Exhibit 10.25
FIRST AMENDMENT TO LEASE
I. PARTIES AND DATE.
This Amendment to Lease dated September 14, 2004, is by and between THE
IRVINE COMPANY, a Delaware corporation ("LANDLORD"), and SM&A, formerly known as
Steven Myers & Associates, Inc., a California corporation ("TENANT").
II. RECITALS.
On December 18, 1996, Landlord and Tenant entered into an office space
lease ("LEASE") for space in a building located at 4695 MacArthur Court, Suite
800, Newport Beach, California ("PREMISES"), for a Term currently scheduled to
expire on June 30, 2007.
Landlord and Tenant each desire to modify the Lease to add space on the
ninth (9th) floor of the Building ("SUITE 900"), extend the Lease Term, adjust
the Basic Rent, and make such other modifications as are set forth in "III.
MODIFICATIONS" next below.
III. MODIFICATIONS.
A. Basic Lease Provisions. The Basic Lease Provisions are hereby
amended as follows:
1. Effective as of the Commencement Date for Suite 900 (as
hereinafter defined), Item 2 of the Basic Lease Provisions shall be
amended by adding "Suite 900."
2. Item 4 of the Basic Lease Provisions is hereby amended by
adding the following:
"Estimated Commencement Date for Suite 900: December 1, 2004."
3. Item 5 of the Basic Lease Provisions is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"5. Lease Term: The Term of this Lease shall expire at
midnight on June 30, 2012 as to the Premises and Suite 900."
4. (a) Effective as of the Commencement Date for Suite 900, and
continuing through June 30, 2007, Item 6 of the Basic Lease
Provisions shall be amended by adding the following, which amounts
shall be in addition to the Basic Rent for the Premises set forth in
the Lease:
"Basic Rent for Suite 900: Twenty-Three Thousand Five Hundred
Three Dollars ($23,503.00) per month, based on $2.20 per
rentable square foot.
Rental Adjustments:
Commencing October 1, 2005, the Basic Rent for Suite 900 shall
be Twenty-Four Thousand Five Hundred Seventy-One Dollars
($24,571.00) per month, based on $2.30 per rentable square
foot.
Commencing October 1, 2006, the Basic Rent for Suite 900 shall
be Twenty-Five Thousand Six Hundred Thirty-Nine Dollars
($25,639.00) per month, based on $2.40 per rentable square
foot."
(b) Effective as of July 1, 2007, Item 6 of the Basic Lease
Provisions shall be deleted in its entirety and the following shall
be substituted in lieu thereof:
"Basic Rent: Seventy-Six Thousand Three Hundred Seventy-Five
Dollars ($76,375.00) per month, based on $2.50 per rentable
square foot.
Rental Adjustments:
Commencing July 1, 2008, the Basic Rent shall be Seventy-Nine
Thousand Four Hundred Thirty Dollars ($79,430.00) per month,
based on $2.60 per rentable square foot.
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Commencing July 1, 2009, the Basic Rent shall be Eighty-Two
Thousand Four Hundred Eighty-Five Dollars ($82,485.00) per
month, based on $2.70 per rentable square foot.
Commencing July 1, 2010, the Basic Rent shall be Eighty-Five
Thousand Five Hundred Forty Dollars ($85,540.00) per month,
based on $2.80 per rentable square foot.
Commencing July 1, 2011, the Basic Rent shall be Eighty-Eight
Thousand Five Hundred Ninety-Five Dollars ($88,595.00) per
month, based on $2.90 per rentable square foot."
5. (a) Effective as of the Commencement Date for Suite 900,
Item 7 of the Basic Lease Provisions shall be amended by adding the
following:
"Property Tax Base for Suite 900: The Property Taxes per
rentable square foot actually incurred by Landlord in
connection with Suite 900 for its fiscal year ending June 30,
2005.
Building Cost Base for Suite 900: The Building Costs per
rentable square foot actually incurred by Landlord in
connection with Suite 900 for its fiscal year ending June 30,
2005."
(b) Effective as of July 1, 2007, the Expense Base Year for
Suite 800 shown in Item 7 of the Basic Lease Provisions shall be
deleted in its entirety and the following substituted in lieu
thereof:
"7. Property Tax Base for Suite 800: The Property Taxes per
rentable square foot actually incurred by Landlord in
connection with Suite 800 for its fiscal year ending June 30,
2007.
Building Cost Base for Suite 800: The Building Costs per
rentable square foot actually incurred by Landlord in
connection with Suite 800 for its fiscal year ending June 30,
2007.
Expense Recovery Period: Every twelve (12) month period during
the Term (or portion thereof during the first and last Lease
years) ending June 30."
6. (a) Effective as of the Commencement Date for Suite 900,
Item 8 of the Basic Lease Provisions shall be amended by adding "and
Suite 900 comprising approximately 10,683 rentable square feet."
(b) Effective as of July 1, 2007, Item 8 of the Basic Lease
Provisions shall be deleted in its entirety and the following
substituted in lieu thereof:
"8. Floor Area of Premises: approximately 30,550 rentable
square feet comprising approximately 19,867 rentable square
feet in Suite 800 and approximately 10,683 rentable square
feet in Suite 900."
7. (a) Effective as of the Commencement Date for Suite 900 and
continuing through July 1, 2007, Item 12 of the Basic Lease
Provisions shall be amended by adding the following:
"Parking for Suite 900: Thirty-seven (37) unreserved vehicle
parking spaces."
(b) Effective as of July 1, 2007, Item 12 of the Basic Lease
Provisions shall be deleted in its entirety and the following
substituted in lieu thereof:
"12. Parking: Ten (10) reserved and ninety-five (95)
unreserved vehicle parking spaces."
B. Free and Abated Rent.
(1) In consideration of Tenant's execution and delivery of this
Amendment, Landlord agrees that Tenant shall not be obligated to pay the Basic
Rent and Operating Expenses due under the Lease with respect to Suite 900 only
for the two months immediately following the Commencement Date for Suite 900.
(2) Notwithstanding anything in this Amendment to the contrary,
Tenant will not be occupying all of Suite 900 as of the Commencement Date for
Suite 900, and will refrain from the use and occupancy of those portions of
Suite 900 consisting of approximately 3,683
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rentable square feet shown by cross-hatching on Exhibit A-1 attached hereto as
the Vacant Area and the Vacant Corridor Area (collectively, the "Vacant Areas")
until the Full Rent Date (as hereinafter defined). For purposes of this Lease,
the "Full Rent Date" shall mean the date which is the earlier of (a) the date
which is six (6) months following the Commencement Date for Suite 900 and (b)
the date on which Tenant commences use and occupancy of any portion of the
Vacant Areas. Landlord and Tenant agree that the Basic Rent for Suite 900 shall
be abated in the amount of Eight Thousand One Hundred Three Dollars ($8,103.00)
per month (representing $2.20 per rentable square foot for the 3,683 square feet
comprising the Vacant Areas) only for the period (the "Abatement Period")
commencing on the Commencement Date for Suite 900 and ending on the Full Rent
Date. During the Abatement Period, neither Landlord nor Tenant shall have the
right to use or occupy for any purpose whatsoever, the Vacant Areas, except as
expressly set forth in this Section III.B.(2) and except for Tenant's right to
install telecommunications and data cabling, equipment and fixtures in the
Vacant Areas during the Abatement Period. For purposes of this Section III.B.,
"use and occupancy of any portion of the Vacant Areas" shall mean any use,
occupancy, or any storage or placement of any furniture, equipment, fixtures,
files, or other personal property in any portion of the Vacant Areas, provided,
however, that as to the Vacant Corridor Area, use and occupancy shall not
include use of the same as a corridor for the movement of people or personal
property through such Vacant Corridor Area to gain access to other portions of
Suite 900. From and after the Full Rent Date, Tenant shall pay to Landlord the
Full Amount of Basic Rent for Suite 900 without any further abatement.
C. Operating Expenses. Notwithstanding any contrary provision in the
Lease, Landlord hereby agrees that Tenant shall not be obligated to pay Landlord
for Operating Expenses accruing with respect to Suite 900 during the twelve (12)
month period commencing as of the Commencement Date for Suite 900, nor shall
Tenant be obligated to pay Landlord for Operating Expenses accruing with respect
to Suite 800 during the twelve (12) month period commencing as of July 1, 2007.
D. Commencement Date For Suite 900.
(1) Subject to the provisions of Section III.D.(2), below, the
commencement of the term of the Lease as to Suite 900 (the "COMMENCEMENT DATE
FOR SUITE 900"), shall occur upon the earlier of (a) the date Tenant acquires
possession of or commences use of the Premises or any portion thereof (excluding
the Vacant Areas) for any purpose, or (b) the date the Premises are tendered to
Tenant with the tenant improvements (the "SUITE 900 TENANT IMPROVEMENTS")
required to be constructed by Landlord pursuant to the Work Letter attached
hereto as Exhibit X (the "9TH FLOOR WORK LETTER") substantially completed in
accordance with the Working Drawings and Specifications and any Changes (as such
terms are defined in the 9th Floor Work Letter) approved by Tenant, provided
that the Suite 900 Tenant Improvements shall not be deemed to have been
substantially completed until any approvals by relevant governmental authorities
which are required for occupancy of the Premises have been obtained (as
evidenced by written approval thereof in accordance with the building permits
issued for the Suite 900 Tenant Improvements or issuance of a temporary or final
certificate of occupancy for the Premises). Landlord shall provide Tenant
written notice of the substantial completion of the Suite 900 Tenant
Improvements. Prior to Tenant's taking of possession of the Premises, the
parties shall memorialize on a form provided by Landlord the actual Commencement
Date for Suite 900. Tenant's failure to execute that form shall not affect the
validity of Landlord's determination of such date.
(2) If Landlord, for any reason whatsoever, cannot deliver
possession of the Premises to Tenant with the Suite 900 Tenant Improvements
substantially completed on or before the Estimated Commencement Date for Suite
900 as set forth in Item 4 of the Basic Lease Provisions, as hereby amended (the
"SUITE 900 ESTIMATED COMMENCEMENT DATE"), this Lease shall not be void or
voidable nor shall Landlord be liable to Tenant for any resulting loss or
damage. However, Tenant shall not be liable for any rent and the Commencement
Date for Suite 900 shall not occur until Landlord tenders possession of the
Premises in accordance with Section III.D.(1), above, except that if Landlord
cannot so tender possession of the Premises on or before the Suite 900 Estimated
Commencement Date due to any Tenant Delay (as defined in the 9th Floor Work
Letter), then, except as otherwise provided in Section III.D.(3), below, the
Commencement Date for Suite 900 shall be deemed to have occurred and Landlord
shall be entitled to full performance by Tenant (including the payment of rent)
from the date Landlord would have been able to deliver the Premises to Tenant
with the Suite 900 Tenant Improvements substantially completed but for such
Tenant Delay.
(3) Notwithstanding anything to the contrary contained in this
Section III.D., if for any reason other than Tenant Delays (as defined in the
9th Floor Work Letter), or other matters beyond Landlord's reasonable control,
the actual Commencement Date for Suite 900 has not occurred by the date that is
ninety (90) days following the Estimated Commencement Date for Suite 900, then
Tenant may, by written notice to Landlord given at any time thereafter but prior
to the actual occurrence of the Commencement Date for Suite 900, elect to
terminate this Amendment, in which case the Lease shall remain in full force and
effect without regard to any of the provisions of this Amendment.
Notwithstanding the foregoing, if at any time during the period of the
construction of the Suite 900 Tenant Improvements, Landlord reasonably believes
that the Commencement Date for Suite 900 will not occur on or before ninety (90)
days following the Suite
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900 Estimated Commencement Date, Landlord may notify Tenant in writing of such
fact and of a new outside date on or before which the Commencement Date for
Suite 900 will occur, and Tenant must elect within ten (10) days of receipt of
such notice to either terminate this Amendment or waive its right to terminate
this Amendment provided the Commencement Date for Suite 900 occurs on or prior
to the new outside date established by Landlord in such notice to Tenant.
Tenant's failure to elect to terminate this Amendment within such ten (10) day
period shall be deemed Tenant's waiver of its right to terminate this Amendment
as provided in this paragraph as to the previous outside date, but not as to the
new outside date established by said notice.
E. Right to Extend This Lease.
(1) Provided that Tenant is not in default under any provision of
this Lease at the time of exercise of the extension right granted herein, and
provided further that Tenant is occupying the entire Premises and has not
assigned or sublet any of its interest in this Lease (except in connection with
an assignment of the Lease to a Tenant Affiliate as described in Section 9.1(e)
of the Lease), Tenant may extend the Term of this Lease for one (1) period of
sixty (60) months. If Tenant desires to exercise its right to extend the Term of
this Lease, Tenant shall deliver to Landlord, no sooner than May 31, 2011, and
no later than August 15, 2011, Tenant's written notice of its desire to exercise
its right to extend (the "Exercise Notice"). Within fifteen (15) days following
Landlord's receipt of the Exercise Notice, Landlord shall determine, and shall
provide Tenant written notice (the "Rent Notice") of, the Basic Rent (including
periodic adjustments) which Landlord determines to be the prevailing market
rental rate (including periodic adjustments) for comparable and similarly
improved space within the "Comparable Buildings" (as hereinafter defined) as of
the commencement of the extension period, as determined by Landlord based on a
reasonable extrapolation of then-current leasing rates (the "MARKET RENT"). In
no event shall the monthly Basic Rent payable for the extension period be less
than the monthly Basic Rent payable during the month immediately preceding the
commencement of such extension period. For purposes of this Section III.E.,
"Comparable Buildings" shall mean the Project, Jamboree Center in Irvine,
California, and Plaza Tower and Center Tower in Costa Mesa, California.
(2) Within fifteen (15) days after Tenant's receipt of the Rent
Notice, Tenant shall provide Landlord written notice (the "Response Notice")
that: (a) Tenant desires to exercise its right to extend the Term of the Lease
at the Basic Rent set forth in the Rent Notice, (b) that Tenant desires to
exercise its right to extend the Term of the Lease, but disagrees with
Landlord's determination of the Market Rent set forth in the Rent Notice, in
which case the Response Notice shall state the amount which Tenant believes
constitutes the Market Rent for the Premises, or (c) that Tenant does not desire
to exercise its right to extend the Term of the Lease. In the event that the
Response Notice states that Tenant desires to exercise its right to extend the
Term of the Lease in accordance with clause (a) or (b) above, Tenant shall be
deemed to have irrevocably committed to extend the Term of the Lease either for
the Basic Rent (including periodic adjustments) set forth in the Rent Notice in
the case of clause (a), or for the Market Rent to be determined in accordance
with this Section III.E. in the case of clause (b). If the Response Notice
states that Tenant desires to exercise its right to extend the Term of this
Lease in accordance with clause (b), Landlord and Tenant shall attempt to reach
agreement upon the Basic Rent (including periodic adjustments) for the extension
term within fifteen (15) days following the date of the Response Notice (the
"Negotiation Period"). In the event that the parties are not able to reach
agreement in writing within the Negotiation Period, then within ten (10) days
following the expiration of the Negotiation Period, each party shall designate
an appraiser and the Market Rent shall be determined by appraisal in accordance
with Section III.E.(3), below. Should either party fail to so designate an
appraiser within that time, then the appraiser designated by the other party
shall determine the Market Rent. Should each of the parties timely designate an
appraiser, then the two appraisers so designated shall appoint a third appraiser
who shall, acting alone, determine the Market Rent in accordance with Section
III.E.(3), below. Any appraiser designated hereunder shall have an M.A.I.
certification or equivalent with not less than five (5) years experience in the
leasing of office space in commercial office buildings in Orange County,
California. The appraiser responsible for determining the Market Rent pursuant
to the foregoing shall be referred to herein as the "ACTING APPRAISER".
(3) Within ten (10) days following the expiration of the
Negotiation Period, Landlord and Tenant shall each submit to the other, in
writing, its determination of the Market Rent (including periodic adjustments)
for the extension period (respectively, the "LANDLORD'S DETERMINATION" and the
"TENANT'S DETERMINATION"), which shall in no event be more favorable to the
party submitting the same than the initial amount specified by each of Landlord
and Tenant as their determination of the Basic Rent in the Rent Notice and the
Response Notice, respectively. Should either party fail timely to submit its
determination, then the determination of the other party shall be conclusive and
binding on the parties. Copies of Landlord's Determination and Tenant's
Determination shall be provided to the Acting Appraiser as soon as reasonably
possible following the appointment of the Acting Appraiser. Within thirty (30)
days following the selection of the Acting Appraiser and such appraiser's
receipt of the Landlord's Determination and the Tenant's Determination, the
Acting Appraiser shall determine whether the Basic Rent specified by Landlord or
by Tenant more accurately reflects the Market Rent. Accordingly, either the
Landlord's Determination or the Tenant's Determination shall be selected by the
Acting Appraiser as the Market Rent for the Extension Period. In no event shall
the Acting
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Appraiser attribute factors for market tenant improvement allowances (other than
renovation allowances then being provided to renewal tenants by landlords in the
Comparable Buildings) or brokerage commissions to reduce Market Rent. At any
time before the decision of the Acting Appraiser is rendered, either party may,
by written notice to the other party, accept the rental terms submitted to the
other party, in which event such terms shall be the Basic Rent for the extension
term. The fees of the appraiser(s) shall be borne equally by the parties.
(4) Should Tenant fail timely to deliver either the Exercise
Notice or the Response Notice, or should the Response Notice state that Tenant
does not desire to exercise its right to extend the Term of this Lease as stated
in clause (c) of Section III.E.(2), above, then this extension right shall
thereupon lapse and be of no further force or effect. Promptly following either
receipt of the Response Notice stating that Tenant exercises its right to extend
the Term of the Lease in accordance with clause (a) of Section III.E.(2), above,
or the Acting Appraiser's determination of the Market Rent if Tenant exercises
its right to extend the Term of the Lease in accordance with clause (b) of
Section III.E.(2), above, Landlord shall prepare an amendment to the Lease
memorializing the extension of the Term in accordance with the foregoing in form
reasonably satisfactory to Tenant, and Tenant shall duly execute and return same
to Landlord within fifteen (15) days. Should Tenant fail timely to execute and
deliver the amendment, then Landlord may, following notice to Tenant of such
failure and Tenant's failure to execute the amendment within ten (10) days
following such notice, at Landlord's sole written election, either specifically
enforce the Response Notice or extinguish Tenant's right to extend the Term.
Should Landlord elect the latter, then this Lease shall terminate upon the
scheduled date of expiration and Tenant's rights under this paragraph shall be
of no further force or effect.
(5) Any attempt to assign or transfer any right or interest
created by this paragraph, other than to a Tenant Affiliate (as defined in
Section 9.1(c) of the Lease) in connection with the assignment of the Lease to
such Tenant Affiliate, shall be void from its inception. Tenant shall have no
other right to extend the Term beyond the single sixty (60) month extension
created by this paragraph. Unless agreed to in a writing signed by Landlord and
Tenant, any extension of the Term, whether created by an amendment to this Lease
or otherwise, shall be deemed a part of, and not in addition to, any duly
exercised extension period permitted by this Section III.E. Time is specifically
made of the essence of this paragraph. The provisions of this Section III.E.
supersede the provisions of Section 3.1(b) of the Lease, which Section 3.1(b) is
hereby deleted from the Lease in its entirety.
F. Right of First Offer. Effective as of the Commencement Date for
Suite 900, Section 2.1(b) of the Lease shall be deleted in its entirety and the
following shall be substituted in lieu thereof:
"(b) Provided Tenant is not then in default hereunder,
Landlord hereby grants Tenant the continuing right ("FIRST RIGHT")
to lease, during the period commencing April 1, 2005 through June
30, 2012, any space which may become available for lease on the
ninth (9th) floor of the Building ("FIRST RIGHT SPACE") in
accordance with and subject to the provisions of this Section. It is
understood, however, that Tenant's First Right is expressly
conditioned upon the prior delivery by Tenant of written notice to
Landlord in good faith of Tenant's need for additional space (the
"SPACE REQUIREMENT NOTICE"). If, at any time after April 1, 2005 and
following delivery of a Space Requirement Notice and while this
First Right is in effect, Landlord desires to lease the First Right
Space, or any portion thereof, to any third party, Landlord shall
give Tenant written notice of the basic economic terms including but
not limited to the Basic Rent, term, operating expense base,
security deposit, and tenant improvement allowance (collectively,
the "ECONOMIC TERMS"), upon which Landlord is willing to lease such
particular First Right Space to Tenant or to a third party; provided
that the Economic Terms shall exclude brokerage commissions and
other Landlord payments that do not directly inure to the tenant's
benefit. It is understood that should Landlord intend to lease other
space in addition to the First Right Space as part of a single
transaction, then Landlord's notice shall so provide and all such
space shall collectively be subject to the following provisions.
Within five (5) business days after receipt of Landlord's notice,
Tenant must give Landlord written notice pursuant to which Tenant
shall elect to (i) lease all, but not less than all, of the space
specified in Landlord's notice (the "Designated Space") upon such
Economic Terms and the same non-Economic Terms as set forth in this
Lease; (ii) refuse to lease the Designated Space, specifying that
such refusal is not based upon the Economic Terms, but upon Tenant's
lack of need for the Designated Space, in which event Landlord may
lease the Designated Space upon any terms it deems appropriate; or
(iii) refuse to lease the Designated Space, specifying that such
refusal is based upon said Economic Terms, in which event Tenant
shall also specify revised Economic Terms upon which Tenant shall be
willing to lease the Designated Space. In the event that Tenant does
not so respond in writing to Landlord's notice within said period,
Tenant shall be deemed to
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have elected clause (ii) above. In the event Tenant gives Landlord
notice pursuant to clause (iii) above, Landlord may elect to either
(x) lease the Designated Space to Tenant upon such revised Economic
Terms and the same other non-Economic Terms as set forth in the
Lease, or (y) lease the Designated Space to any third party upon
Economic Terms which are not materially more favorable to such party
than those Economic Terms proposed by Tenant. Should Landlord so
elect to lease the Designated Space to Tenant, then Landlord shall
promptly prepare and deliver to Tenant an amendment to this Lease
consistent with the foregoing in form reasonably satisfactory to
Tenant, and Tenant shall execute and return same to Landlord within
fifteen (15) days. Should Tenant fail to timely execute and return
the amendment, then Landlord may, following notice to Tenant and
Tenant's failure to execute the Amendment within ten (10) days
following such notice, at Landlord's sole election, specifically
enforce Tenant's commitment to lease the Designated Space, lease
such space to a third party, and/or pursue any other available legal
remedy. In the event that Landlord leases the First Right Space, or
any portion thereof, to a third party in accordance with the
provisions of this Section, and during the effective period of this
First Right the First Right Space, or any portion thereof, shall
again become available for releasing, then prior to Landlord
entering into any new lease with a third party for the First Right
Space, Landlord shall repeat the procedures specified above in this
Section. Notwithstanding the foregoing, it is understood that
Tenant's First Right shall be subject to any extension rights which
may hereafter be granted by Landlord to any third party tenant now
or hereafter occupying the First Right Space or any portion thereof,
and in no event shall any such First Right Space be deemed available
for leasing unless the then-existing tenant thereof shall vacate
that First Right Space. Tenant's rights under this Section shall be
personal to the original Tenant named in this Lease and may not be
assigned or transferred other than to a Tenant Affiliate in
connection with the assignment of the Lease to such Tenant
Affiliate. Any other attempted assignment or transfer shall be void
and of no force or effect."
G. Letter of Credit. Tenant shall deliver to Landlord, concurrently
with Tenant's execution and delivery of this Amendment, a letter of credit in
the amount of Sixty Four Thousand Three Hundred Sixty Nine Dollars ($64,369.00)
which letter of credit shall be in form and with the substance of Exhibit G
attached hereto. The letter of credit shall be issued by a financial institution
acceptable to Landlord with a branch in Orange County, California, at which
draws on the letter of credit will be accepted. The letter of credit shall
provide for automatic yearly renewals until August 31, 2007. In the event the
letter of credit is not continuously renewed through the period set forth above,
or upon any default under the Lease by Tenant, including specifically Tenant's
failure to pay rent or to abide by its obligations under Sections 7.1 and 15.3
of the Lease, Landlord shall be entitled to draw upon said letter of credit by
the issuance of Landlord's sole written demand to the issuing financial
institution. Any such draw shall be without waiver of any rights Landlord may
have under the Lease or at law or in equity as a result of any default hereunder
by Tenant. So long as Tenant is not in default under this Lease, Landlord shall
cooperate with Tenant to exonerate the letter of credit effective as soon as
reasonably possible following July 1, 2007, provided Landlord shall have
received payment from Tenant of the rent payable for the month of July, 2007,
or, if such payment is made by Tenant's check, such check has cleared Landlord's
bank following the deposit of the same.
H. Floor Plan of Premises. Effective as of the date of this Amendment,
Exhibit A-1 attached to this Amendment shall be added to Exhibit A of the Lease.
I. Parking. Notwithstanding any contrary provision in Exhibit C to the
Lease, effective as of the Commencement Date for Suite 900 through June 30,
2012, Landlord shall make available to Tenant, and Tenant may lease from
Landlord, up to thirty-seven (37) unreserved parking spaces in connection with
its leasing of Suite 900 (as reflected in the revised parking allotment set
forth in Section III.A.7(a) of this Amendment)(the "Suite 900 Allotted Stalls").
Tenant acknowledges that any of the Suite 900 Allotted Stalls that Tenant fails
to lease continuously from and after the date which is one year following the
Commencement Date for Suite 900, shall thereafter be at Landlord's scheduled
parking rates from time to time. Subject to the foregoing and effective as of
the Commencement Date for Suite 900, the stall charge for the Suite 900 Allotted
Stalls shall be Fifty Dollars ($50.00) per unreserved stall per month through
June 30, 2012 only. Commencing July 1, 2007, Landlord shall make available to
Tenant, and Tenant may lease from Landlord for the remaining Term of the Lease,
up to ten (10) reserved and fifty-eight (58) unreserved vehicle parking spaces
in connection with its leasing of Suite 800 (as reflected in the revised parking
allotment set forth in Section III.A.7(b) of this Amendment)(the "Suite 800
Allotted Stalls"). Tenant acknowledges that any of the Suite 800 Allotted Stalls
that Tenant fails to lease continuously from and after July 1, 2008, shall
thereafter be at Landlord's scheduled parking rates from time to time. Subject
to the foregoing and effective as of July 1, 2007, the stall charges for the
Suite 800 Allotted Stalls shall be One Hundred Twenty Dollars ($120.00) per
reserved stall per month and Fifty Dollars ($50.00) per unreserved stall per
month
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through June 30, 2012. Notwithstanding the foregoing, during the period prior to
June 30, 2012, Tenant shall not be charged more than the following monthly stall
charges for any of the Suite 800 and Suite 900 Allotted Stalls as to which
Tenant may be charged Landlord's scheduled parking rates from time to time: (a)
a monthly stall charge increased by not more than five per cent (5%) per year on
a cumulative and annually compounded basis from a base price as of July 1, 2004
of Seventy-Two Dollars ($72.00) per unreserved stall per month, and (b) a
monthly stall charge in excess of One Hundred Fifty Dollars ($150.00) per
reserved stall per month. From and after July 1, 2012, the stall charges for all
of the foregoing parking shall be at Landlord's scheduled parking rates from
time to time.
K. Tenant Improvements. Landlord hereby agrees to complete the Tenant
Improvements for Suite 900 in accordance with the provisions of Exhibit X, Work
Letter, attached hereto and for Suite 800 in accordance with the provisions of
Exhibit X-1, Work Letter, attached hereto.
L. Assignment and Subletting. Effective as of the Commencement Date for
Suite 900, Section 9.1 of the Lease is hereby amended as follows:
(1) Clause (4) of Section 9.1(c) of the Lease is hereby deleted in
its entirety; and
(2) Clause (5) of Section 9.1(c) is hereby modified to read in its
entirety as follows:
"(5) Any proposed assignee or subtenant is neither an existing
tenant of the Building or Project, nor a prospective tenant from whom
Landlord has then received, or to whom Landlord has then provided, a
written proposal to lease space within the Project, provided, however,
that Landlord shall not unreasonably withhold its consent to a transfer to
an existing tenant of the Building or Project, or a prospective tenant
from whom Landlord has then received a proposal to lease space within the
Project, if Landlord is unable to provide to such tenant the square
footage of contiguous space within the Project required by such tenant or
prospective tenant; and"
M. Signage. Effective as of the Commencement Date for Suite 900, the
fifth sentence of Section 5.2(b) of the Lease is hereby modified to read in its
entirety as follows:
"Tenant's signage rights shall belong solely to SM&A, a California
corporation, and shall not be transferred or assigned by it except in
connection with an assignment of this Lease to a Tenant Affiliate as
described in Section 9.1(e), without Landlord's prior written consent,
which may be withheld by Landlord in Landlord's sole discretion, provided,
however, that if such assignment is to a corporation or other business
entity which succeeds to the assets or business of Tenant or Tenant's
parent as a result of merger or consolidation, or acquires all or
substantially all of Tenant's assets or capital stock, such assignment of
the signage rights shall continue to be subject to Landlord's prior
written consent, which may be withheld by Landlord in Landlord's sole
discretion, based upon Landlord's determination of whether the
identification of such assignee would adversely affect the Project or its
reputation, or would conflict with the rights or preferences of another
tenant of the Project, or a prospective tenant of the Project with which
Landlord is then actively negotiating."
IV. GENERAL.
A. Effect of Amendments. The Lease shall remain in full force and
effect except to the extent that it is modified by this Amendment.
B. Entire Agreement. This Amendment embodies the entire understanding
between Landlord and Tenant with respect to the modifications set forth in "III.
MODIFICATIONS" above and can be changed only by a writing signed by Landlord and
Tenant.
C. Counterparts. If this Amendment is executed in counterparts, each is
hereby declared to be an original; all, however, shall constitute but one and
the same amendment. In any action or proceeding, any photographic, photostatic,
or other copy of this Amendment may be introduced into evidence without
foundation.
D. Defined Terms. All words commencing with initial capital letters in
this Amendment and defined in the Lease shall have the same meaning in this
Amendment as in the Lease, unless they are otherwise defined in this Amendment.
E. Authority. If Tenant is a corporation, limited liability company or
partnership, or is comprised of any of them, each individual executing this
Amendment for the corporation, limited liability company or partnership
represents that he or she is duly authorized to execute and deliver this
Amendment on behalf of such entity and that this Amendment is binding upon such
entity in accordance with its terms.
7
F. Attorneys' Fees. The provisions of the Lease respecting payment of
attorneys' fees shall also apply to this Amendment.
V. EXECUTION.
Landlord and Tenant executed this Amendment on the date as set forth in
"I. PARTIES AND DATE." above.
LANDLORD: TENANT:
THE IRVINE COMPANY SM&A
By /s/ William Halford By /s/ Steven S. Myers
William R. Halford Steve S. Myers
President, Office Properties Chairman & Chief Executive Officer
By /s/ Michael Bennett By /s/ Steve Handy
Michael T. Bennett Steve Handy
Office Properties Vice President Corporate Controller
8
IRREVOCABLE STANDBY LETTER OF CREDIT
Number: _____________________________
Date: _____________________________
Amount: _____________________________
Expiration: _____________________________
BENEFICIARY ACCOUNT PARTY
The Irvine Company _________________________
550 Newport Center Drive _________________________
Newport Beach, CA 92660 _________________________
Attn: Vice President, Operations,
Office Properties
We hereby issue our Irrevocable Letter of Credit No.___________ in favor of The
Irvine Company ("Beneficiary"), its successors and assigns, for the account of
______________ . We undertake to honor your sight draft, upon presentation at
our office in ______________ , California, for any sum or sums not to exceed a
total of _______________ ($___________) in favor of Beneficiary when accompanied
by the original of this Letter of Credit.
Partial and multiple drawings are permitted under this Letter of Credit. In the
event of a partial draw, the amount of the draft shall be endorsed on the
reverse side hereof by the negotiating bank.
This Letter of Credit is transferable in its entire undrawn balance to a
successor beneficiary upon presentation by Beneficiary of the original of this
Letter of Credit, together with a written request for transfer executed by
Beneficiary.
It is a condition of this Letter of Credit that it shall remain enforceable
against us for a period of from this date and further, that it shall be deemed
automatically extended for successive one-year periods without amendment
thereafter unless thirty (30) days prior to the expiration date set forth above,
or within thirty (30) days prior to the end of any yearly Anniversary Date
thereafter, you shall receive our notice in writing by certified mail, return
receipt requested, that we elect not to renew this Letter of Credit for any
subsequent year.
The draft must be marked "Drawn under __________________ Letter of Credit No.
________________dated ______________."
There are no other conditions of this letter of credit. Except so far as
otherwise stated, this credit is subject to the International Standby Practices
1998, International Chamber of Commerce Publication No. 590, and is otherwise
governed by the law of the State of California.
________________________
________________________
By:_____________________
By:_____________________
EXHIBIT G
EXHIBIT X
WORK LETTER
(SUITE 900)
DOLLAR ALLOWANCE
SECOND GENERATION SPACE
The Tenant Improvement work (herein "Tenant Improvements") shall consist of any
work required to complete Suite 900 pursuant to plans and specifications
approved by both Landlord and Tenant. All of the Tenant Improvement work shall
be performed in accordance with the procedures and requirements set forth below
by a contractor engaged by Landlord and selected on the basis of a competitive
bidding process involving at least one (1) general contractor designated by
Landlord and two (2) other general contractors approved by the parties. If the
general contractor designated by Landlord submits the lowest qualified bid, such
contractor shall be utilized to perform the work.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES
A. Tenant has approved, or shall approve within the time period set
forth below, a detailed space plan for Suite 900, prepared by the
architect engaged by Landlord for the work described herein
("Landlord's Architect"), which includes interior partitions,
ceilings, interior finishes, interior office doors, suite entrance,
floor coverings, window coverings, lighting, electrical and
telephone outlets, plumbing connections, heavy floor loads and other
special requirements ("Preliminary Plan"). Tenant shall approve or
disapprove the Preliminary Plan by signing and delivering same to
Landlord within five (5) business days of its receipt by Tenant. If
Tenant disapproves any matter, Tenant shall specify in detail the
reasons for disapproval and Landlord shall attempt to modify the
Preliminary Plan to incorporate Tenant's suggested revisions in a
mutually satisfactory manner. Notwithstanding the foregoing,
however, Tenant shall approve in all respects a Preliminary Plan not
later than August 18, 2004 ("Plan Approval Date").
B. On or before the Plan Approval Date, Tenant shall provide in writing
to Landlord or Landlord's Architect all specifications and
information requested by Landlord for the preparation of final
construction documents and costing, including without limitation
Tenant's final selection of wall and floor finishes, complete
specifications and locations (including load and HVAC requirements)
of Tenant's equipment, and details of all "Non-Standard
Improvements" (as defined below) to be installed in Suite 900
(collectively, "Programming Information"). Tenant understands that
final construction documents for the Tenant Improvements shall be
predicated on the Programming Information, and accordingly that such
information must be accurate and complete.
C. Upon Tenant's approval of the Preliminary Plan and delivery of the
complete Programming Information, Landlord's Architect and engineers
shall prepare and deliver to the parties working drawings and
specifications for the Tenant Improvements consistent with the
Preliminary Plans ("Working Drawings and Specifications"). Tenant
shall have five (5) business days from the receipt thereof to
approve or disapprove the Working Drawings and Specifications and
any disapproval or requested modification shall be limited to items
not contained in or not consistent with the approved Preliminary
Plan. Should Tenant disapprove the Working Drawings and
Specifications, such disapproval shall be accompanied by a detailed
list of revisions. Any revision requested by Tenant and accepted by
Landlord shall be incorporated by Landlord's Architect into a
revised set of Working Drawings and Specifications, and Tenant shall
approve same in writing within five (5) business days of receipt
without further revision.
D. In the event that Tenant requests in writing a revision in the
Working Drawings and Specifications following the date of approval
of the Preliminary Plans ("Change"), then provided such Change is
reasonably acceptable to Landlord, Landlord shall advise Tenant by
written change order as soon as is practical of any increase, if
any, in the Completion Cost such Change would cause. Tenant shall
approve or disapprove such change order in writing within three (3)
business days following its receipt of the same from Landlord.
Tenant's approval of a Change shall be accompanied by Tenant's
payment of any resulting increase in the Completion Cost. It is
understood that Landlord shall have no obligation to interrupt or
modify the Tenant Improvement work pending Tenant's approval of a
change order, but that Landlord shall use its reasonable efforts not
to further complete work which would be materially altered by a
Change for five (5) days following Tenant's request for a Change.
E. It is understood that the Preliminary Plan and the Working Drawings
and Specifications, together with any Changes thereto, shall be
subject to the prior approval of Landlord, which approval shall not
be unreasonably withheld. Landlord shall identify any disapproved
items within five (5) business days (or three (3) business days in
the case of Changes) after receipt of the applicable document. In
1
lieu of disapproving an item, Landlord may approve same on the
condition that Tenant pay to Landlord, prior to the start of
construction and in addition to all sums otherwise due hereunder, an
amount equal to the cost, as reasonably estimated by Landlord, of
removing and replacing the item upon the expiration or termination
of the Lease. Should Landlord approve work that would necessitate
any ancillary Building modification or other expenditure by
Landlord, then except to the extent of any remaining balance of the
"Landlord's Contribution" as described below, Tenant shall, in
addition to its other obligations herein, promptly fund the cost
thereof to Landlord.
F. Upon approval of the Working Drawings and Specifications, Landlord
shall submit them to competitive bid as provided above. Each bidding
contractor shall use the electrical, mechanical, plumbing and
fire/life safety engineers and subcontractors designated by
Landlord. All other subcontractors shall be subject to Landlord's
reasonable approval, and Landlord may require that one or more
designated subtrades be union contractors. The lowest responsible
bidder shall be selected as Landlord's general contractor and the
bid amount shall be deemed the "Final Cost Estimate" for purposes
hereof.
G. Landlord shall permit Tenant and its agents to enter Suite 900 at
least five (5) days prior to the Commencement Date for Suite 900 in
order that Tenant may perform any work to be performed by Tenant
hereunder through its own contractors, subject to Landlord's prior
written approval, and in a manner and upon terms and conditions and
at times satisfactory to Landlord's representative. The foregoing
license to enter Suite 900 prior to the Commencement Date for Suite
900 is, however, conditioned upon Tenant's contractors and their
subcontractors and employees working in harmony and not interfering
with the work being performed by Landlord. If at any time that entry
shall cause disharmony or interfere with the work being performed by
Landlord, this license may be withdrawn by Landlord upon twenty-four
(24) hours written notice to Tenant. That license is further
conditioned upon the compliance by Tenant's contractors with all
requirements imposed by Landlord on third party contractors and
subcontractors, including without limitation the maintenance by
Tenant and its contractors and subcontractors of workers'
compensation and public liability and property damage insurance in
amounts and with companies and on forms satisfactory to Landlord,
with certificates of such insurance being furnished to Landlord
prior to proceeding with any such entry. The entry shall be deemed
to be under all of the provisions of the Lease except as to the
covenants to pay rent with respect to Suite 900. Landlord shall not
be liable in any way for any injury, loss or damage which may occur
to any such work being performed by Tenant, the same being solely at
Tenant's risk. In no event shall the failure of Tenant's contractors
to complete any work in Suite 900 extend the Commencement Date for
Suite 900.
H. Tenant hereby designates Steve Handy, Telephone No. (949) 975-1550,
as its representative, agent and attorney-in-fact for the purpose of
receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations
and directives of such person(s) as it given directly by Tenant.
Tenant may amend the designation of its construction
representative(s) at any time upon delivery of written notice to
Landlord.
I. Notwithstanding any provision in the Amendment, and not by way of
limitation of any other rights or remedies of Landlord, if Tenant
fails to approve the Preliminary Plan by the Plan Approval Date,
fails to comply with any of the time periods specified in this Work
Letter, fails otherwise to approve or reasonably disapprove any
submittal within the time period specified herein for such response
(or if no time period is so specified, within five (5) days
following Tenant's receipt thereof), requests any Changes, furnishes
inaccurate or erroneous specifications or other information, or
otherwise delays in any manner the completion of the Tenant
Improvements (including without limitation by specifying materials
that are not readily available) or the issuance of an occupancy
certificate (any of the foregoing being referred to in this Lease as
a "TENANT DELAY"), then Tenant shall bear any resulting additional
construction cost or other expenses, and the Commencement Date for
Suite 900 shall be deemed to have occurred for all purposes,
including without limitation Tenant's obligation to pay rent, as of
the date Landlord reasonably determines that it would have been able
to deliver Suite 900 to Tenant but for the collective Tenant Delays.
Should Landlord determine that the Commencement Date should be
advanced in accordance with the foregoing, it shall so notify Tenant
in writing.
II. COST OF TENANT IMPROVEMENTS
A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved Final
Cost Estimate (subject to the provisions of this Work Letter), in
accordance with final Working Drawings and Specifications approved
by both Landlord and Tenant. Landlord shall pay towards the final
construction costs ("Completion Cost") as incurred a maximum of Two
Hundred Fifty-Five Thousand Seven Dollars ($255,007.00) ("Landlord
Contribution"), based on $28.46 per usable square foot of the
portion of Suite 900 not within the Vacant Areas, plus $26.58 per
usable square foot of the Vacant Areas, and Tenant shall be fully
responsible for the remainder ("Tenant's Contribution"). If the
actual
2
cost of completion of the Tenant Improvements is less than the
maximum amount provided for the Landlord's Contribution, such
savings shall inure to the benefit of Landlord and Tenant shall not
be entitled to any credit or payment. The foregoing Landlord
Contribution is based upon Landlord's ability to amortize the
Landlord Contribution over a term of ninety-one (91) months and
eighty-five (85) months (as to the Vacant Areas), respectively. In
the event that the Preliminary Plans are not approved by Tenant on
or before August 18, 2004, Landlord's Contribution per usable square
foot shall be reduced proportionately based on the number of
additional months (including a portion of a month) of delay in
Tenant's approval of the Preliminary Plans.
B. The Completion Cost shall include all direct costs of Landlord in
completing the Tenant Improvements, including but not limited to the
following: (i) payments made to architects, engineers, contractors,
subcontractors and other third party consultants in the performance
of the work, (ii) permit fees and other sums paid to governmental
agencies, (iii) costs of all materials incorporated into the work or
used in connection with the work, and (iv) keying and signage costs.
The Completion Cost shall also include an administrative/supervision
fee to be paid to Landlord in the amount of five percent (5%) of all
such direct costs.
C. Prior to start of construction of the Tenant Improvements, Tenant
shall pay to Landlord the amount of the Tenant's Contribution set
forth in the approved Final Cost Estimate. In addition, if the
actual Completion Cost of the Tenant Improvements is greater than
the Final Cost Estimate because of modifications or extras not
reflected on the approved working drawings, or because of delays,
then Tenant shall pay to Landlord, within ten (10) days following
submission of an invoice therefor, all such additional costs,
including any additional architectural fee. If Tenant defaults in
the payment of any sums due under this Work Letter, Landlord shall
(in addition to all other remedies) have the same rights as in the
case of Tenant's failure to pay rent under the Lease.
3
EXHIBIT X-1
WORK LETTER
(SUITE 800)
DOLLAR ALLOWANCE
SECOND GENERATION SPACE
The Tenant Improvement work (herein "Tenant Improvements") shall consist of any
work required to complete Suite 800 pursuant to plans and specifications
approved by both Landlord and Tenant. All of the Tenant Improvement work shall
be performed in accordance with the procedures and requirements set forth below
by a contractor engaged by Landlord and selected on the basis of a competitive
bidding process involving at least one (1) general contractor designated by
Landlord and two (2) other general contractors approved by the parties. If the
general contractor designated by Landlord submits the lowest qualified bid, such
contractor shall be utilized to perform the work.
I. ARCHITECTURAL AND CONSTRUCTION PROCEDURES
A. Tenant has approved, or shall approve within the time period set
forth below, a detailed space plan for Suite 800, prepared by the
architect engaged by Landlord for the work described herein
("Landlord's Architect"), which includes interior partitions,
ceilings, interior finishes, interior office doors, suite entrance,
floor coverings, window coverings, lighting, electrical and
telephone outlets, plumbing connections, heavy floor loads and other
special requirements ("Preliminary Plan"). Tenant shall approve or
disapprove the Preliminary Plan by signing and delivering same to
Landlord within five (5) business days of its receipt by Tenant. If
Tenant disapproves any matter, Tenant shall specify in detail the
reasons for disapproval and Landlord shall attempt to modify the
Preliminary Plan to incorporate Tenant's suggested revisions in a
mutually satisfactory manner. Notwithstanding the foregoing,
however, Tenant shall approve in all respects a Preliminary Plan not
later than March 1, 2005 ("Plan Approval Date").
B. On or before the Plan Approval Date, Tenant shall provide in writing
to Landlord or Landlord's Architect all specifications and
information requested by Landlord for the preparation of final
construction documents and costing, including without limitation
Tenant's final selection of wall and floor finishes, complete
specifications and locations (including load and HVAC requirements)
of Tenant's equipment, and details of all "Non-Standard
Improvements" (as defined below) to be installed in Suite 800
(collectively, "Programming Information"). Tenant understands that
final construction documents for the Tenant Improvements shall be
predicated on the Programming Information, and accordingly that such
information must be accurate and complete.
C. Upon Tenant's approval of the Preliminary Plan and delivery of the
complete Programming Information, Landlord's Architect and engineers
shall prepare and deliver to the parties working drawings and
specifications for the Tenant Improvements consistent with the
Preliminary Plans ("Working Drawings and Specifications"). Tenant
shall have five (5) business days from the receipt thereof to
approve or disapprove the Working Drawings and Specifications and
any disapproval or requested modification shall be limited to items
not contained in or not consistent with the approved Preliminary
Plan. Should Tenant disapprove the Working Drawings and
Specifications, such disapproval shall be accompanied by a detailed
list of revisions. Any revision requested by Tenant and accepted by
Landlord shall be incorporated by Landlord's Architect into a
revised set of Working Drawings and Specifications, and Tenant shall
approve same in writing within five (5) business days of receipt
without further revision.
D. In the event that Tenant requests in writing a revision in the
approved Working Drawings and Specifications following the date of
the Preliminary Plans ("Change"), then provided such Change is
reasonably acceptable to Landlord, Landlord shall advise Tenant by
written change order as soon as is practical of any increase, if
any, in the Completion Cost such Change would cause. Tenant shall
approve or disapprove such change order in writing within three (3)
business days following its receipt of the same from Landlord.
Tenant's approval of a Change shall be accompanied by Tenant's
payment of any resulting increase in the Completion Cost. It is
understood that Landlord shall have no obligation to interrupt or
modify the Tenant Improvement work pending Tenant's approval of a
change order, but that Landlord shall use its reasonable efforts to
not further complete work which would be materially altered by a
Change for five (5) days following Tenant's request for a Change.
E. It is understood that the Preliminary Plan and the Working Drawings
and Specifications, together with any Changes thereto, shall be
subject to the prior approval of Landlord which approval shall not
be unreasonably withheld. Landlord shall identify any disapproved
items within five (5) business days (or three (3)
1
business days in the case of Changes) after receipt of the
applicable document. In lieu of disapproving an item, Landlord may
approve same on the condition that Tenant pay to Landlord, prior to
the start of construction and in addition to all sums otherwise due
hereunder, an amount equal to the cost, as reasonably estimated by
Landlord, of removing and replacing the item upon the expiration or
termination of the Lease. Should Landlord approve work that would
necessitate any ancillary Building modification or other expenditure
by Landlord, then except to the extent of any remaining balance of
the "Landlord's Contribution" as described below, Tenant shall, in
addition to its other obligations herein, promptly fund the cost
thereof to Landlord.
F. Upon approval of the Working Drawings and Specifications, Landlord
shall submit them to competitive bid as provided above. Each bidding
contractor shall use the electrical, mechanical, plumbing and
fire/life safety engineers and subcontractors designated by
Landlord. All other subcontractors shall be subject to Landlord's
reasonable approval, and Landlord may require that one or more
designated subtrades be union contractors. The lowest responsible
bidder shall be selected as Landlord's general contractor and the
bid amount shall be deemed the "Final Cost Estimate" for purposes
hereof.
G. Tenant hereby designates Steve Handy, Telephone No. (949) 975-1550,
as its representative, agent and attorney-in-fact for the purpose of
receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations
and directives of such person(s) as it given directly by Tenant.
Tenant may amend the designation of its construction
representative(s) at any time upon delivery of written notice to
Landlord.
H. It is understood that all of the Tenant Improvements shall be done
during Tenant's occupancy of Suite 800. In this regard, Tenant
agrees to assume any risk of injury, loss or damage which may
result. Tenant further agrees that no rental abatement for Suite 800
shall result while the Tenant Improvements are completed in Suite
800. Landlord shall use commercially reasonable efforts to minimize
the disruption caused to Tenant's business operations within the
Premises on account of the completion of the Tenant Improvements
within Suite 800.
II. COST OF TENANT IMPROVEMENTS
A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved Final
Cost Estimate (subject to the provisions of this Work Letter), in
accordance with final Working Drawings and Specifications approved
by both Landlord and Tenant. Landlord shall pay towards the final
construction costs ("Completion Cost") as incurred a maximum of One
Hundred Ninety Thousand Eight Hundred Forty-Two Dollars
($190,842.00) ("Landlord Contribution"), based on $10.46 per usable
square foot of Suite 800, and Tenant shall be fully responsible for
the remainder ("Tenant's Contribution"), provided, however, that
Tenant may elect, by written notice to Landlord, to apply not more
than Forty Thousand Dollars ($40,000.00) of the Landlord's
Contribution to the cost of the Tenant Improvement Work to be
performed in Suite 900 pursuant to the foregoing Exhibit X. If the
actual cost of completion of the Tenant Improvements is less than
the maximum amount provided for the Landlord's Contribution, such
savings shall inure to the benefit of Landlord and Tenant shall not
be entitled to any credit or payment. Tenant shall notify Landlord
in when it desires to have Landlord perform the foregoing work and
shall allow Landlord sufficient access to Suite 800 therefor;
provided, however, that if the Tenant Improvements are not completed
by June 30, 2006, for any reason other than a delay caused by
Landlord, then Landlord shall have no further responsibility to
perform any such work.
B. The Completion Cost shall include all direct costs of Landlord in
completing the Tenant Improvements, including but not limited to the
following: (i) payments made to architects, engineers, contractors,
subcontractors and other third party consultants in the performance
of the work, (ii) permit fees and other sums paid to governmental
agencies, (iii) costs of all materials incorporated into the work or
used in connection with the work, and (iv) keying and signage costs.
The Completion Cost shall also include an administrative/supervision
fee to be paid to Landlord in the amount of five percent (5%) of all
such direct costs.
C. Prior to start of construction of the Tenant Improvements, Tenant
shall pay to Landlord the amount of the Tenant's Contribution set
forth in the approved Final Cost Estimate. In addition, if the
actual Completion Cost of the Tenant Improvements is greater than
the Final Cost Estimate because of modifications or extras not
reflected on the approved working drawings, or because of delays,
then Tenant shall pay to Landlord, within ten (10) days following
submission of an invoice therefor, all such additional costs,
including any additional architectural fee. If Tenant defaults in
the payment of any sums due under this Work Letter, Landlord shall
(in addition to all other remedies) have the same rights as in the
case of Tenant's failure to pay rent under the Lease.
2