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Exhibit 10.22
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "FIRST AMENDMENT") is made this 16th day of
February, 2000, by and between SPIEKER PROPERTIES, L.P., a California limited
partnership, ("LANDLORD"), and BROCADE COMMUNICATIONS SYSTEMS, INC., a Delaware
corporation ("TENANT").
WHEREAS, Landlord and Tenant entered into a Lease dated December 17,
1999, (as amended, the "LEASE"), for those certain premises located at 1745
Technology Drive, San Jose, California (the "PERMANENT PREMISES"), and at 2055
Gateway Place, San Jose, California (the "PHASE I TEMPORARY PREMISES"), and 1741
Technology Drive, San Jose, California (the "PHASE II TEMPORARY PREMISES"), each
as more fully described in the Lease. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Lease; and
WHEREAS, Tenant desires to lease from Landlord, and Landlord desires to
lease to Tenant, additional space in Phase I Temporary Premises Building on a
temporary basis and under the terms and conditions as provided herein; and
WHEREAS, Landlord and Tenant desire to convert the Phase II Temporary
Premises to become a portion of the Permanent Premises; and
WHEREAS, Landlord and Tenant desire to modify the Lease as provided
herein.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereby mutually agree as follows:
1. The following shall be added to and made a part of the Lease as a new
Paragraph 39.F:
"ADDITIONAL TEMPORARY PREMISES.
a. TERM; RENT. Landlord shall deliver to Tenant possession of
the premises depicted on ATTACHMENT A attached hereto,
which premises is comprised of approximately four thousand
one hundred ninety-five (4,195) rentable square feet (the
"PART A ADDITIONAL TEMPORARY PREMISES"), and the premises
depicted on ATTACHMENT B attached hereto, which premises
is comprised of approximately eight thousand two hundred
ten (8,210) rentable square feet (the "PART B ADDITIONAL
TEMPORARY PREMISES," the Part A Additional Temporary
Premises and the Part B Additional Temporary Premises
shall sometimes be referred to herein collectively as the
"ADDITIONAL TEMPORARY PREMISES"), which total Additional
Temporary Premises comprise in total approximately twelve
thousand four hundred five (12,405) rentable square feet
located in the Phase I Temporary Premises Building. The
terms and conditions of this Lease shall apply to Tenant's
possession and use of the Additional Temporary Premises;
provided, however, that Rent due and payable commencing on
each of the Part A Additional Temporary Premises Term
Commencement Date and the Part B Additional Temporary
Premises Term Commencement Date (each as defined herein)
through the date Tenant surrenders possession of the
entire Additional Temporary Premises to Landlord as
provided herein shall be as follows: with respect to the
Part A Additional Temporary Premises, an amount equal to
Twelve Thousand Five Hundred Eighty-Five Dollars and
No/100 ($12,585.00) per month, and with respect to the
Part B Additional Temporary Premises, an amount equal to
Twenty-Four Thousand Six Hundred Thirty and No/100
($24,630.00) per month; The total amount Rent payable by
Tenant on a monthly basis after the Part B Additional
Temporary Premises shall be Thirty-Seven Thousand Two
Hundred Fifteen Dollars and No/100 ($37,215.00). If the
obligation for payment of Rent for either of the Part A
Additional Temporary Premises or the Part B Additional
Temporary Premises commences on a day other than the first
day of a month, then such Rent shall be prorated and the
prorated installment shall be paid on the first day of the
calendar month next succeeding the Part A Additional
Temporary Premises Term Commencement Date or the Part B
Additional Temporary Premises Term Commencement Date (each
as defined herein), as the case may be. The term
commencement date ("PART A ADDITIONAL TEMPORARY PREMISES
TERM COMMENCEMENT DATE") with respect to the Part A
Additional Temporary Premises shall be the date Landlord
delivers possession of the Part A Additional Temporary
Premises to Tenant. The term commencement date ("PART B
ADDITIONAL TEMPORARY PREMISES TERM COMMENCEMENT DATE")
with respect to the Part B Additional Temporary Premises
shall be the date Landlord delivers possession of the Part
B Additional Temporary Premises to Tenant.
b. TENANT IMPROVEMENTS.
(i) Landlord, at Landlord's sole cost and expense, hereby
agrees to perform or cause to be performed the following
improvements in the Additional Temporary Premises prior to
the Part B Additional Temporary Premises Term Commencement
Date: (1) restoration of the ceilings, lighting and HVAC
systems to a condition consistent with the building
standards and located in the Part B Additional Temporary
Premises, (2) shampoo of exiting carpets within the Part A
Additional Temporary Premises and replacing the carpeting
with building standard carpeting within the Part B
Additional Temporary Premises, and (3) repaint those walls
located within the entire Additional Temporary Premises
which are not currently covered with wallcoverings.
(ii) Tenant shall be liable for and shall contribute an
amount equal to fifty percent (50%) of the total cost of
the removal of the training and rear projection rooms
currently located in the Part B Additional Temporary
Premises. Within ten (10) days following the date of
execution of this First Amendment, Tenant shall deliver to
Landlord the amount equal to Sixteen Thousand Four Hundred
Fifty-Six Dollars and 50/100 ($16,456.50) ("TENANT'S
ESTIMATED CONTRIBUTION AMOUNT"). In the event Tenant's
Estimated Contribution Amount is less than fifty percent
(50%) of the costs actually incurred in connection with
the removal of the training and rear projection rooms,
Landlord shall deliver to Tenant a written request with
documentary evidence of the actual cost and Tenant shall,
within ten (10) days after delivery of such notice,
deliver to Landlord the remaining balance owed to Landlord
above Tenant's Estimated Contribution Amount. In the event
Tenant's Estimated Contribution Amount is more than fifty
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percent (50%) of the costs actually incurred in connection
with the removal of the training and rear projection
rooms, Landlord shall reimburse Tenant such excess amount
within ten (10) days after such actual costs is finally
determined by Landlord and all lien releases and other
items related to such removal have been received by
Landlord.
c. SURRENDER OF ADDITIONAL TEMPORARY PREMISES. Within thirty
(30) days following substantial completion of the Tenant
Improvements (as defined in EXHIBIT C hereto), Tenant
shall surrender possession of the Additional Temporary
Premises in accordance with Paragraph 36 hereof."
2. Delete Paragraph 39.D(2) in its entirety.
3. Delete Paragraph 39.A in its entirety and replace with the
following:
"A. RENT.
Subject to the provisions of Paragraphs 2.B, Base Rent, net of Operating
Expenses per Paragraph 7 of this Lease, for the Premises shall be as
follows:
From the Term Commencement Date through the
end of the twelfth (12th) $627,432.00 per month plus operating expenses per Paragraph 7 of
this Lease. Operating Expenses for calendar year 2000 are estimated
to be
month following the Term Commencement Date: $217,256.00 per month.
Month 13 following the Term Commencement
Date through Month 24: $646,254.00 per month plus operating expenses per Paragraph 7 of
this Lease
Month 25 following the Term Commencement
Date through Month 36: $665,642.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 37 following the Term Commencement
Date through Month 48: $685,611.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 49 following the Term Commencement
Date through Month 60: $706,179.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 61 following the Term Commencement
Date through Month 72: $727,364.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 73 following the Term Commencement
Date through Month 84: $749,185.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 85 following the Term Commencement
Date through Month 96: $771,661.00 per month plus operating expenses per Paragraph 7 of
this Lease.
Month 97 following the Term Commencement
Date through Month 108: $794,811.00 per month plus operating expenses per Paragraph 7 of
this Lease
Month 109 following the Term Commencement
Date through Month 120: $818,655.00 per month plus operating expenses per Paragraph 7 of
this Lease."
4. Insert as a new Paragraph 39.F the following:
"F. EXPANSION PREMISES. Prior to delivery by Landlord to Tenant of
the Premises, Landlord shall deliver to Tenant possession of the
premises depicted on ATTACHMENT C, attached hereto (the "EXPANSION
PREMISES"), which Expansion Premises comprise approximately thirty-nine
thousand forty-three (39,043) rentable square feet and is in the
building located at 1741 Technology Drive, San Jose, California. The
terms and conditions of this Lease shall apply to Tenant's possession
and use of the Expansion Premises; provided, however, that Base Rent due
and payable commencing on the Expansion Premises Term Commencement Date
(as defined herein) through the Term Commencement Date shall be an
amount equal to One Hundred Eleven Thousand Two Hundred Seventy-Three
Dollars and No/100 ($111,273.00) per month. Tenant shall be liable for
the payment of Operating Expenses with respect to the Expansion Premises
as of the Expansion Premises Term Commencement Date (as defined below).
If the obligation for payment of Base Rent for the Expansion Premises
commences on a day other than the first day of a month, then such Base
Rent shall be prorated and the prorated installment shall be paid on the
first day of the calendar month next succeeding the Expansion Premises
Term Commencement Date (as defined below). The term commencement date
("EXPANSION PREMISES TERM COMMENCEMENT DATE") with respect to the
Expansion Premises shall be the date Landlord delivers possession of the
Expansion Premises with the improvements, if any, substantially complete
in accordance with the terms of ATTACHMENT D, attached hereto. By taking
possession of the Expansion Premises, Tenant accepts them "as is," as
being in good order, condition and repair and the condition in which
Landlord is obligated to deliver them and suitable for the Permitted Use
(with respect to the Expansion Premises) and Tenant's intended
operations in the Expansion Premises, whether or not any notice of
acceptance is given. Landlord shall make commercially reasonable efforts
to deliver possession of the Expansion Premises to Tenant on or before
May 1, 2000. Tenant's taking of possession of the Expansion Premises or
any part thereof shall constitute Tenant's confirmation of substantial
completion thereof for all purposes hereof, whether or not substantial
completion of the Expansion Premises Building or Project shall have
occurred. If for any reason Landlord cannot deliver possession of the
Expansion Premises to Tenant on the scheduled
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Expansion Premises Term Commencement Date, Landlord shall not be subject
to any liability therefor, nor shall Landlord be in default hereunder
nor shall such failure affect the validity of this Lease, and unless the
Expansion Premises have been delivered to Tenant, Tenant agrees to
accept possession of the Expansion Premises at such time as such
improvements have been substantially completed, which date shall then be
deemed the Expansion Premises Term Commencement Date. In the event of
any dispute as to substantial completion of work performed or required
to be performed by Landlord with respect to the Expansion Premises, the
certificate of Landlord's architect or general contractor shall be
conclusive. Upon the Term Commencement Date, the Expansion Premises
shall be a part of the Premises under this Lease and the terms and
conditions of the Lease shall apply to the Expansion Premises as a part
of the Premises, except as expressly stated herein."
5. The following shall be added to and made a part of the Lease as
a new Paragraph 39.G:
"G. ADDITIONAL LETTER OF CREDIT.
(1) DELIVERY OF ADDITIONAL LETTER OF CREDIT. In lieu of depositing a
cash security deposit with Landlord and in addition to the LOC,
Tenant shall, on execution of this Lease, deliver to Landlord
and cause to be in effect during the Lease Term an
unconditional, irrevocable letter of credit ("ADDITIONAL LOC")
in the amount of One Million Three Hundred Thirty-Five Thousand
Two Hundred Seventy-One and No/100 Dollars ($1,335,271.00), as
it may be increased as provided in this Lease (the "ADDITIONAL
LOC AMOUNT") for an initial term of the Additional LOC of three
(3) years and thereafter shall renew automatically from year to
year through 30 days beyond the expiration date of this Lease or
any extension thereto. The Additional LOC shall be in a form
acceptable to Landlord and shall be issued by an "LOC bank"
selected by Tenant and acceptable to Landlord. The Additional
LOC shall survive the termination of this Lease. An "LOC bank"
is a bank that accepts deposits, maintains accounts, has a local
office that will negotiate a letter of credit, and the deposits
of which are insured by the Federal Deposit Insurance
Corporation. Tenant shall pay all expenses, points, or fees
incurred by Tenant in obtaining the Additional LOC. The
Additional LOC shall not be mortgaged, assigned or encumbered in
any manner whatsoever by Tenant without the prior written
consent of Landlord. Tenant acknowledges that Landlord has the
right to transfer or mortgage its interest in the Project, the
Building and in this Lease and Tenant agrees that in the event
of any such transfer or mortgage, Landlord shall have the right
to transfer or assign the Additional LOC and/or the Additional
LOC Security Deposit (as defined below) to the transferee or
mortgagee, and in the event of such transfer, Tenant shall look
solely to such transferee or mortgagee for the return of the
Additional LOC and/or the Additional LOC Security Deposit. The
maximum amount of any transfer fee associated with such transfer
shall not be in excess of reasonable transfer fees customarily
required by issuing banks, which about shall be expressly stated
in the terms of the Additional LOC, and shall be payable by
Landlord.
(2) REPLACEMENT OF ADDITIONAL LETTER OF CREDIT. Tenant may, from
time to time, replace any existing Additional LOC with a new
Additional LOC if the new Additional LOC (a) becomes effective
at least thirty (30) days before expiration of the Additional
LOC that it replaces; (b) is in the required Additional LOC
amount; (c) is issued by an LOC bank acceptable to Landlord; and
(d) otherwise complies with the requirements of this Paragraph
39.G.
(3) LANDLORD'S RIGHT TO DRAW ON ADDITIONAL LOC. Landlord shall hold
the Additional LOC as security for the performance of Tenant's
obligations under this Lease. If, after notice and failure to
cure within any applicable period provided in this Lease, Tenant
is in default pursuant to this Lease, Landlord may, without
prejudice to any other remedy it has, draw on that portion of
the Additional LOC necessary to (a) pay Rent or other sum in
default; (b) pay or reimburse Landlord for any amount that
Landlord may spend or become obligated to spend in exercising
Landlord's rights under Paragraph 30 (Right of Landlord to
Perform Tenant's Covenant); and/or (c) compensate Landlord for
any expense, loss, or damage that Landlord may suffer because of
Tenant's default. If Tenant fails to renew or replace the
Additional LOC at least thirty (30) days before its expiration,
Landlord may, without prejudice to any other remedy it has, draw
on the entire amount of the Additional LOC.
(4) ADDITIONAL LOC SECURITY DEPOSIT. Any amount of the Additional
LOC that is drawn on by Landlord but not applied by Landlord
shall be held by Landlord as a security deposit (the "ADDITIONAL
LOC SECURITY DEPOSIT") in accordance with Paragraph 19 of this
Lease.
(5) RESTORATION OF ADDITIONAL LOC AND ADDITIONAL LOC SECURITY
DEPOSIT. If Landlord draws on any portion of the Additional LOC
and/or applies all or any portion of such draw, Tenant shall,
within five (5) business days after demand by Landlord, either
(a) deposit cash with Landlord in an amount that, when added to
the amount remaining under the Additional LOC and the amount of
any Additional LOC Security Deposit, shall equal the Additional
LOC Amount then required under this Paragraph 39.G; or (b)
reinstate the Additional LOC to the full Additional LOC Amount.
(6) REDUCTION OF ADDITIONAL LOC AMOUNT. At least fifteen (15)
business days prior to the dates specified in each of clauses a.
through d. below, Tenant shall deliver to Landlord for review
Tenant's financial statements prepared in accordance with
generally accepted accounting principles and audited by a
nationally recognized public accounting firm acceptable to
Landlord, and any other financial information requested by
Landlord ("TENANT'S FINANCIAL INFORMATION") If: (i) Tenant has a
tangible net worth, which "tangible net worth" shall be
determined by Landlord in its sole discretion and shall mean
assets less intangible assets and total liabilities, with
intangible asserts including nonmaterial benefits such as
goodwill, patents, copyrights, and trademarks, in excess of One
Hundred Seventy Five Million and No/100 Dollars
($175,000,000.00) as reflected in Tenant's Financial
Information, which amount shall be determined by Landlord to its
satisfaction prior to any reduction in the Additional LOC
Amount; and (ii) Tenant's Financial Information reflects four
(4) consecutive calendar quarters of profitability, as
determined by Landlord, during the time period immediately
preceding Tenant's request for reduction in the Additional LOC
Amount described in this subparagraph during the time period
immediately preceding Tenant's request for reduction in the
Additional LOC Amount, as such profitability is determined by
Landlord, then the following reductions in the Additional LOC
Amount may be made in accordance with the terms of this
Paragraph 39.G(6):
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a. At any time after the end of the thirty-sixth (36th)
month following the Term Commencement Date, the
Additional LOC Amount may be reduced to an amount equal
to One Million One Thousand Four Hundred Fifty-Three and
No/100 Dollars ($1,001,453.00);
b. At any time after the end of the forty-eighth (48th)
month following the Term Commencement Date, the
Additional LOC Amount may be reduced to an amount equal
to Six Hundred Sixty-Five Thousand Nine Hundred
Sixty-Six and No/100 Dollars ($665,966.00);
c. At any time after the end of the sixtieth (60th) month
following the Term Commencement Date, the Additional LOC
Amount may be reduced to an amount equal to Three
Hundred Thirty Thousand Nine Hundred Eighty-Five and
No/100 Dollars ($330,985.00); and
d. At any time after the end of the seventy-second (72nd)
month following the Term Commencement Date, the
Additional LOC may be returned by Landlord to the
issuing bank for cancellation provided that Tenant has,
prior to such delivery by Landlord, delivered a cash
security Deposit (to be held by Landlord in accordance
with the terms of Paragraph 19 of this Lease) an amount
equal to One Hundred Seventy-Nine Thousand Two Hundred
Seven and No/100 Dollars ($179,207.00).
In the event that any of the above described reductions to the
Additional LOC Amount is made and, subsequently, Tenant fails to meet
the corresponding profitability and tangible net worth condition
precedent for a period of thirty (30) days following delivery by
Landlord of written notice of any such failure, Tenant shall within two
(2) business days, increase the face amount of the Additional LOC to an
amount equal to the Additional LOC Amount existing prior to such
reduction (including the reduction described in clause d. above). If
Tenant fails to increase the Additional LOC Amount as provided above,
such failure shall constitute a default hereunder (which default shall
not be subject to any cure rights afforded anywhere in this Lease and
Landlord shall be entitled to draw on the Additional LOC for the full
Additional LOC Amount and hold such Additional LOC Amount as a Security
Deposit in accordance with the terms of this Lease, and enforce all
other rights available to Landlord pursuant to the terms of this Lease
or under applicable law."
6. Paragraph 4.1 of Exhibit C attached to the Lease shall be
modified as follows: Delete the reference to "One Hundred
Eighty-Five and No/100 Dollars ($185,000.00)" and insert
therefor the following: "One Hundred Seventy Thousand and No/100
($170,000.00)".
7. The definition of Security Deposit in the Basic lease
Information shall be deleted and replaced by the following:
"Seven Million Five Hundred Twenty-Nine Thousand One Hundred
Seventy-Five Dollars and No/100 ($7,529,175.00) Letter of Credit
delivered in accordance with the terms of Paragraph 39.E
(subject to adjustment as provided in Paragraphs 39.E, 39.G (as
applicable) and 19 hereof)."
8. "Tenant's Proportionate Share" with respect to the Expansion
Premises in the Phase II Temporary Premises Building shall be
29.35%.
9. "Occupancy Density" with respect to the Expansion Premises in
the Phase II Temporary Premises Building shall be 4.5 people per
one thousand rentable square feet.
10. Provided Tenant is not, and has not been, in default of any
terms and conditions of this Lease, during the initial Term of
the Lease only, Tenant shall have a one-time right of first
offer to lease space in the Phase II Temporary Premises Building
at such time as such additional space is vacated by the prior
tenant. Upon notification by Landlord in writing of the
availability of space and the terms and conditions on which
Landlord is willing to lease such additional space to Tenant,
Tenant shall have five (5) days to notify Landlord in writing of
Tenant's desire to exercise Tenant's right of first offer on the
terms and conditions. In the event Tenant fails to give Landlord
notice of Tenant's election to lease such additional space
within such time period, or if Tenant elects not to lease such
space, Tenant shall have no further right, title or interest in
such additional space (except as expressly provided in this
Lease) and this right of first offer shall terminate with
respect to the portion of the available space so offered to
Tenant. If, on the other hand, Tenant exercises its right of
first offer in the manner prescribed, Tenant shall immediately
deliver to Landlord payment for the first month's rent for such
additional space (in the same manner as provided for in this
Lease), and the lease for such additional space shall be
consummated without delay in accordance with the terms and
conditions set forth in Landlord's notice Such additional space
shall be leased to Tenant on an "as is" basis and Landlord shall
have no obligation to improve such additional space or grant
Tenant any improvement allowance thereon. Notwithstanding
anything to the contrary herein contained, Tenant's right to the
expansion premises shall be conditioned upon the following: (i)
at the time Tenant agrees to accept the expansion premises and
at the time of the commencement of the term for the expansion
premises, Tenant shall be in possession of and occupying the
primary premises for the conduct of its business therein and the
same shall not be occupied by any assignee, subtenant or
licensee and, provided further, that the option for additional
space shall be applicable hereunder only if the expansion
premises will actually be occupied by Tenant and (ii) the
agreement of acceptance shall constitute a representation by
Tenant to Landlord, effective as of the date of the agreement of
acceptance and as of the date of commencement of the lease for
the expansion premises, that Tenant does not intend to assign
the lease for the expansion premises, in whole or in part or
sublet all or any portion of the Premises, the election to
expand being for the purpose of utilizing the expansion premises
for Tenant's purposes in the conduct of Tenant's business
therein.
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11. The following phrase from last sentence of Paragraph 7.C of the
Lease shall be deleted: "up to an amount not to exceed Fifteen
Thousand Dollars ($15,000)".
Except as expressly modified above, all terms and conditions of the Lease remain
in full force and effect and are hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have entered into this First
Amendment as of the date first written above.
LANDLORD: TENANT:
Spieker Properties, L.P., Brocade Communications Systems, Inc.,
A California limited partnership a Delaware corporation
By: Spieker Properties, Inc., By:
a Maryland corporation --------------------------------
its General Partner Michael J. Byrd
Its: Vice President, Finance
Chief Financial Officer
By: By:
-------------------------------- --------------------------------
Joseph D. Russell, Jr. Victor Rinkle
Its: President, Its: Vice President, Operations
Silicon Valley Region
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ATTACHMENT A
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ATTACHMENT B
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ATTACHMENT C
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ATTACHMENT D
LEASE EXPANSION PREMISES IMPROVEMENT AGREEMENT
This Lease Expansion Premises Improvement Agreement ("EXPANSION PREMISES
IMPROVEMENT AGREEMENT") sets forth the terms and conditions relating to
construction of the initial Expansion Premises Tenant Improvements described in
the Plans referred to below (the "EXPANSION PREMISES TENANT IMPROVEMENTS") in
the Expansion Premises. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Lease (the "LEASE") to which this
Expansion Premises Improvement Agreement is attached and forms a part.
1. Plans and Specifications.
1.1. Landlord shall construct the Expansion Premises Tenant
Improvements in the Expansion Premises pursuant to the plans and drawings as
provided to Landlord by Devcon (collectively, the "PLANS"). Tenant shall make no
changes or modifications to the Plans or submit any change orders without the
prior written approval of Landlord.
1.2. Notwithstanding Landlord's review and approval of the Plans,
Landlord shall have no responsibility or liability whatsoever for any errors or
omissions contained in the Plans, or to verify dimensions or conditions, or for
the quality, design or compliance with applicable Regulations of any
improvements described therein or constructed in the Expansion Premises.
Landlord shall assign to Tenant all warranties and guarantees by the contractor
who constructs the Expansion Premises Tenant Improvements relating to the
Expansion Premises Tenant Improvements, and Tenant hereby waives all claims
against Landlord relating to, or arising out of the construction of, the
Expansion Premises Tenant Improvements.
2. Specifications for Standard Expansion Premises Tenant Improvements.
2.1. Specifications and quantities of standard building components
which will comprise and be used in the construction of the Expansion Premises
Tenant Improvements ("STANDARDS") are set forth in SCHEDULE 1 to this ATTACHMENT
D. As used herein, "STANDARDS" or "BUILDING STANDARDS" shall mean the standards
for a particular item selected from time to time by Landlord for the Building,
including those set forth on SCHEDULE 1 of this ATTACHMENT D, or such other
standards of equal or better quality as may be mutually agreed between Landlord
and Tenant in writing.
2.2. No deviations from the Standards are permitted.
3. Construction of Expansion Premises Tenant Improvements.
3.1. Promptly upon the execution of this Expansion Premises
Improvement Agreement, Landlord shall secure a building permit and commence
construction of the Expansion Premises Tenant Improvements provided that Tenant
shall cooperate with Landlord in executing permit applications and performing
other actions reasonably necessary to enable Landlord to obtain any required
permits or certificates of occupancy. Without limiting the provisions of
Paragraph 35 of the Lease, Landlord shall not be liable for any direct or
indirect damages suffered by Tenant as a result of delays in construction beyond
Landlord's reasonable control, including, but not limited to, delays due to
strikes or unavailability of materials or labor, or delays caused by Tenant
(including delays by the contractor or anyone else performing services on behalf
of Landlord or Tenant).
3.2. If any work is to be performed on the Expansion Premises by
Tenant or Tenant's contractor or agents:
(a) Such work shall proceed upon Landlord's written approval of
Tenant's contractor, public liability and property damage insurance carried by
Tenant's contractor, and detailed plans and specifications for such work shall
be at Tenant's sole cost and expense, and shall further be subject to the
provisions of Paragraphs 12 and 27 of the Lease.
(b) All work shall be done in conformity with a valid building
permit when required, a copy of which shall be furnished to Landlord before such
work is commenced, and in any case, all such work shall be performed in
accordance with all applicable Regulations. Notwithstanding any failure by
Landlord to object to any such work, Landlord shall have no responsibility for
Tenant's failure to comply with all applicable Regulations.
(c) If required by Landlord or any lender of Landlord, all work
by Tenant or Tenant's contractor or agents shall be done with union labor in
accordance with all union labor agreements applicable to the trades being
employed.
(d) All work by Tenant or Tenant's contractor or agents shall be
scheduled through Landlord.
(e) Tenant or Tenant's contractor or agents shall arrange for
necessary utility, hoisting and elevator service with Landlord's contractor and
shall pay such reasonable charges for such services as may be charged by
Tenant's or Landlord's contractor.
(f) Tenant's entry to the Expansion Premises for any purpose,
including, without limitation, inspection or performance of Tenant construction
by Tenant's agents, prior to the date Tenant's obligation to pay rent commences
shall be subject to all the terms and conditions of the Lease except the payment
of Rent. Tenant's entry shall mean entry by Tenant, its officers, contractors,
licensees, agents, servants, employees, guests, invitees, or visitors.
(g) Tenant shall promptly reimburse Landlord upon demand for any
reasonable expense actually incurred by the Landlord by reason of faulty work
done by Tenant or its contractors or by reason of any delays caused by such
work, or by reason of inadequate clean-up.
4. Completion and Rental Commencement Date.
4.1. Tenant's obligation to pay Rent under the Lease shall commence
on the applicable date described in Paragraph 2 of the Lease. However:
(a) If Tenant delays in approving any matter requiring Tenant's
approval within the time limits specified herein; or
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(b) If the construction period is extended because Tenant
requests any changes in construction or modifies the Plans or if the same do not
comply with applicable Regulations; or
(c) If Landlord is otherwise delayed in the construction of the
Expansion Premises Tenant Improvements for any act or omission of or breach by
Tenant or anyone performing services on behalf of Tenant or on account of any
work performed on the Expansion Premises by Tenant or Tenant's contractors or
agents, then the date described in Paragraph 2 of the Lease shall be deemed to
be accelerated by the total number of days of Tenant delays described in (a)
through (c) above (each, a "TENANT DELAY"), calculated in accordance with the
provisions of Paragraph 4.2 below.
4.2. If the Term of the Lease has not already commenced pursuant to
the provisions of Paragraph 2 of the Lease and substantial completion of the
Expansion Premises Tenant Improvements has been delayed on account of any Tenant
Delays, then upon actual substantial completion of the Expansion Premises Tenant
Improvements (as defined in Paragraph 2 of the Lease), Landlord shall notify
Tenant in writing of the date substantial completion of the Expansion Premises
Tenant Improvements would have occurred but for such Tenant Delays, and such
date shall thereafter be deemed to be the Term Commencement Date for all
purposes under the Lease. Tenant shall pay to Landlord, within three (3)
business days after receipt of such written notice (which notice shall include a
summary of Tenant Delays), the per diem Base Rent times the number of days
between the date the Term Commencement Date would have otherwise occurred but
for the Tenant Delays (as determined by Landlord's contractor), and the date of
actual substantial completion of the Expansion Premises Tenant Improvements.
4.3. Promptly after substantial completion of the Expansion Premises
Tenant Improvements, Landlord shall give notice to Tenant and Tenant shall
conduct an inspection of the Expansion Premises with a representative of
Landlord and develop with such representative of Landlord a punchlist of items,
if any, of the Expansion Premises Tenant Improvements that are not complete or
that require correction. Upon receipt of such punchlist, Landlord shall proceed
diligently to remedy such items at Landlord's cost and expense provided such
items are part of the Expansion Premises Tenant Improvements to be constructed
by Landlord hereunder and are otherwise consistent with Landlord's obligations
under this Expansion Premises Improvement Agreement (with any dispute between
Landlord and Tenant pertaining thereto to be resolved by Landlord's architect or
general contractor). Substantial completion shall occur notwithstanding delivery
of any such punchlist.
4.4. A default under this Expansion Premises Improvement Agreement
shall constitute a default under the Lease, and the parties shall be entitled to
all rights and remedies under the Lease in the event of a default hereunder by
the other party (notwithstanding that the Term thereof has not commenced).
4.5. Without limiting the "as-is" provisions of the Lease, except for
the Expansion Premises Tenant Improvements to be constructed by Landlord
pursuant to this Expansion Premises Improvement Agreement, Tenant accepts the
Expansion Premises in its "as-is" condition and acknowledges that it has had an
opportunity to inspect the Expansion Premises prior to signing the Lease.
5. Expansion Premises Tenant Improvement Costs.
5.1. The cost of the Expansion Premises Tenant Improvements shall be
paid for by Tenant (provided, however, that Landlord shall allocate the
Expansion Premises Tenant Improvement Allowance (as herein defined) to such
costs), including, without limitation, the cost of: Standards; space plans and
studies; architectural and engineering fees; permits, approvals and other
governmental fees; labor, material, equipment and supplies; construction fees
and other amounts payable to contractors or subcontractors; taxes; off-site
improvements; remediation and preparation of the Premises for construction of
the Expansion Premises Tenant Improvements; taxes; filing and recording fees;
premiums for insurance and bonds; attorneys' fees; financing costs; and all
other costs expended or to be expended in the construction of the Expansion
Premises Tenant Improvements, including those costs incurred for construction of
elements of the Tenant Improvements in the Premises, which construction was
performed by Landlord prior to the execution of the Lease or for materials
comprising the Expansion Premises Tenant Improvements which were purchased by
Landlord prior to the execution of the Lease; and an administration fee of three
percent (3%) of the amount of the Expansion Premises Tenant Improvements.
5.2. Provided Tenant is not in default under the Lease, including
this Expansion Premises Improvement Agreement, Landlord shall contribute a
one-time tenant improvement allowance not to exceed Thirty and No/100 Dollars
($30.00) per rentable square foot of the Expansion Premises ("EXPANSION PREMISES
TENANT IMPROVEMENT ALLOWANCE") toward the cost of the initial Expansion Premises
Tenant Improvements. If the cost of the Expansion Premises Tenant Improvements
exceeds the Expansion Premises Tenant Improvement Allowance, Tenant shall pay
Landlord such excess cost within ten (10) days after Landlord's notice to Tenant
of such excess cost. No credit shall be given to Tenant if the cost of the
Expansion Premises Tenant Improvements is less than the Expansion Premises
Tenant Improvement Allowance.
5.3. If the cost of the Expansion Premises Tenant Improvements
increases after the Tenant's approval of the Plans due to the requirements of
any governmental agency or applicable Regulation or any other reason, Tenant
shall pay Landlord the amount of such increase within ten (10) days after notice
from Landlord of such increase.
5.4. If Tenant requests any change(s) in the Plans after approval of
the estimate of the cost of the Expansion Premises Tenant Improvements and any
such requested changes are approved by Landlord in writing in Landlord's sole
discretion, Landlord shall advise Tenant promptly of any cost increases and/or
delays such approved change(s) will cause in the construction of the Expansion
Premises Tenant Improvements. Tenant shall approve or disapprove any or all such
change(s) within three (3) business days after notice from Landlord of such cost
increases and/or delays. To the extent Tenant disapproves any such cost increase
and/or delay attributable thereto, Landlord shall have the right, in its sole
discretion, to disapprove Tenant's request for any changes to the approved
Plans. If the cost of the Expansion Premises Tenant Improvements increases due
to any changes in the Plan(s) requested by Tenant, Tenant shall pay Landlord the
amount of such increase within ten (10) days after notice from Landlord of such
increase and Tenant's approval thereof in accordance with this Paragraph 5.4.
5.5. Notwithstanding anything to the contrary in this Expansion
Premises Improvement Agreement, in the event that the cost of the Expansion
Premises Tenant Improvements exceeds the Expansion Premises Tenant Improvement
Allowance, upon Tenant's written request, Landlord shall provide an additional
amount not to exceed Four Dollars ($4.00) per rentable square foot (the
"EXPANSION PREMISES BASE RENT INCREASE FACTOR") toward the excess cost of the
Expansion Premises Tenant Improvements. Tenant must provide such written request
to Landlord prior to the Expansion Premises Term
11
Commencement Date defined in the Lease. In the event Tenant fails to so provide
such written notice to Landlord, Tenant shall be deemed to waive its right to
receive the Expansion Premises Base Rent Increase Factor. The Expansion Premises
Base Rent Increase Factor shall be amortized over the initial Term of the Lease
commencing upon disbursement of monies, at an interest rate of ten percent (10%)
per annum, payable in monthly installments as Base Rent, in accordance with the
terms of the Lease. If the costs of the Expansion Premises Tenant Improvements
does exceed the Expansion Premises Tenant Improvement Allowance, and Tenant
elects to receive the Expansion Premises Base Increase Rent Factor pursuant to
this Paragraph 5.3, Landlord and Tenant shall each execute a written amendment
to the Lease, prepared by Landlord, to reflect the appropriate increase in the
amount of Base Rent.
5.6. Within forty-five (45) days following Landlord's receipt of the
approved Plans, Landlord shall provide to Tenant a cost estimate for the
Expansion Premises Tenant Improvements which cost estimate shall be prepared in
reasonable detail and in good faith. IN the event that the cost of the Expansion
Premises Tenant Improvements is greater than the Expansion Premises Tenant
Improvement Allowance, Tenant shall either (i) deliver such excess amounts to
Landlord in accordance with this Expansion Premises Improvement Agreement, or
(ii) for the excess amount equal to or less than Four Dollars ($4.00) per
rentable square foot, inform Landlord in writing whether Tenant elects to
exercise its rights pursuant to Paragraph 5.5 above with respect to the
Expansion Premises Base Rent Increase Factor. In the event that Tenant elects
clause (ii) above and the excess amount is greater than the Expansion Premises
Base Rent Increase Factor, Tenant shall pay such excess amount above the
Expansion Premises Base Rent Increase Factor to Landlord in accordance with this
Expansion Premises Improvement Agreement.
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SCHEDULE 1
TO ATTACHMENT D
BUILDING STANDARDS
The following constitutes the Building Standard Expansion Premises
Tenant Improvements ("STANDARDS") in the quantities specified:
(to be provided)