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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
JANUARY 13, 1999
PHASE METRICS, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
33-0328048
(Commission File No.) (I.R.S. Employer
Identification No.)
10260 Sorrento Valley Road, San Diego, CA 92121
(Address of Principal Executive Offices) (Zip Code)
(619) 646-4800
(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 30, 1998, Phase Metrics, Inc. (the "Company") completed the sale
(the "Disposition") of its San Diego property to Legacy Partners Commercial,
Inc., a Texas Corporation (the "Purchaser"). The Disposition was consummated
pursuant to the Purchase and Sale Agreement (the "Sale Agreement"), dated
October 16, 1998, as amended, between the Company and the Purchaser, attached
hereto as Exhibit 10.1. Under the Sale Agreement, the Company disposed of the
real property, improvements, fixtures and office buildings (collectively, the
"Property") located at 10220, 10240, and 10260 Sorrento Valley Road, San Diego,
California 92121. The purchase price paid by the Purchaser for the Property was
$12,300,000, which was paid in cash to the Company less applicable closing
costs, on December 30, 1998. The Purchaser includes an entity which is
affiliated with a number of the Company's major stockholders.
In connection with the Disposition, the Company also entered into a Lease
Agreement (the "Lease"), dated as of December 16, 1998, by and between the
Company and the Purchaser, attached hereto as Exhibit 10.2. In connection with
the Lease, the Company will leaseback a portion of the Property from the
Purchaser for three years with renewal options.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
<TABLE>
<S> <C>
10.1 Purchase and Sale Agreement dated as of October 16,
1998, as amended, by and between the Company and Legacy
Partners Commercial, Inc.
10.2 Lease Agreement, dated as of December 16, 1998, by and
between the Company and Legacy Partners Commercial, Inc.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PHASE METRICS, INC.
Date: January 13, 1999 /s/ Brad LaLuzerne
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Brad LaLuzerne
Vice President, Finance,
Chief Financial Officer and Assistant
Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.1 Purchase and Sale Agreement dated as of October 16, 1998, as
amended, by and between the Company and Legacy Partners
Commercial, Inc.
10.2 Lease Agreement, dated as of December 16, 1998, by and between the
Company and Legacy Partners Commercial, Inc.
</TABLE>
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Exhibit 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of October, 1998 (the "Agreement Date"), by and between Phase
Metrics, Inc., a Delaware corporation (the "Seller"), and Legacy Partners
Commercial, Inc., a Texas Corporation (the "Purchaser"), with reference to the
following facts.
RECITALS
A. Seller is the owner of that certain improved real property located
at 10220, 10240 and 10260 Sorrento Valley Road in the City of San Diego, State
of California, consisting of approximately 9.22 acres, as legally described in
Exhibit A attached hereto and made a part hereof (the "Land") together with all
(i) improvements and fixtures, including, but not limited to, those three (3)
certain office buildings containing a total of approximately 122,172 square feet
of building rentable area (collectively, the "Improvements"), and (ii)
warranties, guaranties, easements, appurtenances, rights and privileges
belonging thereto. The Land, the Improvements and the interests described in
(ii) above, are collectively referred to herein as the "Property."
B. Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller the Property, in accordance with the terms and provisions
hereinafter contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Sale of the Property. Seller shall sell to Purchaser and Purchaser
shall buy from Seller the Property at the Closing (defined in Section 5), on the
terms and conditions contained herein.
2. Deposit. Within two (2) business days after the Agreement Date,
Purchaser shall place on deposit into the escrow account (the "Escrow Account")
to be opened with Fidelity National Title Company ("Escrow Holder" or "Title
Company"), located at 1300 Dove Street, Suite 310, Newport Beach, California
92660, Attention: Ms. Patty Beverly, Telephone Number: (949)622-4993, the amount
of Two Hundred and Fifty Thousand Dollars ($250,000.00) as a deposit (the
"Deposit"). The Escrow Holder shall cause the Deposit to be placed into an
interest bearing bank account acceptable to Purchaser. Until the Closing, all
interest earned thereon shall accrue to Purchaser. During the Conditions Period,
the Escrow Holder shall hold the Deposit as Trustee for Purchaser. Except as set
forth Section in 4.3, the Deposit shall be fully refundable to Purchaser until
the earlier of (a) the removal or waiver by Purchaser of all Pre-Closing
Conditions (defined below), or (b) the expiration of the Conditions Period
(defined below in Section 4.1).
3. Purchase Price. The purchase price for the Property shall be
Thirteen Million Four Hundred Thousand Dollars ($13,400,000.00) payable in cash
at the Closing (defined below), adjusted for prorations in accordance with the
provisions of Section 7 below (the "Purchase Price"). At Purchaser's sole
election, to be exercised in writing prior to the Closing and subject to Section
6 (Liquidated Damages), the Deposit and/or all interest earned on the Deposit
shall either be returned to Purchaser or applied to the Purchase Price at the
Closing.
4. Conditions to Purchaser's Obligations. The following conditions are
conditions precedent to Purchaser's obligation to purchase the Property:
4.1 Pre-Closing Conditions. Purchaser's obligations under this
Agreement shall be subject to the satisfaction of or waiver by Purchaser in
writing, in its sole and absolute discretion, on or
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before the expiration of thirty (30) days after the Agreement Date (the
"Conditions Period") of the matters referred to in this Section 4.1
(collectively, the "Pre-Closing Conditions") and Purchaser's failure to approve
or disapprove of any Pre-Closing Condition before the expiration of the
Conditions Period shall be deemed disapproval of such Pre-Closing Condition:
4.1.1 Title. Within five (5) days following the
Agreement Date, Seller shall cause to be issued and delivered to Purchaser a
preliminary title report for the Property, together with all documents
evidencing exceptions to title referred to therein (the "Title Report") issued
by the Title Company. Purchaser shall have until ten (10) business days after
delivery of the Title Report) to either approve the exceptions contained
therein, or to notify Seller in writing, specifying any exceptions to which
Purchaser objects (the "Title Objection Notice"). Seller shall have three (3)
days after Seller's receipt of the Title Objection Notice to remove, or agree to
remove prior to the expiration of the Conditions Period, those exceptions to
which Purchaser has objected, and to inform Purchaser of the same. Failure by
Seller to remove, or agree to remove prior to the expiration of the Conditions
Period, all of the specified exceptions within the specified period shall be
deemed to be a failure of this condition, unless Purchaser withdraws its
objections in writing prior to the expiration of the Conditions Period.
4.1.2 Environmental Investigations. Within three (3)
business days following the Agreement Date, Seller shall deliver to Purchaser
true and complete copies of any environmental site assessment reports and
similar information and data with respect to an evaluation of the presence (or
potential therefor), use or historical uses of hazardous or toxic wastes,
materials or substances, including, without limitation, petroleum hydrocarbons
or its by-products (as said terms are defined in any applicable federal, state
or local laws or ordinances and implementing regulations or guidelines)
(collectively, "Hazardous Materials") in, on or under any portion of the
Property which are in Seller's actual possession. Purchaser and its agents shall
have the right to enter upon the Property at all reasonable times to make and
perform such additional environmental evaluations, inspections and
investigations of the Property as Purchaser may desire and make inquiry of any
persons in possession or occupancy (collectively, the "Environmental
Investigations"). Purchaser agrees to indemnify, defend and hold Seller harmless
against any and all claims for bodily injury, property damage and mechanics'
liens arising out of any actions of Purchaser or its agents or representatives
on the Property in the course of such activities; provided, however, any such
indemnity and defense will not include any claims or damages relating to the
negligence or willful misconduct of Seller, any pre-existing conditions and the
effects of the discovery of the presence of any Hazardous Materials. The
indemnity contained herein shall survive the Closing hereunder or the
termination of this Agreement, as the case may be, for a period of one (1) year.
4.1.3 Pending Litigation. Within three (3) business
days following the Agreement Date, Seller shall deliver to Purchaser a true and
complete copy of a schedule of all pending or threatened litigation or
governmental proceedings or enforcement actions relating to or affecting any of
the Property and known to Seller, whether or not Seller is a party thereto.
4.1.4 Contracts and Other Agreements. Within three
(3) business days following the Agreement Date, Seller shall deliver to
Purchaser a true and complete copy of all service contracts, maintenance
contracts, improvement contracts, license agreements, agreements of any nature
whatsoever affecting the Property, warranties, soils reports, insurance
policies, and other contracts or documents affecting the Property or its
operation that Seller has in its possession (collectively, the "Contracts").
Purchaser shall have until two (2) business days prior to the expiration of the
Conditions Period to either approve of any such Contracts, or to notify Seller
in writing, specifying any Contracts which Purchaser desires be terminated on or
before the Closing (the "Disapproved Contracts"). Seller shall have until one
(1) business day prior to the expiration of the Conditions Period to agree to
lawfully terminate such Disapproved Contracts prior to the Closing, with such
Disapproved Contracts being terminated effective on or before the Closing. Those
Contracts specifically approved by Purchaser (the "Approved Contracts") shall be
assigned by Seller and Seller shall assign its right, title and interest under
the Approved Contracts to Purchaser at the Closing pursuant to the Assignment
and Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as Exhibit B, and made a part
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hereof ("Assignment"). Failure by Seller to agree to so terminate the
Disapproved Contracts within the specified period shall be deemed to be a
failure of this condition and this Agreement shall automatically be terminated
at no cost to Purchaser or Seller, unless Purchaser withdraws its disapproval or
rejection in writing prior to the expiration of the Conditions Period.
4.1.5 Income and Expense Statements; and Property Tax
Bills. Within three (3) business days following the Agreement Date, Seller shall
deliver to Purchaser a true and complete copy of property tax bills for the
current year and for 1997.
4.1.6 Reports and Survey. Within three (3) business
days following the Agreement Date, Seller shall deliver to Purchaser a true and
complete copy of any ALTA Survey which Seller has in its possession and a true
and complete copy of all engineer's reports and/or plans with respect to the
mechanical, electrical, and other physical characteristics of the Property
(including without limitation the roof of the building), and copies of any and
all reports or studies prepared by Seller or Seller's representatives, or by any
third party pursuant to a contract with Seller or Seller's representatives,
relating to the physical condition of the Property (including without
limitation, as to the Americans with Disabilities Act (the "ADA") a federal law
codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III
thereof, all regulations and guidelines related thereto, and any amendments
thereof), and any other such reports or studies by whomsoever prepared that are
in Seller's possession.
4.1.7 Permits and Approvals. Within three (3)
business days following the Agreement Date, to the extent in Seller's
possession, Seller shall deliver to Purchaser a true and complete
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copy of all certificates of compliance, governmental permits and approvals
obtained or held by Seller, or required to be obtained by Seller, and relating
to the construction, operation, use or occupancy of any part of the Property.
Seller shall assign all of its right, title and interest, to the extent
assignable, under the approvals and permits to Purchaser at the Closing pursuant
to the Assignment.
4.1.8 Plans and Warranties; and Insurance
Information. Within three (3) business days following the Agreement Date, Seller
shall deliver to Purchaser a true and complete copy of (i) a list of all claims
for more than $3,000.00 reported, filed or otherwise made under or against any
and all insurance policies for the Property, and (ii) any and all plans,
specifications, drawings and similar documents, and all guaranties and
warranties relating to the Property in the possession of Seller, including, but
not limited to, all as-built architectural, and civil and structural engineering
drawings, and all other as-built drawings or plans prepared for all improvements
constructed or to be constructed on or in the Property or otherwise relating to
the Property (such drawings and plans should be stamped or sealed by the
appropriate consultant). Seller shall assign all of its right, title and
interest under any warranties, guaranties and plans to Purchaser at the Closing
pursuant to the Assignment.
4.1.9 Economic Viability. Purchaser's determination,
in its sole and absolute discretion, of the economic viability of this purchase
of the Property for Purchaser's intended use prior to the expiration of the
Conditions Period.
4.1.10 Seller Lease. Purchaser and Seller shall have
agreed upon all of the terms and conditions of a lease for approximately 38,000
to 43,000 square feet at 10260 and 10220 Sorrento Valley Road of the Property
("Seller Lease"). Purchaser and Seller hereby covenant and agree to use diligent
efforts and to negotiate in good faith to agree upon the final form of the
Seller Lease as soon as possible after the Agreement Date.
4.2 Closing Conditions. Following the expiration of the
Conditions Period, Purchaser's obligation to consummate the purchase of the
Property shall be subject to the satisfaction of the following conditions
(collectively, the "Closing Conditions"):
4.2.1 Representations and Warranties. All of Seller's
representations and warranties contained in or made pursuant to this Agreement
shall have been true and correct when made and shall be true and correct as of
the date of Closing.
4.2.2 Condition of Property. The physical condition
of the Property shall be substantially the same on the day of Closing as on the
date of the execution of this Agreement, including, without limitation, the
Property being free from any Hazardous Materials, reasonable wear and tear and
(subject to Section 12 below) loss by casualty excepted, and, as of the date of
Closing, there shall be no litigation or administrative agency or other
governmental proceeding, pending or threatened, against Seller or the Property.
4.2.3 Termination of Disapproved Instruments. Seller
lawfully terminating, or causing the lawful termination of, any and all
Disapproved Contracts and any other written agreements affecting the Property
required by Purchaser to be terminated with an effective date of termination
being on or before the Closing, no later than three (3) business days prior to
the Closing.
4.2.4 Delivery of Closing Documents. Seller
delivering to Purchaser all documents required for Closing hereunder, including,
without limitation, the documents and instruments set forth in Section 5.4 below
and the Seller Lease.
4.2.5 Delivery of Title Policy. At the Closing the
Title Company shall be irrevocably committed to issue to Purchaser the ALTA
Title Policy.
4.3 Failure of Conditions. In the event that any or all of the
Pre-Closing Conditions are not satisfied or otherwise waived by Purchaser prior
to expiration of the Conditions Period in writing, then
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Purchaser may terminate this Agreement by delivering written notice thereof to
Seller on or before the expiration of the Conditions Period; provided, if
Purchaser fails to deliver any such written notice, this Agreement shall be
deemed automatically terminated and of no further force or effect. If Purchaser
so elects to terminate this Agreement or this Agreement is automatically
terminated, the Deposit and all interest earned thereon shall promptly be
returned to Purchaser and Purchaser shall not have any further liability or
obligation to Seller hereunder. If Purchaser does not elect to terminate this
Agreement due to a failure of any of the Pre-Closing Conditions and notifies
Seller in writing that it intends to proceed with the purchase of the Property
prior to the expiration of the Conditions Period, subject to the terms and
provisions of this Agreement, the Deposit shall become non-refundable to
Purchaser and the Deposit shall be held in escrow for Seller's benefit, however,
all interest earned thereon after the expiration of the Conditions Period shall
be for the Purchaser's benefit. If Purchaser elects to terminate the Agreement,
Purchaser shall not have any further liability or obligation hereunder, except
with respect to the inspection
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indemnity referred to in Section 4.1.2 above. Failure by Purchaser to notify
Seller of the satisfaction or waiver by Purchaser of any of the contingencies
set forth herein shall be deemed disapproval by Purchaser of such matters. The
foregoing conditions contained in this Section 4 are intended solely for the
benefit of Purchaser. If any of the foregoing conditions are not satisfied,
Purchaser shall have the right at its sole election either to waive the
condition in question and proceed with the purchase or, in the alternative,
terminate this Agreement or pursue all rights and remedies available to
Purchaser under this Agreement. After the expiration of the Conditions Period
and provided this Agreement has not already been terminated (or been deemed
terminated) at or prior to the expiration of the Conditions Period, the Deposit
shall be non-refundable to Purchaser subject to (i) the satisfaction or waiver
by Purchaser of all of the Closing Conditions, (ii) the provisions of Section 12
below, and (iii) Seller not being in default of any of the provisions of this
Agreement.
5. Closing and Escrow.
5.1 Escrow Instructions. Upon execution of this Agreement, the
parties hereto shall deposit a copy of an executed counterpart of this Agreement
with Escrow Holder and this instrument shall serve as the instructions to Escrow
Holder for consummation of the purchase and sale contemplated hereby. Seller and
Purchaser agree to execute such additional and supplementary escrow instructions
as may be appropriate to enable the Escrow Holder to comply with the terms of
this Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.
5.2 Date of Closing. Unless otherwise agreed to in writing by
the parties, escrow shall close on or before the tenth (10th) day following the
expiration of the Conditions Period (the "Closing Date"). Such date may not be
extended without the prior written approval of both Seller and Purchaser.
5.3 Conveyance. At Closing, Seller shall convey to Purchaser
insurable and marketable fee simple title to the Property by means of a duly
executed and acknowledged grant deed in the form of Exhibit C attached hereto
and made a part hereof (the "Grant Deed"). Evidence of delivery of insurable fee
simple title shall be the issuance by Title Company of an ALTA Owner's Policy of
Title Insurance (Form B, rev. 10/17/70) in an amount not less than the Purchase
Price insuring fee simple title to the Property in Purchaser, subject only to
such exceptions as Purchaser shall have expressly approved pursuant to Section
4.1.1 above, general real estate taxes and assessments for the then applicable
tax fiscal year in which the Closing occurs, general real estate taxes and
assessments for subsequent years not yet due and payable and the Seller Lease
(the "Title Policy"). Said policy shall provide full coverage against mechanics'
or materialmen's liens arising out of the construction, repair or alteration of
any of the Improvements or any tenant improvements and shall contain such
special endorsements as Purchaser may reasonably require. The Closing shall mean
the date that the Grant Deed is recorded in the official records of San Diego
County and possession of the Property is delivered to Purchaser. Title shall be
free and clear of all liens, encumbrances, easements and restrictions except
those expressly accepted by Purchaser. Seller hereby covenants and agrees that
from and after the Agreement Date, Seller shall not sell, assign, encumber or
create any right, title or interest in the Property, or any part thereof, or
permit to exist, any lien, encumbrance or charge thereon, without the prior
written consent of Purchaser. Notwithstanding anything to the contrary contained
herein, Seller shall remove or cause to be removed by the Closing any and all
monetary liens or encumbrances affecting the Property other than current taxes
and assessments for which a lien is not yet due or payable.
5.4 Closing Documents. At or before the Closing, Seller shall
deliver to Purchaser all of the following documents:
5.4.1 The duly executed and acknowledged Grant Deed;
5.4.2 To the extent available originals, or if
originals are not available certified by Seller as true and complete copies, of
all Approved Contracts and any other agreements to be continued
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by Purchaser after the Closing, and any warranties or guaranties received by
Seller from any contractors, subcontractors, suppliers or materialmen in
connection with any construction, repairs or alterations of any tenant
improvements;
5.4.3 A duly executed Assignment and all appropriate
consents thereto, for the Approved Contracts, any other agreements to be
continued by Purchaser after Closing, and originals (or copies if originals are
not available) of all licenses, permits, approvals, entitlements, plans,
specifications, reports and any other documents in Seller's possession;
5.4.4 Copies of all governmental approvals, permits,
certificates of compliance, building permits and certificates of occupancy for
the Property, including, without limitation, the Improvements and all tenant
occupied space included within the Improvements which are in Seller's
possession;
5.4.5 An affidavit in form reasonably acceptable to
Purchaser certifying that Seller is not a "foreign person" within the meaning of
Section 1445(e)(3) of the Internal Revenue Code of 1986, as amended, and a
California 590-RE/597 form (as applicable);
5.4.6 Such corporate resolutions and/or agreements
relating to Seller as shall be reasonably required in connection with this
transaction;
5.4.7 Seller shall cause the delivery to Purchaser of
the Title Policy;
5.4.8 Any other documents, instruments, records,
correspondence or agreements called for hereunder which have not previously been
delivered; and
5.4.9 Four (4) originals of the Seller Lease, duly
executed by the Seller.
5.5 Seller and Purchaser shall each deposit such other
instruments as are reasonably required by the Escrow Holder, the Title Company
or otherwise required to close the escrow and consummate the purchase of the
Property in accordance with the terms hereof.
6. LIQUIDATED DAMAGES.
6.1 PURCHASER'S DEFAULT. IN THE EVENT PURCHASER FAILS TO COMPLETE THE PURCHASE
OF THE PROPERTY AS CONTEMPLATED HEREIN FOR ANY REASON WHATSOEVER RELATED TO THE
FAILURE BY PURCHASER TO PERFORM ITS OBLIGATIONS HEREUNDER, PURCHASER AND SELLER
HEREBY AGREE THAT THE DEPOSIT (INCLUDING ALL INTEREST EARNED THEREON) SHALL BE
PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HEREBY
ACKNOWLEDGE AND AGREE THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT OR
OTHER FAILURE HEREUNDER BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE DEPOSIT (INCLUDING INTEREST EARNED
THEREON) HAS BEEN AGREED UPON, AFTER NEGOTIATION AND TAKING INTO CONSIDERATION
ALL CIRCUMSTANCES EXISTING AS OF THE AGREEMENT DATE, AS THE PARTIES' REASONABLE
ESTIMATE OF SELLER'S DAMAGES AS WELL AS THE RELATIONSHIP OF THE SUM TO THE RANGE
OF HARM TO SELLER THAT COULD BE ANTICIPATED AND SUCH SUM SHALL BE PAID TO AND
RETAINED BY SELLER AS SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST PURCHASER, AT
LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT OR OTHER FAILURE BY PURCHASER UNDER
THIS AGREEMENT ON THE PART OF PURCHASER. IN PLACING THEIR INITIALS BELOW, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE
FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE
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CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS
MADE.
INITIALS: SELLER ___________ PURCHASER ___________
6.2 SELLER'S DEFAULT. If Seller fails to complete the sale of
the Property as provided in this Agreement by reason of any default of Seller,
Purchaser shall be released from its obligation to purchase the Property from
Seller, and Purchaser may either (i) proceed against Seller by bringing an
action for specific performance (including the filing of a lis pendens) under
this Agreement without any right to seek damages, or (ii) terminate this
Agreement in which event the Deposit shall be returned to Purchaser without the
necessity of delivering to Seller the Due Diligence Materials and Seller shall
pay all escrow cancellation fees and charges. Purchaser and Seller hereby
acknowledge and agree that it would be impractical and/or extremely difficult to
fix or establish the actual damages sustained by Purchaser as a result of such
default by Seller, and agree that the remedy set forth in (ii) above is a
reasonable approximation thereof. Accordingly, in the event that Seller breaches
this Agreement by defaulting in the completion of the sale, and Purchaser elects
not to exercise the remedy set forth in (i) above but instead elects the remedy
set forth in (ii) above, such sums shall constitute and be deemed to be the
agreed and liquidated damages of Purchaser which is not intended to be a
forfeiture or penalty, but is intended to constitute liquidated damages to
Purchaser pursuant to California Civil Code Sections 1671, 1676 and 1677.
Seller's Initials ____ Purchaser's Initials ____
7. Prorations. At Closing, real property taxes and assessments, water,
sewer and utility charges and amounts payable under the Approved Contracts
(calculated on the basis of the period covered), and other expenses normal to
the operation and maintenance of the Property shall be prorated as of midnight
on the day before the Closing Date on the basis of a 360-day year (i.e. 30 day
months). Notwithstanding any other provision of this Agreement to the contrary,
if Purchaser shall become liable after the Closing for payment of any property
taxes, supplemental or otherwise, assessed against the Property for any period
of time prior to the Closing Date, Seller shall immediately pay to Purchaser on
demand an amount equal to such tax assessment.
8. Closing Costs. All costs associated with the transfer of title to
the Property and the associated escrow shall be in accordance with the customary
practices in San Diego County except as otherwise expressly set forth herein.
Seller shall pay the applicable city transfer taxes (if any), the documentary
county transfer taxes, one-half of the escrow fees, any sales taxes, and the
recording costs with respect to the Grant Deed and to remove liens,
encumbrances, title exceptions and survey matters in accordance with the
provisions of this Agreement. Purchaser shall pay one-half of the escrow fees,
and the recording costs for any instruments it desires to be recorded. At
Closing, Purchaser may obtain from the Title Company a CLTA Owner's Policy of
Title Insurance in the aggregate amount of the Purchase Price plus the amount
equal to all costs and expenses reimbursed or paid to Seller pursuant to this
Agreement, insuring fee simple title to the Property in Purchaser, subject to
only those exceptions expressly approved by Purchaser in accordance with the
provisions of Section 4.1.1, general real estate taxes and assessments for the
then applicable tax fiscal year in which the Closing occurs and general real
estate taxes and assessments for subsequent years not yet due and payable (the
"CLTA Title Policy"). Purchaser may elect to cause the Title Company to issue an
ALTA Owner's Policy of Title Insurance (Form B, rev. 10/17/70) and if Purchaser
so elects, Purchaser shall provide the Title Company with an updated ALTA Survey
of the Property, at its sole cost and expense (the "ALTA Policy"). Said title
insurance policy shall provide full coverage against mechanics' or materialmen's
liens arising out of the construction, repair or alteration of any of the
improvements and shall contain such special endorsements as Purchaser may
require. Seller shall pay the premium charged for the CLTA Title Policy
(excluding endorsements except for those endorsements required by the Title
Company to be obtained in order to cause the removal from title of objectionable
title and/or survey matters which Seller has agreed to remove in accordance with
the
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provisions of Sections 4.1.1 and 5.3 above) and Purchaser shall pay for any
incremental premiums or other charges related to the ALTA Policy (including
endorsements).
9. Broker and Brokerage Commission. Seller and Purchaser respectively
represent that there are no brokers or other intermediaries entitled to receive
brokerage commissions or fees or other compensation out of or with respect to
the sale of the Property except for Colliers International ("Broker"). At
Closing, Seller shall pay to the Broker a brokerage commission in accordance
with an agreement by and between the Broker and Seller. Seller shall indemnify,
defend and save and hold Purchaser harmless from and against all claims, suits,
damages and costs incurred or resulting from the claim of any person, except the
Broker (payment of the Broker being Seller's responsibility), that a commission,
fee or remuneration is due in connection with this transaction if such claim
shall be based upon any statement or agreement alleged to have been made by
Seller. Purchaser shall indemnify, defend and save and hold Seller harmless from
and against all claims, suits, damages and costs incurred or resulting from the
claim of any person, except the Broker (payment of the Broker being Seller's
responsibility), that a commission, fee or remuneration is due in connection
with this transaction if such claim shall be based upon any statement or
agreement alleged to have been made by Purchaser. Seller and Purchaser hereby
acknowledge and agree that the Broker represents only the Seller in connection
with this transaction.
10. Representations and Warranties of Seller. Seller hereby represents
and warrants to Purchaser that, as of the date hereof, the following are true
and correct and shall be deemed remade as of the date of the Closing:
10.1 To Seller's actual knowledge, there are no material
physical defects of the Property or any off-site improvements and to the best of
Seller's knowledge, all such items are in good operating condition and repair
and in compliance with all applicable governmental laws or regulations.
10.2 To Seller's actual knowledge, the use and operation of
the Property are in compliance with applicable building codes, environmental,
zoning and land use laws, and other applicable local, state and federal laws and
regulations.
10.3 The certificates of occupancy and all other books and
records relating to the Property and all other contracts or documents delivered
to Purchaser by Seller pursuant to this Agreement or in connection with the
execution hereof are true and correct copies, and are in full force and effect,
without default by (or notice of default to) any party.
10.4 Seller has not received written notice of any
condemnation, environmental, zoning or other land use regulation proceedings nor
has Seller received notice of any special assessment proceedings affecting the
Property.
10.5 All water, sewer, gas, electric and telephone facilities
are installed to the property lines of the Land, are all connected and are
adequate to service the Property.
10.6 There is no litigation pending or, to Seller's actual
knowledge threatened, against the Property or against Seller that might
adversely affect the ability of Seller to perform its obligations under this
Agreement.
10.7 Seller is a Delaware corporation validly existing, and in
good standing under the laws of the States of California and Delaware; this
Agreement and all documents executed by Seller which are to be delivered to
Purchaser at the Closing are or at the time of Closing will be duly authorized,
executed, and delivered by Seller, are or at the time of Closing will be legal,
valid, and binding obligations of Seller, are and at the time of Closing will be
sufficient to convey title (if they purport to do so), and do not and at the
time of Closing will not violate any provisions of any agreement or judicial
order to which Seller is a party or to which Seller or the Property is subject.
Seller hereby further represents and warrants
<PAGE> 10
that the parties signing this Agreement on behalf of Seller have full power and
authority to do so and to fully bind Seller hereunder.
10.8 At the time of Closing, except for the Approved
Contracts, there will be no outstanding contracts made by Seller for any
improvements to the Property which have not been fully paid for and Seller shall
cause to be discharged all mechanics' or materialmen's liens arising from any
labor or materials furnished to the Property prior to the time of Closing.
10.9 There are no leases, occupancy agreements or subleases of
any portion of the Property, except, after Closing, the Seller Lease and there
is no personal property at the Property used in the ownership, management and/or
maintenance of the Property.
10.10 Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code, as amended.
10.11 To Seller's actual knowledge, there are no Hazardous
Materials (defined below) which are now or have been located on or within any
portion of the Property which are in violation of any applicable federal, state
or local laws or ordinances and implementing regulations or guidelines as in
effect as of the Agreement Date or as of the date of the Closing; there are and
have been no enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened pursuant to any applicable federal,
state or local laws or ordinances relating to any Hazardous Materials and
affecting the Property; there are and have been no claims made or threatened by
any third party against Seller or the Property relating to damage, contribution,
cost recovery compensation, loss or injury resulting from any Hazardous
Materials; there are no underground storage tanks located on the Property,
whether now or formerly used for the storage or containment of any Hazardous
Materials, including any petroleum products or by-products; and the Property
does not contain or include any asbestos or asbestos containing materials or any
petroleum or petroleum by-products. "Hazardous Materials" means any hazardous,
toxic or dangerous waste, substance or material, pollutant or contaminant, as
defined for purposes of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as amended
("CERCLA"), or the Resource Conservation and Recovery Act (42 U.S.C. Sections
6901 et seq.), as amended, or any other federal, state or local law, ordinance,
rule or regulation applicable to the Property, or any substance which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous, or any substance which contains gasoline,
diesel fuel or other petroleum hydrocarbons, polychlorinated biphyenyls (PCBs),
or radon gas, urea formaldehyde, asbestos or lead.
11. Possession. Possession of the Property shall be delivered to
Purchaser on the Closing Date, provided, however, that prior to Closing, and
subject to Purchaser's indemnity provided in Section 4.1.2 above, Seller shall
afford authorized representatives of Purchaser reasonable access to the Property
for the purposes of satisfying Purchaser with respect to the representations,
warranties, and covenants of Seller contained herein and with respect to
satisfaction of any conditions precedent to the Closing contained herein.
12. Maintenance of the Property; Casualty and Condemnation. Between the
Agreement Date and the Closing, Seller shall maintain the Property in good
order, condition and repair, and at least in substantially the same manner as at
present, reasonable wear and tear excepted, shall perform all work required to
be done under the terms of any agreement affecting the Property, shall comply
with all laws and recorded restrictions and agreements affecting the Property,
and shall make all repairs, maintenance and replacements of the Improvements and
any personal property and otherwise operate the Property in the same manner as
before the making of this Agreement, the same as though Seller were retaining
the Property except as hereinafter set forth in Section 13 below. In the event
that, prior to Closing, the Property, or any part thereof, is destroyed or
materially damaged, or if condemnation proceedings are commenced or threatened
against the Property, Purchaser shall have the right, exercisable by giving
notice of such decision to Seller within twenty (20) days after receiving
written notice of such damage,
<PAGE> 11
destruction or condemnation proceedings or threat thereof, to terminate this
Agreement, in which case, Seller shall cause the return to Purchaser of the
Deposit (to the extent made) and all interest earned thereon, and neither
Purchaser nor Seller shall have any further liability or obligation to each
other. For purposes of this Agreement, material damage shall mean any damage or
loss which would (a) cost in excess of Fifty Thousand Dollars ($50,000.00) to
repair or restore, as determined in good faith by Seller and Purchaser, (b)
require more than thirty (30) days to repair or restore, as determined in good
faith by Seller and Purchaser, or (c) reduce the total square footage of the
Property by more than ten percent (10%). If Purchaser elects to accept the
Property in its then condition, all proceeds of insurance or condemnation awards
paid or payable to Seller by reason of such damage, destruction or condemnation
shall be paid or assigned to Purchaser and the Purchase Price shall be reduced
by an amount equal to the deductible under Seller's insurance policy. In the
event of non-material damage to the Property, which damage Seller is unwilling
to repair or replace, Purchaser shall have the right, exercisable by giving
notice within twenty (20) days after receiving written notice of such damage,
either (i) to terminate this Agreement as hereinabove provided in this Section
12, or (ii) to accept the Property in its then condition and proceed with the
purchase, in which case Purchaser shall be entitled to a reduction of the
Purchase Price to the extent of the cost of repairing or replacing such damage,
as determined by a licensed general contractor selected by Seller and reasonably
acceptable to Purchaser. Such reduction shall, in no case, exceed $50,000.00.
For purposes of any repairs or replacements of non-material damage under this
Section 12, the Closing Date may be extended, at Purchaser's or Seller's
election, for a reasonable time to allow such repairs or replacements to be
made, which time period shall not exceed ninety (90) days.
13. Purchaser's Consent to New Contracts Affecting the Property;
Seller's Cooperation. Seller shall not, after the Agreement Date, do any of the
following without first involving Purchaser therein and obtaining Purchaser's
written consent thereto: (a) enter into any lease, amendment of lease, contract
or agreement; or (b) enter into any contract or agreement pertaining to the
Property which would survive the Closing or create any lien or obligation on the
Property that could survive the Closing; or (c) modify any contract or agreement
pertaining to the Property or waive any rights of Seller thereunder, without in
each case obtaining Purchaser's prior written consent thereto; or (d) market the
Property or any portion thereof to any potential purchaser, joint venture
partner, lender or tenant. Notwithstanding the foregoing, Seller may accept
"back-up" offers for purchase of the Property. Seller shall fully cooperate with
Purchaser in its acquisition of the Property, including, but not limited to,
promptly delivering to Purchaser a list of all potential tenants and their
representatives and telephone numbers, and if requested to do so by Purchaser,
making introductions to such representatives, allowing Purchaser to tour
prospective tenants through the Property, allowing Purchaser to directly
negotiate with any and all prospective tenants, subtenants and potential
tenants, and executing any and all reasonably necessary documents as requested
by Purchaser. Purchaser shall have the right to disclose to all interested
parties the existence of this Agreement.
14. Limited Liability. Seller on behalf of itself and its directors,
officers and representatives hereby agrees that in no event or circumstance
shall Purchaser, any of its directors, officers, representatives, agents or
employees, any partners of Purchaser, or any representatives, agents, employees
or partners of the partners of Purchaser have any personal liability under this
Agreement, or to any of Seller's creditors, or to any other party in connection
with the Property.
15. Miscellaneous.
15.1 Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been given
when delivered by U.S. mail, registered or certified, return receipt requested,
postage prepaid, or by overnight delivery service showing receipt of delivery,
or by personal delivery, or by facsimile transmission. If to Purchaser, notices
shall be sent to:
Legacy Partners Commercial, Inc.
30 Executive Park, Suite 100
Irvine, California 92614
Attention: Mr. Rich Simons
<PAGE> 12
Facsimile No.: 949-261-1182
and
Legacy Partners Commercial, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attention: Ms. Darleen Fraser
Facsimile No.: 650-672-9527
with a copy to:
Real Estate Law Group, LLP
2330 Marinship Way, Suite 211
Sausalito, California 94965
Attention: Jeffrey D. Ebstein, Esquire
Facsimile No.: 415-331-7272
and if to Seller:
Phase Metrics, Inc.
10260 Sorrento Valley Road
San Diego, California 92121
Attention: Mr. Richard G. Vincent, Treasurer
Facsimile No.: 619-646-4990
with a copy to:
Thomas & Simondi
4685 MacArthur Court, Suite 450
Newport Beach, California 92660
Attention: Michael Simondi, Esquire
Facsimile No.: 949-476-2477
Notices as aforesaid shall be effective upon the earlier of actual receipt, or
twenty-four (24) hours after deposit with the messenger or delivery service, or
the next business day after delivery to an overnight delivery service, or within
three (3) days after the deposit in the U.S. mail, or upon confirmation of
transmission by facsimile.
15.2 Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors, heirs, administrators and assigns. Without being relieved of any
liability under this Agreement, Purchaser reserves the right to take title to
the Property in a name or nominee other than Purchaser. Purchaser may assign its
rights and delegate its obligations under this Agreement without Seller's
consent thereto provided Purchaser delivers to Seller prior written notice
thereof.
15.3 Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
Seller and Purchaser.
15.4 Continuation and Survival of Representations and
Warranties. All representations and warranties by Seller contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and shall
survive the execution and delivery of this Agreement and the delivery of the
Grant Deed and transfer of title to all of the Property. All statements
contained in any certificate or other instrument delivered at any time by or on
behalf of Seller in connection with the transaction contemplated hereby shall
constitute representations and warranties hereunder.
<PAGE> 13
15.5 Entire Agreement. This Agreement constitutes the entire
understanding of the
<PAGE> 14
parties and all prior agreements, representations, and understandings between
the parties, whether oral or written, are deemed null and void, all of the
foregoing having been merged into this Agreement. The parties acknowledge that
each party and/or its counsel have reviewed and revised this Agreement and that
no rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall be employed in the interpretation of this
Agreement or any amendments or exhibits to this Agreement or any document
executed and delivered by either party in connection with this Agreement.
15.6 Enforceability. If for any reason, any provision of this
Agreement shall be held to be unenforceable, it shall not affect the validity or
enforceability of any other provision of this Agreement and to the extent any
provision of this Agreement is not determined to be unenforceable, such
provision, or portion thereof, shall be, and remain, in full force and effect.
15.7 Counterparts. This Agreement may be executed in
counterparts. All executed counterparts shall constitute one agreement, and each
counterpart shall be deemed an original.
15.8 Dispute Costs. In the event any dispute between the
parties with respect to this Agreement results in litigation or other
proceedings, the prevailing party shall be reimbursed by the party not
prevailing in such proceeding for all reasonable costs and expenses, including,
without limitation, reasonable attorneys' and experts' fees and costs incurred
by the prevailing party in connection with such litigation or other proceeding
and any appeal thereof. Such costs, expenses and fees shall be included in and
made a part of the judgment recovered by the prevailing party, if any.
15.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
15.10 Time of the Essence; Business Days; and Force Majeure.
Time is of the essence of this Agreement. Unless the context otherwise requires,
all periods terminating on a given day, period of days, or date shall terminate
at 5:00 p.m. (Pacific Time) on such date or dates and references to "days" shall
refer to calendar days except if such references are to "business days" which
shall refer to days which are not a Saturday, Sunday or legal holiday.
Notwithstanding the foregoing, if any period terminates on a Saturday, Sunday or
legal holiday, under the laws of the State of California, the termination of
such period shall be on the next succeeding business day. The time in which any
act provided under this Agreement is to be done, shall be computed by excluding
the first day and including the last day, unless the last day is a Saturday,
Sunday or legal holiday under the laws of the State of California, and then it
is also so excluded. Notwithstanding anything to the contrary contained herein,
the time in which any act provided under this Agreement is to be done shall be
extended commensurately by the period of time that the party charged with
performing such act is prevented from doing so due to any event or occurrence
considered to be of a force majeure nature, including without limitation,
inclement weather, earthquakes, riots, strikes, boycotts, moratoriums, and any
government closures.
16. Agreement Date. The parties hereby covenant and agree that the
"Agreement Date" shall be the date on which the Escrow Holder confirms in
writing to both Seller and Purchaser that the Escrow Holder has actually
received from both parties three (3) signed and initialled original counterparts
of this Agreement and the Escrow Holder is in a position to release to each of
the parties a fully executed original of this Agreement signed and initialled in
counterparts. The Escrow Holder shall insert such date in each original
counterpart of this Agreement on Page 1 hereof.
17. No Successor Liability. Seller agrees that, except for the Seller
Lease and the Approved Contracts, Purchaser shall have no liability whatsoever
as a successor in interest for any contracts or agreements entered into by
Seller in connection with its ownership or operation of the Property or the use,
occupancy or construction of the improvements located thereon; and Seller shall
fully perform all of its commitments and obligations under any such contracts
and agreements and shall indemnify and defend Purchaser against (by counsel
reasonably acceptable to Purchaser) and hold Purchaser and its partners and
members harmless from any and all losses, costs, damages, liabilities and
expenses, including without
<PAGE> 15
limitation, reasonable attorneys' and experts' fees and costs with respect to
such contracts and agreements referenced herein.
18. Seller's Conditions. Seller's obligation to consummate this
purchase and sale shall be subject to the following conditions: (i) on or before
the expiration of the Conditions Period, Purchaser and Seller shall have agreed
upon all of the terms and conditions of the Seller Lease and (ii) Purchaser
shall not be in default of any material term, covenant or condition contained in
this Agreement.
19. Purchaser's Covenants, Representations and Warranties. In
consideration of Seller entering into this Agreement and as an inducement to
Seller to sell the Property to Purchaser, Purchaser makes the following
covenants, representations and warranties, each of which is material and is
being relied upon by Seller:
<PAGE> 16
19.1 Authority. Purchaser has the legal right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby, and the execution, delivery and performance of this
Agreement have been duly authorized and no other action by Purchaser is
requisite to the valid and binding execution, delivery and performance of this
Agreement, except as otherwise expressly set forth in this Agreement.
19.2 Disclaimer of Representations and Warranties by Seller.
Notwithstanding anything contained herein to the contrary, except with respect
to the representations and warranties of Seller set forth in Section 10, it is
understood and agreed that Seller has not made and is not now making, and Seller
specifically disclaims, any other warranties, representations or guaranties of
any kind or character, express or implied, oral or written, past, present or
future, with respect to the Property, including, but not limited to, warranties,
representations or guaranties as to (A) matters of title, (B) environmental
matters relating to the Property or any portion thereof, (C) geological
conditions, including, without limitation, subsidence, subsurface conditions,
water table, underground water reservoirs, limitations regarding the withdrawal
of water and earthquake faults and the resulting damage of past and/or future
earthquakes, (D) whether, and to the extent to which, the Property or any
portion thereof is affected by any stream (surface or underground), body of
water, flood prone area, flood plain, floodway or special flood hazard, (E)
drainage, (F) soil conditions, including the existence of instability, past soil
repairs, soil additions or conditions of soil fill, or susceptibility to
landslides, or the sufficiency of any undershoring, (G) zoning to which the
Property or any portion thereof may be subject, (H) the availability of any
utilities to the Property or any portion thereof including, without limitation,
water, sewage, gas and electric, (I) usages of adjoining property, (J) access to
the Property or any portion thereof, (K) the value, compliance with the plans
and specifications, size, location, age, use, design, quality, description,
suitability, structural integrity, operation, title to, or physical or financial
condition of the Property or any portion thereof, (L) any income, expenses or
charges on or affecting or pertaining to the Property or any part thereof, (M)
the presence of Hazardous Materials in or on, under or in the vicinity of the
Property, (N) the condition or use of the Property or compliance of the Property
with any or all past, present or future federal, state or local ordinances,
rules, regulations or laws, building, fire or zoning ordinances, codes or other
similar laws (including, but not limited to, Title III of the Americans With
Disabilities Act (42 U.S.C.A. Sections 12101 et seq.), and federal, state or
common-law based actions and any private right of action under state and federal
law to which the Property is or may be subject, including, but not limited to,
CERCLA (42 U.S.C.A. Sections 9601 et seq.) and RCRA (42 U.S.C.A. Sections 6901
et seq.)), (O) the existence or non-existence of underground storage tanks, (P)
any other matters affecting the stability or integrity of the Property, (Q) the
potential for further development of the Property, (R) the existence of vested
land use, zoning or building entitlements affecting the Property, (S) the
merchantability of the Property or fitness of the Property for any particular
purpose (Purchaser affirming that Purchaser has not relied on Seller's skill or
judgment to select or furnish the Property for any particular purpose, and that
Seller makes no warranty that the Property is fit for any particular purpose),
(T) tax consequences, (U) the content or accuracy of any report, study opinion
or conclusion of any soils, environmental or other engineer or other person or
entity who has examined the Property or any aspect thereof, (V) the content or
accuracy of any information released to Purchaser by an engineer or planner in
connection with the development of the Property or (W) except as set forth in
Section 10.3 or otherwise in this Agreement, the content or accuracy of the
documents, materials and any other information given to Purchaser by Seller with
respect to the Property. The terms and conditions of this Paragraph 19.2 shall
expressly survive the Close of Escrow and shall not be merged with the Grant
Deed.
19.3 Sale "AS-IS." Except with respect to the representations
and warranties of Seller set forth in Section 10, Purchaser has not relied upon
and will not rely upon, either directly or indirectly, any representation or
warranty of Seller or any of its respective agents and acknowledges that no such
representations have been made. Purchaser represents that it is a knowledgeable,
experienced and sophisticated purchaser of real estate and that it is relying
solely on its own expertise and that of Purchaser's consultants in purchasing
the Property. Purchaser is, or as of the expiration of the Conditions Period
shall be, familiar with the Property. Purchaser is relying solely upon, and as
of the expiration of the Conditions Period will have conducted, its own,
independent inspection, investigation and analysis of the
<PAGE> 17
Property as it deems necessary or appropriate in so acquiring the Property from
Seller, including, without limitation, an analysis of any and all matters
concerning the condition of the Property and its suitability for Purchaser's
intended purposes, and a review of all applicable laws, ordinances, rules and
governmental regulations (including, but not limited to, those relative to
building, zoning and land use) affecting the development, use, occupancy or
enjoyment of the Property. Purchaser acknowledges and agrees that upon Closing,
Seller shall sell and convey to Purchaser and Purchaser shall accept the
Property "as is, where is," with all faults. Seller is not liable or bound in
any manner by any oral or written statements, representations, or information
pertaining to the Property furnished by any real estate broker, agent, employee,
servant or other person, unless the same are specifically set forth or referred
to herein. The terms and conditions of this Section 19.3 shall expressly survive
the Closing and shall not be merged
<PAGE> 18
with the Grant Deed. Purchaser has fully reviewed the disclaimers and waivers
set forth in this Agreement with its counsel and understands the significance
and effect thereof. Purchaser acknowledges and agrees that the disclaimers and
other agreements set forth in this Agreement are an integral part of this
Agreement and that Seller would not have agreed to sell the Property to
Purchaser for the Purchase Price without this disclaimer and other agreements
set forth in this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed as of the Agreement Date.
SELLER:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________
Its: ______________________________
By: _______________________________
Its: _______________________________
PURCHASER:
LEGACY PARTNERS COMMERCIAL INC.,
a Texas corporation
By: ______________________________
Its: ______________________________
<PAGE> 19
EXHIBIT A TO PURCHASE AND SALE AGREEMENT
LEGAL DESCRIPTION OF THE LAND
<PAGE> 20
EXHIBIT B TO PURCHASE AND SALE AGREEMENT
ASSIGNMENT AND ASSUMPTION OF CONTRACTS, WARRANTIES AND PERMITS
This Assignment and Assumption of Contracts, Warranties and Permits
(the "Assignment") is made and entered into as of this ____ day of ________,
1998 ("Assignment Date"), by and between Phase Metrics, Inc., a Delaware
corporation ("Assignor"), and _______________________________, a
____________________ ("Assignee"), with reference to the following facts.
RECITALS
A. Assignor and Assignee are parties to that certain Purchase and Sale
Agreement made and entered into as of ___________, 1998 (the "Purchase
Agreement") pursuant to which Assignor agreed to sell to Assignee, and Assignee
agreed to purchase from Assignor that certain improved real property located at
10220, 10240 and 10260 Sorrento Valley Road, in the City of San Diego, State of
California, consisting of approximately 9.22 acres, as legally described in
Exhibit A attached hereto and made a part hereof (the "Land") together with all
(i) improvements and fixtures, including, but not limited to, those three (3)
certain office buildings containing approximately 122,172 square feet of
building rentable area (collectively, the "Improvements") and (ii) warranties,
guaranties, easements, appurtenances, rights and privileges belonging thereto.
The Land, the Improvements, and the interests described in (ii) above, are
collectively referred to herein as the "Property."
B. Assignee has acquired fee title to the Property from Assignor on the
Assignment Date. Assignor now desires to assign and transfer to Assignee all of
Assignor's right, title and interest in, to and under the Contracts, Warranties
and Permits, as hereinafter defined.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
1. Assignment and Assumption. Effective as of the Assignment Date,
Assignor hereby grants, transfers, conveys, bargains, assigns and delegates to
Assignee all of its right, title, and interest of Assignor in, to and under (i)
those contracts, warranties and guaranties made by or received from any third
party with respect to any building, building component, structure, fixture,
machinery, equipment or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of the Land that are set forth in Schedule 1
attached hereto and made a part hereof (collectively, the "Warranties"); (ii)
all intangible property now owned by Assignor in connection with any portion of
the Property, including without limitation, all governmental permits, approvals
and licenses (to the extent assignable) (collectively, the "Permits"); and (iii)
those agreements, utility contracts, service contracts, maintenance contracts,
operating contracts and other rights relating to the ownership, use or operation
of the Property that are set forth in Schedule 2 attached hereto and made a part
hereof (collectively, the "Contracts"). Assignee hereby accepts such assignment
and delegation by Assignor and agrees to assume all the obligations of Assignor
under the Warranties, Permits and Contracts first accruing on or after the
Assignment Date. Assignee's assumption hereunder shall be effective only with
respect to the obligations of Assignor accruing from and after the Assignment
Date, and Assignee is not assuming any liability or obligation of Assignor
relating to or arising from Assignor's performance of, or failure to perform,
any of Assignor's obligations under the Warranties, Permits or Contracts arising
or accruing prior to the Assignment Date.
2. Warranties. Assignor does hereby covenant with Assignee, and
represents and warrants to Assignee, that Assignor has the right to transfer and
bargain each of the Warranties, Permits and Contracts to Assignee (to the extent
the terms of any of the Contracts do not limit or restrict such right). Assignor
further warrants that Assignor has received no written notice that any of the
Warranties, Permits
<PAGE> 21
and/or Contracts are not in full force and effect (except as the same may have
expired in accordance with their respective terms) or that there exist any
defaults thereunder, or that any acts or events which, with the passage of time
or the giving of notice or both, could become defaults thereunder, on the part
of any party thereto.
3. Attorneys' Fees. If Assignor or Assignee bring any action against
the other for the enforcement or interpretation of this Assignment, the losing
party shall pay to the prevailing party a reasonable sum for attorneys' fees and
costs.
4. Counterparts. This Assignment may be executed in counterparts, each
of which shall be deemed an original, and all of which shall taken together be
deemed one document.
5. Survival. This Assignment and Assignor's foregoing representations,
covenants and warranties shall survive the Closing (as such term is defined in
the Purchase Agreement) and shall run to the benefit of Assignee and Assignee's
successors and assigns.
6. Indemnification by Assignor. Assignor agrees to protect, defend and
indemnify Assignee from and against any and all claims, damages, liabilities,
judgments, demands, costs and expenses, including without limitation, reasonable
attorneys' fees and costs under the Warranties, Permits and Contracts arising or
accruing prior to the Assignment Date.
7. Indemnification by Assignee. Assignee agrees to protect, defend and
indemnify Assignor from and against any and all claims, damages, liabilities,
judgments, demands, costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, under the Warranties, Permits and
Contracts which arise and accrue on or after the Assignment Date in connection
with the obligations assumed by Assignee hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the Assignment Date.
ASSIGNOR:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________
Its: ______________________________
By: _______________________________
Its: _______________________________
ASSIGNEE:
_____________________________________,
a ___________________________________
By: ______________________________
Its: ______________________________
<PAGE> 22
By: _______________________________
Its: _______________________________
<PAGE> 23
EXHIBIT C TO PURCHASE AND SALE AGREEMENT
GRANT DEED
Recording Requested by and
When Recorded Mail to,
and Mail Tax Statements to:
Legacy Partners Commercial, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attn: Ms. Darleen B. Fraser
Space Above This Line for Recorder's Use
GRANT DEED
The undersigned Grantor declared that Documentary Transfer Tax is not
part of the public records.
For valuable consideration, receipt of which is acknowledged, Phase
Metrics, Inc., a Delaware corporation ("Grantor"), hereby grants to
_________________________________ ("Grantee"), that certain real property
located in the City of San Diego, State of California, consisting of
approximately ____ acres, as legally described in Exhibit A attached hereto and
made a part hereof, and referred to as Assessor's Parcel Numbers
________________ (collectively, the "Property") together with all of Grantor's
right title and interest in and to all improvements located thereon and all
easements, appurtenances, rights and privileges of Grantor appertaining to the
Property and all right, title and interest of Grantor in, to and under adjoining
streets, rights of way and easements.
IN WITNESS WHEREOF, Grantor has caused its duly authorized
representative to execute this instrument as of the date hereinafter written.
DATED:______________, 1998
GRANTOR:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________
Its: ______________________________
By: _______________________________
Its: _______________________________
<PAGE> 24
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment")
is made and entered into to be effective as of the 16th day of November, 1998,
by and between Phase Metrics, Inc., a Delaware corporation ("Seller"), and
Legacy Partners Commercial, Inc., a Texas corporation ("Purchaser"), with
reference to the following facts.
RECITALS
A. Purchaser and Seller have entered into that certain Purchase and
Sale Agreement, dated as of October 16, 1998 (the "Purchase Agreement"),
pursuant to which Seller has agreed to sell and Purchaser has agreed to purchase
that certain improved real property located at 10220, 10240 and 10260 Sorrento
Valley Road, San Diego, California, as more particularly described in Exhibit A
to the Purchase Agreement, on all of the terms and conditions set forth therein.
B. Purchaser and Seller desire to amend the Purchase Agreement on each
and all of the terms, provisions and conditions contained herein.
NOW THEREFORE, in consideration of the promises, terms and conditions
contained herein and such other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Purchaser and Seller hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms as set forth in
the Purchase Agreement.
2. Recitals. Seller and Purchaser hereby agree that the recitals set
forth hereinabove are true and correct and incorporated into this Amendment.
3. Modifications to Purchase Agreement. The parties agree that from and
after the date of this Amendment the Purchase Agreement shall be modified as
follows:
3.1 Extension of Conditions Period. The Conditions Period, as
defined in Section 4.1 of the Purchase Agreement, shall be extended to expire at
5:00 p.m. on November 25, 1998. Any and all differing dates or time periods and
references to the Conditions Period in the Purchase Agreement are hereby deleted
or modified accordingly. In addition, Purchaser (i) hereby waives the
Pre-Closing Condition set forth in Section 4.1.1 of the Purchase Agreement,
except Purchaser does not waive exception number 13 identified in the Title
Company's Preliminary Report dated September 29, 1998 at 7:30 a.m., Order No.
98196286, (ii) hereby waives, with respect to the ALTA Survey only, the
Pre-Closing Condition set forth in Section 4.1.6 of the Purchase Agreement and
(iii) has previously given Seller timely written notice of those Contracts which
constitute Disapproved Contracts. With respect to the Disapproved Contracts,
namely the Food Service Agreement ("Food Service Agreement") between Seller and
Guckenheimer Enterprises, Inc. and the various contracts and equipment leases
(collectively, "ADT Agreements") between Seller and ADT Security Systems, Seller
(a) shall terminate all of the ADT Agreements as of Closing and Purchaser shall
assume no liability or responsibility therefor and (b) shall (i), upon Closing,
give Guckenheimer Enterprises, Inc. written notice that the Food Service
Agreement shall be terminated effective sixty (60) days after Closing and (ii)
after Closing, continue to pay to Guckenheimer Enterprises, Inc. any and all
amounts due and payable to Guckenheimer Enterprises, Inc. as and when due and
Purchaser shall have no liability or responsibility therefor or for any duties
or obligations of Seller under the Food Service Agreement and (c) reaffirms
Seller's indemnification obligations set forth in Section 17 of the Purchase
Agreement. Purchaser acknowledges and agrees that no monies of any kind shall be
paid to Purchaser by or for Guckenheimer Enterprises, Inc. during the period
commencing upon closing and expiring sixty (60)
1
<PAGE> 25
days thereafter.
3.2 Extension of Closing Date. The Closing Date, as defined in
Section 5.2 of the Purchase Agreement, shall be extended to be the date which is
on or before December 8, 1998. Any and all differing dates or time periods and
references to same in the Purchase Agreement are hereby deleted or modified
accordingly.
4. Reaffirmation of Purchase Agreement. Purchaser and Seller hereby
acknowledge and agree that the Purchase Agreement, as modified by this
Amendment, is hereby reaffirmed, ratified and confirmed in its entirety. Except
as modified by this Amendment, the terms and provisions of the Purchase
Agreement shall remain unchanged. If there is any conflict between the terms and
provisions of the Purchase Agreement and this Amendment, the terms and
provisions of this Amendment shall control and prevail.
5. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with, the laws of the State of California.
6. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one Amendment. Seller and Purchaser agree that the delivery of an
executed copy of this Amendment by facsimile shall be legal and binding and
shall have the same full force and effect as if an original executed copy of
this Amendment had been delivered. Facsimile signatures shall be binding upon
the parties hereto.
7. Warranty of Authority. The signatories hereto represent that they
have full and complete authority to bind their respective parties to this
Amendment and that no other consent is necessary or required in order for the
signatories to execute this Amendment on behalf of their respective parties.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Amendment
on the date first above written.
SELLER:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________________
Its: ______________________________________
By: ______________________________________
Its: ______________________________________
PURCHASER:
LEGACY PARTNERS COMMERCIAL, INC.,
a Texas corporation
By:______________________________________
Its: ______________________________________
2
<PAGE> 26
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment")
is made and entered into to be effective as of the 30th day of November, 1998,
by and between Phase Metrics, Inc., a Delaware corporation ("Seller"), and
Legacy Partners Commercial, Inc., a Texas corporation ("Purchaser"), with
reference to the following facts.
RECITALS
A. Purchaser and Seller have entered into that certain Purchase and
Sale Agreement, dated as of October 16, 1998 and that certain First Amendment to
Purchase and Sale Agreement dated as of November 16, 1998 (collectively, the
"Purchase Agreement"), pursuant to which Seller has agreed to sell and Purchaser
has agreed to purchase that certain improved real property located at 10220,
10240 and 10260 Sorrento Valley Road, San Diego, California, as more
particularly described in Exhibit A to the Purchase Agreement, on all of the
terms and conditions set forth therein.
B. Purchaser and Seller desire to amend the Purchase Agreement on each
and all of the terms, provisions and conditions contained herein.
NOW THEREFORE, in consideration of the promises, terms and conditions
contained herein and such other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Purchaser and Seller hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms as set forth in
the Purchase Agreement.
2. Recitals. Seller and Purchaser hereby agree that the recitals set
forth hereinabove are true and correct and incorporated into this Amendment.
3. Modifications to Purchase Agreement. The parties agree that from and
after the date of this Amendment the Purchase Agreement shall be modified as
follows: the Conditions Period, as defined in Section 4.1 of the Purchase
Agreement, shall be extended to expire at 5:00 p.m. on December 2, 1998. Any and
all differing dates or time periods and references to the Conditions Period in
the Purchase Agreement are hereby deleted or modified accordingly.
4. Reaffirmation of Purchase Agreement. Purchaser and Seller hereby
acknowledge and agree that the Purchase Agreement, as modified by this
Amendment, is hereby reaffirmed, ratified and confirmed in its entirety. Except
as modified by this Amendment, the terms and provisions of the Purchase
Agreement shall remain unchanged. If there is any conflict between the terms and
provisions of the Purchase Agreement and this Amendment, the terms and
provisions of this Amendment shall control and prevail.
5. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with, the laws of the State of California.
6. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one Amendment. Seller and Purchaser agree that the delivery of an
executed copy of this Amendment by facsimile shall be legal and binding and
shall have the same full force and effect as if an original executed copy of
this Amendment had been delivered. Facsimile signatures shall be binding upon
the parties hereto.
1
<PAGE> 27
7. Warranty of Authority. The signatories hereto represent that they
have full and complete authority to bind their respective parties to this
Amendment and that no other consent is necessary or required in order for the
signatories to execute this Amendment on behalf of their respective parties.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Amendment
on the date first above written.
SELLER:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________________
Its: ______________________________________
By: ______________________________________
Its: ______________________________________
PURCHASER:
LEGACY PARTNERS COMMERCIAL, INC.,
a Texas corporation
By:______________________________________
Its: ______________________________________
2
<PAGE> 28
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment")
is made and entered into to be effective as of the 4th day of December, 1998, by
and between Phase Metrics, Inc., a Delaware corporation ("Seller"), and Legacy
Partners Commercial, Inc., a Texas corporation ("Purchaser"), with reference to
the following facts.
RECITALS
A. Purchaser and Seller have entered into that certain Purchase and
Sale Agreement, dated as of October 16, 1998 ("Original Agreement"), that
certain First Amendment to Purchase and Sale Agreement dated as of November 16,
1998 ("First Amendment") and that certain Second Amendment dated as of November
30, 1998 ("Second Amendment") (the Original Agreement, First Amendment and
Second Amendment are collectively, the "Purchase Agreement"), pursuant to which
Seller has agreed to sell and Purchaser has agreed to purchase that certain
improved real property located at 10220, 10240 and 10260 Sorrento Valley Road,
San Diego, California, as more particularly described in Exhibit A to the
Original Agreement, on all of the terms and conditions set forth therein.
B. Purchaser and Seller desire to amend the Purchase Agreement on each
and all of the terms, provisions and conditions contained herein.
NOW THEREFORE, in consideration of the promises, terms and conditions
contained herein and such other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Purchaser and Seller hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms as set forth in
the Purchase Agreement.
2. Recitals. Seller and Purchaser hereby agree that the recitals set
forth hereinabove are true and correct and incorporated into this Amendment.
3. Modifications to Purchase Agreement. The parties agree that from and
after the date of this Amendment the Purchase Agreement shall be modified as
follows:
3.1 Purchase Price. The Purchase Price for the Property shall
be reduced to Twelve Million Three Hundred Thousand Dollars ($12,300,000.00)
payable in cash at Closing, adjusted for prorations in accordance with the
provisions of Section 7 of the Original Agreement.
3.2 Closing Condition. Section 4.1.10 of the Original
Agreement shall be deleted and the following shall be added as Section 4.2.6:
Purchaser and Seller shall have agreed upon all of the terms
and conditions of a lease for approximately 38,000 to 43,000 square feet at
10260 and 10220 Sorrento Valley Road of the Property ("Seller Lease"). Purchaser
and Seller covenant and agree to use diligent efforts and to negotiate in good
faith to agree upon the final form of Seller Lease on or before the Closing
Date.
3.3 Extension of Closing Date. The Closing Date, as defined in
Section 5.2 of the Original Agreement, shall be extended to be the date which is
on or before December 15, 1998. Any and all differing dates or time periods and
references to same in the Purchase Agreement are hereby deleted or modified
accordingly.
3.4 Pre-Closing Conditions. Purchaser hereby waives all
Pre-Closing Conditions
1
<PAGE> 29
except as set forth in Section 3.1 of the First Amendment with respect to (i)
exception 13 of the Title Report and (ii) Seller's obligations with respect to
the Disapproved Contracts.
4. Reaffirmation of Purchase Agreement. Purchaser and Seller hereby
acknowledge and agree that the Purchase Agreement, as modified by this
Amendment, is hereby reaffirmed, ratified and confirmed in its entirety. Except
as modified by this Amendment, the terms and provisions of the Purchase
Agreement shall remain unchanged. If there is any conflict between the terms and
provisions of the Purchase Agreement and this Amendment, the terms and
provisions of this Amendment shall control and prevail.
5. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with, the laws of the State of California.
6. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one Amendment. Seller and Purchaser agree that the delivery of an
executed copy of this Amendment by facsimile shall be legal and binding and
shall have the same full force and effect as if an original executed copy of
this Amendment had been delivered. Facsimile signatures shall be binding upon
the parties hereto.
7. Warranty of Authority. The signatories hereto represent that they
have full and complete authority to bind their respective parties to this
Amendment and that no other consent is necessary or required in order for the
signatories to execute this Amendment on behalf of their respective parties.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Amendment
on the date first above written.
SELLER:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________________
Its: ______________________________________
By: ______________________________________
Its: ______________________________________
PURCHASER:
LEGACY PARTNERS COMMERCIAL, INC.,
a Texas corporation
By:______________________________________
Its: ______________________________________
2
<PAGE> 30
FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment")
is made and entered into to be effective as of the 16th day of December, 1998,
by and between Phase Metrics, Inc., a Delaware corporation ("Seller"), and
Legacy Partners Commercial, Inc., a Texas corporation ("Purchaser"), with
reference to the following facts.
RECITALS
A. Purchaser and Seller entered into that certain Purchase and Sale
Agreement, dated as of October 16, 1998 ("Original Agreement"), that certain
First Amendment to Purchase and Sale Agreement dated as of November 16, 1998
("First Amendment"), that certain Second Amendment to Purchase and Sale
Agreement dated as of November 30, 1998 ("Second Amendment") and that certain
Third Amendment to Purchase and Sale Agreement dated as of December 4, 1998
("Third Amendment") (the Original Agreement, First Amendment, Second Amendment
and Third Amendment are collectively, the "Purchase Agreement"), pursuant to
which Seller agreed to sell and Purchaser agreed to purchase that certain
improved real property located at 10220, 10240 and 10260 Sorrento Valley Road,
San Diego, California, as more particularly described in Exhibit A to the
Original Agreement, on all of the terms and conditions set forth therein.
B. Purchaser and Seller desire to amend the Purchase Agreement on each
and all of the terms, provisions and conditions contained herein.
NOW THEREFORE, in consideration of the promises, terms and conditions
contained herein and such other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Purchaser and Seller hereby agree as
follows:
1. Defined Terms. All capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms as set forth in
the Purchase Agreement.
2. Recitals. Seller and Purchaser hereby agree that the recitals set
forth hereinabove are true and correct and incorporated into this Amendment.
3. Modifications to Purchase Agreement. The parties agree that from and
after the date of this Amendment the Purchase Agreement shall be modified as
follows:
3.1 Deposit. The Deposit shall be released from the Escrow
Account to Seller promptly upon execution of this Amendment by Seller and
Purchaser, and this Amendment shall constitute escrow instructions to Title
Company to release the Deposit to Seller upon receipt of this Amendment so
executed. Notwithstanding the release of the Deposit to Seller, the Deposit
remains subject to all of the terms and conditions of the Purchase Agreement,
including without limitation, Section 4.3 of the Original Agreement.
3.2 Extension of Closing Date. The Closing Date, as defined in
Section 5.2 of the Original Agreement, shall be extended to be the date which is
on or before December 31, 1998; provided, Purchaser agrees to use all
commercially reasonable efforts to close the purchase and sale contemplated by
the Purchase Agreement at the earliest date possible. Any and all differing
dates or time periods and references to same in the Purchase Agreement are
hereby deleted or modified accordingly.
3.3 Closing Condition. The following Closing Condition shall
be added as Section 4.2.7 to the Original Agreement:
<PAGE> 31
Electrical Systems. Purchaser and Seller shall have agreed upon
Seller's duties and obligations with respect to the repair, replacement and/or
redesign of the Property's electrical systems. In the event Purchaser and Seller
shall not have agreed upon such duties and obligations of Seller prior to
Closing, Purchaser and Seller shall holdback from the Purchase Price and the
proceeds to which Seller would otherwise be entitled, in an escrow account at
Title Company, an amount equal to One Hundred Thousand Dollars ($100,000.00)
("Work Deposit"). The Work Deposit shall be used solely for purposes of
reimbursing Purchaser for costs incurred by Purchaser in connection with the
Work (defined below). The Work Deposit shall be invested by Title Company in an
interest bearing money market account at a federally insured institution
designated by Purchaser. Interest on such Work Deposit shall accrue for the
benefit of Purchaser. Purchaser shall submit written requests to Seller and
Title Company for disbursement of all or portions of the Work Deposit, together
with copies of invoices evidencing such costs, for payment of costs incurred in
connection with the Work (defined below). Seller shall have the right to review
and approve all such disbursement requests, which approval shall (a) not be
unreasonably withheld, delayed or conditioned and (b) be deemed given in the
event Seller shall not respond in writing to Purchaser's request within five (5)
business days of Purchaser's written request to Seller for approval. If all of
the Work is completed and all of the Work Deposit has not been expended, Seller
shall be entitled to the balance of any portion of the Work Deposit (excluding
interest thereon) not expended by Purchaser. Any costs incurred by Purchaser and
Seller in connection with this escrow shall be paid by Seller and not be
deducted from the Work Deposit. "Work" means any repair, replacement and/or
redesign of the electrical systems of the Property in order to remedy the
defects and/or deficiencies in such electrical systems described in that certain
summary attached hereto as Exhibit A and incorporated herein by this reference.
In no event shall Seller's liability for such Work exceed One Hundred Thousand
Dollars ($100,000.00).
3.4 Bill of Sale. In consideration of payment to Seller of the
Purchase Price, Seller agrees to sell and Purchaser agrees to purchase all of
that certain Personal Property described on Schedule 1 of, and as such term is
defined in, Exhibit B attached to this Amendment, which Exhibit B is
incorporated herein by this reference. The Bill of Sale shall constitute a
document to be executed by Seller and delivered to Purchaser at Closing, as set
forth in Section 5.4 of the Original Agreement.
4. Reaffirmation of Purchase Agreement. Purchaser and Seller hereby
acknowledge and agree that the Purchase Agreement, as modified by this
Amendment, is hereby reaffirmed, ratified and confirmed in its entirety. Except
as modified by this Amendment, the terms and provisions of the Purchase
Agreement shall remain unchanged. If there is any conflict between the terms and
provisions of the Purchase Agreement and this Amendment, the terms and
provisions of this Amendment shall control and prevail.
5. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with, the laws of the State of California.
6. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one Amendment. Seller and Purchaser agree that the delivery of an
executed copy of this Amendment by facsimile shall be legal and binding and
shall have the same full force and effect as if an original executed copy of
this Amendment had been delivered. Facsimile signatures shall be binding upon
the parties hereto.
7. Warranty of Authority. The signatories hereto represent that they
have full and complete
<PAGE> 32
authority to bind their respective parties to this Amendment and that no other
consent is necessary or required in order for the signatories to execute this
Amendment on behalf of their respective parties.
IN WITNESS WHEREOF, Purchaser and Seller have executed this Amendment
on the date first above written.
SELLER:
PHASE METRICS, INC.,
a Delaware corporation
By: ______________________________________
Its: ______________________________________
By: ______________________________________
Its: ______________________________________
PURCHASER:
LEGACY PARTNERS COMMERCIAL, INC.,
a Texas Corporation
By: _______________________________________
Its: ____________________________________
<PAGE> 1
LEASE AGREEMENT EXHIBIT 10.2
(NNN R&D)
BASIC LEASE INFORMATION
LEASE DATE: December 16, 1998
LANDLORD: LEGACY-RECP SORRENTO OPCO, LLC
A DELAWARE LIMITED LIABILITY COMPANY
LANDLORD'S ADDRESS: 6480 Weathers Place, Suite 245
San Diego, CA 92121
TENANT: PHASE METRICS, INC., A DELAWARE CORPORATION
TENANT'S ADDRESS: 10260 SORRENTO VALLEY ROAD
SAN DIEGO, CA 92121
PREMISES: Approximately 41,365 rentable square feet as
shown on Exhibit A
PREMISES ADDRESS: 10260 (ALL) AND 10220 (SUITE MS) SORRENTO VALLEY
ROAD SAN DIEGO, CA 92121
BUILDINGS [10260]: Approximately 36,985
rentable square feet
BUILDINGS [10220]: Approximately 19,970
rentable square feet
TOTAL BUILDINGS: Approximately 56,955
rentable square feet
LOT (BUILDINGS' TAX PARCEL): APN 343-130-17
PARK: Approximately
122,172 rentable
square feet
TERM: DECEMBER 17, 1998 ("Commencement Date"), through
DECEMBER 16, 2001 ("Expiration Date")
BASE RENT (PARAGRAPH 3): FORTY-SIX THOUSAND THREE HUNDRED TWENTY-NINE
DOLLARS ($ 46,329.00) per month
ADJUSTMENTS TO BASE RENT: DECEMBER 17, 1999 to DECEMBER 16, 2000:
$ 48,182.00 per month
DECEMBER 17, 2000 to DECEMBER 16, 2001:
$ 50,109.00 per month
SECURITY DEPOSIT FORTY-SIX THOUSAND THREE HUNDRED TWENTY-NINE
(PARAGRAPH 4): DOLLARS ($ 46,329.00)
*TENANT'S SHARE OF OPERATING EXPENSES (PARAGRAPH 6.1): 33.9% of the Park
*TENANT'S SHARE OF TAX EXPENSES (PARAGRAPH 6.2): 33.9% of the Park
*TENANT'S SHARE OF COMMON AREA UTILITY COSTS (PARAGRAPH 7): 33.9% of the Park
*TENANT'S SHARE OF UTILITY EXPENSES (PARAGRAPH 7): 33.9% of the Park
*The amount of Tenant's Share of the expenses as referenced above shall be
subject to modification as set forth in this Lease.
PERMITTED USES (PARAGRAPH 9): RESEARCH, DEVELOPMENT, AND MANUFACTURING OF
COMPUTER TESTING EQUIPMENT and general office use
but only to the extent permitted by the City of
San Diego and all agencies and governmental
authorities having jurisdiction thereof.
PARKING SPACES: One hundred twenty (120) spaces, consisting of
three (3) exclusive and designated spaces, and one
hundred seventeen (117) non-exclusive and
non-designated spaces. Subject to Landlord's sole
approval of location, Tenant may elect to replace
two (2) of the non-exclusive and non-designated
spaces with two (2) exclusive and designated
spaces.
BROKER (PARAGRAPH 38): NONE for Tenant
NONE for Landlord
EXHIBITS: Exhibit A - Premises, Buildings, Lot and/or Park
Exhibit B - Tenant Improvements
Exhibit C - Rules and Regulations
Exhibit D - Intentionally Omitted
Exhibit E - Hazardous Materials Disclosure
Certificate - Example
Exhibit F - Change of Commencement Date -
Example
Exhibit G - Tenant's Initial Hazardous Materials
Disclosure Certificate
Exhibit H - Sign Criteria
ADDENDA: Addendum 1: Option to Extend the Lease
Addendum 2: Right of First Offer
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1. CONDITION TO EFFECTIVENESS; AND PREMISES..................................3
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES................3
3. RENT......................................................................4
4. SECURITY DEPOSIT..........................................................4
5. TENANT IMPROVEMENTS.......................................................4
6. ADDITIONAL RENT...........................................................5
7. UTILITIES.................................................................7
8. LATE CHARGES..............................................................7
9. USE OF PREMISES...........................................................8
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES......................9
11. REPAIRS AND MAINTENANCE...................................................9
12. INSURANCE................................................................10
13. WAIVER OF SUBROGATION....................................................12
14. LIMITATION OF LIABILITY AND INDEMNITY....................................12
15. ASSIGNMENT AND SUBLEASING................................................12
16. AD VALOREM TAXES.........................................................14
17. SUBORDINATION............................................................14
18. RIGHT OF ENTRY...........................................................14
19. ESTOPPEL CERTIFICATE.....................................................15
20. TENANT'S DEFAULT.........................................................15
21. REMEDIES FOR TENANT'S DEFAULT............................................16
22. HOLDING OVER.............................................................17
23. LANDLORD'S DEFAULT.......................................................17
24. PARKING..................................................................17
25. SALE OF PREMISES.........................................................17
26. WAIVER...................................................................17
27. CASUALTY DAMAGE..........................................................18
28. CONDEMNATION.............................................................18
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS................................19
30. FINANCIAL STATEMENTS.....................................................20
31. GENERAL PROVISIONS.......................................................21
32. SIGNS....................................................................22
33. MORTGAGEE PROTECTION.....................................................22
34. QUITCLAIM................................................................23
35. MODIFICATIONS FOR LENDER.................................................23
36. WARRANTIES OF TENANT.....................................................23
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT..........................23
38. BROKERAGE COMMISSION.....................................................23
39. QUIET ENJOYMENT..........................................................24
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS...........24
</TABLE>
2
<PAGE> 3
LEASE AGREEMENT
DATE: This Lease is made and entered into as of the Lease Date set
forth on Page 1. The Basic Lease Information set forth on Page
1 and this Lease are and shall be construed as a single
instrument.
1. CONDITION TO EFFECTIVENESS; AND PREMISES:
1.1 CONDITION TO EFFECTIVENESS: The parties hereby acknowledge and agree
that as of the Lease Date, Landlord does not own the Premises. Landlord is
presently in contract ("Purchase Agreement") with Tenant to purchase the
Premises and Lot on the terms and conditions contained in the Purchase
Agreement. The effectiveness of this Lease is conditioned upon Landlord
acquiring fee title to the Premises and Lot in accordance with the provisions of
the Purchase Agreement. If for any reason whatsoever Landlord fails to acquire
fee title to the Lot and Premises, then this Lease shall automatically terminate
and be of no further force or effect and Landlord shall return the Security
Deposit to Tenant to the extent the Security Deposit shall have been paid to
Landlord. If Landlord acquires fee title to the Premises and Lot, this Lease
shall become effective between the parties and be in full force and effect. If
the purchase of the Premises and Lot is not consummated by Landlord, then
Landlord shall promptly return the Security Deposit to Tenant to the extent paid
to Landlord.
1.2 PREMISES: Subject to the provisions of Section 1.1 above, Landlord
hereby leases the Premises, Temporary Premises (defined below), and the parking
areas and ancillary facilities located within the common areas of the Park to
Tenant upon the terms and conditions contained herein. Landlord and Tenant
hereby agree that for purposes of this Lease, as of the Lease Date, the rentable
square footage area of the Premises, the Buildings, the Lot and the Park shall
be deemed to be the number of rentable square feet as set forth in the Basic
Lease Information on Page 1. Tenant further agrees that the number of rentable
square feet of the Buildings, the Lot and the Park may subsequently change after
the Lease Date commensurate with any modifications to any of the foregoing by
Landlord due to casualty, condemnation, or sale of any portion of the Park, and
Tenant's Share shall accordingly change.
Landlord and Tenant acknowledge and agree that Tenant shall have the
right to occupy 10240 Sorrento Valley Road, San Diego, California ("Temporary
Premises") for a period of six (6) weeks only, which six (6) week period will
commence on the consummation of the purchase and sale contemplated by Section
1.1 of this Lease. During such six (6) week period, Tenant shall pay Base Rent
for the Premises only and shall reimburse Landlord for Operating Expenses, Tax
Expenses, Utility Expenses and Common Areas Utility Costs based upon both
Tenant's occupancy of the Temporary Premises and Tenant's leasing of the
Premises. For the purpose of this Section 1.2, Operating Expenses payable by
Tenant shall include Operating Expenses attributable to the Park. In the event
Tenant fails to surrender the Temporary Premises in the condition required by
Section 10.2 of this Lease on or before the expiration of such six (6) week
period, such holding over shall be without Landlord's consent and Landlord shall
be entitled to any and all remedies at law or in equity against Tenant with
respect to Tenant's continued occupancy of the Temporary Premises, and Rent
shall, commencing upon the expiration of the six (6) week period, be payable at
the rate of $1.30 per square foot per month, Triple Net, for the Temporary
Premises. Notwithstanding the previous sentence, with respect to only the
telephone equipment room situated on the third floor of the Temporary Premises,
Tenant shall be permitted to hold over its occupancy of the telephone equipment
room for two (2) additional weeks following the previously referenced six (6)
week period and Tenant shall pay Rent for this telephone equipment room at the
rate of $1.30 per square foot per month, Triple Net during this two (2) week
period. All of the terms, covenants, conditions and provisions of this Lease
shall be applicable to the Temporary Premises during the period of Tenant's
occupancy of the Temporary Premises, including, without limitation, Sections 12,
13, 14, and 20 of this Lease. Tenant shall also be responsible for removing all
personal property from 10220 Sorrento Valley Road with the exception of Suite
MS) during said six (6) week period.
2. ADJUSTMENT OF COMMENCEMENT DATE; CONDITION OF THE PREMISES: Except as
otherwise expressly set forth in Section 1.1 above, if Landlord cannot deliver
possession of the Premises on the Commencement Date, Landlord shall not be
subject to any liability nor shall the validity of the Lease be affected;
provided, the Lease Term and the obligation to pay Rent shall commence on the
date possession is tendered and the Expiration Date shall be extended
commensurately. In the event the commencement date and/or the expiration date of
this Lease is other than the Commencement Date and/or Expiration Date specified
in the Basic Lease Information, as the case may be, Landlord and Tenant shall
execute a written amendment to this Lease, substantially in the form of Exhibit
F hereto, wherein the parties shall specify the actual commencement date,
expiration date and the date on which Tenant is to commence paying Rent. The
word "Term" whenever used herein refers to the initial term of this Lease and
any extension thereof. By taking possession of the Premises, Tenant shall be
deemed to have accepted the Premises in
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good condition and state of repair. Tenant hereby acknowledges and agrees that
neither Landlord nor Landlord's agents or representatives has made any
representations or warranties as to the suitability, safety or fitness of the
Premises for the conduct of Tenant's business, Tenant's intended use of the
Premises or for any other purpose. Tenant agrees that at any time before or
during the Term of this Lease, Landlord shall have the right to relocate Tenant
from the portion of the Premises known as 10220 Sorrento Valley Road, Suite MS,
to other space within the Park, provided said other space is on the first floor,
on substantially the same terms and conditions of this Lease provided the other
space is of comparable size. Landlord hereby agrees to pay expenses resulting
from relocating Tenant including moving expenses, telephone installation,
computer wires, sound proofing, wiring and installation, separately metering
electricity, and the cost of stationery to replace that made obsolete as a
result of the move.
3. RENT: On the date that Tenant executes this Lease, Tenant shall deliver to
Landlord the original executed Lease, the Base Rent (which shall be applied
against the Rent payable for the first month Tenant is required to pay Base
Rent), the Security Deposit, and all insurance certificates evidencing the
insurance required to be obtained by Tenant under Section 12 of this Lease.
Tenant agrees to pay Landlord, without prior notice or demand, or abatement,
offset, deduction or claim, the Base Rent specified in the Basic Lease
Information, payable in advance at Landlord's address specified in the Basic
Lease Information on the Commencement Date and thereafter on the first (1st) day
of each month throughout the balance of the Term of the Lease and Tenant agrees
and acknowledges that Tenant shall commence paying Rent on the Commencement
Date, regardless of whether or not the Tenant Improvements are completed as of
the Commencement Date. In addition to the Base Rent set forth in the Basic Lease
Information, Tenant shall pay Landlord in advance on the Commencement Date and
thereafter on the first (1st) day of each month throughout the balance of the
Term of this Lease, as Additional Rent, Tenant's Share of Operating Expenses,
Tax Expenses, Common Area Utility Costs, and Utility Expenses. The term "Rent"
whenever used herein refers to the aggregate of all these amounts. If Landlord
permits Tenant to occupy the Premises without requiring Tenant to pay rental
payments for a period of time, the waiver of the requirement to pay rental
payments shall only apply to waiver of the Base Rent and Tenant shall otherwise
perform all other obligations of Tenant required hereunder. The Rent for any
fractional part of a calendar month at the commencement or termination of the
Lease term shall be a prorated amount of the Rent for a full calendar month
based upon a thirty (30) day month. The prorated Rent shall be paid on the
Commencement Date and the first day of the calendar month in which the date of
termination occurs, as the case may be.
4. SECURITY DEPOSIT: Upon Tenant's execution of this Lease, Tenant shall deliver
to Landlord, as a Security Deposit for the performance by Tenant of its
obligations under this Lease, the amount specified in the Basic Lease
Information. If Tenant is in default, Landlord may, but without obligation to do
so, use the Security Deposit, or any portion thereof, to cure the default or to
compensate Landlord for all damages sustained by Landlord resulting from
Tenant's default, including, but not limited to the Enforcement Expenses. Tenant
shall, immediately on demand, pay to Landlord a sum equal to the portion of the
Security Deposit so applied or used so as to replenish the amount of the
Security Deposit held to increase such deposit to the amount initially deposited
with Landlord. At any time after Tenant has defaulted hereunder, Landlord may
require up to a one hundred percent (100%) increase in the amount of the
Security Deposit required hereunder for the then balance of the Lease Term and
Tenant shall, immediately on demand, pay to Landlord additional sums in the
amount of such increase. Within sixty days following the termination of this
Lease, Landlord shall endeavor to return the Security Deposit to Tenant, less
such amounts as are reasonably necessary, as determined solely by Landlord, to
remedy Tenant's default(s) hereunder or to otherwise restore the Premises to a
clean and safe condition, reasonable wear and tear excepted. If the cost to
restore the Premises exceeds the amount of the Security Deposit, Tenant shall
promptly deliver to Landlord any and all of such excess sums as reasonably
determined by Landlord. Landlord shall not be required to keep the Security
Deposit separate from other funds, and, unless otherwise required by law, Tenant
shall not be entitled to interest on the Security Deposit. In no event or
circumstance shall Tenant have the right to any use of the Security Deposit and,
specifically, Tenant may not use the Security Deposit as a credit or to
otherwise offset any payments required hereunder, including, but not limited to,
Rent or any portion thereof.
5. TENANT IMPROVEMENTS: Tenant hereby accepts the Premises as suitable for
Tenant's intended use and as being in good operating order, condition and
repair, "AS IS", except as specified in Exhibit B attached hereto. Landlord or
Tenant, as the case may be, shall install and construct the Tenant Improvements
(as such term is defined in Exhibit B hereto) in accordance with the terms,
conditions, criteria and provisions set forth in Exhibit B. Landlord and Tenant
hereby agree to and shall be bound by the terms, conditions and provisions of
Exhibit B. Tenant acknowledges and agrees that neither Landlord nor any of
Landlord's agents, representatives or employees has made any representations as
to the suitability, fitness or condition of the Premises for the conduct of
Tenant's business or for any other
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purpose, including without limitation, any storage incidental thereto. Any
exception to the foregoing provisions must be made by express written agreement
by both parties.
6. ADDITIONAL RENT : It is intended by Landlord and Tenant that this Lease be a
"triple net lease." The costs and expenses described in this Section 6 and all
other sums, charges, costs and expenses specified in this Lease other than Base
Rent are to be paid by Tenant to Landlord as additional rent (collectively,
"Additional Rent").
6.1 OPERATING EXPENSES: In addition to the Base Rent set forth in
Section 3, Tenant shall pay Tenant's Share, which is specified in the Basic
Lease Information, of all Operating Expenses as Additional Rent. The term
"Operating Expenses" as used herein shall mean the total amounts paid or payable
by Landlord in connection with the ownership, maintenance, repair and operation
of the Premises, the Buildings and the Lot, and where applicable, of the Park
referred to in the Basic Lease Information. The amount of Tenant's Share of
Operating Expenses shall be reviewed from time to time by Landlord and shall be
subject to modification by Landlord if there is a change in the rentable square
footage of the Premises, the Buildings and/or the Park due to casualty,
condemnation, or sale of any portion of the Park. These Operating Expenses may
include, but are not limited to:
6.1.1 Landlord's cost of repairs to, and maintenance of, the
roof, the roof membrane and the exterior walls of the Buildings;
6.1.2 Landlord's cost of maintaining the outside paved area,
landscaping and other common areas for the Park. The term "Common Areas"
shall mean all areas and facilities within the Park exclusive of the
Premises and the other portions of the Park leasable exclusively to
other tenants. The Common Areas include, but are not limited to, parking
areas, access and perimeter roads, sidewalks, landscaped areas and
similar areas and facilities;
6.1.3 Landlord's annual cost of insurance insuring against
fire and extended coverage (including, if Landlord elects, "all risk" or
"special purpose" coverage) and all other insurance, including, but not
limited to, earthquake, flood and/or surface water endorsements for the
Buildings, the Lot and the Park (including the Common Areas), rental
value insurance against loss of Rent in an amount equal to the amount of
Rent for a period of at least six (6) months commencing on the date of
loss, and subject to the provisions of Section 27 below, any deductible;
6.1.4 Landlord's cost of: (i) modifications and/or new
improvements to the Buildings, the Common Areas occasioned by any
governmental or quasi-governmental rules, laws or regulations effective
subsequent to the date on which the Buildings was originally
constructed; (ii) reasonably necessary replacement improvements to the
Buildings, the Common Areas after the Lease Date; and (iii) new
improvements to the Buildings, the Common Areas that reduce operating
costs or improve life/safety conditions, all as reasonably determined by
Landlord, in its sole discretion;
6.1.5 If Landlord elects to so procure, Landlord's cost of
preventative maintenance, and repair contracts including, but not
limited to, contracts for elevator systems and heating, ventilation and
air conditioning systems, lifts for disabled persons, and trash or
refuse collection serving the Premises, Buildings, and Common Area;
6.1.6 Landlord's cost of security and fire protection services
for the Buildings and/or the Park, as the case may be, if in Landlord's
sole discretion such services are provided;
6.1.7 Intentionally omitted;
6.1.8 Intentionally omitted;
6.1.9 Landlord's cost of supplies, equipment, rental equipment
and other similar items used in the operation and/or maintenance of the
Park;
6.1.10 Landlord's cost for the repairs and maintenance items
set forth in Section 11.2 below; and
6.1.11 Landlord's cost for the management and administration
of the Premises, the Buildings, the Common Areas and the Park, including
without limitation, a property management fee, accounting, auditing,
billing, salaries for clerical and supervisory employees (whether
located within the Park or off-site) and all fees, licenses and permits
related to the ownership, operation and management of any portion of the
Park. Landlord covenants that said costs shall be allocated
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uniformly throughout the Park, and shall not be in excess of those costs
charged by unaffiliated third-party management companies in the San
Diego area.
6.2 TAX EXPENSES: In addition to the Base Rent set forth in Section 3,
Tenant shall pay its share, which is specified in the Basic Lease Information,
of all real property taxes applicable to the land and improvements included
within the Lot on which the Premises are situated and one hundred percent (100%)
of all personal property taxes now or hereafter assessed or levied against the
Premises or Tenant's personal property. The amount of Tenant's Share of Tax
Expenses shall be reviewed from time to time by Landlord and shall be subject to
modification by Landlord if there is a change in the rentable square footage of
the Premises, the Buildings and/or the Park due to casualty, condemnation, or
sale of any portion of the Park. Tenant shall also pay one hundred percent
(100%) of any increase in real property taxes attributable, in Landlord's sole
discretion, to any and all alterations, Tenant Improvements or other
improvements of any kind, which are above standard improvements customarily
installed for similar buildings located within the Buildings or the Park (as
applicable), whatsoever placed in, on or about the Premises for the benefit of,
at the request of, or by Tenant after the Commencement Date. The term "Tax
Expenses" shall mean and include, without limitation, any form of tax and
assessment (general, special, supplemental, ordinary or extraordinary),
commercial rental tax, payments under any improvement bond or bonds, license
fees, license tax, business license fee, rental tax, transaction tax, levy, or
penalty imposed by authority having the direct or indirect power of tax
(including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district thereof) as
against any legal or equitable interest of Landlord in the Premises, the
Buildings, the Lot or the Park, as against Landlord's right to rent, or as
against Landlord's business of leasing the Premises or the occupancy of Tenant
or any other tax, fee, or excise, however described, including, but not limited
to, any value added tax, or any tax imposed in substitution (partially or
totally) of any tax previously included within the definition of real property
taxes, or any additional tax the nature of which was previously included within
the definition of real property taxes. The term "Tax Expenses" shall not include
any franchise, estate, inheritance, net income, or excess profits tax imposed
upon Landlord.
6.3 PAYMENT OF EXPENSES: Landlord shall estimate Tenant's Share of the
Operating Expenses and Tax Expenses for the calendar year in which the Lease
commences. Commencing on the Commencement Date, one-twelfth (1/12th) of this
estimated amount shall be paid by Tenant to Landlord, as Additional Rent, and
thereafter on the first (1st) day of each month throughout the remaining months
of such calendar year. Thereafter, Landlord may estimate such expenses as of the
beginning of each calendar year during the Term of this Lease and Tenant shall
pay one-twelfth (1/12th) of such estimated amount as Additional Rent hereunder
on the first (1st) day of each month during such calendar year and for each
ensuing calendar year throughout the Term of this Lease. Tenant's obligation to
pay Tenant's Share of Operating Expenses and Tax Expenses shall survive the
expiration or earlier termination of this Lease.
6.4 ANNUAL RECONCILIATION: By June 30th of each calendar year, or as
soon thereafter as reasonably possible, Landlord shall furnish Tenant with an
accounting of actual Operating Expenses and Tax Expenses. Within thirty (30)
days of Landlord's delivery of such accounting, Tenant shall pay to Landlord the
amount of any underpayment. Notwithstanding the foregoing, failure by Landlord
to give such accounting by such date shall not constitute a waiver by Landlord
of its right to collect any of Tenant's underpayment at any time. Landlord shall
credit the amount of any overpayment by Tenant toward the next estimated monthly
installment(s) falling due, or where the Term of the Lease has expired, refund
the amount of overpayment to Tenant. If the Term of the Lease expires prior to
the annual reconciliation of expenses Landlord shall have the right to
reasonably estimate Tenant's Share of such expenses, and if Landlord determines
that an underpayment is due, Tenant hereby agrees that Landlord shall be
entitled to deduct such underpayment from Tenant's Security Deposit. If Landlord
reasonably determines that an overpayment has been made by Tenant, Landlord
shall refund said overpayment to Tenant within (60) sixty days following the
termination of the Lease. Notwithstanding the foregoing, failure of Landlord to
accurately estimate Tenant's Share of such expenses or to otherwise perform such
reconciliation of expenses, including without limitation, Landlord's failure to
deduct any portion of any underpayment from Tenant's Security Deposit, shall not
constitute a waiver of Landlord's right to collect any of Tenant's underpayment
at any time during the Term of the Lease or at any time within eighteen (18)
months after the expiration or earlier termination of this Lease.
6.5 AUDIT: After delivery to Landlord of at least thirty (30) days prior
written notice, Tenant, at its sole cost and expense through any accountant
designated by it, shall have the right to examine and/or audit the books and
records evidencing such costs and expenses for the previous one (1) calendar
year, during Landlord's reasonable business hours but not more frequently than
once during any calendar year. Any such accounting firm designated by Tenant may
not be compensated on a contingency fee basis. The results of any such audit
(and any negotiations between the parties related thereto) shall be maintained
strictly confidential by Tenant and its accounting firm and shall not be
disclosed, published or otherwise disseminated to any other party other than to
Landlord and its authorized agents. Landlord and Tenant
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shall use their best efforts to cooperate in such negotiations and to promptly
resolve any discrepancies between Landlord and Tenant in the accounting of such
costs and expenses.
7. UTILITIES: Utility Expenses, Common Area Utility Costs and all other sums or
charges set forth in this Section 7 are considered part of Additional Rent. In
addition to the Base Rent set forth in Section 3 hereof, Tenant shall pay the
cost of all water, sewer use, sewer discharge fees and sewer connection fees,
gas, heat, electricity, refuse pickup, janitorial service, telephone and other
utilities billed or metered separately to the Premises and/or Tenant. Tenant
shall also pay Tenant's Share of any assessments or charges for utility or
similar purposes included within any tax bill for the Lot on which the Premises
are situated, including, without limitation, entitlement fees, allocation unit
fees, and/or any similar fees or charges, and any penalties related thereto. For
any such utility fees or use charges that are not billed or metered separately
to Tenant, including without limitation, water and refuse pick up charges,
Tenant shall pay to Landlord, as Additional Rent, without prior notice or
demand, on the Commencement Date and thereafter on the first (1st) day of each
month throughout the balance of the Term of this Lease the amount which is
attributable to Tenant's use of the utilities or similar services, as reasonably
estimated and determined by Landlord based upon factors such as size of the
Premises and intensity of use of such utilities by Tenant such that Tenant shall
pay the portion of such charges reasonably consistent with Tenant's use of such
utilities and similar services ("Utility Expenses"). If Tenant disputes any such
estimate or determination, then Tenant shall either pay the estimated amount or
cause the Premises to be separately metered at Tenant's sole expense. In
addition, Tenant shall pay to Landlord Tenant's Share of any Common Area utility
costs, fees, charges or expenses ("Common Area Utility Costs"). Tenant shall pay
to Landlord one-twelfth (1/12th) of the estimated amount of Tenant's Share of
the Common Area Utility Costs on the Commencement Date and thereafter on the
first (1st) day of each month throughout the balance of the Term of this Lease
and any reconciliation thereof shall be substantially in the same manner as
specified in Section 6.4 above. The amount of Tenant's Share of Common Area
Utility Costs shall be reviewed from time to time by Landlord and shall be
subject to modification by Landlord if there is a change in the rentable square
footage of the Premises, the Buildings and/or the Park due to casualty,
condemnation, or sale of any portion of the Park. Tenant acknowledges that the
Premises may become subject to the rationing of utility services or restrictions
on utility use as required by a public utility company, governmental agency or
other similar entity having jurisdiction thereof. Notwithstanding any such
rationing or restrictions on use of any such utility services, Tenant
acknowledges and agrees that its tenancy and occupancy hereunder shall be
subject to such rationing restrictions as may be imposed upon Landlord, Tenant,
the Premises, the Buildings or the Park, and Tenant shall in no event be excused
or relieved from any covenant or obligation to be kept or performed by Tenant by
reason of any such rationing or restrictions. Tenant further agrees to timely
and faithfully pay, prior to delinquency, any amount, tax, charge, surcharge,
assessment or imposition levied, assessed or imposed upon the Premises, or
Tenant's use and occupancy thereof. Notwithstanding anything to the contrary
contained herein, if permitted by applicable Laws, Landlord shall have the right
at any time and from time to time during the Term of this Lease to either
contract for service from a different company or companies (each such company
shall be referred to herein as an "Alternate Service Provider") other than the
company or companies presently providing electricity service for the Buildings
or the Park (the "Electric Service Provider") or continue to contract for
service from the Electric Service Provider, at Landlord's sole discretion.
Landlord shall use commercially reasonable efforts to obtain a competitive cost
if Landlord chooses to contract with an Alternate Service Provider. Tenant
hereby agrees to cooperate with Landlord, the Electric Service Provider, and any
Alternate Service Provider at all times and, as reasonably necessary, shall
allow Landlord, the Electric Service Provider, and any Alternate Service
Provider reasonable access to the Buildings' electric lines, feeders, risers,
wiring, and any other machinery within the Premises.
8. LATE CHARGES: Any and all sums or charges set forth in this Section 8 are
considered part of Additional Rent. Tenant acknowledges that late payment (the
fifth day of each month or any time thereafter) by Tenant to Landlord of Base
Rent, Tenant's Share of Operating Expenses, Tax Expenses, Common Area Utility
Costs, and Utility Expenses or other sums due hereunder, will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impracticable to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Landlord by the terms of any note secured by any encumbrance against
the Premises, and late charges and penalties due to the late payment of real
property taxes on the Premises. Therefore, if any installment of Rent or any
other sum due from Tenant is not received by Landlord when due, Tenant shall
promptly pay to Landlord all of the following, as applicable: (a) an additional
sum equal to five percent (5%) of such delinquent amount plus interest on such
delinquent amount at the rate equal to the prime rate plus three percent (3%)
for the time period such payments are delinquent as a late charge for every
month or portion thereof that such sums remain unpaid, (b) the amount of
seventy-five dollars ($75) for each three-day notice prepared for, or served on,
Tenant, (c) the amount of fifty dollars ($50) relating to checks for which there
are not sufficient funds. The parties agree that this late charge and the other
charges referenced above represent a fair and reasonable estimate of the
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costs that Landlord will incur by reason of late payment by Tenant. Acceptance
of any late charge or other charges shall not constitute a waiver by Landlord of
Tenant's default with respect to the delinquent amount, nor prevent Landlord
from exercising any of the other rights and remedies available to Landlord for
any other breach of Tenant under this Lease. If a late charge or other charge
becomes payable for any three (3) installments of Rent within any twelve (12)
month period, then Landlord, at Landlord's sole option, can either require the
Rent be paid quarterly in advance, or be paid monthly in advance by cashier's
check or by electronic funds transfer.
9. USE OF PREMISES:
9.1 COMPLIANCE WITH LAWS, RECORDED MATTERS, AND RULES AND REGULATIONS:
The Premises are to be used solely for the purposes and uses specified in the
Basic Lease Information and for no other uses or purposes without Landlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed so long as the proposed use (i) does not involve the use of Hazardous
Materials other than as expressly permitted under the provisions of Section 29
below, (ii) does not require any additional parking in excess of the parking
spaces already licensed to Tenant pursuant to the provisions of Section 24 of
this Lease, and (iii) is compatible and consistent with the other uses then
being made in the Park and in other similar types of buildings in the vicinity
of the Park, as reasonably determined by Landlord. The use of the Premises by
Tenant and its employees, representatives, agents, invitees, licensees,
subtenants, customers or contractors (collectively, "Tenant's Representatives")
shall be subject to, and at all times in compliance with, (a) any and all
applicable laws, ordinances, statutes, orders and regulations as same exist from
time to time (collectively, the "Laws"), (b) any and all documents, matters or
instruments, including without limitation, any declarations of covenants,
conditions and restrictions, and any supplements thereto, each of which has been
or hereafter is recorded in any official or public records with respect to the
Premises, the Buildings, the Lot and/or the Park, or any portion thereof
(collectively, the "Recorded Matters"), and (c) any and all rules and
regulations set forth in Exhibit C, attached to and made a part of this Lease,
and any other reasonable rules and regulations promulgated by Landlord now or
hereafter enacted relating to parking and the operation of the Premises, the
Buildings and the Park (collectively, the "Rules and Regulations"). Tenant
agrees to, and does hereby, assume full and complete responsibility to ensure
that the Premises are adequate to fully meet the needs and requirements of
Tenant's intended operations of its business within the Premises, and Tenant's
use of the Premises and that same are in compliance with all applicable Laws
throughout the Term of this Lease. Additionally, Tenant shall be solely
responsible for the payment of all costs, fees and expenses associated with any
modifications, improvements or alterations to the Premises, Buildings, the
Common Areas and/or the Park occasioned by the enactment of, or changes to, any
Laws arising from Tenant's particular use of the Premises or alterations,
improvements or additions made to the Premises regardless of when such Laws
became effective.
9.2 PROHIBITION ON USE: Tenant shall not use the Premises or permit
anything to be done in or about the Premises nor keep or bring anything therein
which will in any way conflict with any of the requirements of the Board of Fire
Underwriters or similar body now or hereafter constituted or in any way increase
the existing rate of or affect any policy of fire or other insurance upon the
Buildings or any of its contents, or cause a cancellation of any insurance
policy. No auctions may be held or otherwise conducted in, on or about the
Premises, the Buildings, the Lot or the Park on weekdays and, in any event,
without Landlord's written consent thereto, which consent may be given or
withheld in Landlord's sole but reasonable discretion. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of Landlord, other tenants or occupants of
the Buildings, other buildings in the Park, or other persons or businesses in
the area, or injure or annoy other tenants or use or allow the Premises to be
used for any unlawful or objectionable purpose, as determined by Landlord, in
its reasonable discretion, for the benefit, quiet enjoyment and use by Landlord
and all other tenants or occupants of the Buildings or other buildings in the
Park; nor shall Tenant cause, maintain or permit any private or public nuisance
in, on or about the Premises, Buildings, Park and/or the Common Areas,
including, but not limited to, any offensive odors, noises, fumes or vibrations.
Tenant shall not damage or deface or otherwise commit or suffer to be committed
any waste in, upon or about the Premises. Tenant shall not place or store, nor
permit any other person or entity to place or store, any property, equipment,
materials, supplies, personal property or any other items or goods outside of
the Premises for any period of time. Tenant shall not permit any animals,
including, but not limited to, any household pets, to be brought or kept in or
about the Premises. Tenant shall place no loads upon the floors, walls, or
ceilings in excess of the maximum designed load permitted by the applicable
Uniform Buildings Code or which may damage the Buildings or outside areas; nor
place any harmful liquids in the drainage systems; nor dump or store waste
materials, refuse or other such materials, or allow such to remain outside the
Buildings area, except for any non-hazardous or non-harmful materials which may
be stored in refuse dumpsters or in any enclosed trash areas provided. Tenant
shall honor the terms of all Recorded Matters relating to the Premises, the
Buildings, the Lot and/or the Park. Tenant shall honor the Rules and
Regulations. If Tenant fails to comply with such Laws, Recorded Matters, Rules
and Regulations or the provisions of this Lease, Landlord shall have the right
to collect from Tenant a
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reasonable sum as a penalty, in addition to all rights and remedies of Landlord
hereunder including, but not limited to, the payment by Tenant to Landlord of
all Enforcement Expenses and Landlord's costs and expenses, if any, to cure any
of such failures of Tenant, if Landlord, at its sole option, elects to undertake
such cure.
10. ALTERATIONS AND ADDITIONS; AND SURRENDER OF PREMISES:
10.1 ALTERATIONS AND ADDITIONS: Tenant shall not install any signs,
fixtures, improvements, nor make or permit any other alterations or additions to
the Premises without the prior written consent of Landlord. If any such
alteration or addition is expressly permitted by Landlord, Tenant shall deliver
at least twenty (20) days prior notice to Landlord, from the date Tenant intends
to commence construction, sufficient to enable Landlord to post a Notice of
Non-Responsibility. In all events, Tenant shall obtain all permits or other
governmental approvals prior to commencing any of such work and deliver a copy
of same to Landlord. All alterations and additions shall be installed by a
licensed contractor approved by Landlord, at Tenant's sole expense in compliance
with all applicable Laws (including, but not limited to, the ADA as defined
herein), Recorded Matters, and Rules and Regulations. Tenant shall keep the
Premises and the property on which the Premises are situated free from any liens
arising out of any work performed, materials furnished or obligations incurred
by or on behalf of Tenant. As a condition to Landlord's consent to the
installation of any fixtures, additions or other improvements, Landlord may
require Tenant to post and obtain a completion and indemnity bond for up to one
hundred fifty percent (150%) of the cost of the work.
10.2 SURRENDER OF PREMISES: Upon the termination of this Lease, whether
by forfeiture, lapse of time or otherwise, or upon the termination of Tenant's
right to possession of the Premises, Tenant will at once surrender and deliver
up the Premises, together with the fixtures (other than trade fixtures),
additions and improvements which Landlord has notified Tenant, in writing, that
Landlord will require Tenant not to remove, to Landlord in good condition and
repair (including, but not limited to, replacing all light bulbs and ballasts
not in good working condition) and in the condition in which the Premises
existed as of the Commencement Date, except for reasonable wear and tear.
Reasonable wear and tear shall not include any damage or deterioration to the
floors of the Premises arising from the use of forklifts in, on or about the
Premises (including, without limitation, any marks or stains of any portion of
the floors), and any damage or deterioration that would have been prevented by
proper maintenance by Tenant or Tenant otherwise performing all of its
obligations under this Lease. Upon such termination of this Lease, Tenant shall
remove all tenant signage, trade fixtures, furniture, furnishings, personal
property, additions, and other improvements unless Landlord requests, in writing
at the time of Landlord's delivery of its consent to such installation, that
Tenant not remove some or all of such fixtures (other than trade fixtures),
additions or improvements installed by, or on behalf of Tenant or situated in or
about the Premises. By the date which is twenty (20) days prior to such
termination of this Lease, Landlord shall notify Tenant in writing of those
fixtures (other than trade fixtures), alterations, additions and other
improvements which Landlord shall require Tenant not to remove from the
Premises. Tenant shall repair any damage caused by the installation or removal
of such signs, trade fixtures, furniture, furnishings, fixtures, additions and
improvements which are to be removed from the Premises by Tenant hereunder. If
Landlord fails to so notify Tenant at least twenty (20) days prior to such
termination of this Lease, then Tenant shall remove all tenant signage,
alterations, furniture, furnishings, trade fixtures, additions and other
improvements (other than the Tenant Improvements) installed in or about the
Premises by, or on behalf of Tenant. Tenant shall ensure that the removal of
such items and the repair of the Premises will be completed prior to such
termination of this Lease.
11. REPAIRS AND MAINTENANCE:
11.1 TENANT'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for those
portions of the Buildings to be maintained by Landlord, as provided in Sections
11.2 and 11.3 below, Tenant shall, at Tenant's sole cost and expense, keep and
maintain the Premises and the adjacent dock and staging areas in good, clean and
safe condition and repair to the reasonable satisfaction of Landlord including,
but not limited to, repairing any damage caused by Tenant or Tenant's
Representatives and replacing any property so damaged by Tenant or Tenant's
Representatives. Without limiting the generality of the foregoing, Tenant shall
be solely responsible for maintaining, repairing and replacing (a) all
mechanical systems, heating, ventilation and air conditioning systems
exclusively serving the Premises, (b) all plumbing, electrical wiring and
equipment exclusively serving the Premises, (c) all interior lighting
(including, without limitation, light bulbs and/or ballasts) and exterior
lighting exclusively serving the Premises or adjacent to the Premises (to the
extent that said lighting is not part of the Common Areas), (d) all glass,
windows, window frames, window casements, skylights, interior and exterior
doors, door frames and door closers, (e) all roll-up doors, ramps and dock
equipment, including without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights, (f) all tenant signage, (g) lifts for disabled
persons serving the Premises, (h) sprinkler systems, fire protection systems and
security systems
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exclusively serving the Premises, (i) all partitions, fixtures, equipment,
interior painting, and interior walls and floors of the Premises and every part
thereof (including, without limitation, any demising walls contiguous to any
portion of the Premises).
11.2 REIMBURSABLE REPAIRS AND MAINTENANCE OBLIGATIONS: Subject to the
provisions of Sections 6 and 9 of this Lease and except for (i) the obligations
of Tenant set forth in Section 11.1 above, (ii) the obligations of Landlord set
forth in Section 11.3 below, and (iii) the repairs rendered necessary by the
intentional or negligent acts or omissions of Tenant or any of Tenant's
Representatives, Landlord agrees, at Landlord's expense, subject to
reimbursement pursuant to Section 6 above, to keep in good repair the plumbing
and mechanical systems exterior to the Premises the roof (provided, however,
that Landlord shall not seek reimbursement from Tenant for replacing the roof of
10220 Sorrento Valley Road to be performed in 1999), roof membranes, exterior
walls of the Buildings, signage (exclusive of tenant signage), and exterior
electrical wiring and equipment, exterior lighting, exterior glass, exterior
doors/entrances and door closers, exterior window casements, exterior painting
of the Buildings (exclusive of the Premises), and underground utility and sewer
pipes outside the exterior walls of the Buildings. For purposes of this Section
11.2, the term "exterior" shall mean outside of and not exclusively serving the
Premises. Unless otherwise notified by Landlord, in writing, that Landlord has
elected to procure and maintain the following described contract(s), Tenant
shall procure and maintain (a) the heating, ventilation and air conditioning
systems preventative maintenance and repair contract(s); such contract(s) to be
on a bi-monthly or quarterly basis, as reasonably determined by Landlord, and
(b) the fire and sprinkler protection services and preventative maintenance and
repair contract(s) (including, without limitation, monitoring services); such
contract(s) to be on a bi-monthly or quarterly basis, as reasonably determined
by Landlord. Landlord reserves the right, but without the obligation to do so,
to procure and maintain (i) the heating, ventilation and air conditioning
systems preventative maintenance and repair contract(s), and/or (ii) the fire
and sprinkler protection services and preventative maintenance and repair
contract(s) (including, without limitation, monitoring services). If Landlord so
elects to procure and maintain any such contract(s), Tenant will reimburse
Landlord for the cost thereof in accordance with the provisions of Section 6
above. If Tenant procures and maintains any of such contract(s), Tenant will
promptly deliver to Landlord a true and complete copy of each such contract and
any and all renewals or extensions thereof, and each service report or other
summary received by Tenant pursuant to or in connection with such contract(s).
11.3 LANDLORD'S REPAIRS AND MAINTENANCE OBLIGATIONS: Except for repairs
rendered necessary by the intentional or negligent acts or omissions of Tenant
or any of Tenant's Representatives, Landlord agrees, at Landlord's sole cost and
expense, to (a) keep in good repair the structural portions of the floors,
foundations and exterior perimeter walls of the Buildings (exclusive of glass
and exterior doors), and (b) replace the structural portions of the roof of the
Buildings (excluding the roof membrane) as, and when, Landlord determines such
replacement to be necessary in Landlord's sole discretion.
11.4 TENANT'S FAILURE TO PERFORM REPAIRS AND MAINTENANCE OBLIGATIONS:
Except for normal maintenance and repair of the items described above, Tenant
shall have no right of access to or right to install any device on the roof of
the Buildings nor make any penetrations of the roof of the Buildings without the
express prior written consent of Landlord. If Tenant refuses or neglects to
repair and maintain the Premises and the adjacent areas properly as required
herein and to the reasonable satisfaction of Landlord, Landlord may, but without
obligation to do so, at any time make such repairs and/or maintenance without
Landlord having any liability to Tenant for any loss or damage that may accrue
to Tenant's merchandise, fixtures or other property, or to Tenant's business by
reason thereof, except to the extent any damage is caused by the willful
misconduct or gross negligence of Landlord or its authorized agents and
representatives. In the event Landlord makes such repairs and/or maintenance,
upon completion thereof Tenant shall pay to Landlord, as additional rent, the
Landlord's costs for making such repairs and/or maintenance, plus ten percent
(10%) for overhead, upon presentation of a bill therefor, plus any Enforcement
Expenses. The obligations of Tenant hereunder shall survive the expiration of
the Term of this Lease or the earlier termination thereof. Tenant hereby waives
any right to repair at the expense of Landlord under any applicable Laws now or
hereafter in effect respecting the Premises.
12. INSURANCE:
12.1 TYPES OF INSURANCE: Tenant shall maintain in full force and effect
at all times during the Term of this Lease, at Tenant's sole cost and expense,
for the protection of Tenant and Landlord, as their interests may appear,
policies of insurance issued by a carrier or carriers reasonably acceptable to
Landlord and its lender(s) which afford the following coverages: (i) worker's
compensation: statutory limits; (ii) employer's liability, as required by law,
with a minimum limit of $100,000 per employee and $500,000 per occurrence; (iii)
commercial general liability insurance (occurrence form) providing coverage
against any and all claims for bodily injury and property damage occurring in,
on or about the Premises arising out of Tenant's and Tenant's Representatives'
use and/or occupancy of the Premises.
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Such insurance shall include coverage for blanket contractual liability, fire
damage, premises, personal injury, completed operations, products liability,
personal and advertising, and a plate-glass rider to provide coverage for all
glass in, on or about the Premises including, without limitation, skylights.
Such insurance shall have a combined single limit of not less than One Million
Dollars ($1,000,000) per occurrence with a Two Million Dollar ($2,000,000)
aggregate limit and excess/umbrella insurance in the amount of Two Million
Dollars ($2,000,000). If Tenant has other locations which it owns or leases, the
policy shall include an aggregate limit per location endorsement. If necessary,
as reasonably determined by Landlord, Tenant shall provide for restoration of
the aggregate limit; (iv) comprehensive automobile liability insurance: a
combined single limit of not less than $2,000,000 per occurrence and insuring
Tenant against liability for claims arising out of the ownership, maintenance,
or use of any owned, hired or non-owned automobiles; (v) "all risk" or "special
purpose" property insurance, including without limitation, sprinkler leakage,
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any personal property, trade fixtures, inventory, fixtures and equipment
located in, on or about the Premises, and in addition, coverage for flood, and
business interruption of Tenant, together with, if the property of Tenant's
invitees is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitees and located in the Premises. Such insurance shall be written on a
replacement cost basis (without deduction for depreciation) in an amount equal
to one hundred percent (100%) of the full replacement value of the aggregate of
the items referred to in this subparagraph (v); and (vi) such other insurance as
Landlord deems necessary and prudent or as may otherwise be required by any of
Landlord's lenders or joint venture partners.
12.2 INSURANCE POLICIES: Insurance required to be maintained by Tenant
shall be written by companies (i) licensed to do business in the State of
California, (ii) domiciled in the United States of America, and (iii) having a
"General Policyholders Rating" of at least A:VII (or such higher rating as may
be required by a lender having a lien on the Premises) as set forth in the most
current issue of "A.M. Best's Rating Guides." Any deductible amounts under any
of the insurance policies required hereunder shall not exceed One Thousand
Dollars ($1,000). Tenant shall deliver to Landlord certificates of insurance and
true and complete copies of any and all endorsements required herein for all
insurance required to be maintained by Tenant hereunder at the time of execution
of this Lease by Tenant. Tenant shall, at least thirty (30) days prior to
expiration of each policy, furnish Landlord with certificates of renewal or
"binders" thereof. Each certificate shall expressly provide that such policies
shall not be cancelable or otherwise subject to modification except after thirty
(30) days prior written notice to the parties named as additional insureds as
required in this Lease (except for cancellation for nonpayment of premium, in
which event cancellation shall not take effect until at least ten (10) days'
notice has been given to Landlord). Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms of this
Lease under a blanket insurance policy, provided such blanket policy expressly
affords coverage for the Premises and for Landlord as required by this Lease.
12.3 ADDITIONAL INSUREDS AND COVERAGE: Landlord, any property management
company and/or agent of Landlord for the Premises, the Buildings, the Lot or the
Park, and any lender(s) of Landlord having a lien against the Premises, the
Buildings, the Lot or the Park shall be named as additional insureds under all
of the policies required in Section 12.1(iii) above. Additionally, such policies
shall provide for severability of interest. All insurance to be maintained by
Tenant shall, except for workers' compensation and employer's liability
insurance, be primary, without right of contribution from insurance maintained
by Landlord. Any umbrella/excess liability policy (which shall be in "following
form") shall provide that if the underlying aggregate is exhausted, the excess
coverage will drop down as primary insurance. The limits of insurance maintained
by Tenant shall not limit Tenant's liability under this Lease. It is the
parties' intention that the insurance to be procured and maintained by Tenant as
required herein shall provide coverage for any and all damage or injury arising
from or related to Tenant's operations of its business and/or Tenant's or
Tenant's Representatives' use of the Premises and/or any of the areas within the
Park, whether such events occur within the Premises (as described in Exhibit A
hereto) or in any other areas of the Park. It is not contemplated or anticipated
by the parties that the aforementioned risks of loss be borne by Landlord's
insurance carriers, rather it is contemplated and anticipated by Landlord and
Tenant that such risks of loss be borne by Tenant's insurance carriers pursuant
to the insurance policies procured and maintained by Tenant as required herein.
12.4 FAILURE OF TENANT TO PURCHASE AND MAINTAIN INSURANCE: In the event
Tenant does not purchase the insurance required in this Lease or keep the same
in full force and effect throughout the Term of this Lease (including any
renewals or extensions), Landlord may, but without obligation to do so, purchase
the necessary insurance and pay the premiums therefor. If Landlord so elects to
purchase such insurance, Tenant shall promptly pay to Landlord as Additional
Rent, the amount so paid by Landlord, upon Landlord's demand therefor. In
addition, Landlord may recover from Tenant and Tenant agrees to pay, as
Additional Rent, any and all damages which Landlord may sustain by reason of
Tenant's failure to obtain and maintain such insurance. If Tenant fails to
maintain any insurance required in this Lease, Tenant shall be liable for all
losses, damages and costs resulting from such failure.
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12.5 LANDLORD'S INSURANCE: Landlord shall maintain in full force and
effect during the Term of this Lease, subject to reimbursement as provided in
Section 6, policies of insurance which afford such coverages as Landlord deems
reasonable and as is consistent with other properties in Landlord's portfolio.
Notwithstanding the foregoing, Landlord shall obtain and keep in force during
the Term of this Lease, as an item of Operating Expenses, a policy or policies
in the name of Landlord, with loss payable to Landlord and to the holders of any
mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"),
insuring loss or damage to the Buildings, including all improvements, fixtures
(other than trade fixtures) and permanent additions. However, all alterations,
additions and improvements made to the Premises by Tenant shall be insured by
Tenant rather than by Landlord. The amount of such insurance procured by
Landlord shall be equal to at least eighty percent (80%) of the full replacement
cost of the Buildings, including all improvements and permanent additions as the
same shall exist from time to time, or the amount required by Lenders. At
Landlord's option, such policy or policies shall insure against all risks of
direct physical loss or damage (including, without limitation, the perils of
flood and earthquake), including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of the Buildings required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss. If any such insurance coverage procured
by Landlord has a deductible clause, the deductible shall not exceed
commercially reasonable amounts, and in the event of any casualty, the amount of
such deductible shall be an item of Operating Expenses. Notwithstanding anything
to the contrary contained herein, to the extent the cost of maintaining
insurance with respect to the Buildings and/or any other buildings within the
Park is increased as a result of Tenant's acts, omissions, use or occupancy of
the Premises, Tenant shall pay for such increase(s).
13. WAIVER OF SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other for any loss of, or damage to,
either parties' property to the extent that such loss or damage is insured by an
insurance policy required to be in effect at the time of such loss or damage.
Each party shall obtain any special endorsements, if required by its insurer
whereby the insurer waives its rights of subrogation against the other party.
This provision is intended to waive fully, and for the benefit of the parties
hereto, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by Tenant pursuant to
Section 12 of this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance. The provisions
of this Section 13 shall not apply in those instances in which such waiver of
subrogation would invalidate such insurance coverage or would cause either
party's insurance coverage to be voided or otherwise uncollectible.
14. LIMITATION OF LIABILITY AND INDEMNITY: Except to the extent of damage
resulting from the sole active gross negligence or willful misconduct of
Landlord or its authorized representatives, Tenant agrees to protect, defend
(with counsel acceptable to Landlord) and hold Landlord and Landlord's lenders,
partners, members, property management company (if other than Landlord), agents,
directors, officers, employees, representatives, contractors, shareholders,
successors and assigns and each of their respective partners, members,
directors, employees, representatives, agents, contractors, shareholders,
successors and assigns (collectively, the "Indemnitees") harmless and indemnify
the Indemnitees from and against all liabilities, damages, claims, losses,
judgments, charges and expenses (including reasonable attorneys' fees, costs of
court and expenses necessary in the prosecution or defense of any litigation
including the enforcement of this provision) arising from or in any way related
to, directly or indirectly, (i) Tenant's or Tenant's Representatives' use of the
Premises, Buildings and/or the Park, (ii) the conduct of Tenant's business,
(iii) from any activity, work or thing done, permitted or suffered by Tenant in
or about the Premises, (iv) in any way connected with the Premises or with the
improvements or personal property therein, including, but not limited to, any
liability for injury to person or property of Tenant, Tenant's Representatives,
or third party persons, and/or (v) Tenant's failure to perform any covenant or
obligation of Tenant under this Lease. Tenant agrees that the obligations of
Tenant herein shall survive the expiration or earlier termination of this Lease.
Except to the extent of damage resulting from the sole active gross
negligence or willful misconduct of Landlord or its authorized representatives,
to the fullest extent permitted by law, Tenant agrees that neither Landlord nor
any of Landlord's lender(s), partners, members, employees, representatives,
legal representatives, successors or assigns shall at any time or to any extent
whatsoever be liable, responsible or in any way accountable for any loss,
liability, injury, death or damage to persons or property which at any time may
be suffered or sustained by Tenant or by any person(s) whomsoever who may at any
time be using, occupying or visiting the Premises, the Buildings or the Park,
including, but not limited to, any acts, errors or omissions by or on behalf of
any other tenants or occupants of the Buildings and/or the Park. Tenant shall
not, in any event or circumstance, be permitted to offset or otherwise credit
against any payments of Rent required herein for matters for which Landlord may
be liable hereunder. Landlord and its authorized representatives shall not be
liable for any interference with light or air, or for any latent defect in the
Premises or the Buildings.
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15. ASSIGNMENT AND SUBLEASING:
15.1 PROHIBITION: Tenant shall not assign, mortgage, hypothecate,
encumber, grant any license or concession, pledge or otherwise transfer this
Lease (collectively, "assignment"), in whole or in part, whether voluntarily or
involuntarily or by operation of law, nor sublet or permit occupancy by any
person other than Tenant of all or any portion of the Premises without first
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant hereby agrees that Landlord may withhold its
consent to any proposed sublease or assignment if the proposed sublessee or
assignee or its business is subject to compliance with additional requirements
of the ADA (defined below) and/or Environmental Laws (defined below) beyond
those requirements which are applicable to Tenant, unless the proposed sublessee
or assignee shall (a) first deliver plans and specifications for complying with
such additional requirements and obtain Landlord's written consent thereto, and
(b) comply with all Landlord's conditions for or contained in such consent,
including without limitation, requirements for security to assure the lien-free
completion of such improvements. If Tenant seeks to sublet or assign all or any
portion of the Premises, Tenant shall deliver to Landlord at least thirty (30)
days prior to the proposed commencement of the sublease or assignment (the
"Proposed Effective Date") the following: (i) the name of the proposed assignee
or sublessee; (ii) such information as to such assignee's or sublessee's
financial responsibility and standing as Landlord may reasonably require; and
(iii) the aforementioned plans and specifications, if any. Within ten (10) days
after Landlord's receipt of a written request from Tenant that Tenant seeks to
sublet or assign all or any portion of the Premises, Landlord shall deliver to
Tenant a copy of Landlord's standard form of sublease or assignment agreement
(as applicable), which instrument shall be utilized for each proposed sublease
or assignment (as applicable), and such instrument shall include a provision
whereby the assignee or sublessee assumes all of Tenant's obligations hereunder
and agrees to be bound by the terms hereof. As Additional Rent hereunder, Tenant
shall pay to Landlord a fee in the amount of five hundred dollars ($500) plus
Tenant shall reimburse Landlord for actual legal and other expenses incurred by
Landlord in connection with any actual or proposed assignment or subletting. In
the event the sublease or assignment (1) by itself or taken together with prior
sublease(s) or partial assignment(s) covers or totals, as the case may be, more
than twenty-five percent (25%) of the rentable square feet of the Premises or
(2) is for a term which by itself or taken together with prior or other
subleases or partial assignments is greater than fifty percent (50%) of the
period remaining in the Term of this Lease as of the time of the Proposed
Effective Date, then Landlord shall have the right, to be exercised by giving
written notice to Tenant, to recapture the space described in the sublease or
assignment. If such recapture notice is given, it shall serve to terminate this
Lease with respect to the proposed sublease or assignment space, or, if the
proposed sublease or assignment space covers all the Premises, it shall serve to
terminate the entire term of this Lease in either case, as of the Proposed
Effective Date. However, no termination of this Lease with respect to part or
all of the Premises shall become effective without the prior written consent,
where necessary, of the holder of each deed of trust encumbering the Premises or
any part thereof. If this Lease is terminated pursuant to the foregoing with
respect to less than the entire Premises, the Rent shall be adjusted on the
basis of the proportion of square feet retained by Tenant to the square feet
originally demised and this Lease as so amended shall continue thereafter in
full force and effect. Each permitted assignee or sublessee shall assume and be
deemed to assume this Lease and shall be and remain liable jointly and severally
with Tenant for payment of Rent and for the due performance of, and compliance
with all the terms, covenants, conditions and agreements herein contained on
Tenant's part to be performed or complied with, for the term of this Lease. No
assignment or subletting shall affect the continuing primary liability of Tenant
(which, following assignment, shall be joint and several with the assignee), and
Tenant shall not be released from performing any of the terms, covenants and
conditions of this Lease. Tenant hereby acknowledges and agrees that it
understands that Landlord's accounting department may process and accept Rent
payments without verifying that such payments are being made by Tenant, a
permitted sublessee or a permitted assignee in accordance with the provisions of
this Lease. Although such payments may be processed and accepted by such
accounting department personnel, any and all actions or omissions by the
personnel of Landlord's accounting department shall not be considered as
acceptance by Landlord of any proposed assignee or sublessee nor shall such
actions or omissions be deemed to be a substitute for the requirement that
Tenant obtain Landlord's prior written consent to any such subletting or
assignment, and any such actions or omissions by the personnel of Landlord's
accounting department shall not be considered as a voluntary relinquishment by
Landlord of any of its rights hereunder nor shall any voluntary relinquishment
of such rights be inferred therefrom. For purposes hereof, in the event Tenant
is a corporation, partnership, joint venture, trust or other entity other than a
natural person, any change in the direct or indirect ownership of Tenant
(whether pursuant to one or more transfers) which results in a change of more
than fifty percent (50%) in the direct or indirect ownership of Tenant shall be
deemed to be an assignment within the meaning of this Section 15 and shall be
subject to all the provisions hereof. Any and all options, first rights of
refusal, tenant improvement allowances and other similar rights granted to
Tenant in this Lease, if any, shall not be assignable by Tenant unless expressly
authorized in writing by Landlord.
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15.2 EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION: In the event of
any sublease or assignment of all or any portion of the Premises where the rent
or other consideration provided for in the sublease or assignment either
initially or over the term of the sublease or assignment exceeds the Rent or pro
rata portion of the Rent, as the case may be, for such space reserved in the
Lease, Tenant shall pay the Landlord monthly, as Additional Rent, at the same
time as the monthly installments of Rent are payable hereunder, seventy-five
percent (75%) of the excess of each such payment of rent or other consideration
in excess of the Rent called for hereunder.
15.3 WAIVER: Notwithstanding any assignment or sublease, or any
indulgences, waivers or extensions of time granted by Landlord to any assignee
or sublessee, or failure by Landlord to take action against any assignee or
sublessee, Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.
16. AD VALOREM TAXES: Prior to delinquency, Tenant shall pay all taxes and
assessments levied upon trade fixtures, alterations, additions, improvements,
inventories and personal property located and/or installed on or in the Premises
by, or on behalf of, Tenant; and if requested by Landlord, Tenant shall promptly
deliver to Landlord copies of receipts for payment of all such taxes and
assessments. To the extent any such taxes are not separately assessed or billed
to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord.
17. SUBORDINATION: Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any bona fide mortgagee or deed of trust beneficiary
with a lien on all or any portion of the Premises or any ground lessor with
respect to the land of which the Premises are a part, the rights of Tenant under
this Lease and this Lease shall be subject and subordinate at all times to: (i)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Buildings or the land upon which the Buildings is
situated or both, and (ii) the lien of any mortgage or deed of trust which may
now exist or hereafter be executed in any amount for which the Buildings, the
Lot, ground leases or underlying leases, or Landlord's interest or estate in any
of said items is specified as security. Notwithstanding the foregoing, Landlord
or any such ground lessor, mortgagee, or any beneficiary shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination and upon the request of such successor to
Landlord, attorn to and become the Tenant of the successor in interest to
Landlord, provided such successor in interest will not disturb Tenant's use,
occupancy or quiet enjoyment of the Premises so long as Tenant is not in default
of the terms and provisions of this Lease. The successor in interest to Landlord
following foreclosure, sale or deed in lieu thereof shall not be (a) liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) subject to any offsets or defenses which
Tenant might have against any prior lessor; (c) bound by prepayment of more than
one (1) month's Rent, except in those instances when Tenant pays Rent quarterly
in advance pursuant to Section 8 hereof, then not more than three months' Rent;
or (d) liable to Tenant for any Security Deposit not actually received by such
successor in interest to the extent any portion or all of such Security Deposit
has not already been forfeited by, or refunded to, Tenant. Landlord shall be
liable to Tenant for all or any portion of the Security Deposit not forfeited
by, or refunded to Tenant, until and unless Landlord transfers such Security
Deposit to the successor in interest. Tenant covenants and agrees to execute
(and acknowledge if required by Landlord, any lender or ground lessor) and
deliver, within five (5) days of a demand or request by Landlord and in the form
requested by Landlord, ground lessor, mortgagee or beneficiary, any additional
documents evidencing the priority or subordination of this Lease with respect to
any such ground leases or underlying leases or the lien of any such mortgage or
deed of trust. Tenant's failure to timely execute and deliver such additional
documents shall, at Landlord's option, constitute a material default hereunder.
It is further agreed that Tenant shall be liable to Landlord, and shall
indemnify Landlord from and against any loss, cost, damage or expense,
incidental, consequential, or otherwise, arising or accruing directly or
indirectly, from any failure of Tenant to execute or deliver to Landlord any
such additional documents, together with any and all Enforcement Expenses.
Tenant's agreement to subordinate this Lease to any future ground or underlying
lease or any future deed of trust or mortgage pursuant to the foregoing
provisions of the Section 17 is conditioned upon Landlord delivering to Tenant
from the lessor under such future ground or underlying lease or the holder of
any such mortgage or deed of trust, a non-disturbance agreement agreeing, among
other things, that Tenant's right to possession of the Premises pursuant to the
terms and conditions of this Lease shall not be disturbed provided Tenant is not
in default under this Lease beyond the applicable notice and cure periods
hereunder.
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18. RIGHT OF ENTRY: Tenant grants Landlord or its agents the right to enter the
Premises at all reasonable times for purposes of inspection, exhibition, posting
of notices, repair or alteration. At Landlord's option, Landlord shall at all
times have and retain a key with which to unlock all the doors in, upon and
about the Premises, excluding Tenant's vaults and safes. It is further agreed
that Landlord shall have the right to use any and all means Landlord deems
necessary to enter the Premises in an emergency. Landlord shall have the right
to place "for rent" or "for lease" signs on the outside of the Premises, the
Buildings and in the Common Areas. Notwithstanding the previous sentence,
Landlord shall not place "for rent" or "for lease" signs on 10260 Sorrento
Valley Road earlier than six (6) months prior to the expiration of the Term of
the Lease, unless Tenant notifies Landlord earlier than the date which is six
(6) months prior to the expiration of the Term of the Lease that Tenant intends
to vacate the Premises. Landlord shall also have the right to place "for sale"
signs on the outside of the Buildings and in the Common Areas. Tenant hereby
waives any claim from damages or for any injury or inconvenience to or
interference with Tenant's business, or any other loss occasioned thereby except
for any claim for any of the foregoing arising out of the sole active gross
negligence or willful misconduct of Landlord or its authorized representatives.
19. ESTOPPEL CERTIFICATE: Tenant shall execute (and acknowledge if required by
any lender or ground lessor) and deliver to Landlord, within ten (10) days after
Landlord provides such to Tenant, a statement in writing certifying that this
Lease is unmodified and in full force and effect (or, if modified, stating the
nature of such modification), the date to which the Rent and other charges are
paid in advance, if any, acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder or specifying
such defaults as are claimed, and such other matters as Landlord may reasonably
require. Any such statement may be conclusively relied upon by Landlord and any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon the Tenant that
(a) this Lease is in full force and effect, without modification except as may
be represented by Landlord; (b) there are no uncured defaults in Landlord's
performance; and (c) not more than one month's Rent has been paid in advance,
except in those instances when Tenant pays Rent quarterly in advance pursuant to
Section 8 hereof, then not more than three month's Rent has been paid in
advance. Failure by Tenant to so deliver such certified estoppel certificate
shall be a material default of the provisions of this Lease. Tenant shall be
liable to Landlord, and shall indemnify Landlord from and against any loss,
cost, damage or expense, incidental, consequential, or otherwise, arising or
accruing directly or indirectly, from any failure of Tenant to execute or
deliver to Landlord any such certified estoppel certificate, together with any
and all Enforcement Expenses.
20. TENANT'S DEFAULT: The occurrence of any one or more of the following events
shall, at Landlord's option, constitute a material default by Tenant of the
provisions of this Lease:
20.1 The abandonment of the Premises by Tenant or the vacation of the
Premises by Tenant which would cause any insurance policy to be invalidated or
otherwise lapse. Tenant agrees to notice and service of notice as provided for
in this Lease and waives any right to any other or further notice or service of
notice which Tenant may have under any statute or law now or hereafter in
effect;
20.2 The failure by Tenant to make any payment of Rent, Additional Rent
or any other payment required hereunder within five (5) days of the date said
payment is due. Tenant agrees to notice and service of notice as provided for in
this Lease and waives any right to any other or further notice or service of
notice which Tenant may have under any statute or law now or hereafter in
effect;
20.3 The failure by Tenant to observe, perform, or comply with any of
the conditions, covenants or provisions of this Lease (except failure to make
any payment of Rent and/or Additional Rent) and such failure is not cured within
(i) fifteen (15) calendar days of the date on which Landlord delivers written
notice of such failure to Tenant for all failures other than with respect to
Hazardous Materials, and (ii) ten (10) calendar days of the date on which
Landlord delivers written notice of such failure to Tenant for all failures in
any way related to Hazardous Materials. However, Tenant shall not be in default
of its obligations hereunder if such failure cannot reasonably be cured within
such fifteen (15) or ten (10) calendar day period, as applicable, and Tenant
promptly commences, and thereafter diligently proceeds with same to completion,
all actions necessary to cure such failure as soon as is reasonably possible,
but in no event shall the completion of such cure be later than sixty (60) days
after the date on which Landlord delivers to Tenant written notice of such
failure, unless Landlord, acting reasonably and in good faith, otherwise
expressly agrees in writing to a longer period of time based upon the
circumstances relating to such failure as well as the nature of the failure and
the nature of the actions necessary to cure such failures;
20.4 The making of a general assignment by Tenant for the benefit of
creditors, the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation, or reorganization of Tenant under any law relating to bankruptcy,
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insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing, the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold, Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due, any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets, Tenant taking
any action toward the dissolution or winding up of Tenant's affairs, the
cessation or suspension of Tenant's use of the Premises, or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
20.5 Tenant's use or storage of Hazardous Materials in, on or about the
Premises, the Buildings, the Lot and/or the Park other than as expressly
permitted by the provisions of Section 29 below; or
20.6 The making of any material misrepresentation or omission by Tenant
in any materials delivered by or on behalf of Tenant to Landlord pursuant to
this Lease.
21. REMEDIES FOR TENANT'S DEFAULT:
21.1 LANDLORD'S RIGHTS: In the event of Tenant's material default under
this Lease, Landlord may terminate Tenant's right to possession of the Premises
by any lawful means in which case upon delivery of written notice by Landlord
this Lease shall terminate on the date specified by Landlord in such notice and
Tenant shall immediately surrender possession of the Premises to Landlord. In
addition, the Landlord shall have the immediate right of re-entry whether or not
this Lease is terminated, and if this right of re-entry is exercised following
abandonment of the Premises by Tenant, Landlord may consider any personal
property belonging to Tenant and left on the Premises to also have been
abandoned. No re-entry or taking possession of the Premises by Landlord pursuant
to this Section 21 shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant. If Landlord relets
the Premises or any portion thereof, (i) Tenant shall be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, broker's commissions, expenses of
cleaning, redecorating, and further improving the Premises and other similar
costs (collectively, the "Reletting Costs"), and (ii) the rent received by
Landlord from such reletting shall be applied to the payment of, first, any
indebtedness from Tenant to Landlord other than Base Rent, Operating Expenses,
Tax Expenses, Common Area Utility Costs, and Utility Expenses; second, all costs
including maintenance, incurred by Landlord in reletting; and, third, Base Rent,
Operating Expenses, Tax Expenses, Common Area Utility Costs, Utility Expenses,
and all other sums due under this Lease. Any and all of the Reletting Costs
shall be fully chargeable to Tenant and shall not be prorated or otherwise
amortized in relation to any new lease for the Premises or any portion thereof.
After deducting the payments referred to above, any sum remaining from the
rental Landlord receives from reletting shall be held by Landlord and applied in
payment of future Rent as Rent becomes due under this Lease. In no event shall
Tenant be entitled to any excess rent received by Landlord. Reletting may be for
a period shorter or longer than the remaining term of this Lease. No act by
Landlord other than giving written notice to Tenant shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of Tenant's right to possession. So
long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises, to cause a receiver
to be appointed to administer the Premises and new or existing subleases and to
add to the Rent payable hereunder all of Landlord's reasonable costs in so
doing, with interest at the maximum rate permitted by law from the date of such
expenditure.
21.2 DAMAGES RECOVERABLE: If Tenant breaches this Lease and abandons the
Premises before the end of the Term, or if Tenant's right to possession is
terminated by Landlord because of a breach or default under this Lease, then in
either such case, Landlord may recover from Tenant all damages suffered by
Landlord as a result of Tenant's failure to perform its obligations hereunder,
including, but not limited to, the cost of any Tenant Improvements constructed
by or on behalf of Tenant pursuant to Exhibit B hereto, the portion of any
broker's or leasing agent's commission incurred with respect to the leasing of
the Premises to Tenant for the balance of the Term of the Lease remaining after
the date on which Tenant is in default of its obligations hereunder, and all
Reletting Costs, and the worth at the time of the award (computed in accordance
with paragraph (3) of Subdivision (a) of Section 1951.2 of the California Civil
Code) of the amount by which the Rent then unpaid hereunder for the balance of
the Lease Term exceeds the amount of such loss of Rent for the same period which
Tenant proves could be reasonably avoided by Landlord and in such case, Landlord
prior to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant's failure to perform its obligations
hereunder; provided, however, that even though Tenant has abandoned the Premises
following such breach, this Lease shall nevertheless continue in full force and
effect for as long as Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord shall have the remedy described in Section
1951.4 of the California Civil Code (Landlord may continue this Lease in effect
after Tenant's
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breach and abandonment and recover Rent as it becomes due, if Tenant has the
right to sublet or assign, subject only to reasonable limitations) and may
enforce all its rights and remedies under this Lease, including the right to
recover the Rent from Tenant as it becomes due hereunder. The "worth at the time
of the award" within the meaning of Subparagraphs (a)(1) and (a)(2) of Section
1951.2 of the California Civil Code shall be computed by allowing interest at
the rate of ten percent (10%) per annum. Tenant waives redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law, in the event Tenant is evicted or
Landlord takes possession of the Premises by reason of any default of Tenant
hereunder.
21.3 RIGHTS AND REMEDIES CUMULATIVE: The foregoing rights and remedies
of Landlord are not exclusive; they are cumulative in addition to any rights and
remedies now or hereafter existing at law, in equity by statute or otherwise, or
to any equitable remedies Landlord may have, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights generally. In
addition to all remedies set forth above, if Tenant materially defaults under
this Lease, any and all Base Rent waived by Landlord under Section 3 above shall
be immediately due and payable to Landlord and all options granted to Tenant
hereunder shall automatically terminate, unless otherwise expressly agreed to in
writing by Landlord.
21.4 WAIVER OF A DEFAULT: The waiver by Landlord of any default of any
provision of this Lease shall not be deemed or construed a waiver of any other
default by Tenant hereunder or of any subsequent default of this Lease, except
for the default specified in the waiver.
22. HOLDING OVER: If Tenant holds possession of the Premises after the
expiration of the Term of this Lease with Landlord's consent, Tenant shall
become a tenant from month-to-month upon the terms and provisions of this Lease,
provided the monthly Base Rent during the second and each subsequent month of
such hold over period shall be 150% of the Base Rent due on the last month of
the Lease Term, payable in advance on or before the first day of each month.
Acceptance by Landlord of the monthly Base Rent without the additional fifty
percent (50%) increase of Base Rent shall not be deemed or construed as a waiver
by Landlord of any of its rights to collect the increased amount of the Base
Rent as provided herein at any time. Such month-to-month tenancy shall not
constitute a renewal or extension for any further term. All options, if any,
granted under the terms of this Lease shall be deemed automatically terminated
and be of no force or effect during said month-to-month tenancy. Tenant shall
continue in possession until such tenancy shall be terminated by either Landlord
or Tenant giving written notice of termination to the other party at least
thirty (30) days prior to the effective date of termination. This paragraph
shall not be construed as Landlord's permission for Tenant to hold over.
Acceptance of Base Rent by Landlord following expiration or termination of this
Lease shall not constitute a renewal of this Lease.
23. LANDLORD'S DEFAULT: Landlord shall not be deemed in breach or default of
this Lease unless Landlord fails within a reasonable time to perform an
obligation required to be performed by Landlord hereunder. For purposes of this
provision, a reasonable time shall not be less than thirty (30) days after
receipt by Landlord of written notice specifying the nature of the obligation
Landlord has not performed; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days, after receipt of written
notice, is reasonably necessary for its performance, then Landlord shall not be
in breach or default of this Lease if performance of such obligation is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
24. PARKING: Tenant shall have a license to use the number of parking spaces
specified in the Basic Lease Information. Landlord shall exercise reasonable
efforts to insure that such spaces are available to Tenant for its use.
25. SALE OF PREMISES: In the event of any sale of the Premises by Landlord or
the cessation otherwise of Landlord's interest therein, Landlord shall be and is
hereby entirely released from any and all of its obligations to perform or
further perform under this Lease and from all liability hereunder accruing from
or after the date of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease. For purposes of this
Section 25, the term "Landlord" means only the owner and/or agent of the owner
as such parties exist as of the date on which Tenant executes this Lease. A
ground lease or similar long term lease by Landlord of the entire Buildings, of
which the Premises are a part, shall be deemed a sale within the meaning of this
Section 25. Tenant agrees to attorn to such new owner provided such new owner
does not disturb Tenant's use, occupancy or quiet enjoyment of the Premises so
long as Tenant is not in default of any of the provisions of this Lease.
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26. WAIVER: No delay or omission in the exercise of any right or remedy of
Landlord on any default by Tenant shall impair such a right or remedy or be
construed as a waiver. The subsequent acceptance of Rent by Landlord after
default by Tenant of any covenant or term of this Lease shall not be deemed a
waiver of such default, other than a waiver of timely payment for the particular
Rent payment involved, and shall not prevent Landlord from maintaining an
unlawful detainer or other action based on such breach. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or other sum or pursue any other remedy
provided in this Lease. No failure, partial exercise or delay on the part of the
Landlord in exercising any right, power or privilege hereunder shall operate as
a waiver thereof.
27. CASUALTY DAMAGE: If the Premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Buildings shall be so damaged by fire or other casualty
that substantial alteration or reconstruction of the Buildings shall, in
Landlord's sole opinion, be required (whether or not the Premises shall have
been damaged by such fire or other casualty), Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination within
ninety (90) days after the date of such damage, in which event the Rent shall be
abated as of the date of such damage. In addition to the foregoing, if the
Premises or any part thereof shall be damaged by fire or other casualty such
that the reparation of such damage or casualty shall, in Landlord's reasonable
judgement, require more than two hundred forty (240) days to complete (subject
to extension for force majeure delays attributable to Tenant's or any of
Tenant's Representatives' acts or omissions), then either Tenant or Landlord may
terminate this Lease by notifying the other party of such election to terminate
this Lease within thirty (30) days after the date of Landlord's determination of
the extent of such damage, in which event the Rent shall be abated as of the
date of such damage. If neither party elects to terminate this Lease, and
provided insurance proceeds and any contributions from Tenant, if necessary, are
available to fully repair the damage, Landlord shall within one hundred twenty
(120) days after the date of such damage commence to repair and restore the
Buildings and shall proceed with reasonable diligence to restore the Buildings
(except that Landlord shall not be responsible for delays outside its control)
to substantially the same condition in which it was immediately prior to the
happening of the casualty; provided, Landlord shall not be required to rebuild,
repair, or replace any part of Tenant's furniture, furnishings, fixtures and/or
equipment removable by Tenant or any improvements, alterations or additions
installed by or for the benefit of Tenant under the provisions of this Lease.
Landlord shall not in any event be required to spend for such work an amount in
excess of the insurance proceeds (excluding any deductible) and any
contributions from Tenant, if necessary, actually received by Landlord as a
result of the fire or other casualty. Landlord shall not be liable for any
inconvenience or annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by the Tenant or loss of Tenant's personal
property resulting in any way from such damage or the repair thereof, except
that, subject to the provisions of the next sentence, Landlord shall allow
Tenant a fair diminution of Rent during the time and to the extent the Premises
are unfit for occupancy. Notwithstanding anything to the contrary contained
herein, if the Premises or any other portion of the Buildings be damaged by fire
or other casualty resulting from the intentional or negligent acts or omissions
of Tenant or any of Tenant's Representatives, (i) the Rent shall not be
diminished during the repair of such damage, (ii) Tenant shall not have any
right to terminate this Lease due to the occurrence of such casualty or damage,
and (iii) Tenant shall be liable to Landlord for the cost and expense of the
repair and restoration of all or any portion of the Buildings caused thereby
(including, without limitation, any deductible) to the extent such cost and
expense is not covered by insurance proceeds. In the event the holder of any
indebtedness secured by the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within thirty
(30) days after the date of notice to Tenant of any such event, whereupon all
rights and obligations shall cease and terminate hereunder except for those
obligations expressly intended to survive any such termination of this Lease.
Except as otherwise provided in this Section 27, Tenant hereby waives the
provisions of Sections 1932(2.), 1933(4.), 1941 and 1942 of the California Civil
Code.
28. CONDEMNATION: If twenty-five percent (25%) or more of the Premises is
condemned by eminent domain, inversely condemned or sold in lieu of condemnation
for any public or quasi-public use or purpose ("Condemned"), then Tenant or
Landlord may terminate this Lease as of the date when physical possession of the
Premises is taken and title vests in such condemning authority, and Rent shall
be adjusted to the date of termination. Tenant shall not because of such
condemnation assert any claim against Landlord or the condemning authority for
any compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate of
interest or other interest of Tenant. If neither party elects to terminate this
Lease, Landlord shall, if necessary, promptly proceed to restore the Premises or
the Buildings to substantially its same condition
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prior to such partial condemnation, allowing for the reasonable effects of such
partial condemnation, and a proportionate allowance shall be made to Tenant, as
solely determined by Landlord, for the Rent corresponding to the time during
which, and to the part of the Premises of which, Tenant is deprived on account
of such partial condemnation and restoration. Landlord shall not be required to
spend funds for restoration in excess of the amount received by Landlord as
compensation awarded.
29. ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS:
29.1 HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE: Prior to executing this
Lease, Tenant has completed, executed and delivered to Landlord Tenant's initial
Hazardous Materials Disclosure Certificate (the "Initial HazMat Certificate"), a
copy of which is attached hereto as Exhibit G and incorporated herein by this
reference. Tenant covenants, represents and warrants to Landlord that the
information on the Initial HazMat Certificate is true and correct and accurately
describes the use(s) of Hazardous Materials which will be made and/or used on
the Premises by Tenant. Tenant shall commencing with the date which is one year
from the Commencement Date and continuing every year thereafter, complete,
execute, and deliver to Landlord, a Hazardous Materials Disclosure Certificate
("the "HazMat Certificate") describing Tenant's present use of Hazardous
Materials on the Premises, and any other reasonably necessary documents as
requested by Landlord. The HazMat Certificate required hereunder shall be in
substantially the form as that which is attached hereto as Exhibit E.
29.2 DEFINITION OF HAZARDOUS MATERIALS: As used in this Lease, the term
Hazardous Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws; (b) petroleum, petroleum by
products, gasoline, diesel fuel, crude oil or any fraction thereof; (c) asbestos
and asbestos containing material, in any form, whether friable or non-friable;
(d) polychlorinated biphenyls; (e) radioactive materials; (f) lead and
lead-containing materials; (g) any other material, waste or substance displaying
toxic, reactive, ignitable or corrosive characteristics, as all such terms are
used in their broadest sense, and are defined or become defined by any
Environmental Law (defined below); or (h) any materials which cause or threatens
to cause a nuisance upon or waste to any portion of the Premises, the Buildings,
the Lot, the Park or any surrounding property; or poses or threatens to pose a
hazard to the health and safety of persons on the Premises or any surrounding
property.
29.3 PROHIBITION; ENVIRONMENTAL LAWS: Tenant shall not be entitled to
use nor store any Hazardous Materials on, in, or about the Premises, the
Buildings, the Lot and the Park, or any portion of the foregoing, without, in
each instance, obtaining Landlord's prior written consent thereto. If Landlord
consents to any such usage or storage, then Tenant shall be permitted to use
and/or store only those Hazardous Materials that are necessary for Tenant's
business and to the extent disclosed in the HazMat Certificate and as expressly
approved by Landlord in writing, provided that such usage and storage is only to
the extent of the quantities of Hazardous Materials as specified in the then
applicable HazMat Certificate as expressly approved by Landlord and provided
further that such usage and storage is in full compliance with any and all
local, state and federal environmental, health and/or safety-related laws,
statutes, orders, standards, courts' decisions, ordinances, rules and
regulations (as interpreted by judicial and administrative decisions), decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to Tenant or all or any portion of the Premises (collectively, the
"Environmental Laws"). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion. Tenant
shall not be entitled nor permitted to install any tanks under, on or about the
Premises for the storage of Hazardous Materials without the express written
consent of Landlord, which may be given or withheld in Landlord's sole
discretion. Landlord shall have the right at all times during the Term of this
Lease to (i) inspect the Premises, (ii) conduct tests and investigations to
determine whether Tenant is in compliance with the provisions of this Section
29, and (iii) request lists of all Hazardous Materials used, stored or otherwise
located on, under or about any portion of the Premises and/or the Common Areas.
The cost of all such inspections, tests and investigations shall be borne solely
by Tenant, if Landlord reasonably determines that Tenant or any of Tenant's
Representatives are directly or indirectly responsible in any manner for any
contamination revealed by such inspections, tests and investigations. The
aforementioned rights granted herein to Landlord and its representatives shall
not create (a) a duty on Landlord's part to inspect, test, investigate, monitor
or otherwise observe the Premises or the activities of Tenant and Tenant's
Representatives with respect to Hazardous Materials, including without
limitation, Tenant's operation, use and any remediation related thereto, or (b)
liability on the part of Landlord and its representatives for Tenant's use,
storage, disposal or remediation of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.
29.4 TENANT'S ENVIRONMENTAL OBLIGATIONS: Tenant shall give to Landlord
immediate verbal and follow-up written notice of any spills, releases,
discharges, disposals, emissions, migrations, removals
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or transportation of Hazardous Materials on, under or about any portion of the
Premises or in any Common Areas. Tenant, at its sole cost and expense, covenants
and warrants to promptly investigate, clean up, remove, restore and otherwise
remediate (including, without limitation, preparation of any feasibility studies
or reports and the performance of any and all closures) any spill, release,
discharge, disposal, emission, migration or transportation of Hazardous
Materials arising from or related to the intentional or negligent acts or
omissions of Tenant or Tenant's Representatives such that the affected portions
of the Park and any adjacent property are returned to the condition existing
prior to the appearance of such Hazardous Materials. Any such investigation,
clean up, removal, restoration and other remediation shall only be performed
after Tenant has obtained Landlord's prior written consent, which consent shall
not be unreasonably withheld so long as such actions would not potentially have
a material adverse long-term or short-term effect on any portion of the
Premises, the Buildings, the Lot or the Park. Notwithstanding the foregoing,
Tenant shall be entitled to respond immediately to an emergency without first
obtaining Landlord's prior written consent. Tenant, at its sole cost and
expense, shall conduct and perform, or cause to be conducted and performed, all
closures as required by any Environmental Laws or any agencies or other
governmental authorities having jurisdiction thereof. If Tenant fails to so
promptly investigate, clean up, remove, restore, provide closure or otherwise so
remediate, Landlord may, but without obligation to do so, take any and all steps
necessary to rectify the same and Tenant shall promptly reimburse Landlord, upon
demand, for all costs and expenses to Landlord of performing investigation,
clean up, removal, restoration, closure and remediation work. All such work
undertaken by Tenant, as required herein, shall be performed in such a manner so
as to enable Landlord to make full economic use of the Premises, the Buildings,
the Lot and the Park after the satisfactory completion of such work.
29.5 ENVIRONMENTAL INDEMNITY: In addition to Tenant's obligations as set
forth hereinabove, Tenant agrees to, and shall, protect, indemnify, defend (with
counsel acceptable to Landlord) and hold Landlord and the other Indemnitees
harmless from and against any and all claims, judgments, damages, penalties,
fines, liabilities, losses (including, without limitation, diminution in value
of any portion of the Premises, the Buildings, the Lot or the Park, damages for
the loss of or restriction on the use of rentable or usable space, and from any
adverse impact of Landlord's marketing of any space within the Buildings and/or
Park), suits, administrative proceedings and costs (including, but not limited
to, attorneys' and consultant fees and court costs) arising at any time during
or after the Term of this Lease in connection with or related to, directly or
indirectly, the use, presence, transportation, storage, disposal, migration,
removal, spill, release or discharge of Hazardous Materials on, in or about any
portion of the Premises, the Common Areas, the Buildings, the Lot or the Park as
a result (directly or indirectly) of the intentional or negligent acts or
omissions of Tenant or any of Tenant's Representatives. Neither the written
consent of Landlord to the presence, use or storage of Hazardous Materials in,
on, under or about any portion of the Premises, the Buildings, the Lot and/or
the Park, nor the strict compliance by Tenant with all Environmental Laws shall
excuse Tenant from its obligations of indemnification pursuant hereto. Tenant
shall not be relieved of its indemnification obligations under the provisions of
this Section 29.5 due to Landlord's status as either an "owner" or "operator"
under any Environmental Laws.
29.6 SURVIVAL: Tenant's obligations and liabilities pursuant to the
provisions of this Section 29 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Premises, the Buildings, the Lot and/or the Park is
not in compliance with the provisions of this Lease with respect to Hazardous
Materials, including without limitation all Environmental Laws at the expiration
or earlier termination of this Lease, then in Landlord's sole discretion,
Landlord may require Tenant to hold over possession of the Premises until Tenant
can surrender the Premises to Landlord in the condition in which the Premises
existed as of the Commencement Date and prior to the appearance of such
Hazardous Materials except for reasonable wear and tear, including without
limitation, the conduct or performance of any closures as required by any
Environmental Laws. The burden of proof hereunder shall be upon Tenant. For
purposes hereof, the term "reasonable wear and tear" shall not include any
deterioration in the condition or diminution of the value of any portion of the
Premises, the Buildings, the Lot and/or the Park in any manner whatsoever
related to directly, or indirectly, Hazardous Materials. Any such holdover by
Tenant will be with Landlord's consent, will not be terminable by Tenant in any
event or circumstance and will otherwise be subject to the provisions of Section
22 of this Lease.
30. FINANCIAL STATEMENTS: Tenant, for the reliance of Landlord, any lender
holding or anticipated to acquire a lien upon the Premises, the Buildings or the
Park or any portion thereof, or any prospective purchaser of the Buildings or
the Park or any portion thereof, within thirty (30) days after Landlord's
request therefor, but not more often than once annually so long as Tenant is not
in default of this Lease, shall deliver to Landlord the then current audited
financial statements of Tenant (including interim periods following the end of
the last fiscal year for which annual statements are available) which statements
shall be prepared or compiled by a certified public accountant and shall present
fairly the financial condition of Tenant at such dates and the result of its
operations and changes in its financial positions for the periods ended on such
dates. If an audited financial statement has not been prepared, Tenant shall
provide
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Landlord with an unaudited financial statement and/or such other information
certified by Tenant's Chief Financial Officer, the type and form of which are
acceptable to Landlord in Landlord's reasonable discretion, which reflects the
financial condition of Tenant. Any and all options granted to Tenant hereunder
shall be subject to and conditioned upon Landlord's reasonable approval of
Tenant's financial condition at the time of Tenant's exercise of any such
option.
31. GENERAL PROVISIONS:
31.1 TIME. Time is of the essence in this Lease and with respect to each
and all of its provisions in which performance is a factor.
31.2 SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
31.3 RECORDATION. Tenant shall not record this Lease or a short form
memorandum hereof without the prior written consent of the Landlord.
31.4 LANDLORD'S PERSONAL LIABILITY. The liability of Landlord (which,
for purposes of this Lease, shall include Landlord and the owner of the
Buildings if other than Landlord) to Tenant for any default by Landlord under
the terms of this Lease shall be limited to the actual interest of Landlord and
its present or future partners or members in the Premises or the Buildings, and
Tenant agrees to look solely to the Premises for satisfaction of any liability
and shall not look to other assets of Landlord nor seek any recourse against the
assets of the individual partners, members, directors, officers, shareholders,
agents or employees of Landlord (including without limitation, any property
management company of Landlord); it being intended that Landlord and the
individual partners, members, directors, officers, shareholders, agents and
employees of Landlord (including without limitation, any property management
company of Landlord) shall not be personally liable in any manner whatsoever for
any judgment or deficiency. The liability of Landlord under this Lease is
limited to its actual period of ownership of title to the Buildings, and
Landlord shall be automatically released from further performance under this
Lease upon transfer of Landlord's interest in the Premises or the Buildings.
31.5 SEPARABILITY. Any provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provision shall remain in full force and
effect.
31.6 CHOICE OF LAW. This Lease shall be governed by, and construed in
accordance with, the laws of the State of California.
31.7 ATTORNEYS' FEES. In the event any dispute between the parties
results in litigation or other proceeding, the prevailing party shall be
reimbursed by the party not prevailing for all reasonable costs and expenses,
including, without limitation, reasonable attorneys' and experts' fees and costs
incurred by the prevailing party in connection with such litigation or other
proceeding, and any appeal thereof. Such costs, expenses and fees shall be
included in and made a part of the judgment recovered by the prevailing party,
if any.
31.8 ENTIRE AGREEMENT. This Lease supersedes any prior agreements,
representations, negotiations or correspondence between the parties, and
contains the entire agreement of the parties on matters covered. No other
agreement, statement or promise made by any party, that is not in writing and
signed by all parties to this Lease, shall be binding.
31.9 WARRANTY OF AUTHORITY. On the date that Tenant executes this Lease,
Tenant shall deliver to Landlord an original certificate of status for Tenant
issued by the California Secretary of State or statement of partnership for
Tenant recorded in the county in which the Premises are located, as applicable,
and such other documents as Landlord may reasonably request with regard to the
lawful existence of Tenant. Each person executing this Lease on behalf of a
party represents and warrants that (1) such person is duly and validly
authorized to do so on behalf of the entity it purports to so bind, and (2) if
such party is a partnership, corporation or trustee, that such partnership,
corporation or trustee has full right and authority to enter into this Lease and
perform all of its obligations hereunder. Tenant hereby warrants that this Lease
is valid and binding upon Tenant and enforceable against Tenant in accordance
with its terms.
31.10 NOTICES. Any and all notices and demands required or permitted to
be given hereunder to Landlord shall be in writing and shall be sent: (a) by
United States mail, certified and postage prepaid; or (b) by personal delivery;
or (c) by overnight courier, addressed to Landlord at 6480 Weathers Place, Suite
245, San Diego, California 92121. Any and all notices and demands required or
permitted to be given
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hereunder to Tenant shall be in writing and shall be sent: (i) by United States
mail, certified and postage prepaid; or (ii) by personal delivery to any
employee or agent of Tenant over the age of eighteen (18) years of age; or (iii)
by overnight courier, all of which shall be addressed to Tenant at the Premises.
Notice and/or demand shall be deemed given upon the earlier of actual receipt or
the third day following deposit in the United States mail. Any notice or
requirement of service required by any statute or law now or hereafter in
effect, including, but not limited to, California Code of Civil Procedure
Sections 1161, 1161.1, and 1162 (including any amendments, supplements or
substitutions thereof), is hereby waived by Tenant.
31.11 JOINT AND SEVERAL. In the event of an assignment or subletting of
all or any portion of the Premises, if Tenant consists of more than one person
or entity, the obligations of all such persons or entities shall be joint and
several.
31.12 COVENANTS AND CONDITIONS. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
31.13 WAIVER OF JURY TRIAL. The parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way related to this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises, the Buildings or the Park, and/or any
claim of injury, loss or damage.
31.14 INTENTIONALLY OMITTED.
31.15 UNDERLINING. The use of underlining within the Lease is for
Landlord's reference purposes only and no other meaning or emphasis is intended
by this use, nor should any be inferred.
31.16 MERGER. The voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof by Landlord and Tenant, or a
termination of this Lease by Landlord for a material default by Tenant
hereunder, shall not work a merger, and, at the sole option of Landlord, (i)
shall terminate all or any existing subleases or subtenancies, or (ii) may
operate as an assignment to Landlord of any or all of such subleases or
subtenancies. Landlord's election of either or both of the foregoing options
shall be exercised by delivery by Landlord of written notice thereof to Tenant
and all known subtenants under any sublease.
32. SIGNS: All signs and graphics of every kind visible in or from public view
or corridors or the exterior of the Premises shall be subject to Landlord's
prior written approval and shall be subject to any applicable governmental laws,
ordinances, and regulations and in compliance with Landlord's sign criteria as
same may exist from time to time or as set forth in Exhibit H hereto and made a
part hereof. Tenant shall remove all such signs and graphics prior to the
termination of this Lease. Such installations and removals shall be made in a
manner as to avoid damage or defacement of the Premises; and Tenant shall repair
any damage or defacement, including without limitation, discoloration caused by
such installation or removal. Landlord shall have the right, at its option, to
deduct from the Security Deposit such sums as are reasonably necessary to remove
such signs, including, but not limited to, the costs and expenses associated
with any repairs necessitated by such removal. Notwithstanding the foregoing, in
no event shall any: (a) neon, flashing or moving sign(s) or (b) sign(s) which
shall interfere with the visibility of any sign, awning, canopy, advertising
matter, or decoration of any kind of any other business or occupant of the
Buildings or the Park be permitted hereunder. Tenant further agrees to maintain
any such sign, awning, canopy, advertising matter, lettering, decoration or
other thing as may be approved in good condition and repair at all times.
33. MORTGAGEE PROTECTION: Upon any default on the part of Landlord, Tenant will
give written notice by registered or certified mail to any beneficiary of a deed
of trust or mortgagee of a mortgage covering the Premises who has provided
Tenant with notice of their interest together with an address for receiving
notice, and shall offer such beneficiary or mortgagee a reasonable opportunity
to cure the default (which, in no event shall be less than ninety (90) days),
including time to obtain possession of the Premises by power of sale or a
judicial foreclosure, if such should prove necessary to effect a cure. If such
default cannot be cured within such time period, then such additional time as
may be necessary will be given to such beneficiary or mortgagee to effect such
cure so long as such beneficiary or mortgagee has commenced the cure within the
original time period and thereafter diligently pursues such cure to completion,
in which event this Lease shall not be terminated while such cure is being
diligently pursued. Tenant agrees that each lender to whom this Lease has been
assigned by Landlord is an express third party beneficiary hereof. Tenant shall
not make any prepayment of Rent more than one (1) month in advance without the
prior written consent of each such lender, except if Tenant is required to make
quarterly payments of Rent in advance pursuant to the provisions of Section 8
above. Tenant waives the
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collection of any deposit from such lender(s) or any purchaser at a foreclosure
sale of such lender(s)' deed of trust unless the lender(s) or such purchaser
shall have actually received and not refunded the deposit. Tenant agrees to make
all payments under this Lease to the lender with the most senior encumbrance
upon receiving a direction, in writing, to pay said amounts to such lender.
Tenant shall comply with such written direction to pay without determining
whether an event of default exists under such lender's loan to Landlord.
34. QUITCLAIM: Upon any termination of this Lease, Tenant shall, at Landlord's
request, execute, have acknowledged and deliver to Landlord a quitclaim deed of
Tenant's interest in and to the Premises. If Tenant fails to so deliver to
Landlord such a quitclaim deed, Tenant hereby agrees that Landlord shall have
the full authority and right to record such a quitclaim deed signed only by
Landlord and such quitclaim deed shall be deemed conclusive and binding upon
Tenant.
35. MODIFICATIONS FOR LENDER: If, in connection with obtaining financing for the
Premises or any portion thereof, Landlord's lender shall request reasonable
modification(s) to this Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto, provided such
modifications do not materially adversely affect Tenant's rights hereunder or
the use, occupancy or quiet enjoyment of Tenant hereunder.
36. WARRANTIES OF TENANT: Tenant hereby warrants and represents to Landlord, for
the express benefit of Landlord, that Tenant has undertaken a complete and
independent evaluation of the risks inherent in the execution of this Lease and
the operation of the Premises for the use permitted hereby, and that, based upon
said independent evaluation, Tenant has elected to enter into this Lease and
hereby assumes all risks with respect thereto. Tenant hereby further warrants
and represents to Landlord, for the express benefit of Landlord, that in
entering into this Lease, Tenant has not relied upon any statement, fact,
promise or representation (whether express or implied, written or oral) not
specifically set forth herein in writing and that any statement, fact, promise
or representation (whether express or implied, written or oral) made at any time
to Tenant, which is not expressly incorporated herein in writing, is hereby
waived by Tenant.
37. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Landlord and Tenant hereby
agree and acknowledge that the Premises, the Buildings and/or the Park may be
subject to the requirements of the Americans with Disabilities Act, a federal
law codified at 42 U.S.C. 12101 et seq, including, but not limited to Title III
thereof, all regulations and guidelines related thereto, together with any and
all laws, rules, regulations, ordinances, codes and statutes now or hereafter
enacted by local or state agencies having jurisdiction thereof, including all
requirements of Title 24 of the State of California, as the same may be in
effect on the date of this Lease and may be hereafter modified, amended or
supplemented (collectively, the "ADA"). Any Tenant Improvements to be
constructed hereunder shall be in compliance with the requirements of the ADA,
and all costs incurred for purposes of compliance therewith shall be a part of
and included in the costs of the Tenant Improvements. Tenant shall be solely
responsible for conducting its own independent investigation of this matter and
for ensuring that the design of all Tenant Improvements strictly comply with all
requirements of the ADA. Subject to reimbursement pursuant to Section 6 of the
Lease, if any barrier removal work or other work is required to the Buildings,
the Common Areas or the Park under the ADA, then such work shall be the
responsibility of Landlord; provided, if such work is required under the ADA as
a result of Tenant's use of the Premises or any work or alteration made to the
Premises by or on behalf of Tenant, then such work shall be performed by
Landlord at the sole cost and expense of Tenant. Except as otherwise expressly
provided in this provision, Tenant shall be responsible at its sole cost and
expense for fully and faithfully complying with all applicable requirements of
the ADA, including without limitation, not discriminating against any disabled
persons in the operation of Tenant's business in or about the Premises, and
offering or otherwise providing auxiliary aids and services as, and when,
required by the ADA. Within ten (10) days after receipt, Landlord and Tenant
shall advise the other party in writing, and provide the other with copies of
(as applicable), any notices alleging violation of the ADA relating to any
portion of the Premises or the Buildings; any claims made or threatened in
writing regarding noncompliance with the ADA and relating to any portion of the
Premises or the Buildings; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance with the ADA and
relating to any portion of the Premises or the Buildings. Tenant shall and
hereby agrees to protect, defend (with counsel acceptable to Landlord) and hold
Landlord and the other Indemnitees harmless and indemnify the Indemnitees from
and against all liabilities, damages, claims, losses, penalties, judgments,
charges and expenses (including reasonable attorneys' fees, costs of court and
expenses necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, Tenant's or Tenant's Representatives' violation or alleged
violation of the ADA.
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Tenant agrees that the obligations of Tenant herein shall survive the expiration
or earlier termination of this Lease.
38. BROKERAGE COMMISSION: Landlord and Tenant each represents and warrants for
the benefit of the other that it has had no dealings with any real estate
broker, agent or finder in connection with the Premises and/or the negotiation
of this Lease, except for the Broker(s) (as set forth on Page 1), and that it
knows of no other real estate broker, agent or finder who is or might be
entitled to a real estate brokerage commission or finder's fee in connection
with this Lease or otherwise based upon contacts between the claimant and
Tenant. Each party shall indemnify and hold harmless the other from and against
any and all liabilities or expenses arising out of claims made for a fee or
commission by any real estate broker, agent or finder in connection with the
Premises and this Lease other than Broker(s), if any, resulting from the actions
of the indemnifying party. Any real estate brokerage commission or finder's fee
payable to the Broker(s) in connection with this Lease shall only be payable and
applicable to the extent of the initial Term of the Lease and to the extent of
the Premises as same exist as of the date on which Tenant executes this Lease.
Unless expressly agreed to in writing by Landlord and Broker(s), no real estate
brokerage commission or finder's fee shall be owed to, or otherwise payable to,
the Broker(s) for any renewals or other extensions of the initial Term of this
Lease or for any additional space leased by Tenant other than the Premises as
same exists as of the date on which Tenant executes this Lease. Tenant further
represents and warrants to Landlord that Tenant will not receive (i) any portion
of any brokerage commission or finder's fee payable to the Broker(s) in
connection with this Lease or (ii) any other form of compensation or incentive
from the Broker(s) with respect to this Lease.
39. QUIET ENJOYMENT: Landlord covenants with Tenant, upon the paying of Rent and
observing and keeping the covenants, agreements and conditions of this Lease on
its part to be kept, and during the periods that Tenant is not otherwise in
default of any of the terms or provisions of this Lease, and subject to the
rights of any of Landlord's lenders, (i) that Tenant shall and may peaceably and
quietly hold, occupy and enjoy the Premises and the Common Areas during the Term
of this Lease, and (ii) neither Landlord, nor any successor or assign of
Landlord, shall disturb Tenant's occupancy or enjoyment of the Premises and the
Common Areas.
40. LANDLORD'S ABILITY TO PERFORM TENANT'S UNPERFORMED OBLIGATIONS:
Notwithstanding anything to the contrary contained in this Lease, if Tenant
shall fail to perform any of the terms, provisions, covenants or conditions to
be performed or complied with by Tenant pursuant to this Lease, and/or if the
failure of Tenant relates to a matter which in Landlord's judgment reasonably
exercised is of an emergency nature and such failure shall remain uncured for a
period of time commensurate with such emergency, then Landlord may, at
Landlord's option without any obligation to do so, and in its sole discretion as
to the necessity therefor, perform any such term, provision, covenant, or
condition, or make any such payment and Landlord by reason of so doing shall not
be liable or responsible for any loss or damage thereby sustained by Tenant or
anyone holding under or through Tenant. If Landlord so performs any of Tenant's
obligations hereunder, the full amount of the cost and expense entailed or the
payment so made or the amount of the loss so sustained shall immediately be
owing by Tenant to Landlord, and Tenant shall promptly pay to Landlord upon
demand, as Additional Rent, the full amount thereof with interest thereon from
the date of payment at the greater of (i) ten percent (10%) per annum, or (ii)
the highest rate permitted by applicable law and Enforcement Expenses.
IN WITNESS WHEREOF, this Lease is executed by the parties as of the
Lease Date referenced on Page 1 of this Lease.
TENANT:
PHASE METRICS, INC.,
A DELAWARE CORPORATION
By:_________________________
Its:________________________
Date:_______________________
By: ________________________
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Its:________________________
Date:_______________________
LANDLORD:
LEGACY-RECP SORRENTO OPCO, LLC
A DELAWARE LIMITED LIABILITY COMPANY
By: Legacy Partners Commercial, Inc.
as Manager and Agent of Landlord
By: _________________________________
Terry Thompson, Vice President
Date:____________________________________
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EXHIBIT A - PREMISES
This exhibit, entitled "Premises", is and shall constitute EXHIBIT A to that
certain Lease Agreement dated DECEMBER 16, 1998 (the "Lease"), by and between
LEGACY-RECP SORRENTO OPCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY
("Landlord") and PHASE METRICS, INC., A DELAWARE CORPORATION ("Tenant") for the
leasing of certain premises at 10260 (ALL) AND 10220 (SUITE MS) SORRENTO VALLEY
ROAD, SAN DIEGO, CALIFORNIA (the "Premises").
The Premises consist of the rentable square footage of space specified in the
Base Lease Information and has the address specified in the Base Lease
Information. The Premises are a part of and are contained in the Buildings
specified in the Base Lease Information. The cross-hatched area depicts the
Premises within the Buildings:
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EXHIBIT B TO LEASE AGREEMENT
TENANT IMPROVEMENTS
This exhibit, entitled "Tenant Improvements", is and shall constitute EXHIBIT B
to that certain Lease Agreement dated December 16, 1998 (the "Lease"), by and
between LEGACY-RECP SORRENTO OPCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY
("Landlord") and PHASE METRICS, INC., A DELAWARE CORPORATION ("Tenant") for the
leasing of certain premises located at 10260 (ALL) AND 10220 (SUITE MS),
SORRENTO VALLEY ROAD, SAN DIEGO, CALIFORNIA (the "Premises"). The terms,
conditions and provisions of this EXHIBIT B are hereby incorporated into and are
made a part of the Lease. Any capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to such terms as set forth in the
Lease:
1. Tenant Improvements. Subject to the conditions set forth below, Landlord
agrees to construct and install certain improvements ("Tenant Improvements") in
the Buildings of which the Premises are a part in accordance with Section 2
below and pursuant to the terms of this EXHIBIT B.
2. Definition. "Tenant Improvements" as used in this Lease shall include only
those interior portions of the Buildings which are described below. "Tenant
Improvements" shall specifically not include any alterations, additions or
improvements installed or constructed by Tenant, and any of Tenant's trade
fixtures, equipment, furniture, furnishings, telephone equipment or other
personal property (collectively, "Personal Property"). The Tenant Improvements
shall include only those interior improvements to be made to the Premises as
specified in this Section 2 below (collectively, the "Initial Plans"). Such
work, as set forth below and as shown in the Initial Plans shall be hereinafter
referred to as the "Work". Landlord shall not be obligated to pay for any
improvements which are not expressly set forth herein below. The Tenant
Improvements shall consist of the following Work:
(a) Fill in doors at Machine Shop within 10220 Building to
fully demise it from the remainder of the Building.
(b) Provide dedicated electrical meter for Machine Shop
within 10220 Building.
(c) Remove windows on wall demising Suite MS from the
remainder of the 10220 Building, and patch with drywall.
3. Tenant Improvement Costs. The Tenant Improvements' cost (Tenant Improvement
Costs") shall mean and include any and all costs and expenses of the Work,
including, without limitation, all of the following:
(a) All costs of preliminary space planning and final architectural and
engineering plans and specifications (including, without limitation, the scope
of work, all plans and specifications, the Initial Plans and the Final Drawings)
for the Tenant Improvements, and architectural fees, engineering costs and fees,
and other costs associated with completion of said plans;
(b) All costs of obtaining building permits and other necessary
authorizations and approvals from the City of San Diego and other applicable
jurisdictions;
(c) All costs of interior design and finish schedule plans and
specifications including as-built drawings;
(d) All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee for overhead and profit, the cost of all on-site
supervisory and administrative staff, office, equipment and temporary services
rendered by Landlord's consultants and the General Contractor in connection with
construction of the Tenant Improvements, and all labor (including overtime) and
materials constituting the Work;
(e) All fees payable to the General Contractor, architect and
Landlord's engineering firm if they are required by Tenant to redesign any
portion of the Tenant Improvements following Tenant's approval of the Final
Drawings; and
(f) A construction management fee payable to Landlord in the amount of
five percent (5%) of all direct and indirect costs of procuring, constructing
and installing the Tenant Improvements in the Premises and the Buildings.
4. Building Standard Work. Landlord shall provide that the Tenant Improvements
be at least equal, in quality, to Landlord's building standard materials,
quantities and procedures then in use by Landlord ("Building Standards")
attached hereto as Exhibit B-1, and shall consist of improvements which are
generic in nature.
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5. Landlord shall not be obligated to pay for any Tenant Improvements which are
not specifically set forth in Section 2 above or in Exhibit B-2.
6. Lease Provisions; Conflict. The terms and provisions of the Lease, insofar as
they are applicable, in whole or in part, to this EXHIBIT B, are hereby
incorporated herein by reference, and specifically including all of the
provisions of Section 31 of the Lease. In the event of any conflict between the
terms of the Lease and this EXHIBIT B, the terms of this EXHIBIT B shall
prevail.
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EXHIBIT B-1
BUILDING STANDARDS
OFFICE AREA
DEMISING PARTITION AND CORRIDOR WALLS:
A. 6" 20-gauge metal studs at 24" O.C. (or as required by code for span)
framed full height from finish floor to structure above
B. One (1) layer 5/8" drywall Type "X" both sides of wall, fire taped only
INTERIOR PARTITIONS:
A. 3 5/8" 25-gauge metal studs at 24" O.C. to bottom of T-bar ceiling grid
approximately 9' - 0' high
B. Top track to be pre-formed slotted aluminum taped in
C. One (1) layer 5/8" drywall both sides of wall, taped texture ready for
paint
D. 3 5/8" metal studs including all lateral bracing as required by code
PERIMETER DRYWALL (AT OFFICE AREAS):
A. One (1) layer 5/8" Type "X" drywall taped texture ready for paint
B. Provide alternate to texture concrete in lieu of furring walls
COLUMN FURRING:
A. Furring channel all sides
B. One (1) layer 5/8" drywall taped texture and ready for paint
C. Provide deductive alternate for texturing columns where there are no
pipes to furred out
ACOUSTICAL CEILINGS:
A. 2' x 4' standard white T-bar grid system as manufactured by Chicago
Metallic or equal
B. 2' x 4' x 5/8" white, fissured, non-directional acoustical tile to be
Cortega as manufactured by Armstrong or equal
PAINTING:
A. Sheetrock walls to receive two (2) coats of interior latex paint as
manufactured by Kelly Moore or equal. Some portions of second coat to
be single accent color
B. Provide a deductive alternate for not painting warehouse walls
WINDOW COVERING:
A. 1" aluminum mini-blinds as manufactured by Levelor or equal, color to
be selected by Legacy Partners
B. Blinds to be sized to fit window module
VCT:
VCT to be 1/8" x 12" x 12" as manufactured by Armstrong - Excelon Series or
equal
LIGHT FIXTURES:
2' x 4' T-bar lay in 3-tube energy efficient fixture with cool white
fluorescent tubes with prismatic acrylic lens as manufactured by Lithonia
or equal
LIGHT SWITCHES:
A. Double switching as required by Title 24
B. Switch assembly to be Leviton, color - Ivory
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<PAGE> 30
ELECTRICAL OUTLET:
A. 110-v duplex outlet in demising or interior partitions only, as
manufactured by Leviton, color to be Ivory
B. Eight (8) outlets per circuit, spacing to meet code (2 per office)
C. Transformers to be a minimum of 20% or over required capacity
D. Contractors to inspect electric room and to include all necessary
metering costs
E. No aluminum wiring is acceptable
TELEPHONE OUTLET:
A. One (1) single outlet box in wall with pullwire from outlet box to area
above T-bar ceiling per office
B. Cover plate for phone outlets to be included
FIRE SPRINKLERS:
As required by fire codes
TOPSET BASE:
A. 4" rubber base as manufactured by Burke or equal, standard colors only
B. 4" rubber base at VCT areas
TOILET AREAS:
Wet walls to receive marlite up to 48". Floors to receive sheetvinyl and
cove base as required by code
CARPET:
Minimum 30 ounce, commercial grade, level loop, UM44-C. Type 1 Class 1.
100% continuous filament. 5-year wear guarantee. Glue down, no pad.
WOOD DOORS:
Shall be 3'-0" x 7'-0" x 1 3/4" (unless otherwise specified) solid core,
prefinished birch "Cal-Wood" B-3 or equal if approved by owner
DOOR FRAMES:
Shall be ACI or equal, 3 3/4" or 4 7/8" throat, aluminum, dark bronze
anodized, snap-on trim
HARDWARE:
Shall be "Schlage", a lever type "Levon" D series, dark bronze 613 finish,
2 3/4" backset. Closers (where required) shall be Duro X PA X SN-1
INSULATION:
By Title 24 insulation
PLUMBING:
A. Shall comply with all local codes and handicapped code requirements.
Fixtures shall be either "American Standard", "Koher" or "Norris". All
toilet accessories and grab bars shall be "Bobrick" or equal and
approved by owner
B. Plumbing bid shall include 5 gallon minimum, or insta hot with mixer
valve electric water heater
TOILET PARTITIONS:
Shall be as manufactured by Fiat, global or equal if approved by owner.
Color shall be chosen by tenant
4
<PAGE> 31
HVAC:
Five (5) year warranty provided on all HVAC compressor units. All
penetrations and sleeper supports to be hot mopped to LPC standard. Provide
alternate price for electric heat pumps at conditioned spaces. Provide time
overlay switch at compressors.
WAREHOUSE AREAS:
Floor - sealed concrete
Fire Extinguishers - 2A 10 BC surface mount by code x by S.F.
Lighting - 1x8 strip lighting single tube chain hung 25 ft.
Draft stops - by code UBC 198 Edition
Service electrical outlets - HVAC or heaters at tenant cost (400 W metal halide
lighting are acceptable in lieu of strip lighting at warehouse minimum 15 F.C.)
5
<PAGE> 32
EXHIBIT C TO LEASE AGREEMENT
RULES & REGULATIONS
This exhibit, entitled "Rules & Regulations", is and shall constitute EXHIBIT C
to that certain Lease Agreement dated December 16, 1998 (the "Lease"), by and
between LEGACY-RECP SORRENTO OPCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY
("Landlord") and PHASE METRICS, INC., A DELAWARE CORPORATION ("Tenant") for the
leasing of certain premises located at 10260 (ALL) AND 10220 (SUITE MS),
SORRENTO VALLEY ROAD, SAN DIEGO, CALIFORNIA (the "Premises"). The terms,
conditions and provisions of this EXHIBIT C are hereby incorporated into and are
made a part of the Lease. Any capitalized terms used herein and not otherwise
defined herein shall have the meaning ascribed to such terms as set forth in the
Lease:
1. No advertisement, picture or sign of any sort shall be displayed on or
outside the Premises or the Buildings without the prior written consent
of Landlord. Landlord shall have the right to remove any such
unapproved item without notice and at Tenant's expense.
2. Tenant shall not regularly park motor vehicles in designated parking
areas after the conclusion of normal daily business activity, except
for occasional periods of up to four (4) consecutive nights.
3. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord without the prior written consent of
Landlord.
4. All window coverings installed by Tenant and visible from the outside
of the Buildings require the prior written approval of Landlord.
5. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials on
or around the Premises, the Buildings or the Park.
6. Tenant may install locks on any door at the Premises without the prior
consent of Landlord so long as Tenant provides a key for said lock to
Landlord.
7. Tenant agrees not to make any duplicate keys without the prior consent
of Landlord.
8. Tenant shall park motor vehicles in those general parking areas as
designated by Landlord except for loading and unloading. During those
periods of loading and unloading, Tenant shall not unreasonably
interfere with traffic flow within the Park and loading and unloading
areas of other tenants.
9. Tenant shall not disturb, solicit or canvas any occupant of the
Buildings or Park and shall cooperate to prevent same.
10. No person shall go on the roof without Landlord's permission.
11. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of
the Buildings, to such a degree as to be objectionable to Landlord or
other Tenants, shall be placed and maintained by Tenant, at Tenant's
expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.
12. All goods, including material used to store goods, delivered to the
Premises of Tenant shall be immediately moved into the Premises and
shall not be left in parking or receiving areas overnight.
13. Tractor trailers which must be unhooked or parked with dolly wheels
beyond the concrete loading areas must use steel plates or wood blocks
under the dolly wheels to prevent damage to the asphalt paving
surfaces. No parking or storing of such trailers will be permitted in
the auto parking areas of the Park or on streets adjacent thereto.
14. Forklifts which operate on asphalt paving areas shall not have solid
rubber tires and shall only use tires that do not damage the asphalt.
15. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable
receptacles stored behind screened enclosures at locations approved by
Landlord.
16. Tenant shall not store or permit the storage or placement of goods, or
merchandise or pallets or equipment of any sort in or around the
Premises, the Buildings, the Park or any of the Common Areas of the
foregoing. No displays or sales of merchandise shall be allowed in the
parking lots or other Common Areas.
17. Tenant shall not permit any animals, including, but not limited to, any
household pets, to be brought or kept in or about the Premises, the
Buildings, the Park or any of the Common Areas of the foregoing.
18. Tenant shall not permit any motor vehicles to be washed on any portion
of the Premises or in the Common Areas of the Park, nor shall Tenant
permit mechanical work or maintenance of motor vehicles to be performed
on any portion of the Premises or in the Common Areas of the Park.
<PAGE> 33
EXHIBIT E
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Lessor (identified below) to evaluate and finalize a lease agreement
with you as lessee. After a lease agreement is signed by you and the Lessor (the
"Lease Agreement"), on an annual basis in accordance with the provisions of
Section 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Lessor subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Lessor to defend itself or its lenders, partners or
representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Lessor: Legacy Partners Commercial, Inc.
6480 Weathers Place, Suite 245
San Diego, California 92121
Phone: (619) 453-4800
Name of (Prospective) Lessee:__________________________________
Mailing Address:________________________________________________________________
________________________________________________________________________________
Contact Person, Title and Telephone Number(s):__________________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):____________________________________________________________
Address of (Prospective) Premises:______________________________________________
Length of (Prospective) initial Term:___________________________________________
________________________________________________________________________________
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products
processed, manufactured or assembled services and activities to be
provided or otherwise conducted. Existing lessees should describe any
proposed changes to on-going operations.
_______________________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or
disposed of in, on or about the Premises? Existing lessees
should describe any Hazardous Materials which continue to be
used, generated, stored or disposed of in, on or about the
Premises.
Wastes Yes ? No ?
Chemical Products Yes ? No ?
Other Yes ? No ?
If Yes is marked, please explain:_____________________________
______________________________________________________________
______________________________________________________________
If Yes is marked in Section 2.1, attach a list of any
Hazardous Materials to be used, generated, stored or disposed
of in, on or about the Premises, including the applicable
hazard class and an estimate of the quantities of such
Hazardous Materials at any given time; estimated annual
throughput; the proposed location(s) and method of storage
(excluding nominal amounts of ordinary household cleaners and
janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method
of disposal for each Hazardous Material, including, the
estimated frequency, and the proposed contractors or
subcontractors. Existing lessees should attach a list setting
forth the information requested above and such list should
include actual data from on-going operations and the
identification of any variations in such information from the
prior year's certificate.
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<PAGE> 34
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel,
petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? Existing lessees should
describe any such actual or proposed activities.
Yes ? No ?
If yes, please explain:_______________________________________
______________________________________________________________
______________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator
I.D. Number? Existing lessees should describe any additional
identification numbers issued since the previous certificate.
Yes ? No ?
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing lessees should describe
any new reports filed.
Yes ? No ?
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
________ storm drain? ______sewer?
________ surface water? ______no wastewater or other
wastes discharged.
Existing lessees should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
______________________________________________________________
______________________________________________________________
5.2 Will any such wastewater or waste be treated before discharge?
Yes ? No ?
If yes, describe the type of treatment proposed to be
conducted. Existing lessees should describe the actual
treatment conducted.
______________________________________________________________
______________________________________________________________
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be
used in your company's operations in, on or about the Premises
that will discharge into the air; and will such air emissions
be monitored? Existing lessees should indicate whether or not
there are any such air filtration systems or stacks in use in,
on or about the Premises which discharge into the air and
whether such air emissions are being monitored.
Yes ? No ?
If yes, please describe:______________________________________
______________________________________________________________
______________________________________________________________
6.2 Do you propose to operate any of the following types of
equipment, or any other equipment requiring an air emissions
permit? Existing lessees should specify any such equipment
being operated in, on or about the Premises.
______Spray booth(s) ______Incinerator(s)
______Dip tank(s) ______Other (Please describe)
______Drying oven(s) ______No Equipment Requiring Air
Permits
If yes, please describe:______________________________________
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<PAGE> 35
______________________________________________________________
______________________________________________________________
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan")
pursuant to Fire Department or other governmental or
regulatory agencies' requirements? Existing lessees should
indicate whether or not a Management Plan is required and has
been prepared.
Yes ? No ?
If yes, attach a copy of the Management Plan. Existing lessees
should attach a copy of any required updates to the Management
Plan.
7.2 Are any of the Hazardous Materials, and in particular
chemicals, proposed to be used in your operations in, on or
about the Premises regulated under Proposition 65? Existing
lessees should indicate whether or not there are any new
Hazardous Materials being so used which are regulated under
Proposition 65.
Yes ? No ?
If yes, please explain:_______________________________________
______________________________________________________________
______________________________________________________________
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has
your company ever been subject to any agency enforcement
actions, administrative orders, or consent decrees or has your
company received requests for information, notice or demand
letters, or any other inquiries regarding its operations?
Existing lessees should indicate whether or not any such
actions, orders or decrees have been, or are in the process of
being, undertaken or if any such requests have been received.
Yes ? No ?
If yes, describe the actions, orders or decrees and any
continuing compliance obligations imposed as a result of these
actions, orders or decrees and also describe any requests,
notices or demands, and attach a copy of all such documents.
Existing lessees should describe and attach a copy of any new
actions, orders, decrees, requests, notices or demands not
already delivered to Lessor pursuant to the provisions of
Section 29 of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
______________________________________________________________
8.2 Have there ever been, or are there now pending, any lawsuits
against your company regarding any environmental or health and
safety concerns?
Yes ? No ?
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other
documents related thereto as requested by Lessor. Existing
lessees should describe and attach a copy of any new
complaint(s), cross-complaint(s), pleadings and other related
documents not already delivered to Lessor pursuant to the
provisions of Section 29 of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
______________________________________________________________
8.3 Have there been any problems or complaints from adjacent
tenants, owners or other neighbors at your company's current
facility with regard to environmental or health and safety
concerns? Existing lessees should indicate whether or not
there have been any such problems or complaints from adjacent
tenants, owners or other neighbors at, about or near the
Premises.
Yes ? No ?
If yes, please describe. Existing lessees should describe any
such problems or complaints not already disclosed to Lessor
under the provisions of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
3
<PAGE> 36
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses
including a Transporter Permit number issued to your company
with respect to its proposed operations in, on or about the
Premises, including, without limitation, any wastewater
discharge permits, air emissions permits, and use permits or
approvals. Existing lessees should attach copies of any new
permits and licenses as well as any renewals of permits or
licenses previously issued.
The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Lessor in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 29 of the Lease Agreement; and (C) that
Lessee shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Lessor's receipt and/or approval of such certificate. Lessee
further agrees that none of the following described acts or events shall be
construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Lessee from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Lessee's indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Lessor, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Lessor to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Lessee is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Lessor and/or Lessor's acceptance of such
certificate, (ii) Lessor's review and approval of such certificate, (iii)
Lessor's failure to obtain such certificate from Lessee at any time, or (iv)
Lessor's actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Lessee or Lessee's Representatives. Notwithstanding the
foregoing or anything to the contrary contained herein, the undersigned
acknowledges and agrees that Lessor and its partners, lenders and
representatives may, and will, rely upon the statements, representations,
warranties, and certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof throughout the
term, and any renewals thereof, of the Lease Agreement.
I (print name) ____________________, acting with full authority to bind the
(proposed) Lessee and on behalf of the (proposed) Lessee, certify, represent and
warrant that the information contained in this certificate is true and correct.
TENANT
By:_________________________
Title:______________________
Date:_______________________
4
<PAGE> 37
EXHIBIT F
FIRST AMENDMENT TO LEASE AGREEMENT
CHANGE OF COMMENCEMENT DATE
This First Amendment to Lease Agreement (the "Amendment") is made and entered
into to be effective as of ___________________, by and between
____________________________ ("LANDLORD"), AND ________________________
("TENANT"), with reference to the following facts:
RECITALS
A. Landlord and Tenant have entered into that certain Lease Agreement dated
___________ (the "Lease"), for the leasing of certain premises containing
approximately __________ rentable square feet of space located at
____________________________, California (the "Premises") as such Premises
are more fully described in the Lease.
B. Landlord and Tenant wish to amend the Commencement Date of the Lease.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. Recitals: Landlord and Tenant agree that the above recitals are true
and correct.
2. The Commencement Date of the Lease shall be ________________________.
3. The last day of the Term of the Lease (the "Expiration Date") shall be
______________.
4. The dates on which the Base Rent will be adjusted are:
for the period _________ to ________ the monthly Base Rent shall be
$_____________;
for the period _________ to ________ the monthly BaseRent shall be
$_____________;
and for the period _________ to________ the monthly Base Rent shall
be $_____________.
5. Effect of Amendment: Except as modified herein, the terms and
conditions of the Lease shall remain unmodified and continue in full
force and effect. In the event of any conflict between the terms and
conditions of the Lease and this Amendment, the terms and conditions
of this Amendment shall prevail.
6. Definitions: Unless otherwise defined in this Amendment, all terms not
defined in this Amendment shall have the meaning set forth in the
Lease.
7. Authority: Subject to the provisions of the Lease, this Amendment
shall be binding upon and inure to the benefit of the parties hereto,
their respective heirs, legal representatives, successors and assigns.
Each party hereto and the persons signing below warrant that the
person signing below on such party's behalf is authorized to do so and
to bind such party to the terms of this Amendment.
8. The terms and provisions of the Lease are hereby incorporated in this
Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year first above written.
TENANT:
PHASE METRICS, INC.,
A DELAWARE CORPORATION
By:_______________________________
For:______________________________
Date:_____________________________
By:_______________________________
1
<PAGE> 38
For:_______________________
Date:______________________
LANDLORD:
LEGACY-RECP SORRENTO OPCO, LLC
A DELAWARE LIMITED LIABILITY COMPANY
By: Legacy Partners Commercial, Inc.
As Manager and Agent of Landlord
By: _________________________________
Terry Thompson, Vice President
Date: _________________________________
2
<PAGE> 39
EXHIBIT G (TENANT/LANDLORD)
TENANT'S INITIAL HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as tenant. After a lease agreement is signed by you and the Landlord
(the "Lease Agreement"), on an annual basis in accordance with the provisions of
Section 29 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Landlord: Legacy Partners Commercial, Inc.
6480 Weathers Place, Suite 245
San Diego, California 92121
Phone: (619) 453-4800
Name of (Prospective) Tenant:___________________________________________________
Mailing Address:________________________________________________________________
________________________________________________________________________________
Contact Person, Title and Telephone Number(s):__________________________________
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):____________________________________________________________
Address of (Prospective) Premises:______________________________________________
Length of (Prospective) initial Term:___________________________________________
________________________________________________________________________________
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products
processed, manufactured or assembled services and activities to be
provided or otherwise conducted. Existing tenants should describe any
proposed changes to on-going operations.
______________________________________________________________
______________________________________________________________
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used, generated, stored or
disposed of in, on or about the Premises? Existing tenants
should describe any Hazardous Materials which continue to be
used, generated, stored or disposed of in, on or about the
Premises.
Wastes Yes ? No ?
Chemical Products Yes ? No ?
Other Yes ? No ?
If Yes is marked, please explain:_____________________________
______________________________________________________________
______________________________________________________________
2.2 If Yes is marked in Section 2.1, attach a list of any
Hazardous Materials to be used, generated, stored or disposed
of in, on or about the Premises, including the applicable
hazard class and an estimate of the quantities of such
Hazardous Materials at any given time; estimated annual
throughput; the proposed location(s) and method of storage
(excluding nominal amounts of ordinary household cleaners and
janitorial supplies which are not regulated by any
Environmental Laws); and the proposed location(s) and method
of disposal for each Hazardous Material, including, the
estimated frequency, and the proposed contractors or
subcontractors. Existing tenants should attach a list setting
forth the
1
<PAGE> 40
information requested above and such list should include
actual data from on-going operations and the identification of
any variations in such information from the prior year's
certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline, diesel,
petroleum, or other Hazardous Materials in tanks or sumps
proposed in, on or about the Premises? Existing tenants should
describe any such actual or proposed activities.
Yes ? No ?
If yes, please explain:_______________________________________
______________________________________________________________
______________________________________________________________
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste Generator
I.D. Number? Existing tenants should describe any additional
identification numbers issued since the previous certificate.
Yes ? No ?
4.2 Has your company filed a biennial or quarterly reports as a
hazardous waste generator? Existing tenants should describe
any new reports filed.
Yes ? No ?
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
_______storm drain? _______sewer?
_______surface water? _______no wastewater or other
wastes discharged.
Existing tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
______________________________________________________________
______________________________________________________________
5.2 Will any such wastewater or waste be treated before discharge?
Yes ? No ?
If yes, describe the type of treatment proposed to be
conducted. Existing tenants should describe the actual
treatment conducted.
______________________________________________________________
______________________________________________________________
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to be
used in your company's operations in, on or about the Premises
that will discharge into the air; and will such air emissions
be monitored? Existing tenants should indicate whether or not
there are any such air filtration systems or stacks in use in,
on or about the Premises which discharge into the air and
whether such air emissions are being monitored.
Yes ? No ?
If yes, please describe:______________________________________
______________________________________________________________
______________________________________________________________
6.2 Do you propose to operate any of the following types of
equipment, or any other equipment requiring an air emissions
permit? Existing tenants should specify any such equipment
being operated in, on or about the Premises.
_______Spray booth(s) _______Incinerator(s)
2
<PAGE> 41
_______Dip tank(s) _______Other (Please describe)
_______Drying oven(s) _______No Equipment Requiring Air
Permits
If yes, please describe: _____________________________________
______________________________________________________________
______________________________________________________________
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to prepare a
Hazardous Materials management plan ("Management Plan")
pursuant to Fire Department or other governmental or
regulatory agencies' requirements? Existing tenants should
indicate whether or not a Management Plan is required and has
been prepared.
Yes ? No ?
If yes, attach a copy of the Management Plan. Existing tenants
should attach a copy of any required updates to the Management
Plan.
7.2 Are any of the Hazardous Materials, and in particular
chemicals, proposed to be used in your operations in, on or
about the Premises regulated under Proposition 65? Existing
tenants should indicate whether or not there are any new
Hazardous Materials being so used which are regulated under
Proposition 65.
Yes ? No ?
If yes, please explain:_______________________________________
______________________________________________________________
______________________________________________________________
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental Laws, has
your company ever been subject to any agency enforcement
actions, administrative orders, or consent decrees or has your
company received requests for information, notice or demand
letters, or any other inquiries regarding its operations?
Existing tenants should indicate whether or not any such
actions, orders or decrees have been, or are in the process of
being, undertaken or if any such requests have been received.
Yes ? No ?
If yes, describe the actions, orders or decrees and any
continuing compliance obligations imposed as a result of these
actions, orders or decrees and also describe any requests,
notices or demands, and attach a copy of all such documents.
Existing tenants should describe and attach a copy of any new
actions, orders, decrees, requests, notices or demands not
already delivered to Landlord pursuant to the provisions of
Section 29 of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
______________________________________________________________
8.2 Have there ever been, or are there now pending, any lawsuits
against your company regarding any environmental or health and
safety concerns?
Yes ? No ?
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and all other
documents related thereto as requested by Landlord. Existing
tenants should describe and attach a copy of any new
complaint(s), cross-complaint(s), pleadings and other related
documents not already delivered to Landlord pursuant to the
provisions of Section 29 of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
______________________________________________________________
8.3 Have there been any problems or complaints from adjacent
tenants, owners or other neighbors at your company's current
facility with regard to environmental or health and safety
concerns? Existing tenants should indicate whether or not
there have been any such problems or complaints from adjacent
tenants, owners or other neighbors at, about or near the
Premises.
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Yes ? No ?
If yes, please describe. Existing tenants should describe any
such problems or complaints not already disclosed to Landlord
under the provisions of the signed Lease Agreement.
______________________________________________________________
______________________________________________________________
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and licenses
including a Transporter Permit number issued to your company
with respect to its proposed operations in, on or about the
Premises, including, without limitation, any wastewater
discharge permits, air emissions permits, and use permits or
approvals. Existing tenants should attach copies of any new
permits and licenses as well as any renewals of permits or
licenses previously issued.
The undersigned hereby acknowledges and agrees that (A) this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Landlord in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit; (B) that this Hazardous
Materials Disclosure Certificate is being delivered in accordance with, and as
required by, the provisions of Section 29 of the Lease Agreement; and (C) that
Tenant shall have and retain full and complete responsibility and liability with
respect to any of the Hazardous Materials disclosed in the HazMat Certificate
notwithstanding Landlord's/Tenant's receipt and/or approval of such certificate.
Tenant further agrees that none of the following described acts or events shall
be construed or otherwise interpreted as either (a) excusing, diminishing or
otherwise limiting Tenant from the requirement to fully and faithfully perform
its obligations under the Lease with respect to Hazardous Materials, including,
without limitation, Tenant's indemnification of the Indemnitees and compliance
with all Environmental Laws, or (b) imposing upon Landlord, directly or
indirectly, any duty or liability with respect to any such Hazardous Materials,
including, without limitation, any duty on Landlord to investigate or otherwise
verify the accuracy of the representations and statements made therein or to
ensure that Tenant is in compliance with all Environmental Laws; (i) the
delivery of such certificate to Landlord and/or Landlord's acceptance of such
certificate, (ii) Landlord's review and approval of such certificate, (iii)
Landlord's failure to obtain such certificate from Tenant at any time, or (iv)
Landlord's actual or constructive knowledge of the types and quantities of
Hazardous Materials being used, stored, generated, disposed of or transported on
or about the Premises by Tenant or Tenant's Representatives. Notwithstanding the
foregoing or anything to the contrary contained herein, the undersigned
acknowledges and agrees that Landlord and its partners, lenders and
representatives may, and will, rely upon the statements, representations,
warranties, and certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof throughout the
term, and any renewals thereof, of the Lease Agreement.
I (print name)_______________________________________, acting with full
authority to bind the (proposed) Tenant and on behalf of the (proposed) Tenant,
certify, represent and warrant that the information contained in this
certificate is true and correct.
TENANT:
Phase Metrics, Inc.,
a Delaware Corporation
By:_________________________________
Title:______________________________
Date:_______________________________
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EXHIBIT H
SIGN CRITERIA
Tenant shall also be entitled to display its business name on a sign to be
mounted on the fascia of 10260 Sorrento Valley Road at a location to be approved
by Landlord. All aspects of said signage (including, but not limited to, size,
font, location, etc.) shall be subject to Landlord's approval, and must meet
governmental and quasi-governmental regulations. Tenant may relocate its
existing sign at 10220 Sorrento Valley Road to 10260 Sorrento Valley Road at a
location subject to Landlord's approval.
The fabrication and installation of all Tenant signage shall be at Tenant's sole
expense. The removal of said signage at the end of the Term shall also be at
Tenant's sole expense.
<PAGE> 44
ADDENDUM 1
OPTION TO EXTEND THE LEASE
This Addendum 1 ("Addendum") is incorporated as part of that certain Lease
Agreement, dated for reference purposes as of December 16, 1998 (the "Lease"),
by PHASE METRICS, INC., A DELAWARE CORPORATION ("Tenant"), and LEGACY-RECP
SORRENTO OPCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY ("Landlord"), for the
leasing of those certain premises located at 10260 (ALL) AND 10220 (SUITE MS),
SORRENTO VALLEY ROAD, SAN DIEGO, CALIFORNIA as more particularly described in
Exhibit A to the Lease (the "Premises"). Any capitalized terms used herein and
not otherwise defined herein shall have the meaning ascribed to such terms as
set forth in the Lease.
1. GRANT OF EXTENSION OPTION. Subject to the provisions of this Addendum, if
Tenant has not at any time been in default of its obligations beyond applicable
cure periods more than three (3) times during any twelve (12) month period of
the initial term of this Lease (a "Chronic Default"), or is not in default in
the performance of any of its obligations under this Lease beyond applicable
cure periods at the time of Tenant's exercise of this option to extend the
initial term of this Lease, Tenant shall have the right, at its option (the
"Option"), to extend the initial term of the Lease for one (1) additional three
(3) year period (the "Extended Term").
2. TENANT'S OPTION NOTICE. If Landlord does not receive written notice from
Tenant of its exercise of this Option on a date which is not more than two
hundred seventy (270) days nor less than one hundred eighty (180) days prior to
the end of the initial term of the Lease ("Option Notice"), all rights under
this Option shall automatically lapse and terminate and shall be of no further
force or effect. Time is of the essence herein.
3. ESTABLISHING THE MONTHLY BASE RENT FOR THE EXTENDED TERM. The monthly Base
Rent for the Extended Term shall be the then current market rent for similar
space within the competitive market area of the Premises (the "Fair Rental
Value") agreed upon by and between Landlord and Tenant and their agents
appointed for this purpose. The "Fair Rental Value" of the Premises shall be
defined to mean the current market rental value of the Premises as of the
commencement of the Extended Term, taking into consideration all relevant
factors, including length of term, the uses permitted under the Lease, the
quality, size, design and location of the Premises, including the condition and
value of existing tenant improvements, and the monthly base rent paid by tenants
for premises comparable to the Premises, and located within the competitive
market area of the Premises, as reasonably determined by Landlord.
If Landlord and Tenant are unable to agree on the Fair Rental Value for the
Extended Term within ten (10) days of receipt by Landlord of the Option Notice,
Landlord and Tenant each, at its cost and by giving notice to the other party,
shall appoint a competent and disinterested commercial real estate MAI appraiser
(hereinafter "appraiser") with at least ten (10) years' full-time commercial
real estate appraisal experience in the geographical area of the Premises to set
the Fair Rental Value for the Extended Term. If either Landlord or Tenant does
not appoint an appraiser within ten (10) days after the other party has given
notice of the name of its appraiser, the single appraiser appointed shall be the
sole appraiser and shall set the Fair Rental Value for the Extended Term. If two
(2) appraisers are appointed by Landlord and Tenant as stated in this paragraph,
they shall meet promptly and attempt to set the Fair Rental Value. If the two
(2) appraisers are unable to agree within ten (10) days after the second
appraiser has been appointed, they shall attempt to select a third appraiser,
meeting the qualifications stated in this paragraph within ten (10) days after
the last day the two (2) appraisers are given to set the Fair Rental Value. If
they are unable to agree on the third appraiser, either Landlord or Tenant by
giving ten (10) days' notice to the other party, can apply to the Presiding
Judge of the Superior Court of the county in which the Premises is located for
the selection of a third appraiser who meets the qualifications stated in this
paragraph. Landlord and Tenant each shall bear one-half (1/2) of the cost of
appointing the third appraiser and of paying the third appraiser's fee. The
third appraiser, however selected, shall be a person who has not previously
acted in any capacity for either Landlord or Tenant. Within fifteen (15) days
after the selection of the third appraiser, the third appraiser shall select and
specify a Fair Rental Value for the Extended Term, which Fair Rental Value shall
not be higher than the highest Fair Rental Value nor lower than the lowest Fair
Rental Value submitted by the first two appraisers as the Fair Rental Value for
the Extended Term. If either of the first two appraisers fails to submit their
opinion of the Fair Rental Value, then the single Fair Rental Value submitted
shall automatically be the monthly Base Rent for the Extended Term.
Upon determination of the initial monthly Base Rent for the Extended Term,
pursuant to the terms outlined above, Landlord and Tenant shall immediately
execute an amendment to the Lease. Such amendment, shall set forth among other
things, the initial monthly Base Rent for the Extended Term, and the actual
commencement date and expiration date of the Extended Term, and shall otherwise
be on the same terms and provisions of the Lease to the extent then applicable
(by way of example only, the provisions of Exhibit B to the Lease may not be
applicable during the Extended Term). Tenant shall have no other right to
further extend the term of the Lease under this Addendum unless Landlord and
Tenant otherwise expressly agree in writing.
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4. CONDITION OF PREMISES AND BROKERAGE COMMISSIONS FOR THE EXTENDED TERM. If
Tenant timely and properly exercises this Option, in accordance with the terms
contained herein: (1) Tenant shall accept the Premises in its then "As-Is"
condition and, accordingly, Landlord shall not be required to perform any
additional improvements to the Premises; and (2) Tenant hereby agrees that it
will solely be responsible for any and all brokerage commissions and finder's
fees payable to any broker now or hereafter procured or hired by Tenant or who
otherwise claims a commission based on any act or statement of Tenant ("Tenant's
Broker") in connection with this Option; and Tenant hereby further agrees that
Landlord shall in no event or circumstance be responsible for the payment of any
such commissions and fees to Tenant's Broker.
5. LIMITATIONS ON, AND CONDITIONS TO, EXTENSION OPTION. This Option is personal
to Tenant and may not be assigned separate from or as a part of the Lease. At
Landlord's option, all rights of Tenant under this Option shall terminate and be
of no force or effect if any of the following individual events occur or any
combination thereof occur: (1) Tenant has been in Chronic Default at any time
during the initial term of the Lease, or is in default in the performance of any
of its obligations under this Lease beyond any applicable cure periods at the
time of Tenant's exercise of this Option; and/or (2) Tenant's financial
condition is unacceptable to Landlord at the time of Tenant's delivery to
Landlord of the Option Notice (provided, however, if there is not any
substantial adverse change in Tenant's net profits and net worth as of the date
Tenant elects to exercise this Option compared to Tenant's net profits and net
worth as of the Commencement Date, then Tenant's then existing financial
condition shall be acceptable to Landlord); and/or (3) Tenant has failed to
exercise properly the Option described in this Addendum in a timely manner in
strict accordance with the provisions of this Addendum; and/or (4) Tenant no
longer has lawful possession of the Premises under the Lease, or if the Lease
has been terminated earlier, pursuant to the terms of the Lease.
6. TIME IS OF THE ESSENCE. Time is of the essence with respect to each and every
time period set forth in this Addendum.
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<PAGE> 46
ADDENDUM 2
RIGHT OF FIRST OFFER
This Addendum 2 is incorporated as part of that certain Lease Agreement dated
December 16, 1998, by and between PHASE METRICS, INC., A DELAWARE CORPORATION
("Tenant"), and LEGACY-RECP SORRENTO OPCO, LLC, A DELAWARE LIMITED LIABILITY
COMPANY ("Landlord"), for the Premises located at 10260 (ALL) AND 10220 (SUITE
MS) SORRENTO VALLEY ROAD, SAN DIEGO, CALIFORNIA (the "Premises").
During the initial term of the Lease only, Tenant shall have a continuing First
Offer to Lease ("Right of First Offer") any space that becomes vacant after the
initial lease-up of the Park located at 10220 and 10240 Sorrento Valley Road,
San Diego, California, as outlined on Exhibit A attached hereto and made a part
hereof (the "Expansion Space"). Tenant's Right of First Offer, as granted
herein, is subject to the following conditions:
i. Tenant's Right of First Offer shall be void if, at any time,
Tenant has been, or is currently in default in the performance
of any of its obligations under the Lease; and,
ii. Tenant's Right of First Offer shall be subject to Landlord's
review and approval of Tenant's then current financial
condition.
Provided the above conditions are satisfied, if any portion of the Expansion
Space becomes vacant, and Landlord desires to lease the Expansion Space,
Landlord shall give Tenant written notice, by facsimile and by mail, describing
the location and size of such space, the estimated date upon which Landlord can
deliver such space to Tenant, and the terms and conditions upon which Landlord
is willing to lease the Expansion Space ("Landlord's Availability Notice").
Tenant shall notify Landlord within seven (7) calendar days following receipt of
Landlord's Availability Notice of Tenant's election to lease all the Expansion
Space upon those terms by written acceptance delivered to Landlord ("Election
Notice"). If Tenant fails to notify Landlord of Tenant's election to lease the
Expansion Space within the time specified herein, it shall be deemed that (i)
Tenant has elected not to lease said Expansion Space; and (ii) Landlord may
thereafter enter into a Lease Agreement with a third party. Time is of the
essence herein.
In the event Tenant exercises this Right of First Offer as herein provided,
Tenant shall provide Landlord a non-refundable deposit, equivalent to the first
month's rent for the Expansion Space and the parties shall have ten (10) working
days after Landlord receives the Election Notice and deposit from Tenant in
which to execute an amendment to the Lease setting forth the agreed upon terms.
Upon full execution of an amendment for the Expansion Space, the non-refundable
deposit shall be credited toward Base Rent or the security deposit for the
Expansion Space, as agreed between the parties.
This Right of First Offer shall terminate and be of no force and effect if, at
any time, Tenant is or has been in default of the performance of any of the
covenants, conditions or agreements to be performed under this Lease; or the
Premises are being subleased at the time of this Right of First Offer is
offered.
This Right of First Offer is personal to Tenant and may not be assigned,
voluntarily or involuntarily, separate from or as part of the Lease.
Should Tenant exercise this Right of First Offer, Landlord and Tenant shall
execute an amendment to this Lease, adding the Expansion Space to the Premises
and adjusting the Base Rent and Tenant's proportionate share of the items set
forth in Sections 6 and 7 of this Lease.
