EXHIBIT 10.16
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease is attached to and forms a part of that certain
Lease dated March 10, 1999 and Lease Amendment Number One dated March 10, 1999
(hereinafter collectively called the "Lease"), made this 12th day of October,
2000 between SPIEKER PROPERTIES, L.P., a California limited partnership, as
Landlord and MULTILINK TECHNOLOGY CORPORATION, a California corporation as
Tenant, for the Premises commonly known as Garden Level in the building located
at 2850 Ocean Park Boulevard, Santa Monica, California 90405.
Effective October 12, 2000, the Lease will be amended as follows to provide for
the renewal of term and the expansion of premises.
RENEWAL PREMISES
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Building. 2850 Ocean Park Boulevard, Santa Monica, California.
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Renewal Premises. The Renewal Premises to include that portion of the Building
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consisting of approximately 4,681 rentable square feet commonly referred to as
Garden Level, Suite 330 consisting of approximately 2,361 rentable square feet
and Suite 335 consisting of approximately 2,635 rentable square feet, as shown
on the attached Exhibit "A."
Renewal Term. The renewal term shall commence October 1, 2000 and expire
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December 31, 2005.
Monthly Base Rent. The monthly full service gross Base Rent for the Renewal
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Premises shall be as follows:
October 1, 2000 - December 31, 2001 $27,579.45 per month ($2.85/rsf)
January 1, 2002 - December 31, 2002 $28,643.92 per month ($2.96/rsf)
January 1, 2003 - December 31, 2003 $29,805.16 per month ($3.08/rsf)
January 1, 2004 - December 31, 2004 $30,966.40 per month ($3.20/rsf)
January 1, 2005 - December 31, 2005 $32,224.41 per month ($3.33/rsf)
EXPANSION PREMISES
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Building: 2850 Ocean Park Boulevard, Santa Monica, California.
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Premises: The Premises to include that portion of the Building consisting of
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approximately 19,924 rentable square feet commonly referred to as Suite 100
which is not cross hatched on the attached Exhibit "B."
Expansion Term. The term shall commence on the earlier of (a) occupancy by
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Tenant of more than 3,000 useable square feet of the Expansion Premises for
business purposes or (b) thirty (30) days following Landlord's "delivery," as
such term is defined in the Paragraph below entitled "Alterations," of the
Expansion Premises to Tenant, whether or not Tenant commences business therefrom
(the "Expansion Premises Commencement Date"), and expire on December 31, 2005.
If for any reason Landlord cannot deliver possession of the Expansion Premises
to Tenant on or prior to January 1, 2001, despite using Landlord's reasonable
good faith efforts and subject to delays caused by Tenant or by events beyond
Landlord's control and other force majeure events, including, but not limited
to, strikes, material shortages, delays of governmental agencies or Acts of God,
which delays will not be cause for termination hereunder, Tenant may, by written
notice to Landlord, terminate the Lease and this Second Amendment and Tenant
shall thereafter have one hundred eighty (180) days to vacate the Renewal
Premises. Tenant shall be liable for Rent for the Renewal Premises for the
period commencing October 1, 2000 until the termination date.
Upon Landlord's request, Tenant shall promptly execute and return to Landlord an
accurate "Start-Up Letter" in which Tenant shall agree, among other things, to
acceptance of the
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Expansion Premises and to the determination of the Expansion Premises
Commencement Date in accordance with the terms of this Second Amendment to
Lease, but Tenant's failure or refusal to do so shall not negate Tenant's
acceptance of the Expansion Premises or affect determination of the Expansion
Premises Commencement Date.
Monthly Base Rent. The monthly full service gross Base Rent for the Expansion
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Premises shall be as follows:
Expansion Premises
Commencement Date - December 31, 2001 $56,783.40 per month ($2.85/rsf)
January 1, 2002 - December 31, 2002 $58,975.04 per month ($2.96/rsf)
January 1, 2003 - December 31, 2003 $61,365.92 per month ($3.08/rsf)
January 1, 2004 - December 31, 2004 $63,756.90 per month ($3.20/rsf)
January 1, 2005 - December 31, 2005 $66,346.92 per month ($3.33/rsf)
REMAINING PROVISIONS APPLICABLE RENEWAL PREMISES & EXPANSION PREMISES:
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Tenant's Proportionate Share of Building: Tenant's percentage Proportionate
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Share of Building for the Renewal Premises and Expansion Premises shall be
20.55%
Base Year for Operation Expenses. Base Year for the Renewal Term and Extension
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Term shall be calendar year 2001.
Proposition 13 Protection. Despite any other provision of this Lease, if any
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sale, refinancing, or change in ownership of the Project is consummated and, as
a result, all or part of the Project is reassessed ("Reassessment") for real
estate tax purposes by the appropriate government authority under the terms of
Proposition 13 (as adopted by the voters of the State of California in the June
1978 election) or any similar statute, the terms of this Paragraph shall apply.
I. For purposes of this Paragraph the term "Tax Increase" shall mean that
portion of the Taxes, as calculated immediately following the Reassessment
that is attributable solely to the Reassessment. Accordingly, a Tax
Increase shall not include any portion of the Taxes, as calculated
immediately following the Reassessment, that is:
(1) Attributable to the initial assessment of the value of the
Project, the base, shell and core of the Project, or the tenant
improvements located in the Project;
(2) Attributable to assessments pending immediately before the
Reassessment, but not otherwise excludable, that were conducted
during, and included in, that Reassessment or that otherwise rendered
unnecessary following the Reassessment;
(3) Attributable to the annual inflationary increase in Taxes; or
(4) Part of Taxes incurred or considered to be incurred during the
applicable Base Year as determined under this Lease.
II. Tenant shall not be obligated to pay the portion of any Tax Increase
relating to any Reassessment of the Project in accordance with the
following schedule:
Date of Reassessment Event Percent of Tax Increase Which
-------------------------- Tenant is Protected Against Due
to Reassessment Event
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Expansion Premises
Commencement Date - December 31, 2001 100%
January 1, 2002 - December 31, 2002 80%
January 1, 2003 - December 31, 2003 60%
January 1, 2004 - December 31, 2004 40%
January 1, 2005 - December 31, 2005 20%
III. The amount of Taxes that Tenant is not obligated to pay or shall not
be obligated to pay during the Term in connection with a particular
Reassessment under the terms of this Paragraph shall be referred to as the
Proposition 13 Protection Amount. If a Reassessment is reasonably
forseeable by Landlord and the Proposition 13 Protection Amount
attributable to that Reassessment may be reasonably quantified or estimated
for each Lease Year beginning with the Lease Year in which the Reassessment
will occur, the terms of this Paragraph shall apply to each such
Reassessment. "Lease Year" shall be defined as each 12-month period
commencing on January 1, 2001. On notice to Tenant, Landlord shall have the
right to purchase the entire Proposition 13 Protection Amount relating to
the applicable Reassessment ("Applicable Reassessment"), at any time during
the Term, by paying to Tenant an amount equal to the "Proposition 13
Purchase Price," as defined below, for the Applicable Reassessment as long
as the right of any successor of Landlord to exercise its right of
repurchase under this Lease shall not apply to any Reassessment that
results from the event under which that successor became Landlord under
this Lease. As used in this Lease, the term "Proposition 13 Purchase Price"
shall mean the present value of the Proposition 13 Protection Amount
remaining during the Term, as of the date of payment of the Proposition 13
Purchase Price by Landlord. The present value shall be calculated by:
(1) Using the portion of the Proposition 13 Protection Amount
attributable to each remaining Lease Year (as though the portion
of that Proposition 13 Protection Amount benefited Tenant at the
end of each Lease Year) at the amounts to be discounted, and
(2) Using discount rates for each amount to be discounted equal
to.
(A) The average rates of yield for United States Treasury
Obligations with maturity dates as close as reasonably
possible to the end of each Lease Year during which the
portions of the Proposition 13 Protection Amount would have
benefited Tenant using the rates in effect as of Landlord's
exercise of its right to purchase, as set forth in this
Paragraph; plus
(B) one percent (1%) per annum.
On payment of the Proposition 13 Purchase Price, subparagraph (a)
of this Paragraph shall not apply to any Taxes attributable to
the Applicable Reassessment. Because Landlord is estimating the
Proposition 13 Purchase Price because a Reassessment has not yet
occurred, an adjustment
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shall be made when a Reassessment occurs. If Landlord has
underestimated the Proposition 13 Purchase Price, Landlord
shall, on notice to Tenant, credit Tenant's Rent next due
with the amount of that underestimation (and Landlord's
successor in interest shall be bound by any such
underestimation). If Landlord has overestimated the
Proposition 13 Purchase Price, Landlord shall, on notice
to Tenant, increase Tenant's Rent next due by the amount
of the overestimation
Occupancy Density. Notwithstanding anything to the contrary contained in this
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Lease, the Occupancy Density shall be five (5) persons per 1,000 rentable square
feet. "Occupancy Density" shall mean the number of full time employees of Tenant
who are primarily located at the Premises but specifically not including
invitees, visitors, contractors, consultants or employees temporarily visiting
from other locations. Notwithstanding anything to the contrary contained herein,
in the event the Occupancy Density in the Renewal Premises and Expansion
Premises during the Term exceeds 5 people per 1,000 rentable square feet
(currently 148 people) in the Renewal Premises and Expansion Premises (the "5
Threshold Figure") at any time, from and after the date the Occupancy Density
first exceeds the 5 Threshold Figure, the Base Rent shall be increased by an
amount equal to $.05 per rentable square foot of the Renewal Premises and
Expansion Premises per month for the balance of the Term, regardless of whether
the Occupancy Density is thereafter decreased below the 5 Threshold Figure. In
the event the Occupancy Density in the Renewal Premises and Expansion Premises
during the Term exceeds 6 people per 1,000 rentable square feet (currently 178
people) in the Renewal Premises and Expansion Premises (the "6 Threshold
Figure") at any time, from and after the date the Occupancy Density first
exceeds the 6 Threshold Figure, the Base Rent shall be increased by an amount
equal to $.10 per rentable square foot of the Renewal Premises and Expansion
Premises per month for the balance of the Term, regardless of whether the
Occupancy Density is thereafter decreased below the 6 Threshold Figure. In the
event the Occupancy Density in the Renewal Premises and Expansion Premises
during the Term exceeds 7 people per 1,000 rentable square feet (currently 207
people) in the Renewal Premises and Expansion Premises (the "7 Threshold
Figure") at any time, from and after the date the Occupancy Density first
exceeds the 7 Threshold Figure, the Base Rent shall be increased by an amount
equal to $.20 per rentable square foot of the Renewal Premises and Expansion
Premises per month for the balance of the Term, regardless of whether the
Occupancy Density is thereafter decreased below the 7 Threshold Figure.
Parking. Tenant shall have the right, but not the obligation, to lease up to
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3.5 unreserved parking spaces for every one thousand (1,000) rentable square
feet of the Premises leased, from time to time, at the current market rate which
is $60.00 per space per month exclusive of city taxes. This parking right shall
replace all previous rights granted in the Lease and subsequent Amendments.
Tenant may convert up to thirty-seven (37) of the total spaces to reserved
parking in the subterranean parking lot at 2850 Ocean Park Boulevard. The
reserved parking shall be in the form of seven (7) single spaces at the reserved
rate of $85.00 per space per month, exclusive of city taxes, and fifteen (15)
tandem stalls (30 spaces) at the reserved rate of $120.00 per tandem stall per
month exclusive of city taxes. Tenant may change the amount of spaces leased by
Tenant from time to time, including reserved spaces, upon thirty (30) days prior
written notice.
Right at First Offer. Provided Tenant is not in default of any terms and
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conditions of this Lease beyond all applicable notice and cure periods, Tenant
shall have a continuous right of first offer to lease the Right of First Offer
Space detailed below throughout the Expansion Term at the then current
prevailing market terms and conditions.
First Offer Space
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Suite 150 Approximately 24,921 rentable square feet -
Subordinate to the lease to be signed
concurrently with Tenant
Suites 230-270-280-290 Approximately 8,775 rentable square feet
Suite 292 Approximately 3,229 rentable square feet
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Suite 325 Approximately 3,240 rentable square feet
Second Offer Space (Subordinate to Vizional Technologies rights)
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Suite 225 Approximately 12,364 rentable square feet
Landlord shall notify Tenant in writing of the availability of space and the
terms and conditions upon which Landlord is willing to lease such additional
space to a third party tenant. The proposed terms and conditions shall be based
upon comparable lease transactions within the Santa Monica Business Park which
have occurred during the previous six months, adjusted for differences in size,
location, length of term, level of existing improvements, tenant improvement
allowance provided, length of buildout, as applicable, commissions paid and any
other concessions. The proposed terms and conditions shall also be modified to
reflect changes which have occurred in the Santa Monica market since the
comparable deals were completed, as applicable, and adjusted to reflect a term
that is coterminous with the First Offer Space. Tenant shall have five (5)
business days after such determination to notify Landlord in writing of Tenant's
desire to exercise Tenant's right of first offer on the terms and conditions as
set forth above. In the event Tenant fails to give Landlord notice of Tenant's
election to lease such additional space within such time period, Tenant shall
have no further right, title or interest in such additional space and this right
of first offer shall terminate with respect to the space identified in such
notice. 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 and shall be coterminous with this Lease. Notwithstanding
anything to the contrary herein contained, Tenant's right to the first offer
premises shall be conditioned upon the following: (i) at the time Tenant agrees
to accept the first offer premises and at the time of the commencement of the
term for the first offer premises, Tenant shall be in possession of and
occupying at least ninety percent (90%) of the primary premises for the conduct
of its business therein and not more than ten percent (10%) of the same shall be
occupied by any assignee, subtenant or licensee and, provided further, that the
option for additional space shall be applicable hereunder only if the first
offer 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 first offer premises, that Tenant does not intend to assign
the lease for the first offer 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 first offer premises for Tenant's purposes in the conduct of
Tenant's business therein.
Advance Rents/Security Deposit. Tenant shall remit the first month's Base Rent
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for the Expansion Premises in the amount of $56,793.40 at such time as this
Second Amendment is executed and returned to Landlord. Additionally, upon
execution, Tenant shall increase the existing cash Security Deposit of
$19,135.70 or provide a Letter of Credit in an amount equal to $197,142.66.
1. Delivery of Letter of Credit. In accordance with the provisions of this
Section, if at any time during the Expansion Term Tenant elects to provide a
Letter of Credit in lieu of a cash Security Deposit, Tenant shall have the
option to deliver to Landlord and cause to be in effect during the Lease Term an
unconditional, irrevocable letter of credit ("LOC") in the amount specified
above (the "LOC Amount") for an initial term of the LOC of one (1) year and
thereafter shall renew automatically from year to year through 30 days beyond
the expiration date of this Lease or any extension thereto. Landlord shall use
its best efforts to return the cash Security Deposit as expeditiously as
possible, which shall be delivered to Tenant no later than fifteen (15) days
after receipt of an LOC which satisfies the requirements set forth herein. The
LOC shall be in a form reasonably acceptable to Landlord and shall be issued by
an LOC bank selected by Tenant and reasonably acceptable to Landlord. The LOC
shall survive 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 LOC. The LOC shall not be mortgaged, assigned or encumbered
in any manner
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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 LOC and/or the 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 LOC and/or the LOC
Security Deposit. Tenant shall, within ten (10) business days of request by
Landlord, execute such further instruments or assurances as Landlord may
reasonably deem necessary to evidence or confirm Landlord's transfer or
assignment of the LOC Security Deposit and/or the LOC to such transferee or
mortgagee.
2. Replacement of Letter of Credit. Tenant may, from time to time, replace
any existing LOC with a new LOC if the new LOC (a) becomes effective before
expiration of the LOC that it replaces; (b) is in the required LOC amount; (c)
is issued by an LOC bank reasonably acceptable to Landlord; and (d) otherwise
complies with the requirements of this Paragraph.
3. Landlord's Right to Draw on Letter of Credit. The LOC shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the Lease Term. The LOC shall not be mortgaged, assigned or encumbered
in any manner whatsoever by Tenant without the prior written consent of
Landlord. Landlord shall hold the 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 defaults on any
provision of this Lease, Landlord may, without prejudice to any other remedy it
has, draw on all or any portion of the 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. The use, application or retention of the LOC, or
any portion thereof, by Landlord shall not prevent Landlord from exercising any
other right or remedy provided by this Lease or by law, it being intended that
Landlord shall not first be required to proceed against the LOC and shall not
operate as a limitation on any recovery to which Landlord may otherwise be
entitled. If Tenant fails to renew or replace the 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 LOC.
4. LOC Security Deposit. Any amount of the LOC that is drawn on by Landlord
but not applied by Landlord shall be held by Landlord as a security deposit (the
"LOC Security Deposit") in accordance with Paragraph 19 of the Lease.
5. Restoration of Letter of Credit and LOC Security Deposit. If Landlord
draws on all or any portion of the 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 LOC and the amount of the LOC Security Deposit, shall
equal the LOC Amount then required under this Paragraph; or (b) reinstate the
LOC to the full LOC Amount, and Tenant's failure to do so shall be a default
under this Lease.
Financial Statements. Article 17 of the Lease shall be modified to reflect
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that, during the lease term, upon Landlord's written request, Tenant shall
provide Landlord with the most recent audited financial statements prepared in
the ordinary course of business which statements shall be furnished to Landlord
following Landlord's execution of a commercially reasonable confidentiality
agreement, but not more often than two (2) times per year.
Services and Utilities. The last sentence of Article 15B of the Lease is hereby
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deleted in its entirety and replaced with the following:
"In the event that Tenant is prevented from using, and does not use, the
Premises or any portion thereof, for five (5) consecutive business days or
fifteen (15) business days in any twelve (12) month period following Landlord's
receipt of written notice from Tenant (the "Eligibility Period") as a result of
any (i) repair, maintenance or alteration performed by Landlord, or which
Landlord failed to perform and which was required by this Lease (which is not
necessitated by
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the negligence of Tenant or its employees, agents, contractors or invitees) and
which substantially interferes with Tenant's use of the Premises, and (ii)
interruption in any of the following building services required to be provided
by Landlord (so long as it is not due to the fault or neglect of Tenant, its
agents, employees, contractors or invitees): heating, ventilation and air
conditioning, electrical services, janitorial service or water or any other
"essential" building service (each such circumstance to be known as an
"Abatement Event"), then Tenant's rent and parking charges shall be abated or
reduced, as the case may be, after expiration of the Eligibility Period for
such time that Tenant continues to be so prevented from using, and does not use,
the Premises, or a portion thereof, in the proportion that the rentable area of
the portion of the Premises, that Tenant is prevented from using, and does not
use, bears to the total rentable area of the Premises. However, in the event
that Tenant is prevented from conducting, and does not conduct, its business in
any portion of the Premises for a period of time in excess of the Eligibility
Period, and the remaining portion of the Premises is not sufficient to allow
Tenant to effectively conduct its business therein, and if Tenant does not
conduct its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the rent for the entire Premises
and all of Tenant's parking charges shall be abated; provided, however, if
Tenant reoccupies and conducts its business from any portion of the Premises
during such period, the rent and parking charges allocable to such reoccupied
portion, based on the proportion that the rentable area of such reoccupied
portion of the Premises bears to the total rentable area of the Premises, shall
be payable by Tenant from the date such business operations commence.
Notwithstanding anything to the contrary contained herein, the terms of Article
23 and 24 shall govern and control Tenant's right to any rental abatement as a
result of any event covered by Article 23 or 24 below."
Commission. Landlord shall pay a commission to Westmac Commercial Brokerage
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Company who has represented Tenant in this transaction. The commission shall be
equal to four percent (4%) of the total Basic Monthly Rent payable pursuant to
this Second Amendment to Lease for the Renewal Premises and Expansion Premises.
One half of the total commission shall be paid to Westmac upon full execution
and delivery of this Amendment and the second half shall be paid to Westmac upon
the Expansion Premises Commencement Date.
Services and Utilities. Notwithstanding anything to the contrary contained in
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the Lease, Paragraph 15A of the Lease is hereby deleted in its entirety and
replaced with the following:
"Subject to the provisions elsewhere herein contained and to the rules and
regulations of the Building, Landlord shall furnish to the Premises during
Business Hours (but exclusive, in any event, of Saturdays and Sundays and
generally recognized legal holidays), water for kitchen, lavatory and drinking
purposes and electricity, heat and air conditioning as usually furnished or
supplied for use of the Premises for reasonable and normal office use
(consistent with other tenants in the Building). Notwithstanding the foregoing,
and subject to all of the other terms and conditions of this Lease, water,
elevator service and electricity shall be furnished or supplied for use of the
Premises twenty-four (24) hours per day, three hundred sixty-five (365) days per
year. The term "Business Hours" shall mean 7:00 a.m. to 6:00 p.m., Monday
through Friday.
Landlord shall provide as part of Operating Expenses adequate electrical wiring,
facilities and power for normal general office use as reasonably determined by
Landlord (but not including above-standard or continuous cooling for excessive
heat-generating machines, excess lighting or equipment), and elevator service,
which shall mean service either by non-attended automatic elevators or elevators
with attendants, or both, at the option of Landlord. For purposes of this
Paragraph, the term "power for normal general office use" shall equal
approximately five (5) watts connected load per usable square foot of the
premises on an annual basis.
Tenant shall have the right to install its own supplemental air-conditioning
unit (the cost of which, if installed concurrently with the construction of the
Tenant Improvements, may be applied against any unused tenant improvement
allowance), provided that Landlord approves the installation of such unit and
the same does not interfere with the operation systems and equipment, including
without limitation, the Building heating, ventilation and air-conditioning
systems (as determined by Landlord in its reasonable discretion); provided,
however, (i) Tenant shall be solely responsible for all costs relating to the
installation and operation of such unit, and
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shall, upon Landlord's request, Tenant shall remove such unit upon the
expiration or earlier termination of the Term, (ii) Tenant shall cause such unit
to be separately metered at Tenant's expense, and (iii) Tenant shall pay
Landlord the then current monthly roof rental rates associated with supplemental
air-conditioning units, which is currently $250.00 per unit per month. Landlord
shall provide janitorial services five (5) days per week which are comparable to
services provided by comparable buildings in the vicinity of the Building.
Landlord agrees to provide a card key access system to control access to the
Building's parking facility and for after-hours access to the Building.
Furthermore, Landlord will maintain reasonable security measures at the Project,
as determined by Landlord in its reasonable discretion given the character and
nature of the Project. Subject Landlord's approval as to the method of
installation and type of security system, Tenant shall have the right to install
its own security system and/or personnel provided (i) Landlord and its agents,
representatives and employees shall be able to reasonably access the Premises
for any purposes for which Landlord is entitled to access the Premises under
this Lease (including, without limitation, for emergency purposes), (ii) the
same does not interfere with the Building systems or equipment, (iii) Tenant
shall indemnify, defend and hold harmless Landlord from and against any and all
claims, loss, damage or expenses suffered by Landlord resulting from or arising
out of the installation of said security system or maintenance of security
personnel, and (iv) upon Landlord's request, Tenant shall remove any such system
upon the expiration or earlier termination of this Lease and repair any damage
caused by such removal.
Landlord shall provide after-hours heating or air-conditioning, at Tenant's
request and Tenant shall pay to Landlord a reasonable charge for such services
as reasonably determined by Landlord (which charge is currently $25.00 per
unit/zone per hour, such charge to include Landlord's actual cost plus a
reasonable administration fee). Tenant agrees to keep and cause to be kept
closed all window covering when necessary because of the sun's position, and
Tenant also agrees at all times to cooperate fully with Landlord and to abide by
all of the reasonable, non-discriminatory regulations and requirements which
Landlord may prescribe for the proper functioning and protection of electrical,
heating, ventilating and air conditioning systems. Wherever heat-generating
machines, excess lighting or equipment are used in the Premises which affect the
temperature otherwise maintained by the air conditioning system (other than
standard general office equipment), Landlord reserves the right to install
supplementary air conditioning units in the Premises and the cost thereof,
including the cost of installation and the cost of operation and maintenance
thereof, shall be paid by Tenant to Landlord within thirty (30) days after
demand by Landlord.
In the event that Tenant requires utilities (other than electricity, water and
HVAC) and/or services in excess of what Landlord is required to provide during
Business Hours, Landlord agrees to use its commercially reasonable efforts to
provide such extra utilities and services, and Tenant agrees to pay to Landlord
its then standard charge for any such extra utilities or services."
Operating Expenses. Notwithstanding anything to the contrary contained in the
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Lease, the following shall be added to the end of Paragraph 7(A):
"Landlord (i) shall not collect or be entitled to collect from Tenant an amount
in excess of Tenant's Proportionate Share of one hundred percent (100%) of the
Operating Expenses actually paid or incurred by Landlord; and (ii) shall reduce
the amount of the Operating Expenses by any refund or discount received by
Landlord in connection with any expenses previously included in the Operating
Expenses (such reduction to be credited to Tenant in the year in which the
refund or discount is received by Landlord). The deductible portion of any
repair costs covered by earthquake insurance shall be amortized over a ten (10)
year period. Notwithstanding the foregoing, for purposes of this Lease, the
Operating Expenses shall not, however, include:
(1) bad debt expenses and interest, principal, points and fees on debts
(except in connection with the financing of items which may be included
in the Operating Expenses) or amortization on any mortgage or mortgages
or any other debt instrument encumbering the Building or the Project;
(2) marketing costs, including leasing commissions, attorneys' fees in
connection with the negotiation and preparation of letters, deal memos,
letters of intent, leases,
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sublease and/or assignments, space planning costs, and other costs and expenses
incurred in connection with lease, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other occupants of the
Project, including attorneys' fees and other costs and expenditures incurred in
connection with disputes with present or prospective tenants or other occupants
of the Project;
(3) costs of inspecting and correcting defects in the Project (including
without limitation, defects discovered as a result of earthquake damage and any
other patent or latent defects in the Project) and costs, including permit,
license and inspection costs, incurred with respect to the installation of other
tenants' or occupants' improvements made for tenants or other occupants in the
Project or incurred in renovating or otherwise improving, decorating, painting
or redecorating vacant space for tenants or other occupants in the Project;
(4) the cost of providing any service directly to and paid directly by any
tenant;
(5) any costs expressly excluded from the Operating Expenses elsewhere in this
Lease;
(6) costs of any items (including, but not limited to, costs incurred by
Landlord for the repair or damage to the Project or Building) to the extent
Landlord receives reimbursement from insurance proceeds (such proceeds to be
deducted from the Operating Expenses in the year in which received) or from a
third party (such proceeds to be credited to the Operating Expenses in the year
in which received, except that any deductible amount under any insurance policy
shall be included within the Operating Expenses of the Project);
(7) costs of a capital nature, including, without limitation, capital
improvements, capital repairs and capital equipment, except for those (i)
acquired to reduce the Operating Expenses (amortized at an annual rate
reasonably calculated to equal the amount of the Operating Expenses to be saved
in each calendar year throughout the Term of the Lease, as reasonably determined
at the time Landlord elected to proceed with the capital improvement or
acquisition of the capital equipment to reduce the Operating Expenses), together
with interest at the actual interest rate incurred by Landlord, or (ii) incurred
after the Term Commencement Date in order to comply with any governmental law or
regulation that was enacted subsequent to the Term Commencement Date (but
specifically not including any re-enactment or subsequent codification, local or
otherwise, of any laws or regulations existing as of the Term Commencement Date,
including without limitation, the Americans with Disabilities Act or any state
or local codifications thereof) provided that such capital costs shall be
amortized over their useful life, together with interest at the actual interest
rate incurred by Landlord; all other capital expenditures and improvements shall
be excluded from the Operating Expenses.
(8) rentals and other related expenses for leasing a HVAC system, elevators,
other items (except when needed in connection with normal repairs and
maintenance of the Project) which, if purchased, rather than rented, would
constitute a capital improvement not included in the Operating Expenses pursuant
to this Lease;
(9) depreciation, amortization and interest payments, except as specifically
included in the Operating Expenses pursuant to the terms of this Lease and
except on materials, tools, supplies and vendor-type equipment purchased by
Landlord to enable Landlord to supply services Landlord might otherwise contract
for with a third party, where such depreciation, amortization and interest
payments would otherwise have been included in the charge for such third party's
services, all as determined in accordance with generally accepted accounting
principles, consistently applied, and when depreciation or amortization is
permitted or required, the item shall be amortized over its reasonably
anticipated useful life;
(10) costs incurred by Landlord for alterations (including structural
additions), repairs, equipment and tools which are a capital nature and/or
which are considered capital improvements or replacements under generally
accepted accounting principles,
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consistently applied, except as specifically included in the Operating
Expenses pursuant to the terms of this Lease;
(11) expenses in connection with services or other benefits which are not
offered to Tenant or for which Tenant is charged for directly but which are
provided to another tenant or occupant of the Project, without charge;
(12) costs incurred by Landlord due to the violation by Landlord or any
tenant of the terms and conditions of any lease of space in the Project;
(13) overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for goods and/or services in the Project to the
extent the same exceeds the costs of such by unaffiliated third parties on
a competitive basis;
(14) Landlord's general corporate overhead and general and administrative
expenses, excluding on-site management to the level of Project director
(and/or vice president responsible for the Project) and Project engineer
and on-site accounting attributable to the Project, but including costs
associated with the operation of the business of the ownership or entity
which constitutes "Landlord," as distinguished from the costs of building
operations, including, but not limited to, partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee, costs of
selling, syndicating, financing, mortgaging or hypothecating any of
Landlord's interest in the Project, costs of any disputes between Landlord
and its employees or with its Project management;
(15) advertising and promotional expenditures, and costs of signs in or on
the Project identifying the owner of the Project or other tenants' signs,
except for Project directors or Project standard signage;
(16) electric power costs or other utility costs for which any tenant
directly contracts with the local public service company (but Landlord
shall have the right to "gross-up" as if the floor was vacant);
(17) tax penalties incurred as a result of Landlord's negligence, inability
or unwillingness to make payments or file returns when due;
(18) costs arising from Landlord's charitable or political contributions;
(19) costs of installing, maintaining and operating any specialty service
operated by Landlord, including without limitation, any luncheon club or
athletic facility, or the repair thereof;
(20) costs necessitated by or resulting from the gross negligence of
Landlord, or any of its agents, employees or independent contractors;
(21) any ground lease rental;
(22) costs of capital acquisition of sculptures, paintings or other objects
of art;
(23) costs of earthquake insurance (except to the extent maintained in the
Base Year);
(24) notwithstanding any contrary provision of this Lease, including
without limitation, any provision relating to capital expenditures, costs
arising from the presence of "hazardous materials," "hazardous substances,"
and/or "toxic substances," as defined in any federal, state, county or
local law, including asbestos, in or about the Building and the Project;
and
(25) management fees in excess of that charged by comparable buildings in
the vicinity of the Building."
Indemnity. Landlord shall indemnify, defend and hold harmless Tenant from any
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loss, costs, liability, damage or expense resulting from the negligence or
willful misconduct of landlord or its agents, servants, employees, contractors
or licensees in connection with Landlord's activities with respect to the
Project or from any default by Landlord under the terms of this Lease (except
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for damage to the tenant improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises to the extent such damage is covered by
insurance Tenant is required to carry pursuant to Paragraph 8B.
Alterations. Notwithstanding the foregoing, Tenant shall have the right, without
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consent of, but upon at least ten (10) business days' prior written notice (as
provided under Paragraph 12.B of the Lease) to, Landlord, to make non-structural
Alterations within the interior of the Premises (and which are not visible from
the outside of the Premises), which do not impair the value of the Building, and
which cost, in the aggregate, less than Twenty-Five Thousand Dollars
($25,000.00) in any twelve (12) month period during the Term of this Lease,
provided that such Alterations shall nevertheless be subject to all of the
remaining requirements of this Paragraph, including without limitation,
subparagraphs (a) through (c) and payment of the administration fee referred to
in Paragraph 12.A, other than the requirement of Landlord's prior consent. In
addition, all Alterations shall be performed by duly licensed contractors or
subcontractors reasonably acceptable to Landlord, proof of insurance shall be
submitted to Landlord as required under Paragraph 8.B, and Landlord reserves the
right to impose reasonable rules and regulations for contractors and
subcontractors. Tenant shall, if requested by Landlord, promptly furnish
Landlord with complete as-built plans and specifications for any Alterations
performed by Tenant to the Premises, at Tenant's sole cost and expense. Prior to
the commencement of the Alterations, Tenant shall be responsible for
coordinating access to the Premises with Landlord for the completion of the
Alterations. Any time Tenant proposes to make Alterations which require the
consent of Landlord pursuant to this Section, Tenant's notice regarding the
proposed Alterations shall be provided together with the plans and
specifications for the Alterations, and Landlord shall approve or disapprove of
the same within fifteen (15) business days after its receipt of all of the same;
provided, however, with respect to the initial Alterations and any initial
Alterations in any First Offer Space, the fifteen (15) business day period shall
be reduced to five (5) business days
Tenant Improvements. Landlord shall contribute a tenant improvement allowance
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equal to Two Hundred Ninety-Six Thousand and Ten Dollars ($296,010.00) to be
credited by Landlord toward all costs and expenses of Tenant's design and
construction of tenant improvements anywhere in the Premises provided that no
credit shall be given to Tenant one (1) year after the Expansion Premises
Commencement Date if Tenant does not invoice Landlord for the full amount of the
tenant improvement allowance by such date. The tenant improvement allowance, or
portions thereof, as applicable, shall be paid to Tenant within thirty (30) days
after Tenant's submission of applicable invoices therefor to Landlord. Tenant
may use up to $2.00 per usable square foot of the tenant improvement allowance
for telephone and data cabling and moving expenses. Landlord shall charge an
administration fee of three percent (3%) of the hard costs of the tenant
improvements, which amount may be deducted from the tenant improvement
allowance. Landlord shall, at its sole expense, demise the Expansion Premises
from the remaining space on the ground floor of the Building. This work shall
include the erection of walls between the two spaces, including drywall,
mudding, taping, sanding and painting with building standard paint and shall
include the separation of HVAC and electrical services within the two spaces.
"Delivery" of the Expansion Premises shall mean the date Landlord has delivered
possession of the Expansion Premises to Tenant with the demising of the wall, as
set forth in the immediately prior two (2) sentences, completed.
Assignment and Subletting. Notwithstanding anything to the contrary contained
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in this Lease, Paragraphs 21(A) and (B) are hereby deleted in their entirety and
replaced with the following:
(1) General. Tenant shall not assign or pledge this Lease or sublet
-------
the Premises or any part thereof, whether voluntarily or by operation of
law, or permit the use or occupancy of the Premises or any part thereof
by anyone other than Tenant, or suffer or permit any such assignment,
pledge, subleasing or occupancy, without Landlord's prior written
consent except as provided herein. If Tenant desires to assign this
Lease or sublet any or all of the Premises, Tenant shall give Landlord
written notice (the "Transfer Notice") at least twenty (20) days prior
to the anticipated effective date of the proposed assignment or
sublease, which shall contain all of the information reasonably
requested by Landlord to address Landlord's decision criteria specified
hereinafter. Within twenty (20) days following Landlord's receipt of the
Transfer Notice, Landlord shall notify Tenant in writing that Landlord
elects either to consent or reasonably deny consent to the
11
proposed assignment or sublease. Consent to any assignment or subletting shall
not constitute consent to any subsequent transaction to which this Paragraph
applies.
(2) Conditions of Landlord's Consent. Without limiting the other instances in
--------------------------------
which it may be reasonable for Landlord to withhold Landlord's consent to an
assignment or subletting, Landlord and Tenant acknowledge that it shall be
reasonable for Landlord to withhold Landlord's consent in the following
instances: if the proposed assignee does not agree to be bound by and assume the
obligations of Tenant under this Lease in a commercially reasonable form and
substance reasonably satisfactory to Landlord; the use of the Premises by such
proposed assignee or subtenant would not be a Permitted Use or would violate any
exclusivity or other arrangement which Landlord has with any other tenant or
occupant or any Regulation or would violate the Occupancy Density or Parking
Density set forth in Paragraph 4 above; the proposed assignee or subtenant is a
governmental agency with the power of condemnation or high foot traffic or
otherwise of a character which is not consistent (in Landlord's reasonable
opinion) with the professional image of the Building or the character of the
other tenants therein; the proposed assignee or subtenant does not have a good
reputation as a tenant of property or a good business reputation (as determined
by Landlord in its reasonable discretion); the proposed assignee or subtenant is
a person with whom Landlord is actively negotiating to lease space in the
Project (which for purposes of this Lease, shall mean a written lease proposal
or proposals setting forth the material business terms of a proposed lease have
been exchanged within the immediately preceding three (3) month period between
Landlord and the proposed transferee) or is a present tenant of the Project and
the Landlord has comparable space within the Project available for such tenant;
the assignment or subletting would entail any use of Hazardous Materials or
other noxious use or use which may disturb other tenants of the Project; or
Tenant is in default of any obligation of Tenant under this Lease. Failure by or
refusal of Landlord to consent to a proposed assignee or subtenant shall not
cause a termination of this Lease. At the option of Landlord, a surrender or
termination of this Lease shall operate as an assignment to Landlord of some or
all subleases or subtenancies. Landlord shall exercise this option by giving
notice of that assignment to such subtenants on or before the effective date of
the surrender and termination. In connection with each request for assignment or
subletting, Tenant shall pay to Landlord Landlord's actual out-of-pocket costs
for approving such requests, as well as all costs incurred by Landlord or any
mortgagee or ground lessor in approving each such request and effecting any such
transfer, including, without limitation, reasonable attorneys' fees (not to
exceed $1,500 in the aggregate).
(3) Bonus Rent. Any Rent or other consideration realized by Tenant under any
----------
such sublease or assignment in excess of the Rent payable hereunder, after
deducting any Subleasing Costs (defined below) incurred by Tenant in connection
with said sublease or assignment (which Subleasing Costs shall be amortized over
the term of said sublease or assignment), shall be divided and paid, fifty
percent (50%) to Tenant, fifty percent (50%) to Landlord. "Subleasing Costs"
shall mean reasonable, out-of-pocket expenses for (i) any changes, alterations
and improvements to the Premises in connection with the transfer, (ii) any
brokerage commissions in connection with the transfer, (iii) any costs to
buy-out or takeover the previous lease of a transferee, (iv) reasonable legal
fees incurred in connection with the transfer including those fees and costs
reimbursed to Landlord pursuant to this Lease, and (v) any other
"out-of-pocket" monetary concessions reasonably provided in connection with the
transfer including, but not limited to, tenant improvement or decorating
allowances (collectively, the "Subleasing Costs").
(4) Affiliate. Notwithstanding anything to the contrary contained in this
---------
Section, neither (i) an assignment or subletting of all or a portion of the
Premises (A) to an entity which is controlled by, controls or is under common
control with Tenant (or a valid assignee of this Lease), (B) to a purchaser of
all or substantially all of the assets of Tenant or of an entity which is
controlled by, controls or is under common control with Tenant (or a valid
assignee of this Lease), (C) to an entity which is controlled by, controls or is
under common control with Tenant (or a valid assignee of this Lease), or (D)
any transaction or series of venture funding or similar type transactions so
long as effective management control of Tenant is not altered as a result
thereof, (ii) said company or entity becoming a publicly traded on a regional or
national stock exchange, (iii) a transfer,
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by operation of law or otherwise, in connection with the merger,
consolidation or other reorganization of Tenant or of an entity which is
controlled by, controls or is under common control with Tenant (or a valid
assignee of this Lease), nor (iv) the temporary use or occupancy of
portions of the Premises (not to exceed 5,000 rentable square feet, in the
aggregate) by a party or parties in connection with the transaction or
business with Tenant or with an entity which is controlled by, controls or
is under common control with Tenant (or with a valid assignee of this
Lease), shall be subject to the Landlord's consent (collectively, such
entities, purchasers, and parties shall be referred to herein collectively
or individually as an "Affiliate"), provided such assignment or sublease is
not a subterfuge by Tenant to avoid its obligations under this Lease.
Tenant shall immediately notify Landlord of any such assignment, purchase,
transfer, sublease, action, or use. For purposes of this Lease, "control"
shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person or entity,
or majority ownership of any sort, whether through the ownership of voting
securities, by contract or otherwise.
(5) Landlord's Option as to Subject Space. Notwithstanding anything to the
-------------------------------------
contrary contained in this Paragraph, in the event Tenant contemplates a
transfer (hereinafter, a "Transfer") of all or a portion of the Premises
(other than to an Affiliate), Tenant shall give Landlord notice (the
"Intention to Transfer Notice") of such contemplated Transfer (whether or
not the contemplated transferee or the terms of such contemplated Transfer
have been determined). The Intention to Transfer Notice shall specify the
portion of and amount of reasonable square feet of the Premises which
Tenant intends to Transfer (the "Contemplated Transfer Space"), the
contemplated date of commencement of the contemplated Transfer (the
"Contemplated Effective Date"), the contemplated length of the term of such
contemplated Transfer, and shall specify that such Intention to Transfer
Notice is delivered to Landlord pursuant to this Paragraph 21 in order to
allow Landlord to elect to recapture the Contemplated Transfer Space for
the term set forth in the Intention to Transfer Notice. Thereafter (or in
the event of any other Transfer or Transfers entered into by Tenant as a
subterfuge in order to avoid the terms of this Paragraph), Landlord shall
have the option, by giving written notice to Tenant within twenty (20) days
after receipt of any Intention to Transfer Notice, to recapture the
Contemplated Transfer Space as of the Contemplated Effective Date until the
last day of the term of the Contemplated Transfer as forth in the Intention
to Transfer Notice (the "Recapture Term"), and during the Recapture Term,
Tenant shall be relieved of its obligations under the terms of this Lease.
In the event of a recapture by Landlord, if this Lease shall be canceled
with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of rentable square feet
retained by Tenant in proportion to the number of rentable square feet
contained in the Premises, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. If Landlord
declines, or fails to elect in a timely manner, to recapture such
Contemplated Transfer Space under this Paragraph, then, subject to the
terms of Paragraph 21, for a period of six (6) months (the "Six Month
Period") commencing on the last date of such twenty (20) day period,
Landlord shall not have any right to recapture the Contemplated Transfer
Space with respect to any Transfer made during the Six Month Period,
provided that any such Transfer is substantially on the terms set forth in
the Intention to Transfer Notice, and provided further that any such
Transfer shall be subject to the remaining terms of this Paragraph. If
Landlord elects to recapture as provided herein for less than all of the
Premises or less than the entire Lease Term, Landlord shall return such
space to Tenant at the end of the Recapture Term in the same condition when
received if Tenant will be using the Contemplated Transfer Space in its
then existing or substantially similar condition. If such a Transfer is not
so consummated within the Six Month Period (or if a Transfer is so
consummated, then upon the expiration of the term of any Transfer of such
Contemplated Transfer Space consummated within such Six Month Period),
Tenant shall again be required to submit a new Intention to Transfer Notice
to Landlord with respect to any contemplated Transfer, as provided in this
Paragraph.
Early Entry into Premises. Provided the Expansion Premises is vacant and in
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Landlord's possession, Tenant may enter into the Expansion Premises prior to the
Expansion Premises Commencement Date immediately following the execution and
delivery of this Second
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Amendment, solely for the purpose of installing furniture, trade fixtures,
telephones, computers, photocopy equipment, and other business equipment, for
construction and installation of tenant improvements therein and for the
occupancy of not more than 3,000 usable square feet thereof for business
purposes. Such early entry will not advance the Expansion Premises Commencement
Date so long as Tenant does not commence business operations from more than
3,000 useable square feet of the Expansion Premises. All of the provisions of
this Lease shall apply to Tenant during any early entry, including the indemnity
in Section 8C, but excluding the obligation to pay Rent unless and until the
earlier of (a) Tenant has commenced business operations from more than 3,000
useable square feet in the Expansion Premises, or (b) Expansion Premises
Commencement Date, whereupon Rent shall commence in accordance with Section 2A
above. Tenant shall not be obligated to pay any charges for electricity, HVAC,
water, elevators, parking or access to loading docks during such early entry
period. If Tenant is granted early entry, Landlord shall not be responsible for
any loss, including theft, damage or destruction to any work or material
installed or stored by Tenant at the premises or for any injury to Tenant or
Tenant's Parties. Landlord shall have the right to post appropriate notices of
non-responsibility and to require Tenant to provide Landlord with evidence that
Tenant has fulfilled its obligation to provide insurance pursuant to this Lease.
Remaining Provisions. Notwithstanding the foregoing, the terms and conditions
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contained in the lease which have not been addressed in this amendment will
remain in bill force and effect with respect to the Renewal Premises and
Expansion Premises
IN WITNESS WHEREOF, the parties hereto have signed and sealed this Second
Amendment to Lease as dated below.
LANDLORD: TENANT:
SPIEKER PROPERTIES L.P., MULTILINK TECHNOLOGY CORPORATION,
a California limited partnership a California corporation
By: Spieker Properties, Inc.,
a Maryland corporation
Its: General Partner
By: /s/ Thomas A. Herta By: /s/ Richard N. Nottenburg
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Thomas A. Herta Richard N. Nottenburg
Its: Vice President Its: President and CEO
Date: 10/18/00 Date: 10/16/00
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