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EXHIBIT 10.5
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease (this "Amendment"), entered into as of
August 8, 1996, by and between SORRENTO TECH ASSOCIATES, a California limited
partnership ("Landlord"), and APPLIED DIGITAL ACCESS, a California corporation
("Tenant"), modifies that certain R & D Building Lease dated as of June, 1993,
by and between Landlord and Tenant, as amended by that certain First Amendment
to Lease dated as of September 23, 1994 (collectively, the "Lease"). All
capitalized terms used in this Amendment and not defined shall have the meanings
set forth in the Lease.
The parties hereto desire that the Lease be modified to provide for,
among other things, an increase in the size of the Premises, an extension of the
Term and an addition of an option to further extend the Term.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
the above recitals and as follows:
1. Premises. The Lease is hereby amended to provide for a new
definition of the Premises. Effective December 1, 1996, approximately 23,381
additional square feet ("Expansion Areat') shall be added to the existing
approximately 38,987 square feet, for a total of approximately 62,368 square
feet which shall constitute the new Premises. The additional square feet
described in the foregoing sentence are shown on Exhibit A attached hereto and
incorporated by this reference.
2. Commencement Date. The provisions of the Lease shall become
applicable to the Expansion Area on December 1, 1996 and Tenant shall pay Rent
and Additional Charges on the Expansion Area as per the terms of the Lease
commencing on said date. Upon said date, the Rent and Tenant's Additional
Charges shall be determined using the rentable square feet within the Premises
as amended hereby.
3. Acceptance of Expansion Area. Upon taking possession of the
Expansion Area, Tenant shall be deemed to have accepted the Expansion Area in
its "As Is" condition, and to have acknowledged that the same fully comply with
Landlord's obligations under the Lease and this Amendment. Tenant shall be
entitled to construct certain improvements in the Expansion Area, subject to
obtaining Landlord's prior written consent of the architects, contractors and
all plans and specifications for such improvements before the commencement of
any work. Landlord shall provide to Tenant an improvement allowance of $150,000
to be applied towards actual costs in connection with Tenant's construction of
improvements in the Expansion Area. Landlord will fund such allowance within
thirty days of receipt of invoices for actual costs expended towards such
improvements. The provisions of the Lease shall apply to such improvements,
including, but not limited, to Articles 11 and 12 of the Lease.
Landlord hereby notifies Tenant that Landlord does not know, and does not have
reasonable cause to believe, that any Hazardous Materials has come to be located
on or beneath the Expansion Area. In the event Hazardous Materials are
discovered to have been released in, on, under or about the Expansion Area by
Pacific Data Products, prior to the Commencement Date for the Expansion Area,
Landlord agrees to diligently pursue Landlord's applicable rights and remedies
pursuant to Landlord's current lease agreement with Pacific Data Products
arising from any remediation required as a result of such Hazardous Materials.
Additionally, in the event Pacific Data Products remains in the Expansion Area
after the Commencement Date, without having subleased the Expansion Area from
Tenant as provided below, then Landlord agrees to enforce Pacific Data Products'
surrender obligations under the current lease of the Expansion Area.
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4. Extension of Term Rent. The Term of the Lease is hereby extended for
an additional period of forty-eight months ("Extension Term") with the new
Expiration Date being August 31, 2003. Rent during the Extension Term shall be
payable at the following rates per rentable square foot of the Premises per
month:
September 1, 1999 Through August 31, 2000 $ .97
September 1, 2000 Through August 31, 2001 $1.00
September 1, 2001 Through August 31, 2002 $1.04
September 1, 2002 Through August 31, 2003 $1.08
5. Option to Extend Term. Subject to all of the terms and conditions of
the Lease, Tenant shall have a one time option ("Extension Option") to further
extend the Term of the Lease for an additional five (5) years. Tenant must
deliver irrevocable written notice to Landlord of Tenant's exercise of the
Extension Option not later than August 31, 2002. Tenant's failure to timely
deliver such notice shall constitute an automatic termination of the Extension
Option and Tenant shall have no further right to extend the term of the Lease.
During the five year extension, Rent and Additional Charges shall be based on
100% of the then current fair market value of the Premises, as determined at
that time for comparable space in the Project, but in no event shall such
amounts be less than the Rent and Additional Charges paid by Tenant during the
prior year under the Lease. If Landlord and Tenant are unable to agree to the
fair market value of the Premises for the additional five year extension term,
then the matter shall be submitted to arbitration for determination under the
procedures set forth in the Lease.
6. Security Deposit. Upon execution of this Amendment, Tenant shall pay
to Landlord in immediately available funds as a portion of the Security Deposit
held by Landlord pursuant to the terms and conditions of the Lease, an amount
equal to $26,500.00, in order to adjust the amount of the Security Deposit so
that the amount of the Security Deposit held by Landlord shall be $65,700.00.
7. Contingent Upon Termination of PDP Lease. Tenant acknowledges that
the Expansion Area is currently occupied by Pacific Data Products under the
terms of a lease between Pacific Data Products and Landlord. Landlord shall have
no obligations under this Amendment and this Amendment shall not be effective
unless and until Landlord and Pacific Data Products enter into a termination
agreement in a form acceptable to Landlord pursuant to which Pacific Data
Products agrees to vacate the Expansion Area by no later than November 30, 1996.
Landlord agrees to diligently and in good faith negotiate a mutually
acceptable termination agreement with Pacific Data Products and, if such
termination agreement is not executed by both Landlord and Pacific Data Products
by November 1, 1996, this Second Amendment to Lease shall be null and void and
be of no further force or effect, and neither party shall have further rights or
obligations to the other except that Landlord shall return any payment made by
Tenant to Landlord. Notwithstanding Landlord's termination of the current lease
of the Expansion Area to Pacific Data Products, Landlord hereby preapproves
Pacific Data Products as a subtenant of Tenant in the Expansion Area pursuant to
a sublease between Tenant and Pacific Data Products, in a form reasonably
acceptable to Landlord, and subject to all terms and conditions of the Lease
including without limitation the provisions of Article 18 of the Lease.
8. Broker's Commissions. Tenant represents and warrants that it has not
entered into any agreement or incurred or created any obligation which might
require Landlord to pay any broker's commission, finder's fee or other
commission or fee relating to subject matter of this Amendment.
9. Lender Consent. Landlord shall diligently pursue and obtain from the
Mortgagee of Landlord's interest in the Project appropriate consents to this
Second Amendment to Lease.
10. Miscellaneous.
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10.1 Further Assurances. Each of the parties hereto agrees to execute
all documents and instruments and to take all other actions as may specifically
be provided for herein or in the Lease as may be required in order to consummate
the purposes of this Amendment.
10.2 No Third Parties. Except as specifically set forth herein, no
third party shall be benefitted by any of the provisions of this Amendment, nor
shall any such third party have the right to rely in any manner upon any of the
terms hereof, and none of the covenants, representations, warranties or
agreements herein contained shall run in favor of any third party not
specifically referenced herein.
10.3 Legal Expenses. The prevailing party in any litigation or dispute
over rights, remedies or duties arising under this Amendment shall be entitled
to recover, in addition to other appropriate relief, its reasonable costs and
expenses, including, without limitation, attorneys' fees and court costs. Such
entitlement shall include costs and expenses incurred in the collection of any
judgment or settlement.
10.4 Integration: Interpretation. This Amendment in combination with
the Lease contains or expressly incorporates by reference the entire agreement
of the parties with respect to the matters contemplated herein and supersedes
all prior negotiations. Except as specifically set forth herein, the Lease
remains unmodified and in full force and effect.
10.5 Construction. The parties acknowledge that each party and its
counsel have reviewed this Amendment. The parties agree that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Amendment.
10.6 Severability. If any provision of this Amendment or of the Lease
shall be determined by a court of competent jurisdiction to be invalid, illegal
or unenforceable, that portion shall be deemed severed therefrom and the
remaining parts shall remain in full force as though the invalid, illegal, or
unenforceable portion had never been a part thereof.
10.7 No Defaults. Tenant hereby represents and warrants that it is not
in default under the Lease nor do any facts or circumstances exist which with
the passage of time or the giving of notice, or both, could ripen into a
default.
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first above set forth.
LANDLORD: TENANT:
SORRENTO TECH ASSOCIATES, APPLIED DIGITAL ACCESS,
a California limited partnership a California corporation
By Barnes Canyon RPF Realty By ______________________
Corp., a Connecticut
corporation, General ______________________
Partner
[Print Name and Title]
By
____________________
Mark S. Knapp,
Vice President
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EXHIBIT A
[Expansion Area]