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EXHIBIT 10.14
L-5777 CF1-605499
CA0591512
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease (this "Second Amendment") is made and
effective as of this 30th day of August, 1999 (the "Effective Date") by and
between Catellus Finance 1, L.L.C., a Delaware limited liability company,
successor-in-interest to Catellus Development Corporation ("Landlord"), and
VitalCom Inc., a Delaware corporation ("Tenant"), as follows:
A. Landlord and Tenant are parties to that certain Multi-Tenant Industrial
Triple Net Lease dated July 25, 1995 (the "Lease"), pursuant to which Landlord
leased to Tenant certain premises located at 15222 Del Amo Avenue, Tustin,
California, as more particularly described in the Lease ("Original Premises"),
as amended by that certain (i) Commencement Date Memorandum executed October 31,
1995 by Tenant, and (ii) Lease Amendment dated January 10, 1996 ("Lease
Amendment"). The Lease, Commencement Date Memorandum, and Lease Amendment are
hereinafter collectively referred to as the "Lease".
B. Tenant desires to lease from Landlord and Landlord desires to lease to
Tenant certain additional space located on the 2nd floor of the Building on the
terms and conditions set forth herein.
C. In connection therewith, Landlord and Tenant desire to amend the Lease
as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree to amend the Lease as follows:
1. Incorporation. Paragraphs A and B above are hereby incorporated by
reference as if set forth in full at this point. All provisions and defined
terms of the Lease are also incorporated by reference.
2. Expansion of Premises.
2.1 Effective January 1, 2000 (the "Expansion Occupancy Date"), the
Premises shall be expanded to include approximately 10,706 rentable square feet
of additional space located on the 2nd floor of the Building (the "Expansion
Space"), thereby increasing the total area of the Premises to approximately
46,231 rentable square feet. The Original Premises and Expansion Space are
hereinafter referred to collectively as the "Premises".
2.2 Tenant acknowledges that Tenant has inspected the Expansion
Space and that Tenant accepts the Expansion Space in an "AS-IS" "WHERE-IS"
condition, subject to Landlord's obligation to cause the electrical, plumbing
and HVAC systems serving the Expansion Space to be in good working order as of
September 1,1999.
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3. Early Entry. Subject to the following provisions of this Section 3,
Tenant shall have the right to enter the Expansion Space at any time on or after
September 1, 1999, for the purpose of constructing tenant improvements to the
Expansion Space ("Tenant's Work"). Tenant's Work shall be constructed in
accordance with the provisions of Section 10 of the Lease and with Landlord's
requirements for improvements or alterations by Tenant. Tenant agrees (i) any
such early entry by Tenant shall be at Tenant's sole risk, (ii) Tenant shall
comply with and be bound by all provisions of this Lease during the period of
any such early entry, except for the payment of monthly Base Rent, including,
but not limited to, the payment of Tenant's Share of Operating Expenses, Real
Property Taxes and insurance, (iii) prior to entry upon the Expansion Space by
Tenant, Tenant agrees to pay for and provide to Landlord certificates evidencing
the existence and amounts of liability insurance carried by Tenant, which
coverage must comply with the provisions of the Lease relating to insurance,
(iv) Tenant and its agents and contractors agree to comply with all applicable
laws, regulations, permits and other approvals required to perform its work, and
(v) Tenant agrees to indemnify, protect, defend and save Landlord and the
Premises harmless from and against any and all liens, liabilities, losses,
damages, costs, expenses, demands, actions, causes of action and claims
(including, without limitation, attorneys' fees and legal costs) arising out of
the early entry, use, construction, or occupancy of the Expansion Space by
Tenant or its agents, employees or contractors.
4. Revised Lease Term. The initial Term of the Lease (as defined in
Section 2.1 of the Lease) is hereby extended such that the initial Term shall
expire on June 30, 2005 (the "Revised Lease Term"). For all purposes, the
commencement date of the Revised Lease Term shall be deemed January 1, 2000,
even though the prior lease term would not have expired until October 31, 2001.
5. Tenant's Share. Tenant's Share with respect to the Expansion Space is
17.88%, thereby increasing, effective September 1, 1999, Tenant's Share for the
entire Premises from 59.4% to 77.28% (based on a total Building rentable square
footage of 59,825 RSF).
6. Base Rent.
6.1 Pursuant to the terms of the Lease, effective November 1,1999, the
monthly Base Rent for the Original Premises shall be increased to Twenty-Three
Thousand Nine Hundred Ninety Dollars ($23,990.00) per month.
6.2 Effective January 1, 2000, the monthly Base Rent payable by Tenant
to Landlord for use of the Premises during the Revised Lease Term shall be in
accordance with the following schedule:
Months Monthly Base Rent
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January 1, 2000 - October 31, 2000 $34,696.00 per month
November 1, 2000 - August 31, 2001 $34,696.00 per month
September 1, 2001 - October 31, 2001 $35,339.00 per month
November 1, 2001- August 31, 2003 $49,014.00 per month
September 1, 2003 - June 30, 2005 $51,799.00 per month
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7. Rental Abatement Period. Tenant's obligation to pay Base Rent for the
Expansion Space only shall be conditionally and partially abated by one-half
(1/2) ($5,353.00 per month) for the period of January 1, 2000 through October
31, 2000 ("Rental Abatement Period"). Such abatement shall apply to Base Rent
for the Expansion Space only and shall not apply to any other sums payable under
the Lease. The abatement of Base Rent described above is expressly conditioned
on Tenant's performance of its obligations under the Lease throughout the
Revised Lease Term. If Tenant defaults under the Lease and such default results
in a termination of the Lease prior to the expiration of the Revised Lease Term,
then Tenant shall pay to Landlord on the date of such termination, in addition
to all other amounts and damages to which Landlord is entitled, the amount of
Base Rent which would otherwise have been due and payable during the Rental
Abatement Period.
8. Base Rent Increases: Option to Extend.
8.1 Sections 21 and 22 of the Lease are hereby deleted in their
entirety.
8.2 Option to Extend.
8.2.1 Terms of Option: Provided (i) Tenant is not in default under the
terms of this Lease at the time this renewal option is exercised or at the
commencement of the Option Term (as hereinafter defined), (ii) Tenant is
occupying at least ninety percent (90%) of the Premises, including the Expansion
Space, and (iii) Landlord has not given more than two (2) notices of default
during the final twelve (12) months of the Revised Lease Term for nonpayment of
monetary obligations, Tenant shall have the option to renew this Lease for an
additional period of sixty (60) months ("Option Term". The Option Term shall be
on all the terms and conditions of this Lease, except that Landlord shall have
no additional obligation for free rent, leasehold improvements or for any other
tenant inducements for the Option Term and Tenant shall have no termination
rights or expansion rights during the Option Term. Base Rent shall be increased
(but not decreased) to one hundred percent (100%) of the fair market rental rate
("Market Rent") as set forth below and the Security Deposit will be increased to
reflect any increase in Base Rent payable under the Lease. There shall be no
additional extension terms beyond the Option Term set forth herein. Tenant must
exercise its option to extend this Lease by giving Landlord written notice of
its election to do so not less than one hundred eighty (180) days prior to the
end of the Revised Lease Term. Any notice not given in a timely manner shall be
void, and Tenant shall be deemed to have waived its extension rights. Except as
provided in Section 16.2 of the Lease pertaining to an assignment to an
Affiliate, the extension option set forth herein is personal to Tenant and shall
not be included in any assignment of this Lease.
8.3 Determination of Base Rent During Extension Term.
8.3.1 Agreement on Base Rent. Landlord and Tenant shall have thirty
(30) days after Landlord receives the exercise notice in which to agree on the
Base Rent for the Option Term. Notwithstanding anything set forth herein to the
contrary, in no event shall the Base Rent for the Option Term be less than the
Base Rent in effect immediately prior to the Option Term.
8.3.2 Appraisal. If Landlord and Tenant are unable to agree upon the
Base Rent for the Option Term within such thirty (30) day period, then within
fifteen (15) days after the expiration of the thirty (30) day period, each
party, by giving notice to the other party, shall
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appoint a real estate appraiser who is a current member of the American
Institute of Real Estate Appraisers, with at least five (5) years of experience
appraising building space comparable to the Premises in the city and county
where the Premises is located and such appraiser will determine the Market Rent.
Market Rent shall mean the monthly amount per rentable square foot in the
Premises that a willing, non-equity new tenant would pay and a willing landlord
would accept at arm's length for space in a comparable building or buildings,
with comparable tenant improvements, in a comparable location, giving
appropriate consideration to monthly rental rates per rentable square foot, the
presence or absence of rent escalation clauses such as operating expense and tax
pass-throughs, length of lease term, size and location of premises being leased
and other generally applicable terms and conditions of tenancy for a similar
building or buildings. If the two (2) appraisers are unable to agree on the
Market Rent for the Option Term within twenty (20) days, they shall select a
third appraiser meeting the qualifications stated in this Section within five
(5) days after the end of such twenty (20) day period. The third appraiser,
however selected, shall be a person who has not previously acted in any capacity
for either party. Within twenty (20) days after the selection of the third
appraiser, a majority of the appraisers shall set the Market Rent for the Option
Term. If a majority of the appraisers is unable to set the Market Rent within
the twenty (20) day period, the two (2) closest appraisals shall be added
together and their total divided by two (2). The resulting quotient shall be the
Market Rent for the Option Term. Each party shall be responsible for the costs,
charges and fees of the appraiser appointed by that party plus one-half of the
cost of the third appraiser.
8.3.3 Amendment of Lease. Immediately after the Base Rent is
determined for the Option Term, Landlord and Tenant shall execute an amendment
to this Lease stating the new Base Rent in effect.
8.3.4 Base Rent Increases During Option Term. Effective as of the
first day of the twenty-fifth (25th) and forty-ninth (49th) months of the Option
Term (the "Adjustment Date(s)", the monthly Base Rent shall be increased in
accordance with the percentage increase, if any, in the Consumer Price Index, to
an amount that is equal to the product of (i) the Index (as hereafter defined)
for April, 2007, multiplied by (ii) the monthly Base Rent payable during the
first twenty-four (24) months of the Option Term, divided by (iii) the Basic
Index (as hereafter defined); provided however, in no event shall the Base Rent
(as adjusted) in effect immediately prior to the applicable Adjustment Date be
increased as a result of a CPI adjustment by less than three percent (3%) nor
more than eight percent (8%) of such amount per Lease Year, compounded annually.
The Index shall mean the Consumer Price Index, All Items, 1982-1984 = 100, All
Urban Consumers, for the Los Angeles/Riverside/Anaheim Area, as published by the
United States Department of Labor, Bureau of Labor Statistics, or its successor
index, and the Basic Index shall mean the Index published for April, 2005. The
adjusted Base Rent shall be rounded to the nearest $1.00. If the Index required
for the calculation specified in this subsection is not available on any
Adjustment Date, Tenant shall continue to pay the same amount of Base Rent
payable during the period immediately preceding such Adjustment Date until the
Index is available and the necessary calculation is made. As soon as such
calculation is made, Tenant shall immediately pay to Landlord the amount of any
underpayment of Base Rent for the month(s) that have elapsed. In the event the
compilation or publication of the Index shall be transferred to any other
department, bureau or agency or shall be discontinued, the index most nearly the
same as the Index shall be used to make such calculation.
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9. Option to Terminate Lease. Section 2.4 of the Lease is hereby deleted in
its entirety and replaced with the following:
"2.4 Option to Terminate Lease. In the event that Tenant requires
additional space and no expansion space is available within the Building,
PacifiCenter-Santa Ana, PacifiCenter-Tustin, or other mutually agreeable
location, Tenant shall have the right to terminate this Lease at any time
between July 1, 2004, and June 30, 2005 (and not, if Tenant elects to extend the
Term, during the Option Term), by delivering to Landlord written notice of
Tenant's unconditional and irrevocable exercise of such option to terminate this
Lease not less than six (6) months prior to the effective date of such
termination. On or before the effective date of such termination, Tenant shall
pay to Landlord, in cash, (i) three (3) months rent and (ii) One Thousand Four
Hundred Fifty-Five Dollars ($1455) multiplied by the number of months or
portions thereof by which Tenant's exercise of the option to terminate reduces
the Term of the Lease from June 30, 2005 (which amount represents a pro rated
reimbursement of the rental abatement provided by Landlord pursuant to Section 7
above), (collectively, the "Termination Reimbursement"). If Tenant fails to give
six (6) months' notice of the exercise of the option to terminate this Lease, or
having given such notice, Tenant fails to deliver the Termination Reimbursement
on or before the effective date of the termination, such notice shall be
ineffective and the Lease shall not be terminated. In the event that this Lease
is terminated pursuant to this Section 2.4, Tenant shall not be released from
any liability or obligation under this Lease, whether of indemnity or otherwise,
resulting from any act, omission, or event occurring prior to the effective date
of such termination."
10. Right of First Offer. Notwithstanding anything to the contrary set
forth in Section 23.1 of the Lease, the right of first offer granted to Tenant
in Section 23.1 shall be with respect to any rentable space in the Building that
becomes available during the Revised Lease Term. Notwithstanding the foregoing,
Tenant shall have no right of first offer during the Option Term.
11. Parking. The reference to "Parking Spaces" on Page ii of the Basic
Lease Information is hereby deleted in its entirety and replaced with the
following:
"Parking Spaces: One hundred eighty-four (184) parking spaces, of which
fifteen (15) shall be designated as reserved for Tenant's
use in the locations shown on Exhibit B attached hereto."
12. Brokerage Commission. Landlord shall pay a brokerage commission in
connection with the execution of this Amendment to CB Richard Ellis ("CB"), and
CB shall be responsible for any commission due Cushman & Wakefield of
California, Inc. or The Seeley Company, in accordance with a separate agreement
between Landlord and CB, Cushman & Wakefield of California, Inc. and The Seeley
Company. Tenant hereby agrees to indemnify, protect, and defend Landlord from
and against any claims, liabilities, damages, or expenses, including reasonable
attorneys' fees, arising out of any claim or demand by any person for a
brokerage commission, finder's fee, or other compensation as a result of any
statement, act, omission, or agreement of Tenant.
13. Exhibit A of the Lease. Effective as of September 1, 1999, Exhibit A of
the Lease is hereby deleted in its entirety and replaced with Exhibit A attached
hereto and incorporated herein by this reference.
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14. Additional Security Deposit. Concurrently with the execution of this
Amendment, Tenant shall deposit with Landlord the sum of Ten Thousand Dollars
($10,000.00), thereby increasing the amount of the Security Deposit referred to
in the Basic Lease Information of the Lease to the sum of Thirty-One Thousand
Three Hundred Fifteen Dollars ($31,315.00).
15. Conflict. In the event of a conflict or discrepancy between the Lease
and this Second Amendment, the provisions of this Second Amendment shall
control.
16. Successors; Integration and Restatement
16.1 This Second Amendment shall inure to the benefit of and be
binding upon Landlord and Tenant and their respective successors and assigns.
16.2 This Second Amendment constitutes the entire agreement of the
parties with respect to the subject matter hereof. The Lease and this Second
Amendment shall not be further amended or modified except by a written
instrument signed by both parties. This Second Amendment is the joint work
product of both parties and shall not be construed more favorably for, or more
strictly against, either party on the grounds that such party participated more
or less fully in the preparation of this Second Amendment.
16.3 Except as expressly amended hereby, the Lease remains unmodified
and in full force and effect and is incorporated in this Second Amendment as if
fully set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to
Lease as of the Effective Date.
CATELLUS FINANCE 1, L.L.C., VITALCOM, INC.,
a Delaware limited liability company a Delaware corporation
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ SHELLEY B. THUNEN
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Title: Director, asst. management Title: Chief Financial Officer
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By: /s/ FRANK T. SAMPLE
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Title: CEO
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EXHIBIT A-1
[FLOOR PLAN]
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EXHIBIT A-2
[FLOOR PLAN]
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EXHIBIT B
[PROPERTY LAYOUT]