenses
incurred in contesting the amount or validity of any Property Tax by
appropriate proceedings.
(g) The term "Building Cost" shall specifically not
include broker commissions, advertising costs, payments under loans secured by
the Project, reimbursed insurance proceeds, charges for excess utilities used
by other tenants, costs of initial construction of the Project or repair of
construction defects, and legal expenses relating to tenant disputes.
SECTION 4.3 SECURITY DEPOSIT. Concurrently with Tenant's
delivery of this Lease, Tenant shall deposit with Landlord the sum, if any,
stated in Item 9 of the Basic Lease Provisions, to be held by Landlord as
security for the full and faithful performance of Tenant's obligations under
this Lease (the "Security Deposit"). Upon any default by Tenant, including
specifically Tenant's failure to pay rent or to abide by its obligations under
Sections 7.1 and 15.3 below, whether or not Landlord is informed of or has
knowledge of the default, the Security Deposit shall be deemed to be
automatically and immediately applied, without waiver of any rights Landlord
may have under this Lease or at law or in equity as a result of the default, as
full or partial compensation for that default. If any portion of the Security
Deposit is so applied, Tenant shall
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within five (5) days after written demand by Landlord deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its
original amount. Landlord shall not be required to keep this Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest
on the Security Deposit. If Tenant fully performs its obligations under this
Lease, the Security Deposit or any balance thereof shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's interest in this
Lease) after the expiration of the Term, provided that Landlord may retain the
Security Deposit until such time as all amounts due from Tenant in accordance
with this Lease have been determined and paid in full.
ARTICLE V. USES
SECTION 5.1 USE. Tenant shall use the Premises only for the
purposes stated in Item 3 of the Basic Lease Provisions. The parties agree
that any contrary use shall be deemed to cause material and irreparable harm to
Landlord and shall entitle Landlord to injunctive relief in addition to any
other available remedy. Tenant, at its expense, shall procure, maintain and
make available for Landlord's inspection throughout the Term, all governmental
approvals, licenses and permits required for the proper and lawful conduct of
Tenant's permitted use of the Premises. Tenant shall not do or permit anything
to be done in or about the Premises which will in any way interfere with the
rights of other occupants of the Building or the Project, or use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Project. Tenant shall not
do or permit to be done anything which will invalidate or increase the cost of
any insurance policy(ies) covering the Building, the Project and/or their
contents, and shall comply with all applicable insurance underwriters rules and
the requirements of the Pacific Fire Rating Bureau or any other organization
performing a similar function. Tenant shall comply at its expense with all
present and future laws, ordinances, restrictions, regulations, orders, rules
and requirements of all governmental authorities that pertain to Tenant or its
use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building and/or Project, and any amendments or modifications
thereto, including without limitation the payment by Tenant of any periodic or
special dues or assessments charged against the Premises or Tenant which may be
allocated to the Premises or Tenant in accordance with the provisions thereof.
Tenant shall promptly upon demand reimburse Landlord for any additional
insurance premium charged by reason of Tenant's failure to comply with the
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provisions of this Section, and shall indemnify Landlord from any liability
and/or expense resulting from Tenant's noncompliance.
SECTION 5.2 SIGNS.
Landlord shall designate the location on the Premises for one
(1) exterior identification signs for Tenant. Tenant shall have no right to
maintain identification signs in any other location in, on or about the
Premises or the Project and shall not place or erect any other signs, displays
or other advertising materials that are visible from the exterior of the
Building. The size, design, color and other physical aspects of permitted
signs shall be subject to Landlord's written approval prior to installation
(which approval may be withheld in Landlord's discretion), any covenants,
conditions or restrictions encumbering the Premises, and any applicable
municipal or other governmental permits and approvals. The size and graphics
shall further conform to the Irvine Spectrum Sign Program dated March 14, 1995
promulgated by Landlord for the Project, if applicable. Tenant shall be
responsible for the cost of all signs and graphics, including the installation,
maintenance and removal thereof. If Tenant fails to maintain its signs, or if
Tenant fails to remove same upon termination of this Lease and repair any
damage caused by such removal, Landlord may do so at Tenant's expense.
SECTION 5.3 HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term "Hazardous
Materials" includes (i) any "hazardous materials" as defined in Section
25501(k) of the California Health and Safety Code, (ii) any other substance or
matter which results in liability to any person or entity from exposure to such
substance or matter under any statutory or common law theory, and (iii) any
substance or matter which is in excess of permitted levels set forth in any
federal, California or local law or regulation pertaining to any hazardous or
toxic substance, material or waste.
(b) Tenant shall not cause or permit any Hazardous
Materials to be brought upon, stored, used, generated, released or disposed of
on, under, from or about the Premises (including without limitation the soil
and groundwater thereunder) without the prior written consent of Landlord.
Those Hazardous Materials used in the ordinary course of Tenant's business and
hereby approved by Landlord are set forth in Exhibit B attached hereto and made
a part hereof. Landlord may, in its sole discretion, place such conditions as
Landlord deems appropriate with respect to any such Hazardous Materials, and
may further require that Tenant demonstrate that any such Hazardous Materials
are necessary or useful to Tenant's business and will be generated, stored,
used and disposed of in a manner that complies with all applicable laws and
regulations pertaining thereto and with good business practices. Tenant
understands that Landlord may utilize an environmental consultant to assist in
determining conditions
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of approval in connection with the presence, storage, generation or use of
Hazardous Materials by Tenant on or about the Premises, and Tenant agrees that
any costs incurred by Landlord in connection therewith not to exceed Five
Hundred Dollars ($500.00) shall be reimbursed by Tenant to Landlord as
additional rent hereunder upon demand.
(c) Prior to the execution of this Lease, Tenant shall
complete, execute and deliver to Landlord an Environmental Questionnaire and
Disclosure Statement (the "Environmental Questionnaire") in the form of Exhibit
B attached hereto. The completed Environmental Questionnaire shall be deemed
incorporated into this Lease for all purposes, and Landlord shall be entitled
to rely fully on the information contained therein. On each anniversary of the
Commencement Date until the expiration or sooner termination of this Lease,
Tenant shall disclose to Landlord in writing the names and amounts of all
Hazardous Materials which were stored, generated, used or disposed of on, under
or about the Premises for the twelve-month period prior thereto, and which
Tenant desires to store, generate, use or dispose of on, under or about the
Premises for the succeeding twelve-month period. In addition, to the extent
Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant
shall promptly provide Landlord with complete and legible copies of all the
following environmental documents relating thereto: reports filed pursuant to
any self-reporting requirements; permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, and underground storage tanks for Hazardous
Materials; orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage
or disposal of Hazardous Materials.
(d) Landlord and its agents shall have the right, but not
the obligation, to inspect, sample and/or monitor the Premises and/or the soil
or groundwater thereunder at any time to determine whether Tenant is complying
with the terms of this Section 5.3, and in connection therewith Tenant shall
provide Landlord with full access to all relevant facilities, records and
personnel. If Tenant is not in compliance with any of the provisions of this
Section 5.3, or in the event of a release of any Hazardous Material on, under
or about the Premises, Landlord and its agents shall have the right, but not
the obligation, without limitation upon any of Landlord's other rights and
remedies under this Lease, to immediately enter upon the Premises without
notice and to discharge Tenant's obligations under this Section 5.3 at Tenant's
expense, including without limitation the
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taking of emergency or long-term remedial action. Landlord and its agents
shall endeavor to minimize interference with Tenant's business in connection
therewith, but shall not be liable for any such interference. In addition,
Landlord, at Tenant's expense, shall have the right, but not the obligation, to
join and participate in any legal proceedings or actions initiated in
connection with any claims arising out of the storage, generation, use or
disposal by Tenant or its agents of Hazardous Materials on, under, from or
about the Premises.
(e) If the presence of any Hazardous Materials on, under,
from or about the Premises or the Project caused or permitted by Tenant results
in (i) injury to any person, (ii) injury to or any contamination of the
Premises or the Project, or (iii) injury to or contamination of any real or
personal property wherever situated, Tenant, at its expense, shall promptly
take all actions necessary to return the Premises and the Project to the
condition existing prior to the introduction of such Hazardous Materials and to
remedy or repair any such injury or contamination, including without
limitation, any cleanup, remediation, removal, disposal, neutralization or
other treatment of any such Hazardous Materials. Notwithstanding the
foregoing, Tenant shall not, without Landlord's prior written consent, take any
remedial action in response to the presence of any Hazardous Materials on,
under or about the Premises or enter into any similar agreement, consent,
decree or other compromise with any governmental agency with respect to any
Hazardous Materials claims; provided however, Landlord's prior written consent
shall not be necessary in the event that the presence of Hazardous Materials
on, under or about the Premises (i) imposes an immediate threat to the health,
safety or welfare of any individual or (ii) is of such a nature that an
immediate remedial response is necessary and it is not possible to obtain
Landlord's consent before taking such action. To the fullest extent permitted
by law, Tenant shall indemnify, hold harmless, protect and defend (with
attorneys acceptable to Landlord) Landlord and any successors to all or any
portion of Landlord's interest in the Premises and the Project from and against
any and all liabilities, losses, damages, diminution in value, judgments,
fines, demands, claims, recoveries, deficiencies, costs and expenses (including
without limitation attorneys' fees, court costs and other professional
expenses), whether foreseeable or unforeseeable, arising directly or indirectly
out of the presence, use, generation, storage, treatment, on- or off-site
disposal or transportation of Hazardous Materials on, into, from, under or
about the Premises, the Building and the Project by Tenant, its agents,
employees, contractors, licensees or invitees, specifically including without
limitation the cost of any required or necessary repair, restoration, cleanup
or detoxification of the Premises, the Building and the Project, and the
preparation of any closure or other required plans, whether or not such action
is required or necessary during the Term or after the expiration of this Lease.
If Landlord at any time discovers that Tenant may have caused or permitted the
release of
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a Hazardous Material on, under, from or about the Premises, Tenant shall, at
Landlord's request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord's approval, specifying the actions to be taken by
Tenant to return the Premises to the condition existing prior to the
introduction of Hazardous Materials. Upon Landlord's approval of such cleanup
plan, Tenant shall, at its expense, and without limitation of any rights and
remedies of Landlord under this Lease or at law or in equity, immediately
implement such plan and proceed to cleanup such Hazardous Materials in
accordance with all applicable laws and as required by such plan and this
Lease. The provisions of this subsection (e) shall expressly survive the
expiration or sooner termination of this Lease.
(f) Landlord hereby discloses to Tenant, and Tenant
hereby acknowledges, certain facts relating to Hazardous Materials at the
Project known by Landlord to exist as of the date of this Lease, as more
particularly described in Exhibit C attached hereto. Tenant shall have no
liability or responsibility with respect to the Hazardous Materials facts
described in Exhibit C and Landlord, at its sole cost and expense, shall be
responsible (as between Landlord and Tenant) for all governmentally required
clean-up or remediation costs and expenses in connection with such Hazardous
Materials condition. Landlord hereby represents, warrants and covenants to
Tenant that, to the "actual knowledge" of Landlord (as hereinafter defined),
except as set forth in Exhibit C, there are no Hazardous Materials not in
compliance with all applicable laws in, on, under or about the Premises or the
Common Areas. As used herein, "actual knowledge" of Landlord means the actual
knowledge of the current employees of Landlord charged with responsibility for
Hazardous Materials on Landlord's property, without duty of on-site inspection
or investigation. The foregoing representations, warranties, covenants and
obligations on the part of Landlord are personal to Landlord and shall not be
binding upon or enforceable against any Lender acquiring title to the Project
or the Premises by way of foreclosure or deed-in-lieu of foreclosure.
SECTION 5.4 ADA. Landlord has prepared and is implementing that
certain Americans with Disabilities Act Action Plan dated February 24, 1995
(the "ADA Plan") for purposes of bringing the exterior of the Building and the
Common Areas of the Project into compliance with the Americans with
Disabilities Act (the "ADA"). The approximate cost allocable to the Project
for implementation of the ADA Plan is Thirteen Thousand Four Hundred Seventy
Dollars ($13,470.00). Notwithstanding the provisions of Section 5.1 of the
Lease, Landlord will assume the responsibility for: (i) the removal of the
architectural barriers in the Common Areas of the Project and to the exterior
of the Building in compliance with Title III of the ADA, and (ii) the
compliance with the ADA of the Tenant Improvements to be constructed by
Landlord in accordance with Exhibit X attached hereto. Landlord shall bear the
cost of such compliance, provided that Tenant
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shall bear its pro rata cost, as an Operating Expense of the Project, of the
implementation of the ADA Plan. All other ADA compliance issues, including
without limitation, any obligation arising from Tenant's construction of any
alterations and/or improvements on the Premises, or any amendments to the ADA
or its regulations, shall be the responsibility of Tenant at its sole cost and
expense. Tenant acknowledges Tenant's obligations to make any goods and
services Tenant offers to the public accessible to the disabled, and to comply
with the employment requirements set forth in Title I of the ADA.
ARTICLE VI. LANDLORD SERVICES
SECTION 6.1 UTILITIES AND SERVICES. Tenant shall be responsible
for and shall pay promptly, directly to the appropriate supplier, all charges
for water, gas, electricity, sewer, heat, light, power, telephone, refuse
pickup, janitorial service, interior landscape maintenance and all other
utilities, materials and services furnished directly to Tenant or the Premises
or used by Tenant in, on or about the Premises during the Term, together with
any taxes thereon. Landlord shall not be liable for damages or otherwise for
any failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any rent due
hereunder. Landlord shall at all reasonable times have free access to all
electrical and mechanical installations of Landlord. Notwithstanding the
foregoing provisions for rental abatement, in the event that such failure or
interruption shall be the result of the actions of Landlord or its agents,
employees or contractors, and such failure or interruption shall result in the
material disruption of Tenant's business on the Premises, then following
forty-eight (48) hours' notice to Landlord, Basic Rent shall be abated for each
day thereafter until such service is restored. In such event, Landlord shall
diligently commence and use its diligent efforts to effect restoration of such
service.
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON AREAS. During
the Term, Landlord shall operate all Common Areas within the Project, if any.
The term "Common Areas" shall mean all areas which are not held for exclusive
use by persons entitled to occupy space, and all other appurtenant areas and
improvements provided by Landlord for the common use of Landlord and tenants
and their respective employees and invitees, including without limitation
parking areas and structures, driveways, sidewalks, landscaped and planted
areas, hallways and interior stairwells not located within the premises of any
tenant, common entrances and lobbies, elevators, and rostrums not located
within the premises of any tenant. If the Premises are not part of a Project
as herein defined, then there shall not be any Common Areas and all references
to "Common Areas" herein shall be inapplicable.
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SECTION 6.3 USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all rules and regulations as
are prescribed from time to time by Landlord. Landlord shall operate and
maintain the Common Areas in the manner Landlord may determine to be
appropriate. All costs incurred by Landlord for the maintenance and operation
of the Common Areas shall be included in Building Costs unless any particular
cost incurred can be charged to a specific tenant of the Project. Landlord
shall at all times during the Term have exclusive control of the Common Areas,
and may restrain any use or occupancy, except as authorized by Landlord's rules
and regulations. Tenant shall keep the Common Areas clear of any obstruction
or unauthorized use related to Tenant's operations. Nothing in this Section
6.3 shall be deemed to impose liability upon Landlord for any damage to or loss
of the property of, or for any injury to, Tenant, its invitees or employees
unless such damage, loss of property or injury was a result of any negligent
act or omission of Landlord or its authorized representatives. Landlord may
temporarily close any portion of the Common Areas for repairs, remodeling
and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reason deemed sufficient by Landlord.
SECTION 6.4 PARKING. Tenant shall be entitled to the number of
vehicle parking spaces set forth in Item 14 of the Basic Lease Provisions,
which spaces shall be unreserved and unassigned, on those portions of the
Common Areas designated by Landlord for parking. Tenant shall not use more
parking spaces than such number. All parking spaces shall be used only for
parking by vehicles no larger than full size passenger automobiles or pickup
trucks. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers or
invitees to be loaded, unloaded or parked in areas other than those designated
by Landlord for such activities. If Tenant permits or allows any of the
prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to
Tenant. Parking within the Common Areas shall be limited to striped parking
stalls, and no parking shall be permitted in any driveways, access ways or in
any area which would prohibit or impede the free flow of traffic within the
Common Areas. There shall be no overnight parking of any vehicles of any kind,
and vehicles which have been abandoned or parked in violation of the terms
hereof may be towed away at the owner's expense. Nothing contained in this
Lease shall be deemed to create liability upon Landlord for any damage to motor
vehicles of visitors or employees, for any loss of property from within those
motor vehicles, or for any injury to Tenant, its visitors or employees, unless
ultimately determined to be caused by the sole active
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negligence or willful misconduct of Landlord, its agents, servants and
employees. Landlord shall have the right to establish, and from time to time
amend, and to enforce against all users all reasonable rules and regulations
(including the designation of areas for employee parking) that Landlord may
deem necessary and advisable for the proper and efficient operation and
maintenance of parking within the Common Areas. Landlord shall have the right
to construct, maintain and operate lighting facilities within the parking
areas; to change the area, level, location and arrangement of the parking areas
and improvements therein; to restrict parking by tenants, their officers,
agents and employees to employee parking areas; to enforce parking charges (by
operation of meters or otherwise); and to do and perform such other acts in and
to the parking areas and improvements therein as, in the use of good business
judgment, Landlord shall determine to be advisable. Any person using the
parking area shall observe all directional signs and arrows and any posted
speed limits. In no event shall Tenant interfere with the use and enjoyment of
the parking area by other tenants of the Project or their employees or
invitees. Parking areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the storage of vehicles for
24-hour periods, is prohibited unless otherwise authorized by Landlord. Tenant
shall have no right to install any fixtures, equipment or personal property in
the parking areas.
SECTION 6.5 CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves
the right to make alterations or additions to the Project, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the various buildings (other than the Building), parking areas,
and other Common Areas, and may add buildings and areas to the Project from
time to time. No change shall entitle Tenant to any abatement of rent or other
claim against Landlord, provided that the change does not deprive Tenant of
reasonable access to or use of the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole
expense shall comply with all applicable laws and governmental regulations
governing the Premises and make all repairs necessary to keep the Premises in
the condition as existed on the Commencement Date (or on any later date that
the improvements may have been installed), excepting ordinary wear and tear,
including without limitation the roof, foundations, footings, the structural,
electrical and mechanical systems, any air conditioning, ventilating or heating
equipment which serves the Premises, all glass, windows, doors, door closures,
hardware, fixtures, electrical, plumbing, fire extinguisher equipment and other
equipment. In addition, if the Building is not a part of a Project as
identified in this Lease, Tenant shall also maintain
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and keep in good repair all outside areas of the Premises, including without
limitation all landscaping, walkways, fencing, parking areas, signage, exterior
lighting, and exterior surfaces of exterior walls of the Building. Any damage
or deterioration of the Premises shall not be deemed ordinary wear and tear if
the same could have been prevented by good maintenance practices by Tenant. As
part of its maintenance obligations hereunder, Tenant shall, at Landlord's
request, provide Landlord with copies of all maintenance schedules, reports and
notices prepared by, for or on behalf of Tenant. Tenant shall obtain
preventive maintenance contracts from a licensed heating and air conditioning
contractor to provide for regular inspection and maintenance of the heating,
ventilating and air conditioning systems servicing the Premises, all subject to
Landlord's approval. All repairs shall be at least equal in quality to the
original work, shall be made only by a licensed contractor approved in writing
in advance by Landlord and shall be made only at the time or times approved by
Landlord. Any contractor utilized by Tenant shall be subject to Landlord's
standard requirements for contractors, as modified from time to time. Landlord
shall have the right at all times to inspect Tenant's maintenance of the roof
and all equipment (including without limitation air conditioning, ventilating
and heating equipment), and may impose reasonable restrictions and requirements
with respect to repairs, as provided in Section 7.3, and the provisions of
Section 7.4 shall apply to all repairs. Alternatively, Landlord may elect to
make any repair or maintenance required hereunder on behalf of Tenant and at
Tenant's expense, and Tenant shall promptly reimburse Landlord for all costs
incurred upon submission of an invoice.
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR.
(a) Only if the Building is part of a Project as
identified in this Lease, and subject to Section 7.1 and Article XI, Landlord
shall provide service, maintenance and repair with respect to the structural
aspects of the Building, including the roof, foundations, footings, structural,
electrical and mechanical systems, as well as ordinary wear and tear to the
heating, ventilating and air conditioning systems, and with respect to all
landscaping, walkways, parking areas, Common Areas, exterior lighting, and the
exterior surfaces of the exterior walls of the Building, except that Tenant at
its expense shall make all repairs which Landlord deems reasonably necessary as
a result of the act or negligence of Tenant, its agents, employees, invitees,
subtenants or contractors. Landlord shall have the right to employ or
designate any reputable person or firm, including any employee or agent of
Landlord or any of Landlord's affiliates or divisions, to perform any service,
repair or maintenance function. Landlord need not make any other improvements
or repairs except as specifically required under this Lease, and nothing
contained in this Section shall limit Landlord's right to reimbursement from
Tenant for maintenance, repair costs and replacement costs as provided
elsewhere in this Lease. Tenant understands that it shall not make repairs at
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Landlord's expense or by rental offset. Tenant further understands that
Landlord shall not be required to make any repairs to Tenant's permitted
signage and fencing (if any) in the outside areas of the Premises. All costs
of any maintenance and repairs on the part of Landlord provided hereunder shall
be considered part of Building Costs. Notwithstanding the foregoing, during
the Term of the Lease (and any extension), Landlord shall be responsible for
repair and/or replacement, at Landlord's sole cost and expense, of the
structural elements of the Building (including without limitation, latent
defects thereto), which repairs and/or replacements shall arise as the result
of a defect in construction workmanship or materials.
(b) Except as provided in Sections 11.1 and 12.1 below,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business (including without
limitation consequential damages and lost profit or opportunity costs) arising
from the making of any repairs, alterations or improvements to any portion of
the Building, including repairs to the Premises, nor shall any related activity
by Landlord constitute an actual or constructive eviction; provided, however,
that in making repairs, alterations or improvements, Landlord shall interfere
as little as reasonably practicable with the conduct of Tenant's business in
the Premises. Notwithstanding anything to the contrary contained in this Lease
with the exception of Sections 11.1 and 12.1 below, in the event the Premises
are deemed unusable by Tenant for a period in excess of forty-eight (48) hours
due to Landlord's failure to maintain and repair the Premises pursuant to
Section 7.2(a) above, Basic Rent due under this Lease shall be abated until the
Premises are once again deemed usable by Tenant.
SECTION 7.3 ALTERATIONS. Tenant shall make no alterations,
additions or improvements to the Premises without the prior written consent of
Landlord, which consent may be given or withheld in Landlord's sole discretion.
Notwithstanding the foregoing, Landlord shall not unreasonably withhold its
consent to any alterations, additions or improvements to the Premises which
cost less than One Dollar ($1.00) per square foot of the Premises and do not
(i) affect the exterior of the Building or outside areas (or be visible from
adjoining sites), or (ii) affect or penetrate any of the structural portions of
the Building, including but not limited to the roof, or (iii) require any
change to the basic floor plan of the Premises, any change to any structural or
mechanical systems of the Premises, or any governmental permit as a
prerequisite to the construction thereof, or (iv) interfere in any manner with
the proper functioning of or Landlord's access to any mechanical, electrical,
plumbing or HVAC systems, facilities or equipment located in or serving the
Building, or (v) diminish the value of the Premises. Landlord may impose, as a
condition to its consent, any requirements that Landlord in its discretion may
deem reasonable or desirable, including but not limited to a requirement that
all work be covered by a lien and completion
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bond satisfactory to Landlord and requirements as to the manner, time, and
contractor for performance of the work. Tenant shall obtain all required
permits for the work and shall perform the work in compliance with all
applicable laws, regulations and ordinances. Under no circumstances shall
Tenant make any improvement which incorporates any Hazardous Materials,
including without limitation asbestos-containing construction materials into
the Premises. Any request for Landlord's consent shall be made in writing and
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Unless Landlord otherwise agrees in writing, all
alterations, additions or improvements affixed to the Premises (excluding
moveable trade fixtures and furniture) shall become the property of Landlord
and shall be surrendered with the Premises at the end of the Term, except that
Landlord may, by notice to Tenant, require Tenant to remove by the Expiration
Date, or sooner termination date of this Lease, all or any alterations,
decorations, fixtures, additions, improvements and the like installed either by
Tenant or by Landlord at Tenant's request and to repair any damage to the
Premises arising from that removal. Except as otherwise provided in this Lease
or in any Exhibit to this Lease, should Landlord make any alteration or
improvement to the Premises for Tenant, Landlord shall be entitled to prompt
reimbursement from Tenant for all costs incurred.
SECTION 7.4 MECHANIC'S LIENS. Tenant shall keep the Premises
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly cause any such lien to be released by posting a bond in accordance
with California Civil Code Section 3143 or any successor statute. In the event
that Tenant shall not, within thirty (30) days following the imposition of any
lien, cause the lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other available remedies, the
right to cause the lien to be released by any means it deems proper, including
payment of or defense against the claim giving rise to the lien. All expenses
so incurred by Landlord, including Landlord's attorneys' fees, shall be
reimbursed by Tenant promptly following Landlord's demand, together with
interest from the date of payment by Landlord at the maximum rate permitted by
law until paid. Tenant shall give Landlord no less than twenty (20) days'
prior notice in writing before commencing construction of any kind on the
Premises so that Landlord may post and maintain notices of nonresponsibility on
the Premises.
SECTION 7.5 ENTRY AND INSPECTION. Landlord shall at all
reasonable times, upon not less than twenty-four (24) hours written or oral
notice (except in emergencies, when no notice shall be required) have the right
to enter the Premises to inspect them, to supply services in accordance with
this Lease, to protect the interests of Landlord in the Premises, and to submit
the Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty
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(180) days of the Term or when an uncured Tenant default exists, to prospective
tenants), all without being deemed to have caused an eviction of Tenant and
without abatement of rent except as provided elsewhere in this Lease. Landlord
shall at all times have and retain a key which unlocks all of the doors in the
Premises, excluding Tenant's vaults and safes, and Landlord shall have the
right to use any and all means which Landlord may deem proper to open the doors
in an emergency in order to obtain entry to the Premises, and any entry to the
Premises obtained by Landlord shall not under any circumstances be deemed to be
a forcible or unlawful entry into, or a detainer of, the Premises, or any
eviction of Tenant from the Premises.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
Tenant shall be liable for and shall pay, at least ten (10) days
before delinquency, all taxes and assessments levied against all personal
property of Tenant located in the Premises and any alterations, additions or
like improvements made to the Premises by or on behalf of Tenant. When
possible Tenant shall cause its personal property and alterations to be
assessed and billed separately from the real property of which the Premises
form a part. If any taxes on Tenant's personal property and/or alterations are
levied against Landlord or Landlord's property and if Landlord pays the same,
or if the assessed value of Landlord's property is increased by the inclusion
of a value placed upon the personal property and/or alterations of Tenant and
if Landlord pays the taxes based upon the increased assessment, Tenant shall
pay to Landlord the taxes so levied against Landlord or the proportion of the
taxes resulting from the increase in the assessment. In calculating what
portion of any tax bill which is assessed against Landlord separately, or
Landlord and Tenant jointly, is attributable to Tenant's fixtures, alterations
and personal property, Landlord's reasonable determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1 RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the
contrary, Tenant will not, either voluntarily or by operation of law, assign,
sublet, encumber, or otherwise transfer all or any part of Tenant's interest in
this lease, or permit the Premises to be occupied by anyone other than Tenant
or a Related Party, without Landlord's prior written consent, which consent
shall not unreasonably be withheld in accordance with the provisions of Section
9.1.(c). No assignment (whether voluntary, involuntary or by operation of law)
and no subletting shall be valid or effective without Landlord's prior written
consent and, at
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Landlord's election, shall constitute a material default of this Lease.
Landlord shall not be deemed to have given its consent to any assignment or
subletting by any other course of action, including its acceptance of any name
for listing in the Building directory. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth
in Section 9.1(c) of this Lease. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and all monies or
other considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease
is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed
to have assumed all of the obligations arising under this Lease on and after
the date of the assignment, and shall upon demand execute and deliver to
Landlord an instrument confirming that assumption.
(b) If Tenant desires to transfer an interest in this
Lease, it shall first notify Landlord of its desire and shall submit in writing
to Landlord: (i) the name and address of the proposed transferee; (ii) the
nature of any proposed subtenant's or assignee's business to be carried on in
the Premises; (iii) the terms and provisions of any proposed sublease or
assignment, including a copy of the proposed assignment or sublease form; (iv)
evidence of insurance of the proposed assignee or sublessee complying with the
requirements of Exhibit D hereto; (v) a completed Environmental Questionnaire
from the proposed assignee or sublessee; and (vi) any other information
requested by Landlord and reasonably related to the transfer. Except as
provided in Subsection (e) of this Section, Landlord shall not unreasonably
withhold its consent, provided: (1) the use of the Premises will be consistent
with the provisions of this Lease and with Landlord's commitment to other
tenants of the Project; (2) the proposed assignee or sublessee has not been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee's or sublessee's actions or use of the
property in question and is not subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; (3) at Landlord's election, insurance requirements shall be
brought into conformity with Landlord's then current leasing practice; (4) any
proposed subtenant or assignee demonstrates that it is financially responsible
by submission to Landlord of all reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee
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as of a date within ninety (90) days of the request for Landlord's consent and
statements of income or profit and loss of the proposed subtenant or assignee
for the two-year period preceding the request for Landlord's consent; (5) any
proposed subtenant or assignee demonstrates to Landlord's reasonable
satisfaction a record of successful experience in business; (6) the proposed
assignee or subtenant is not an existing tenant of the Project; and (7) the
proposed transfer will not impose additional burdens or adverse tax effects on
Landlord. Tenant acknowledges that if Tenant has any exterior sign rights
under this Lease, such rights are personal to Tenant and may not be assigned or
transferred to any assignee or subtenant without Landlord's separate prior
written consent, which consent may be withheld in Landlord's sole and absolute
discretion. If Landlord consents to the proposed transfer, Tenant may within
ninety (90) days after the date of the consent effect the transfer upon the
terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set
forth in this Section. Landlord shall approve or disapprove any requested
transfer within thirty (30) days following receipt of Tenant's written request
and the information set forth above.
(c) Notwithstanding the provisions of Subsection (b)
above, in lieu of consenting to a proposed assignment or subletting, Landlord
may elect to (i) sublease the Premises (or the portion proposed to be
subleased), or take an assignment of Tenant's interest in this Lease, upon the
same terms as offered to the proposed subtenant or assignee (excluding terms
relating to the purchase of personal property, the use of Tenant's name or the
continuation of Tenant's business), or (ii) terminate this Lease as to the
portion of the Premises proposed to be subleased or assigned with a
proportionate abatement in the rent payable under this Lease, effective on the
date that the proposed sublease or assignment would have become effective.
Landlord may thereafter, at its option, assign or re-let any space so
recaptured to any third party, including without limitation the proposed
transferee of Tenant.
(d) Tenant agrees that fifty percent (50%) of any amounts
paid by the assignee or sublessee, however described, in excess of (i) the
Basic Rent payable by Tenant hereunder, or in the case of a sublease of a
portion of the Premises, in excess of the Basic Rent reasonably allocable to
such portion, plus (ii) Tenant's direct out-of-pocket costs which Tenant
certifies to Landlord have been paid to provide occupancy related services to
such assignee or sublessee of a nature commonly provided by landlords of
similar space, shall be the property of Landlord and such amounts shall be
payable directly to Landlord by the assignee or sublessee or, at Landlord's
option, by Tenant. At Landlord's request, a written agreement shall be entered
into by and among Tenant, Landlord and the proposed assignee or sublessee
confirming the requirements of this subsection.
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(e) Tenant shall pay to Landlord a transfer fee of Five
Hundred Dollars ($500.00) if and when any transfer requested by Tenant is
approved. In addition, should Landlord or its agents procure for Tenant a
subtenant, assignee or new tenant for all or part of the Premises (but not as a
result of Landlord exercising its rights under Section 9.1(c) above), then
Tenant shall pay to Landlord, concurrently with the execution of the
conveyancing documents, a leasing fee of six percent (6%) of the remaining
future gross rentals under this Lease.
(f) Notwithstanding anything to the contrary set forth
herein, but subject to the provisions of Section 9.2 of this Lease, Tenant
shall have the right, without Landlord's consent, to assign this Lease to a
corporation with which it may merge or consolidate, or to any subsidiary or
affiliate of Tenant or to a purchaser or substantially all of Tenant's assets
(collectively a "Related Party"), provided: (i) the assignee executes an
agreement reasonably acceptable to Landlord assuming Tenant's obligations under
this Lease, and (ii) the assignee's net worth, at the date of assignment, shall
be at least or greater than Tenant's net worth as shown as Tenant's financial
statements dated as of December 31, 1994.
SECTION 9.2 EFFECT OF TRANSFER. No subletting or assignment,
even with the consent of Landlord, shall relieve Tenant of its obligation to
pay rent and to perform all its other obligations under this Lease. Moreover,
Tenant shall indemnify and hold Landlord harmless, as provided in Section 10.3,
for any act or omission by an assignee or subtenant. Each assignee, other than
Landlord, shall be deemed to assume all obligations of Tenant under this Lease
and shall be liable jointly and severally with Tenant for the payment of all
rent, and for the due performance of all of Tenant's obligations, under this
Lease. No transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements
of this Article. The acceptance by Landlord of any payment due under this
Lease from any other person shall not be deemed to be a waiver by Landlord of
any provision of this Lease or to be a consent to any transfer. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel to
the future enforcement by Landlord of its rights under this Lease.
SECTION 9.3 SUBLEASE REQUIREMENTS. The following terms and
conditions shall apply to any subletting by Tenant of all or any part of the
Premises and shall be included in each sublease:
(a) Tenant hereby irrevocably assigns to Landlord all of
Tenant's interest in all rentals and income arising from any sublease of the
Premises, and Landlord may collect such rent and income and apply same toward
Tenant's obligations under this Lease; provided, however, that until a default
occurs in the
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performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by
reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant's obligations
under the sublease. Tenant hereby irrevocably authorizes and directs any
subtenant, upon receipt of a written notice from Landlord stating that an
uncured default exists in the performance of Tenant's obligations under this
Lease, to pay to Landlord all sums then and thereafter due under the sublease.
Tenant agrees that the subtenant may rely on that notice without any duty of
further inquiry and notwithstanding any notice or claim by Tenant to the
contrary. Tenant shall have no right or claim against the subtenant or
Landlord for any rentals so paid to Landlord.
(b) In the event of the termination of this Lease,
Landlord may, at its sole option, take over Tenant's entire interest in any
sublease and, upon notice from Landlord, the subtenant shall attorn to
Landlord. In no event, however, shall Landlord be liable for any previous act
or omission by Tenant under the sublease or for the return of any advance
rental payments or deposits under the sublease that have not been actually
delivered to Landlord, nor shall Landlord be bound by any sublease modification
executed without Landlord's consent or for any advance rental payment by the
subtenant in excess of one month's rent. The general provisions of this Lease,
including without limitation those pertaining to insurance and indemnification,
shall be deemed incorporated by reference into the sublease despite the
termination of this Lease.
(c) Tenant agrees that Landlord may, at its sole option,
authorize a subtenant of the Premises to cure a default by Tenant under this
Lease. Should Landlord accept such cure, the subtenant shall have a right of
reimbursement and offset from and against Tenant under the applicable sublease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1 TENANT'S INSURANCE. Tenant, at its sole cost and
expense, shall provide and maintain in effect the insurance described in
Exhibit D. Evidence of that insurance must be delivered to Landlord prior to
the Commencement Date. Tenant reserves the right at any time to self insure
for the amounts set forth in Exhibit D, provided however, that should there be
a material change in the financial condition of Tenant, then Tenant shall
notify Landlord of such material change in financial condition and shall
immediately obtain the insurance required in Exhibit D to the Lease.
SECTION 10.2 LANDLORD'S INSURANCE. Landlord may, at its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be
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determined by Landlord in its discretion: "all risk" property insurance,
subject to standard exclusions, covering the Building or Project, and such
other risks as Landlord or its mortgagees may from time to time deem
appropriate, including leasehold improvements made by Landlord, and
comprehensive public liability coverage. Landlord shall not be required to
carry insurance of any kind on Tenant's property, including leasehold
improvements, trade fixtures, furnishings, equipment, plate glass, signs and
all other items of personal property, and shall not be obligated to repair or
replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building and Project shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any
repairs. At Landlord's option, Landlord may self-insure all or any portion of
the risks for which Landlord elects to provide insurance hereunder.
SECTION 10.3 TENANT'S INDEMNITY. To the fullest extent permitted
by law, Tenant shall defend, indemnify, protect, save and hold harmless
Landlord, its agents, and any and all affiliates of Landlord, including,
without limitation, any corporations or other entities controlling, controlled
by or under common control with Landlord, from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant's use or occupancy of the Premises, the Building or the Common
Areas, or from the conduct of its business, or from any activity, work, or
thing done, permitted or suffered by Tenant or its agents, employees, invitees
or licensees in or about the Premises, the Building or the Common Areas, or
from any default in the performance of any obligation on Tenant's part to be
performed under this Lease, or from any act or negligence of Tenant or its
agents, employees, visitors, patrons, guests, invitees or licensees. Landlord
may, at its option, require Tenant to assume Landlord's defense in any action
covered by this Section through counsel reasonably satisfactory to Landlord.
The provisions of this Section shall expressly survive the expiration or sooner
termination of this Lease.
SECTION 10.4 LANDLORD'S NONLIABILITY. Unless the result of any
negligent act or omission of Landlord or its authorized representative,
Landlord shall not be liable to Tenant, its employees, agents and invitees, and
Tenant hereby waives all claims against Landlord for loss of or damage to any
property, or any injury to any person, resulting from, but not limited to,
fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak or flow from or into any part of the Building or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Project. In no event, however, shall
Landlord be liable for Tenant's loss or interruption of business or income
resulting from any of the
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foregoing conditions. It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building. Neither
Landlord nor its agents shall be liable for interference with light or other
similar intangible interests. Tenant shall immediately notify Landlord in case
of fire or accident in the Premises, the Building or the Project and of defects
in any improvements or equipment.
SECTION 10.5 WAIVER OF SUBROGATION. Landlord and Tenant each
hereby waives all rights of recovery against the other and the other's agents
on account of loss and damage occasioned to the property of such waiving party
to the extent only that such loss or damage is required to be insured against
under any "all risk" property insurance policies required by this Article X;
provided however, that the foregoing waiver shall not apply to the extent of
Tenant's obligations to pay deductibles under any such policies and this Lease.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1 RESTORATION.
(a) If the Building is damaged, Landlord shall repair
that damage as soon as reasonably possible, at its expense, unless: (i)
Landlord reasonably determines that the cost of repair is not covered by
Landlord's fire and extended coverage insurance plus such additional amounts
Tenant elects, at its option, to contribute, excluding however the deductible
(for which Tenant shall be responsible for Tenant's proportionate share); (ii)
Landlord reasonably determines that the Premises cannot, with reasonable
diligence, be fully repaired by Landlord (or cannot be safely repaired because
of the presence of hazardous factors, including without limitation Hazardous
Materials, earthquake faults, and other similar dangers) within nine (9) months
after the date of the damage; (iii) an event of default by Tenant has occurred
and is continuing at the time of such damage; or (iv) the damage occurs during
the final twelve (12) months of the Term. Should Landlord elect not to repair
the damage for one of the preceding reasons, Landlord shall so notify Tenant in
writing within sixty (60) days after the damage occurs and this Lease shall
terminate as of the date of that notice.
(b) Unless Landlord elects to terminate this Lease in
accordance with subsection (a) above, this Lease shall continue in effect for
the remainder of the Term; provided that if the damage is so extensive as to
reasonably prevent Tenant's substantial use and enjoyment of the Premises for
more than nine (9) months, then Tenant may elect to terminate this Lease by
written notice to Landlord within the sixty (60) day period stated in
subsection (a).
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(c) Commencing on the date of any damage to the Building,
and ending on the sooner of the date the damage is repaired or the date this
Lease is terminated, the rental to be paid under this Lease shall be abated in
the same proportion that the floor area of the Building that is rendered
unusable by the damage from time to time bears to the total floor area of the
Building, but only to the extent that any business interruption insurance
proceeds are received by Landlord therefor from Tenant's insurance described in
Exhibit D.
(d) Notwithstanding the provisions of subsections (a),
(b) and (c) of this Section, and subject to the provisions of Section 10.5
above, the cost of any repairs shall be borne by Tenant, and Tenant shall not
be entitled to rental abatement or termination rights, if the damage is due to
the fault or neglect of Tenant or its employees, subtenants, invitees or
representatives. In addition, the provisions of this Section shall not be
deemed to require Landlord to repair any improvements or fixtures that Tenant
is obligated to repair or insure pursuant to any other provision of this Lease.
SECTION 11.2 LEASE GOVERNS. Tenant agrees that the provisions of
this Lease, including without limitation Section 11.1, shall govern any damage
or destruction and shall accordingly supersede any contrary statute or rule of
law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1 TOTAL OR PARTIAL TAKING. If all or a material
portion of the Premises is taken by any lawful authority by exercise of the
right of eminent domain, or sold to prevent a taking, either Tenant or Landlord
may terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the Premises
is taken or sold in lieu of taking, and if Landlord elects to restore the
Premises in such a way as to alter the Premises materially, either party may
terminate this Lease, by written notice to the other party, effective on the
date of vesting of title. In the event neither party has elected to terminate
this Lease as provided above, then Landlord shall promptly, after receipt of a
sufficient condemnation award, proceed to restore the Premises to substantially
their condition prior to the taking, and a proportionate allowance shall be
made to Tenant for the rent corresponding to the time during which, and to the
part of the Premises of which, Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the
entire amount of the condemnation award without deduction for any estate or
interest of Tenant; provided that nothing in this Section shall be deemed to
give Landlord any interest in, or prevent Tenant from seeking any award against
the taking authority for, the taking of personal property and fixtures
belonging to Tenant or for
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relocation or business interruption expenses and goodwill recoverable from the
taking authority.
SECTION 12.2 TEMPORARY TAKING. No temporary taking of the
Premises shall terminate this Lease or give Tenant any right to abatement of
rent, and any award specifically attributable to a temporary taking of the
Premises shall belong entirely to Tenant. A temporary taking shall be deemed
to be a taking of the use or occupancy of the Premises for a period of not to
exceed one hundred eighty (180) days.
SECTION 12.3 TAKING OF PARKING AREA. In the event there shall be
a taking of the parking area such that Landlord can no longer provide
sufficient parking to comply with this Lease, Landlord may substitute
reasonably equivalent parking in a location reasonably close to the Building;
provided that if Landlord fails to make that substitution within one hundred
eighty (180) days following the taking and if the taking materially impairs
Tenant's use and enjoyment of the Premises, Tenant may, at its option,
terminate this Lease by written notice to Landlord. If this Lease is not so
terminated by Tenant, there shall be no abatement of rent and this Lease shall
continue in effect.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
SECTION 13.1 SUBORDINATION.
(a) At the option of Landlord, this Lease shall be either
superior or subordinate to all ground or underlying leases, mortgages and deeds
of trust, if any, which may hereafter affect the Premises, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the
event of termination of any such ground or underlying lease, or the foreclosure
of any such mortgage or deed of trust, to which Tenant has subordinated this
Lease pursuant to this Section. In the event of a termination or foreclosure,
Tenant shall become a tenant of and attorn to the successor-in-interest to
Landlord upon the same terms and conditions as are contained in this Lease, and
shall execute any instrument reasonably required by Landlord's successor for
that purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust, or, if requested by Landlord, to
subordinate, in whole or in part, any ground or underlying lease or the lien of
any mortgage or deed of trust to this Lease. As soon as practicable, and in no
event more than sixty (60) days after the parties' execution hereof, Landlord
shall obtain from Connecticut
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General Life Insurance Company, a Subordination, Non-Disturbance and Attornment
Agreement substantially in the form and with the content of Exhibit F attached
hereto.
(b) Failure of Tenant to execute any reasonable
statements or instruments necessary or desirable to effectuate the provisions
of this Article, within ten (10) days after written request by Landlord, shall
constitute a default under this Lease. In that event, Landlord, in addition to
any other rights or remedies it might have, shall have the right, by written
notice to Tenant, to terminate this Lease as of a date not less than twenty
(20) days after the date of Landlord's notice. Landlord's election to
terminate shall not relieve Tenant of any liability for its default.
SECTION 13.2 ESTOPPEL CERTIFICATE.
(a) Tenant shall, at any time upon not less than ten (10)
days prior written notice from Landlord, execute, acknowledge and deliver to
Landlord, in any form that Landlord may reasonably require, a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of the modification and certifying
that this Lease, as modified, is in full force and effect) and the dates to
which the rental, additional rent and other charges have been paid in advance,
if any, and (ii) acknowledging that, to Tenant's knowledge, there are no
uncured defaults on the part of Landlord, or specifying each default if any are
claimed, and (iii) setting forth all further information that Landlord may
reasonably require. Tenant's statement may be relied upon by any prospective
purchaser or encumbrancer of the Premises.
(b) Tenant's failure to deliver any estoppel statement
within the provided time shall constitute a default under this Lease and shall
be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are
no uncured defaults in Landlord's performance, and (iii) not more than one
month's rental has been paid in advance.
SECTION 13.3 FINANCIALS.
(a) Tenant shall deliver to Landlord, prior to the
execution of this Lease and thereafter at any time upon quarterly Landlord's
request, Tenant's current tax returns, financial unaudited statements, and
annual audited statements certified true, accurate and complete by the chief
financial officer of Tenant, including a balance sheet and profit and loss
statement for the most recent prior year (collectively, the "Statements"),
which Statements shall accurately and completely reflect the financial
condition of Tenant. Landlord agrees that it will keep the Statements
confidential, except that Landlord shall have the
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right to deliver the same to any proposed purchaser or encumbrancer of the
Premises.
(b) Tenant acknowledges that Landlord is relying on the
Statements in its determination to enter into this Lease, and Tenant represents
to Landlord, which representation shall be deemed made on the date of this
Lease and again on the Commencement Date, that no material change in the
financial condition of Tenant, as reflected in the Statements, has occurred
since the date Tenant delivered the Statements to Landlord. The Statements are
represented and warranted by Tenant to be correct and to accurately and fully
reflect Tenant's true financial condition as of the date of submission by any
Statements to Landlord.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1 TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:
(a) The failure by Tenant to make any payment of rent or
additional rent required to be made by Tenant, as and when due, where the
failure continues for a period of ten (10) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 1161(a) as amended. For purposes of these default
and remedies provisions, the term "additional rent" shall be deemed to include
all amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer
of the Lease by Tenant, either voluntarily or by operation of law, whether by
judgment, execution, transfer by intestacy or testacy, or other means, without
the prior written consent of Landlord.
(c) The discovery by Landlord that any financial
statement provided by Tenant, or by any affiliate, successor or guarantor of
Tenant, was materially false.
(d) The failure or inability by Tenant to observe or
perform any of the express or implied covenants or provisions of this Lease to
be observed or performed by Tenant, other than as specified in any other
subsection of this Section, where the failure continues for a period of ninety
(90) days after written notice from Landlord to Tenant or such shorter period
as is specified in any other provision of this Lease; provided, however, that
any such notice shall be in lieu of, and not in
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addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to be in default if Tenant commences the cure within
thirty (30) days, and thereafter diligently pursues the cure to completion.
(e) (i) The making by Tenant of any general assignment
for the benefit of creditors; (ii) the filing by or against Tenant of a
petition to have Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code
or to have debts discharged or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed within thirty (30) days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
if possession is not restored to Tenant within ninety (90) days; (iv) the
attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where the seizure is not discharged within ninety (90) days; or (v) Tenant's
convening of a meeting of its creditors for the purpose of effecting a
moratorium upon or composition of its debts. Landlord shall not be deemed to
have knowledge of any event described in this subsection unless notification in
writing is received by Landlord, nor shall there be any presumption
attributable to Landlord of Tenant's insolvency. In the event that any
provision of this subsection is contrary to applicable law, the provision shall
be of no force or effect.
SECTION 14.2 LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, or in the
event of the abandonment of the Premises by Tenant, then in addition to any
other remedies available to Landlord, Landlord may exercise the following
remedies:
(i) Landlord may terminate Tenant's right to
possession of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord. Such termination shall not affect any accrued obligations of Tenant
under this Lease. Upon termination, Landlord shall have the right to reenter
the Premises and remove all persons and property. Landlord shall also be
entitled to recover from Tenant:
(1) The worth at the time of award of
the unpaid rent and additional rent which had been earned at the time of
termination;
(2) The worth at the time of award of
the amount by which the unpaid rent and additional rent which would have been
earned after termination until the time of award
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exceeds the amount of such loss that Tenant proves could have been reasonably
avoided;
(3) The worth at the time of award of
the amount by which the unpaid rent and additional rent for the balance of the
Term after the time of award exceeds the amount of such loss that Tenant proves
could be reasonably avoided;
(4) Any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result from Tenant's default, including,
but not limited to, the cost of recovering possession of the Premises,
commissions and other expenses of reletting, including necessary repair, the
unamortized portion of any tenant improvements and brokerage commissions funded
by Landlord in connection with this Lease, reasonable attorneys' fees, and any
other reasonable costs; and
(5) At Landlord's election, all other
amounts in addition to or in lieu of the foregoing as may be permitted by law.
The term "rent" as used in this Lease shall be deemed to mean the Basic Rent
and all other sums required to be paid by Tenant to Landlord pursuant to the
terms of this Lease. Any sum, other than Basic Rent, shall be computed on the
basis of the average monthly amount accruing during the twenty-four (24) month
period immediately prior to default, except that if it becomes necessary to
compute such rental before the twenty-four (24) month period has occurred, then
the computation shall be on the basis of the average monthly amount during the
shorter period. As used in subparagraphs (1) and (2) above, the "worth at the
time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subparagraph (3) above, the "worth at the
time of award" shall be computed by discounting the amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).
(ii) Landlord may elect not to terminate Tenant's
right to possession of the Premises, in which event Landlord may continue to
enforce all of its rights and remedies under this Lease, including the right to
collect all rent as it becomes due. Efforts by the Landlord to maintain,
preserve or relet the Premises, or the appointment of a receiver to protect the
Landlord's interests under this Lease, shall not constitute a termination of
the Tenant's right to possession of the Premises. In the event that Landlord
elects to avail itself of the remedy provided by this subsection (ii), Landlord
shall not unreasonably withhold its consent to an assignment or subletting of
the Premises subject to the reasonable standards for Landlord's consent as are
contained in this Lease.
(b) Landlord shall be under no obligation to observe or
perform any covenant of this Lease on its part to be observed
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or performed which accrues after the date of any default by Tenant unless and
until the default is cured by Tenant. The various rights and remedies reserved
to Landlord in this Lease or otherwise shall be cumulative and, except as
otherwise provided by California law, Landlord may pursue any or all of its
rights and remedies at the same time.
(c) No delay or omission of Landlord to exercise any
right or remedy shall be construed as a waiver of the right or remedy or of any
default by Tenant. The acceptance by Landlord of rent shall not be a (i)
waiver of any preceding breach or default by Tenant of any provision of this
Lease, other than the failure of Tenant to pay the particular rent accepted,
regardless of Landlord's knowledge of the preceding breach or default at the
time of acceptance of rent, or (ii) a waiver of Landlord's right to exercise
any remedy available to Landlord by virtue of the breach or default. The
acceptance of any payment from a debtor in possession, a trustee, a receiver or
any other person acting on behalf of Tenant or Tenant's estate shall not waive
or cure a default under Section 14.1. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent required by this Lease shall be
deemed to be other than a partial payment on account of the earliest due
stipulated rent, nor shall any endorsement or statement on any check or letter
be deemed an accord and satisfaction and Landlord shall accept the check or
payment without prejudice to Landlord's right to recover the balance of the
rent or pursue any other remedy available to it. No act or thing done by
Landlord or Landlord's agents during the Term shall be deemed an acceptance of
a surrender of the Premises, and no agreement to accept a surrender shall be
valid unless in writing and signed by Landlord. No employee of Landlord or of
Landlord's agents shall have any power to accept the keys to the Premises prior
to the termination of this Lease, and the delivery of the keys to any employee
shall not operate as a termination of the Lease or a surrender of the Premises.
SECTION 14.3 LATE PAYMENTS.
(a) Any rent due under this Lease that is not paid to
Landlord within ten (10) days of the date when due shall bear interest at the
maximum rate permitted by law (i.e. the San Francisco Reserve Discount Rate +
five percent (5%)) from the date due until fully paid. The payment of interest
shall not cure any default by Tenant under this Lease. In addition, Tenant
acknowledges that the late payment by Tenant to Landlord of rent will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult and impracticable to ascertain. Those costs
may include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the Premises. Accordingly, if
any rent due from Tenant shall not be received by Landlord or Landlord's
designee within five (5) days after the date due, then Tenant shall pay to
Landlord, in addition to the
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interest provided above, a late charge in the amount of Two Hundred Fifty
Dollars ($250.00) for each delinquent payment. Acceptance of a late charge by
Landlord shall not constitute a waiver of Tenant's default with respect to the
overdue amount, nor shall it prevent Landlord from exercising any of its other
rights and remedies.
(b) Following each second consecutive installment of rent
that is not paid within ten (10) days following notice of nonpayment from
Landlord, Landlord shall have the option (i) to require that beginning with the
first payment of rent next due, rent shall no longer be paid in monthly
installments but shall be payable quarterly three (3) months in advance and/or
(ii) to require that Tenant increase the amount, if any, of the Security
Deposit by one hundred percent (100%). Should Tenant deliver to Landlord, at
any time during the Term, two (2) or more insufficient checks, the Landlord may
require that all monies then and thereafter due from Tenant be paid to Landlord
by cashier's check.
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM. All covenants and
agreements to be performed by Tenant under this Lease shall be performed at
Tenant's sole cost and expense and without any abatement of rent or right of
set-off except as otherwise specifically provided in this Lease. If Tenant
fails to pay any sum of money, other than rent, or fails to perform any other
act on its part to be performed under this Lease, and the failure continues
beyond any applicable grace period set forth in Section 14.1, then in addition
to any other available remedies, Landlord may, at its election make the payment
or perform the other act on Tenant's part. Landlord's election to make the
payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
from the date of the payment by Landlord. Landlord shall have the same rights
and remedies if Tenant fails to pay those amounts as Landlord would have in the
event of a default by Tenant in the payment of rent.
SECTION 14.5 DEFAULT BY LANDLORD. Landlord shall not be deemed to
be in default in the performance of any obligation under this Lease unless and
until it has failed to perform the obligation within thirty (30) days after
written notice by Tenant to Landlord specifying in reasonable detail the nature
and extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.
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SECTION 14.6 EXPENSES AND LEGAL FEES. All sums reasonably
incurred by Landlord in connection with any event of default by Tenant under
this Lease or holding over of possession by Tenant after the expiration or
earlier termination of this Lease, including without limitation all costs,
expenses and actual accountants, appraisers, attorneys and other professional
fees, and any collection agency or other collection charges, shall be due and
payable by Tenant to Landlord on demand, and shall bear interest at the rate of
ten percent (10%) per annum. Should either Landlord or Tenant bring any action
in connection with this Lease, the prevailing party shall be entitled to
recover as a part of the action its reasonable attorneys' fees, and all other
costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.
SECTION 14.7 WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH
ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS
CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY
EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST
THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR
SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.
SECTION 14.8 SATISFACTION OF JUDGMENT. The obligations of
Landlord do not constitute the personal obligations of the individual partners,
trustees, directors, officers or shareholders of Landlord or its constituent
partners. Should Tenant recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Premises and out of the rent or other income from
such property receivable by Landlord or out of consideration received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title or interest in the Premises, and no action for any deficiency may
be sought or obtained by Tenant.
ARTICLE XV. END OF TERM
SECTION 15.1 HOLDING OVER. This Lease shall terminate without
further notice upon the expiration of the Term, and any holding over by Tenant
after the expiration shall not constitute a renewal or extension of this Lease,
or give Tenant any rights under this Lease, except when in writing signed by
both parties. If Tenant holds over for any period after the expiration (or
earlier termination) of the Term, Landlord may, at its option, treat Tenant as
a tenant at sufferance only, commencing on the first (1st) day following the
termination of this Lease and
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subject to all of the terms of this Lease, except that the monthly Basic Rent
shall be the greater of (a) one hundred fifty percent (150%) of the Basic Rent
for the month immediately preceding the date of termination or (b) the then
currently scheduled Basic Rent for comparable space in the Building. If Tenant
fails to surrender the Premises upon the expiration of this Lease despite
demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless
from all loss or liability, including without limitation, any claims made by
any succeeding tenant relating to such failure to surrender. Acceptance by
Landlord of rent after the termination shall not constitute a consent to a
holdover or result in a renewal of this Lease. The foregoing provisions of
this Section are in addition to and do not affect Landlord's right of re-entry
or any other rights of Landlord under this Lease or at law.
SECTION 15.2 MERGER ON TERMINATION. The voluntary or other
surrender of this Lease by Tenant, or a mutual termination of this Lease, shall
terminate any or all existing subleases unless Landlord, at its option, elects
in writing to treat the surrender or termination as an assignment to it of any
or all subleases affecting the Premises.
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall
quit and surrender possession of the Premises to Landlord in as good order,
condition and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear and repairs which are Landlord's
obligation excepted, and shall, without expense to Landlord, remove or cause to
be removed from the Premises all personal property and debris, except for any
items that Landlord may by written authorization allow to remain. Tenant shall
repair all damage to the Premises resulting from the removal, which repair
shall include the patching and filling of holes and repair of structural
damage, provided that Landlord may instead elect to repair any structural
damage at Tenant's expense. If Tenant shall fail to comply with the provisions
of this Section, Landlord may effect the removal and/or make any repairs, and
the cost to Landlord shall be additional rent payable by Tenant upon demand.
If Tenant fails to remove Tenant's personal property from the Premises upon the
expiration of the Term, Landlord may remove, store, dispose of and/or retain
such personal property, at Landlord's option, in accordance with then
applicable laws, all at the expense of Tenant. If requested by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord an instrument in
writing releasing and quitclaiming to Landlord all right, title and interest of
Tenant in the Premises. Not by way of limitation of the foregoing, at
Landlord's election, Tenant at its expense shall either remove or leave in
place any of the Tenant Improvements as such term is defined in Exhibit X
attached to this Lease.
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ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without
deduction or offset, in lawful money of the United States to Landlord at its
address set forth in Item 12 of the Basic Lease Provisions, or at any other
place as Landlord may designate in writing. Unless this Lease expressly
provides otherwise, as for example in the payment of rent pursuant to Section
4.1, all payments shall be due and payable within five (5) business days after
demand. All payments requiring proration shall be prorated on the basis of a
thirty (30) day month and a three hundred sixty (360) day year. Any notice,
election, demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in
person or by courier or overnight delivery service to the other party, or may
be deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant, at
that address or, from and after the Commencement Date, at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises), or may be
delivered by telegram, telex or telecopy, provided that receipt thereof is
telephonically confirmed. Either party may, by written notice to the other,
served in the manner provided in this Article, designate a different address.
If any notice or other document is sent by mail, it shall be deemed served or
delivered twenty-four (24) hours after mailing. If more than one person or
entity is named as Tenant under this Lease, service of any notice upon any one
of them shall be deemed as service upon all of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to observe faithfully and comply strictly with the Rules
and Regulations, attached as Exhibit E, and any reasonable and
nondiscriminatory amendments, modifications and/or additions as may be adopted
and published by written notice to tenants by Landlord for the safety, care,
security, good order, or cleanliness of the Premises, and Project and Common
Areas (if applicable). Landlord shall not be liable to Tenant for any
violation of the Rules and Regulations or the breach of any covenant or
condition in any lease by any other tenant. One or more waivers by Landlord of
any breach of the Rules and Regulations by Tenant or by any other tenant(s)
shall not be a waiver of any subsequent breach of that rule or any other.
Tenant's failure to keep and observe the Rules and Regulations shall constitute
a default under this Lease. In the case of any conflict between the Rules and
Regulations and this Lease, this Lease shall be controlling.
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ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent
employed or claiming to represent or to have been employed by Tenant in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease. If Tenant fails to take possession of
the Premises or if this Lease otherwise terminates prior to the Expiration Date
as the result of failure of performance by Tenant, Landlord shall be entitled
to recover from Tenant the unamortized portion of any brokerage commission
funded by Landlord in addition to any other damages to which Landlord may be
entitled.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's interest in the Premises,
the transferor shall be automatically relieved of all obligations on the part
of Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No holder of a mortgage and/or
deed of trust to which this Lease is or may be subordinate, and no landlord
under a so-called sale-leaseback, shall be responsible in connection with the
Security Deposit, unless the mortgagee or holder of the deed of trust or the
landlord actually receives the Security Deposit. It is intended that the
covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the foregoing, be binding on Landlord, its successors and
assigns, only during and in respect to their respective successive periods of
ownership.
ARTICLE XX. INTERPRETATION
SECTION 20.1 GENDER AND NUMBER. Whenever the context of this
Lease requires, the words "Landlord" and "Tenant" shall include the plural as
well as the singular, and words used in neuter, masculine or feminine genders
shall include the others.
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SECTION 20.2 HEADINGS. The captions and headings of the articles
and sections of this Lease are for convenience only, are not a part of this
Lease and shall have no effect upon its construction or interpretation.
SECTION 20.3 JOINT AND SEVERAL LIABILITY. If more than one person
or entity is named as Tenant, the obligations imposed upon each shall be joint
and several and the act of or notice from, or notice or refund to, or the
signature of, any one or more of them shall be binding on all of them with
respect to the tenancy of this Lease, including, but not limited to, any
renewal, extension, termination or modification of this Lease.
SECTION 20.4 SUCCESSORS. Subject to Articles IX and XIX, all
rights and liabilities given to or imposed upon Landlord and Tenant shall
extend to and bind their respective heirs, executors, administrators,
successors and assigns. Nothing contained in this Section is intended, or
shall be construed, to grant to any person other than Landlord and Tenant and
their successors and assigns any rights or remedies under this Lease.
SECTION 20.5 TIME OF ESSENCE. Time is of the essence with respect
to the performance of every provision of this Lease.
SECTION 20.6 CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7 SEVERABILITY. If any term or provision of this
Lease, the deletion of which would not adversely affect the receipt of any
material benefit by either party or the deletion of which is consented to by
the party adversely affected, shall be held invalid or unenforceable to any
extent, the remainder of this Lease shall not be affected and each term and
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES. One or more waivers
by Landlord or Tenant of any breach of any term, covenant or condition
contained in this Lease shall not be a waiver of any subsequent breach of the
same or any other term, covenant or condition. Consent to any act by one of
the parties shall not be deemed to render unnecessary the obtaining of that
party's consent to any subsequent act. No breach by Tenant of this Lease shall
be deemed to have been waived by Landlord unless the waiver is in a writing
signed by Landlord. The rights and remedies of Landlord under this Lease shall
be cumulative and in addition to any and all other rights and remedies which
Landlord may have.
SECTION 20.9 INABILITY TO PERFORM. In the event that either party
shall be delayed or hindered in or prevented from the performance of any work
or in performing any act required under this Lease by reason of any cause
beyond the reasonable control of that party, then the performance of the work
or the
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doing of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant's reasonable control.
SECTION 20.10 ENTIRE AGREEMENT. This Lease and its exhibits and
other attachments cover in full each and every agreement of every kind between
the parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement
or implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.
SECTION 20.11 QUIET ENJOYMENT. Upon the observance and performance
of all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or
through Landlord.
SECTION 20.12 SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of
the respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1 COUNTERPARTS. This Lease may be executed in one or
more counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant shall, at Landlord's request, deliver a
certified copy of its board of directors' resolution or partnership agreement
or certificate authorizing or evidencing the execution of this Lease.
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SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER. The
submission of this Lease to Tenant shall be for examination purposes only, and
shall not constitute an offer to or option for Tenant to lease the Premises.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding upon Landlord, notwithstanding any time interval, until Landlord has in
fact executed and delivered this Lease to Tenant, it being intended that this
Lease shall only become effective upon execution by Landlord and delivery of a
fully executed counterpart to Tenant.
SECTION 21.4 RECORDING. Tenant shall not record this Lease
without the prior written consent of Landlord. Tenant, upon the request of
Landlord, shall execute and acknowledge a "short form" memorandum of this Lease
for recording purposes.
SECTION 21.5 AMENDMENTS. No amendment or termination of this
Lease shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No
actions, policies, oral or informal arrangements, business dealings or other
course of conduct by or between the parties shall be deemed to modify this
Lease in any respect.
SECTION 21.6 EXECUTED COPY. Any fully executed photocopy or
similar reproduction of this Lease shall be deemed an original for all
purposes.
SECTION 21.7 EXHIBITS; REFERENCES. All exhibits, amendments,
riders and addenda attached to this Lease are hereby incorporated into and made
a part of this Lease.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges
and agrees that the terms of this Lease are confidential and constitute
proprietary information of Landlord. Disclosure of the terms could adversely
affect the ability of Landlord to negotiate other leases and impair Landlord's
relationship with other tenants. Accordingly, Tenant agrees that it, and its
partners, officers, directors, employees and attorneys, shall not intentionally
and voluntarily disclose the terms and conditions of this Lease to any other
tenant or apparent prospective tenant of the Project, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease.
SECTION 22.2 GUARANTY. As a condition to the execution of this
Lease by Landlord, the obligations, covenants and performance of the Tenant as
herein provided shall be guaranteed in writing by the Guarantor(s) listed in
Item 7 of the Basic
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Lease Provisions, if any, on a form of guaranty provided by Landlord.
SECTION 22.3 CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Premises or the Project, the lender shall request
reasonable non-monetary modifications in this Lease as a condition to the
financing, Tenant will not unreasonably withhold or delay its consent, provided
that the modifications do not materially increase the obligations of Tenant or
materially and adversely affect the leasehold interest created by this Lease.
SECTION 22.4 MORTGAGEE PROTECTION. No act or failure to act on
the part of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Premises
whose address has been furnished to Tenant and (b) such beneficiary is afforded
a reasonable opportunity to cure the default by Landlord (which in no event
shall be less than sixty (60) days), including, if necessary to effect the
cure, time to obtain possession of the Premises by power of sale or judicial
foreclosure provided that such foreclosure remedy is diligently pursued.
Tenant agrees that each beneficiary of a deed of trust or mortgage covering the
Premises is an express third party beneficiary hereof, Tenant shall have no
right or claim for the collection of any deposit from such beneficiary or from
any purchaser at a foreclosure sale unless such beneficiary or purchaser shall
have actually received and not refunded the deposit, and Tenant shall comply
with any written directions by any beneficiary to pay rent due hereunder
directly to such beneficiary without determining whether an event of default
exists under such beneficiary's deed of trust.
SECTION 22.5 COVENANTS AND CONDITIONS. All of the provisions of
this Lease shall be construed to be conditions as well as covenants as though
the words specifically expressing or imparting covenants and conditions were
used in each separate provision.
SECTION 22.6 DISCLOSURE STATEMENT. Tenant acknowledges that it
has read, understands and, if applicable, shall comply with the provisions of
Exhibit C to this Lease, if that Exhibit is attached.
SECTION 22.7 SECURITY MEASURES. Tenant hereby acknowledges that
Landlord shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Project. Tenant
assumes all responsibility for the protection of Tenant, its agents, invitees
and property from acts of third parties. Nothing herein contained shall
prevent Landlord, at its sole option, from providing security protection for
the Project or any part
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thereof, in which event the cost thereof shall be included within the
definition of Building Costs.
SECTION 22.8 TERMINATION OF EXISTING LEASE. Tenant understands
and agrees that the effectiveness of this Lease is conditioned upon the mutual
execution and delivery of a lease surrender and termination agreement between
Landlord and Southern California Edison Company, a California corporation, the
current tenant in possession of the Suite 102 Premises.
SECTION 22.9 LANDLORD'S WARRANTIES. Landlord represents and
warrants to Tenant that: (i) Landlord is the sole owner of all right, title
and interest in the Premises, and that no other tenants or occupants have a
possessory interest in the Premises superior to Tenant's interest under this
Lease; (ii) there are no mechanic liens or materialmen's liens affecting the
Premises or any pending lawsuits which would adversely affect Tenant's use or
occupancy of the Premises for its intended use; and (iii) except as otherwise
provided in this Lease, Landlord's construction of the Building (including
without limitation, the construction of the Tenant Improvements in accordance
with the Work Letter) was and shall be in accordance with all current rules,
regulations and ordinances governing such construction.
SECTION 22.10 ANTENNAE. Notwithstanding anything to the contrary
set forth in the rules and regulations attached hereto, Tenant shall have the
right to install antennae on the roof of the Building, at its sole cost and
expense, so long as such antennae are not visible from the ground adjacent to
the Building. Such antennae shall be removed by Tenant as of the expiration of
the Term of the Lease and any damage occasioned by the installation or removal
of such antennae shall be repaired by Tenant at its sole cost and expense.
LANDLORD: TENANT:
THE IRVINE COMPANY, DATUM, INC.
a Michigan corporation
-----------------------------
By /s/ Clarence W. Baker By /s/ Louis B. Horwitz
---------------------------- --------------------------
Clarence W. Barker,
President, Irvine Title President
Industrial Company, -----------------------
a division of The Irvine
Company
By /s/ John C. Tsu By /s/ David A. Young
---------------------------- ---------------------------
John C. Tsu,
Assistant Secretary Title Chief Financial Officer
----------------------
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EXHIBIT A
DESCRIPTION OF PREMISES
[Schematic of industrial park containing premises subject to lease (9975 Toledo
Way).]
A-1
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EXHIBIT B
IRVINE INDUSTRIAL COMPANY
HAZARDOUS MATERIALS SURVEY FORM
The purpose of this form is to obtain information regarding the use of
hazardous substances on Irvine Office and Industrial Company property.
Prospective tenants and contractors should answer the questions in light of
their proposed operations on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing operations on the
premises and should update any information previously submitted.
If additional space is needed to answer the questions, you may attach separate
sheets of paper to this form. When completed, the form should be sent to the
following address:
___________________________________
___________________________________
___________________________________
___________________________________
(insert address of Property
Management Company)
Your cooperation in this matter is appreciated. If you have any
questions, please do not hesitate to call [insert name of Property Manager] at
[insert phone number] for assistance.
1. GENERAL INFORMATION
Name of Responding Company:_________________________________________
Check all that apply: Tenant ( ) Contractor ( )
Prospective ( ) Existing ( )
Mailing Address:____________________________________________________
____________________________________________________________________
Contact Person & Title:_____________________________________________
Telephone Number: ( )____-__________
Address of Leased Premises:_________________________________________
Length of Lease or Contract Term:___________________________________
B-1
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Describe the proposed operations to take place on the property,
including principal products manufactured or services to be conducted.
Existing tenants and contractors should describe any proposed changes
to ongoing operations.
______________________________________________________________________
______________________________________________________________________
2. STORAGE OF HAZARDOUS MATERIALS
2.1 Will any hazardous materials be used or stored on-site?
Wastes Yes ( ) No ( )
Chemical Products Yes ( ) No ( )
Biological Hazards/
Infectious Wastes Yes ( ) No ( )
Radioactive Materials Yes ( ) No ( )
2.2 List any hazardous materials to be used or stored, the
quantities that will be on-site at any given time, and the
location and method of storage (e.g., bottles in storage
closet on the premises).
Location
and Method
Waste/Products of Storage Quantity
-------------- ---------- --------
______________ __________ ________
______________ __________ ________
______________ __________ ________
2.3 Is any underground storage of hazardous substances proposed or
currently conducted on the premises? Yes ( ) No ( )
If yes, describe the materials to be stored, and the size and
construction of the tank. Attach copies of any permits
obtained for the underground storage of such substances.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
3. SPILLS
3.1 During the past year, have any spills occurred on the premises?
Yes ( ) No ( )
If so, please describe the spill and attach the results of any
testing conducted to determine the extent of such spills.
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3.2 Were any agencies notified in connection with such spills?
Yes ( ) No ( )
If so, attach copies of any spill reports or other
correspondence with regulatory agencies.
3.3 Were any clean-up actions undertaken in connection with the
spills? Yes ( ) No ( )
If so, briefly describe the actions taken. Attach copies of
any clearance letters obtained from any regulatory agencies
involved and the results of any final soil or groundwater
sampling done upon completion of the clean-up work.
4. WASTE MANAGEMENT
4.1 List the waste, if any, generated or to be generated at the
premises, whether it is as hazardous waste, biological or
radioactive hazard, its hazard class and the quantity
generated on a monthly basis.
Waste Hazard Class Quantity/Month
----- ------------ --------------
_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________
4.2 Describe the method(s) of disposal for each waste. Indicate
where and how often disposal will take place.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
4.3 Is any treatment or processing of hazardous, infectious or
radioactive wastes currently conducted or proposed to be
conducted at the premises? Yes ( ) No ( )
If yes, please describe any existing or proposed treatment
methods._____________________________________________________
_____________________________________________________________
4.4 Attach copies of any hazardous waste permits or licenses
issued to your company with respect to its operations on the
premises.
B-3
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5. WASTEWATER TREATMENT/DISCHARGE
5.1 Do you discharge industrial wastewater to:
___ storm drain? ___ sewer?
___ surface water? ___ no industrial discharge
5.2 Is your industrial wastewater treated before discharge?
Yes ( ) No ( )
If yes, describe the type of treatment conducted.
5.3 Attach copies of any wastewater discharge permits issued to
your company with respect to its operations on the premises.
6. AIR DISCHARGES
6.1 Do you have any air filtration systems or stacks that discharge
into the air? Yes ( ) No ( )
6.2 Do you operate any equipment that require air emissions
permits? Yes ( ) No ( )
6.3 Attach copies of any air discharge permits pertaining to these
operations.
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Does your company handle an aggregate of at least 500 pounds,
55 gallons or 200 cubic feet of hazardous material at any
given time? If so, state law requires that you prepare a
hazardous materials management plan. Yes ( ) No ( )
7.2 Has your company prepared a hazardous materials management
plan ('business plan') pursuant to state and Orange County
Fire Department requirements? Yes ( ) No ( )
If so, attach a copy of the business plan.
7.3 Are any of the chemicals used in your operations regulated
under Proposition 65? Yes ( ) No ( )
B-4
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If so, describe the actions taken, or proposed actions to be
taken, to comply with Proposition 65 requirements.
7.4 Is your company subject to OSHA Hazard Communication Standard
Requirements? Yes ( ) No ( )
If so, describe the procedures followed to comply with these
requirements.
8. ENFORCEMENT ACTIONS, COMPLAINTS
8.1 Has your company ever been subject to any agency enforcement
actions, administrative orders, or consent decrees?
Yes ( ) No ( )
If so, describe the actions and any continuing compliance
obligations imposed as a result of these actions.
8.2 Has your company ever received requests for information,
notice or demand letters, or any other inquiries regarding its
operations? Yes ( ) No ( )
8.3 Have there ever been, or are there now pending, any lawsuits
against your company regarding any environmental or health and
safety concerns? Yes ( ) No ( )
8.4 Has an environmental audit ever been conducted at your
company's current facility? Yes ( ) No ( )
If so, discuss the results of the audit.
B-5
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8.5 Have there been any problems or complaints from neighbors at
your company's current facility? Yes ( ) No ( )
_________________________________________
Company
By:______________________________________
Title:___________________________________
Date:____________________________________
B-6
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EXHIBIT C
LANDLORD'S DISCLOSURES
The capitalized terms used and not otherwise defined in this
Exhibit shall have the same definitions as set forth in the Lease. The
provisions of this Exhibit shall supersede any inconsistent or conflicting
provisions of the Lease.
8.6 Landlord has been informed that the El Toro Marine Corps Air
Station (MCAS) has been listed as a Federal Superfund site as a result of
chemical releases occurring over many years of occupancy. Various chemicals
including jet fuel, motor oil and solvents have been discharged in several
areas throughout the MCAS site. A regional study conducted by the Orange
County Water District has estimated that groundwaters beneath more than 2,900
acres have been impacted by Trichloroethlene (TCE), an industrial solvent.
There is a potential that this substance may have migrated into the ground
water underlying the Premises. The U.S. Environmental Protection Agency, the
Santa Ana Region Quality Control Board, and the Orange County Health Care
Agency are overseeing the investigation/cleanup of this contamination. To the
Landlord's current actual knowledge, the ground water in this area is used for
irrigation purposes only, and there is no practical impediment to the use or
occupancy of the Premises due to the El Toro discharges.
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EXHIBIT D
SCHEDULE OF INSURANCE
D-1
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EXHIBIT E
RULES AND REGULATIONS
This Exhibit sets forth the rules and regulations governing
Tenant's use of the Premises leased to Tenant pursuant to the terms, covenants
and conditions of the Lease to which this Exhibit is attached and therein made
part thereof. In the event of any conflict or inconsistency between this
Exhibit and the Lease, the Lease shall control.
1. Tenant shall not place anything or allow anything to
be placed near the glass of any window, door, partition or wall which may
appear unsightly from outside the Premises.
2. The walls, walkways, sidewalks, entrance passages,
courts and vestibules shall not be obstructed or used for any purpose other
than ingress and egress of pedestrian travel to and from the Premises, and
shall not be used for loitering or gathering, or to display, store or place any
merchandise, equipment or devices, or for any other purpose. The walkways,
entrance passageways, courts, vestibules and roof are not for the use of the
general public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence in the judgment of the
Landlord shall be prejudicial to the safety, character, reputation and
interests of the Building and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of Tenant's business unless such persons
are engaged in illegal activities. No tenant or employee or invitee of any
tenant shall be permitted upon the roof of the Building.
3. No awnings or other projection shall be attached to
the outside walls of the Building. No security bars or gates, curtains,
blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises without the prior written
consent of Landlord. Neither the interior nor exterior of any windows shall be
coated or otherwise sunscreened without the express written consent of
Landlord.
4. Tenant shall not mark, nail, paint, drill into, or in
any way deface any part of the Premises or the Building. Tenant shall not lay
linoleum, tile, carpet or other similar floor covering so that the same shall
be affixed to the floor of the Premises in any manner except as approved by
Landlord in writing. The expense of repairing any damage resulting from a
violation of this rule or removal of any floor covering shall be borne by
Tenant.
E-1
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5. The toilet rooms, urinals, wash bowls and other
plumbing apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the tenant who, or whose employees
or invitees, caused it.
6. Landlord shall direct electricians as to the manner
and location of any future telephone wiring. No boring or cutting for wires
will be allowed without the prior consent of Landlord. The locations of the
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the prior written approval of Landlord.
7. The Premises shall not be used for manufacturing or
for the storage of merchandise except as such storage may be incidental to the
permitted use of the Premises. No exterior storage shall be allowed at any
time without the prior written approval of Landlord. The Premises shall not be
used for cooking or washing clothes without the prior written consent of
Landlord, or for lodging or sleeping or for any immoral or illegal purposes.
8. Tenant shall not make, or permit to be made, any
unseemly or disturbing noises or disturb or interfere with occupants of this or
neighboring buildings or premises or those having business with them, whether
by the use of any musical instrument, radio, phonograph, noise, or otherwise.
Tenant shall not use, keep or permit to be used, or kept, any foul or obnoxious
gas or substance in the Premises or permit or suffer the Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other
occupants of this or neighboring buildings or premises by reason of any odors,
fumes or gases.
9. No animals shall be permitted at any time within the
Premises.
10. Tenant shall not use the name of the Building or the
Project in connection with or in promoting or advertising the business of
Tenant, except as Tenant's address, without the written consent of Landlord.
Landlord shall have the right to prohibit any advertising by any Tenant which,
in Landlord's reasonable opinion, tends to impair the reputation of the Project
or its desirability for its intended uses, and upon written notice from
Landlord any Tenant shall refrain from or discontinue such advertising.
11. Canvassing, soliciting, peddling, parading,
picketing, demonstrating or otherwise engaging in any conduct that unreasonably
impairs the value or use of the Premises or the Project are prohibited and each
Tenant shall cooperate to prevent the same.
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59
12. No equipment of any type shall be placed on the
Premises which in Landlord's opinion exceeds the load limits of the floor or
otherwise threatens the soundness of the structure or improvements of the
Building.
13. No air conditioning unit or other similar apparatus
shall be installed or used by any Tenant without the prior written consent of
Landlord.
14. No aerial antenna shall be erected on the roof or
exterior walls of the Premises, or on the grounds, without in each instance,
the prior written consent of Landlord. Any aerial or antenna so installed
without such written consent shall be subject to removal by Landlord at any
time without prior notice at the expense of the Tenant, and Tenant shall upon
Landlord's demand pay a removal fee to Landlord of not less than $200.00.
15. The entire Premises, including vestibules, entrances,
doors, fixtures, windows and plate glass, shall at all times be maintained in a
safe, neat and clean condition by Tenant. All trash, refuse and waste
materials shall be regularly removed from the Premises by Tenant and placed in
the containers at the locations designated by Landlord for refuse collection.
All cardboard boxes must be "broken down" prior to being placed in the trash
container. All styrofoam chips must be bagged or otherwise contained prior to
placement in the trash container, so as not to constitute a nuisance. Pallets
may not be disposed of in the trash container or enclosures. The burning of
trash, refuse or waste materials is prohibited.
16. Tenant shall use at Tenant's cost such pest
extermination contractor as Landlord may direct and at such intervals as
Landlord may require.
17. All keys for the Premises shall be provided to Tenant
by Landlord and Tenant shall return to Landlord any of such keys so provided
upon the termination of the Lease. Tenant shall not change locks or install
other locks on doors of the Premises, without the prior written consent of
Landlord. In the event of loss of any keys furnished by Landlord for Tenant,
Tenant shall pay to Landlord the costs thereof.
18. No person shall enter or remain within the Project
while intoxicated or under the influence of liquor or drugs. Landlord shall
have the right to exclude or expel from the Project any person who, in the
absolute discretion of Landlord, is under the influence of liquor or drugs.
Landlord reserves the right to amend or supplement the
foregoing Rules and Regulations and to adopt and promulgate additional rules
and regulations applicable to the Premises. Notice of such rules and
regulations and amendments and supplements thereto, if any, shall be given to
the Tenant.
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60
EXHIBIT F
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Tenant Name:
THIS AGREEMENT is dated the __________ day of ____________________,
1995, and is made by and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
having an address care of CIGNA Investments, Inc., 900 Cottage Grove Road,
Bloomfield, Connecticut 06002, Attn: Real Estate Investment Services
("Mortgagee"), ________________________________________ having an address of
_____________________________________________________ ("Tenant"), and The
Irvine Company, a Michigan corporation, having an address care of
_______________________________________ ("Landlord").
R E C I T A L S :
A. Tenant has entered into a lease ("Lease") dated
____________________, 199__ with The Irvine Company as lessor ("Landlord"),
covering the premises known as _________________, Irvine, California (the
"Premises") within the property known as
________________________________________, more particularly described as shown
on Exhibit A, attached hereto (the "Real Property").
B. Mortgagee has made a mortgage loan, as modified, in the amount
of $____________________, to Landlord, secured by a mortgage of Real Property
(the "Mortgage"), and the parties desire to set forth their agreement herein.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. The Lease and all extensions, renewals, replacements
or modifications thereof are and shall be subject and subordinate to the
Mortgage and all terms and conditions thereof insofar as it affects the Real
Property of which the Premises form a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof, to the full extent of
amounts secured thereby and interest thereon.
2. Tenant shall attorn to and recognize any purchaser at
a foreclosure sale under the Mortgage, any transferee who acquires the Premises
by deed in lieu of foreclosure, and the successors and assigns of such
purchaser(s), and its landlord for the unexpired balance (and any extensions,
if exercised) of the term of the Lease on the same terms and conditions set
forth in the Lease.
F-1
61
3. Mortgagee consents to the Lease and agrees that if it
becomes necessary to foreclose the Mortgage, Mortgagee shall neither terminate
the Lease nor join Tenant in summary or foreclosure proceedings and shall
recognize Tenant as the Tenant under the Lease throughout the term thereof and
any extensions so long as Tenant is not in default under any terms, covenants,
or conditions of the Lease.
4. If Mortgagee succeeds to the interest of Landlord
under the Lease, Mortgagee shall not be:
a. liable for any act or omission of any prior
landlord (including Landlord);
b. liable for the return of any security deposit
unless such deposit has been delivered to Mortgagee by Landlord or is an escrow
fund available to Mortgagee;
c. subject to any offsets or defenses that Tenant
might have against any prior landlord (including Landlord);
d. bound by any rent or additional rent that
Tenant might have paid for more than the current month to any prior landlord
(including Landlord);
e. bound by any amendment, modification, or
termination of the Lease made without Mortgagee's consent;
f. personally liable under the Lease,
Mortgagee's liability thereunder being limited to its interest in the Real
Property; or
g. bound by any notice of termination given by
Landlord to Tenant without Mortgagee's prior written consent thereto.
5. This agreement shall be binding on and shall inure to
the benefit of the parties hereto and their successors and assigns.
6. Tenant shall give Mortgagee, by certified mail,
return receipt requested, or by commercial overnight delivery service, a copy
of any notice of default served on Landlord, at Mortgagee's address set forth
above or at such other address as to which Tenant has been notified in writing.
If Landlord shall have failed to cure such default within the time provided for
in the Lease, then Mortgagee shall have an additional ten (10) days within
which to cure any default capable of being cured by the payment of money and an
additional thirty (30) days within which to cure any other default or if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default shall be granted if within such thirty (30) days
Mortgagee has commenced and is diligently pursuing the
F-2
62
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such a cure),
in which event the Lease shall not be terminated while such remedies are being
so diligently pursued.
7. Landlord has agreed under the Mortgage and other loan
documents that rentals payable under the Lease shall be paid directly by Tenant
to Mortgagee upon default by Landlord under the Mortgage. After receipt of
notice from Mortgagee to Tenant, at the address set forth above or at such
other address as to which Mortgagee has been notified in writing, that rental
under the Lease should be paid to Mortgagee, Tenant shall pay to Mortgagee, or
at the direction of Mortgagee, all monies due or to become due to Landlord
under the Lease. Tenant shall have no responsibility to ascertain whether such
demand by Mortgagee is permitted under the Mortgage, or to inquire into the
existence of a default. Landlord hereby waives any right, claim, or demand it
may now or hereafter have against Tenant by reason of such payment to
Mortgagee, and any such payment shall discharge the obligations of Tenant to
make such payment to Landlord.
8. Tenant declares, agrees and acknowledges that
Mortgagee, in making disbursements pursuant to any agreement relating to the
Loan, is under no obligation or duty to, nor has Mortgagee represented that it
will, see to the application of such proceeds by the person or persons to whom
Mortgagee disburses such proceeds, and any application or use of such proceeds
for purposes other than those provided for in such agreement shall not defeat
the subordination herein made in whole or in part.
IN WITNESS WHEREOF, the parties hereto have executed these
presents as of the day and year first above written.
Mortgagee:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
Date: By:
-------------------------- ------------------------------------
Its:
------------------------------------
Tenant:
Date: By:
-------------------------- -----------------------------------
Its:
-----------------------------------
F-3
63
Landlord:
By: The Irvine Company,
a Michigan corporation
Date: By:
------------------ ---------------------------
Its:
---------------------------
By:
---------------------------
Its:
---------------------------
F-4
64
EXHIBIT X
INDUSTRIAL WORK LETTER
DOLLAR ALLOWANCE
The Tenant Improvement work (herein "Tenant Improvements") shall consist of any
work, including work in place as of the date hereof, required to complete the
Premises pursuant to the Tenant's approved plans and specifications. All of
the Tenant Improvement work shall be performed by a contractor selected by
Landlord and in accordance with the procedures and requirements set forth
below.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES.
A. Tenant and Landlord have approved, or shall approve within the
time period set forth below, both (i) a detailed space plan
for the Premises, prepared by Landlord's architect, which
includes interior partitions, ceilings, interior finishes,
interior doors, suite entrance, floor coverings, window
coverings, lighting, electrical and telephone outlets,
plumbing connections, heavy floor loads and other special
requirements ("Preliminary Plan"), and (ii) an estimate,
prepared by Landlord's contractor, of the cost for which
Landlord will complete or cause to be completed the Tenant
Improvements ("Preliminary Cost Estimate"). Tenant shall
approve or disapprove each of the Preliminary Plan and the
Preliminary Cost Estimate by signing copies of the appropriate
instrument and delivering same to Landlord within five (5)
business days of its receipt by Tenant. If Tenant disapproves
any matter, Tenant shall specify in detail the reasons for
disapproval and Landlord shall attempt to modify the
Preliminary Plan and the Preliminary Cost Estimate to
incorporate Tenant's suggested revisions in a mutually
satisfactory manner. Notwithstanding the foregoing, however,
Tenant shall approve in all respects a Preliminary Plan and
Preliminary Cost Estimate not later than the date set forth in
Item 11 of the Basic Lease Provisions ("Plan Approval Date"),
it being understood that Tenant's failure to do so shall
constitute a "Tenant Delay" for purposes of this Lease.
B. On or before the Plan Approval Date, Tenant shall provide in
writing to Landlord or Landlord's architect all specifications
and information requested by Landlord for the preparation of
final construction documents and costing, including without
limitation Tenant's final selection of wall and floor
finishes, complete specifications and locations (including
load and HVAC requirements) of Tenant's equipment, and
X-1
65
details of all "Non-Standard Improvements" (as defined below)
to be installed in the Premises (collectively, "Programming
Information"). Tenant's failure to provide the Programming
Information by the Plan Approval Date shall constitute a
Tenant Delay for purposes of this Lease. Tenant understands
that final construction documents for the Tenant Improvements
shall be predicated on the Programming Information, and
accordingly that such information must be accurate and
complete.
C. Except as otherwise specified by Tenant and authorized herein,
the Tenant Improvements shall incorporate Landlord's building
standard materials and specifications ("Standards"). No
deviations from the Standards may be required by Tenant with
respect to doors and frames, finish hardware, entry graphics,
the ceiling system, light fixtures and switches, mechanical
systems, life and safety systems, and/or window coverings;
provided that Landlord may, in its sole discretion, authorize
in writing one or more of such deviations, in which event
Tenant shall be solely responsible for the cost of replacing
same with the applicable Standard item(s) upon the expiration
or termination of this Lease. All other non-standard items
("Non-Standard Improvements") shall be subject to the
reasonable prior approval of Landlord. Landlord shall in no
event be required to approve any Non-Standard Improvement if
Landlord determines that such improvement (i) is of a lesser
quality than the corresponding Standard, (ii) fails to conform
to applicable governmental requirements, (iii) requires
building services beyond the level normally provided to other
tenants, (iv) would delay construction of the Tenant
Improvements beyond the Estimated Commencement Date and Tenant
declines to accept such delay in writing as a Tenant Delay, or
(v) would have an adverse aesthetic impact from the exterior
of the Premises.
D. Upon Tenant's approval of the Preliminary Plan and Preliminary
Cost Estimate and delivery of the complete Programming
Information, Landlord's architect and engineers shall prepare
and deliver to Tenant complete working drawings and
specifications ("Working Drawings and Specifications"), and
Landlord's contractor shall prepare a final construction cost
estimate ("Final Cost Estimate") for the Tenant Improvements
in conformity with the Working Drawings and Specifications.
Tenant shall have five (5) business days from the receipt
thereof to approve or disapprove the Working Drawings and
Specifications and the Final Cost Estimate. Tenant shall not
unreasonably withhold or delay its approval, and any
disapproval or requested modification shall be limited to
items not contained in the approved
X-2
66
Preliminary Plan or Preliminary Cost Estimate. In no event
shall Tenant disapprove the Final Cost Estimate if it does not
exceed the approved Preliminary Cost Estimate. Should Tenant
disapprove the Working Drawings and Specifications and the
Final Cost Estimate, such disapproval shall be accompanied by
a detailed list of revisions. Any revision requested by
Tenant and accepted by Landlord shall be incorporated into a
revised set of Working Drawings and Specifications and Final
Cost Estimate, and Tenant shall approve same in writing within
five (5) business days of receipt without further revision.
Tenant's failure to comply in a timely manner with any of the
requirements of this paragraph shall constitute a Tenant
Delay. Without limiting the rights of Landlord for Tenant
Delays as set forth herein, in the event Tenant has not
approved both the Working Drawings and Specifications and the
Final Cost Estimate within sixty (60) days following the date
of this Lease, then Landlord may, at its option, elect to
terminate this Lease by written notice to Tenant. In the
event Landlord elects to effect such a termination, Tenant
shall, within ten (10) days following demand by Landlord, pay
to Landlord any costs incurred by Landlord in connection with
the preparation or review of plans, construction estimates,
price quotations, drawings or specifications under this Work
Letter and for all costs incurred in the preparation and
execution of this Lease, including any leasing commissions.
E. In the event that Tenant requests in writing a revision in the
approved Working Drawings and Specifications ("Change"),
Landlord shall advise Tenant by written change order as soon
as is practical of any increase in the Completion Cost and/or
any Tenant Delay such Change would cause. Tenant shall
approve or disapprove such change order in writing within two
(2) business days following its receipt from Landlord.
Landlord shall have the right to decline Tenant's request for
a Change for any of the reasons set forth in Article II.C
above for Landlord's disapproval of a Non-Standard
Improvement. It is understood that Landlord shall have no
obligation to interrupt or modify the Tenant Improvement work
pending Tenant's approval of a change order.
F. Notwithstanding any provision in the Lease to the contrary, if
Tenant fails to comply with any of the time periods specified
in this Work Letter, fails otherwise to approve or reasonably
disapprove any submittal within five (5) business days, fails
to approve in writing both the Preliminary Plan and
Preliminary Cost Estimate for the Tenant Improvements by the
Plan Approval Date, fails to provide all of the
X-3
67
Programming Information requested by Landlord by the Plan
Approval Date, fails to approve in writing the Working
Drawings and Specifications and the Final Cost Estimate within
the time provided herein, requests any Changes, furnishes
inaccurate or erroneous specifications or other information,
or otherwise delays in any manner the completion of the Tenant
Improvements (including without limitation by specifying
materials that are not readily available) or the issuance of
an occupancy certificate (any of the foregoing being referred
to in this Lease as a "Tenant Delay"), then Tenant shall bear
any resulting additional construction cost or other expenses,
and the Commencement Date of this Lease shall be deemed to
have occurred for all purposes, including Tenant's obligation
to pay rent, as of the date Landlord reasonably determines
that it would have been able to deliver the Premises to Tenant
but for the collective Tenant Delays. In no event, however,
shall such date be earlier than the Estimated Commencement
Date set forth in the Basic Lease Provisions. Should Landlord
determine that the Commencement Date should be advanced in
accordance with the foregoing, it shall so notify Tenant in
writing. Landlord's determination shall be conclusive unless
Tenant notifies Landlord in writing, within five (5) business
days thereafter, of Tenant's election to contest same by
arbitration with the Judicial Arbitration and Mediation
Service in Orange County, California. Pending the outcome of
such arbitration proceedings, Tenant shall make timely payment
of all rent due under this Lease based upon the Commencement
Date set forth in the aforesaid notice from Landlord.
G. Landlord shall permit Tenant and its agents to enter the
Premises prior to the Commencement Date of the Lease in order
that Tenant may perform any work to be performed by Tenant
hereunder through its own contractors, subject to Landlord's
prior written approval, and in a manner and upon terms and
conditions and at times satisfactory to Landlord's
representative. The foregoing license to enter the Premises
prior to the Commencement Date is, however, conditioned upon
Tenant's contractors and their subcontractors and employees
working in harmony and not interfering with the work being
performed by Landlord. If at any time that entry shall cause
disharmony or interfere with the work being performed by
Landlord, this license may be withdrawn by Landlord upon
twenty-four (24) hours written notice to Tenant. That license
is further conditioned upon the compliance by Tenant's
contractors with all requirements imposed by Landlord on third
party contractors, including without limitation the
maintenance by Tenant and its contractors and
X-4
68
subcontractors of workers' compensation and public liability
and property damage insurance in amounts and with companies
and on forms satisfactory to Landlord, with certificates of
such insurance being furnished to Landlord prior to proceeding
with any such entry. The entry shall be deemed to be under
all of the provisions of the Lease except as to the covenants
to pay rent. Landlord shall not be liable in any way for any
injury, loss or damage which may occur to any such work being
performed by Tenant, the same being solely at Tenant's risk.
In no event shall the failure of Tenant's contractors to
complete any work in the Premises extend the Commencement Date
of this Lease beyond the date that Landlord has completed its
Tenant Improvement work and tendered the Premises to Tenant.
H. Tenant hereby designates the President of Datum, Inc.,
Telephone No. (714) 770-5000, as its representative, agent and
attorney- in-fact for the purpose of receiving notices,
approving submittals and issuing requests for Changes, and
Landlord shall be entitled to rely upon authorizations and
directives of such person(s) as if given directly by Tenant.
Tenant may amend the designation of its construction
representative(s) at any time upon delivery of written notice
to Landlord.
I. The parties acknowledge and agree that the completion of the
Tenant Improvements shall not be a condition of or affect the
Commencement Date of this Lease.
II. COST OF TENANT IMPROVEMENTS
A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved
Final Cost Estimate (subject to the provisions of this Work
Letter), in accordance with final Working Drawings and
Specifications approved by both Landlord and Tenant. Landlord
shall pay towards the final construction costs ("Completion
Cost") as incurred a maximum of Three Hundred Thirty-Four
Thousand Seven Hundred Fifty Dollars ($334,750.00)
("Landlord's Contribution"), based on $5.00 per square foot of
the Premises, and Tenant shall be fully responsible for the
remainder ("Tenant's Contribution").
B. The Completion Cost shall include all direct costs of Landlord
in completing the Tenant Improvements, including but not
limited to the following: (i) payments made to architects,
engineers, contractors, subcontractors and other third party
consultants in the performance of the work, (ii) salaries and
fringe benefits of persons, if any, in the direct employ of
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69
Landlord performing any part of the construction work, (iii)
permit fees and other sums paid to governmental agencies, (iv)
costs of all materials incorporated into the work or used in
connection with the work, and (v) keying and signage costs.
The Completion Cost shall also include an administrative/
supervision fee to be paid to Landlord's management agent for
the Building in the amount of five percent (5%) of all such
direct costs.
C. Prior to start of construction of the Tenant Improvements,
Tenant shall pay to Landlord in full the amount of the
Tenant's Contribution set forth in the approved Final Cost
Estimate. If the actual Completion Cost of the Tenant
Improvements is greater than the Final Cost Estimate because
of modifications or extras not reflected on the approved
working drawings, or because of delays caused by Tenant, then
Tenant shall be responsible for all such additional costs,
including any additional architectural fee. The balance of
any sums not otherwise paid by Tenant shall be due and payable
on or before the Commencement Date of this Lease. If Tenant
defaults in the payment of any sums due under this Work
Letter, Landlord shall (in addition to all other remedies)
have the same rights as in the case of Tenant's failure to pay
rent under the Lease.
X-6
EX-27.2
6
FINANCIAL DATA SCHEDULE
5
1,000
U.S. DOLLARS
3-MOS
DEC-31-1995
APR-1-1995
JUN-30-1995
1
36
0
12,367
80
18,191
32,376
21,044
5,956
58,194
16,002
9,617
996
0
0
30,246
58,194
16,853
16,853
9,283
16,089
0
0
517
247
102
145
0
0
0
145
.03
.03